Essay:

Essay details:

  • Subject area(s): Marketing
  • Price: Free download
  • Published on: 14th September 2019
  • File format: Text
  • Number of pages: 2

Text preview of this essay:

This page is a preview - download the full version of this essay above.

...Who is Whirlpool?

As they support that;  Whirlpool Corporation's greatest product is; Our people.   

Whirlpool; which is the world's leading producer in white goods industry, was established by Emory and Louis Upton in 1911. The firm, becomes the leader white goods manufacturer of the world from a small machine company.

When we think about home appliances, there are some common names that instantly comes to our minds. One of them is Whirlpool. Now, we can call them as U.S. white goods giant. Company   s annual sales are approximately $ 21 billion. They have 93k employees and 70 manufacturing-technology research centers in 2016.

There are some Whirlpool   s sub-brands; KitchenAid, Maytag, Consul, Brastemp, Amana, Bauknecht, Indesit(entering in Turkey under the name of Indesit, we   ll explain the reason in below) and other major brands in every country.

(Whirlpool, 2017)

White Good Sector Description

The White Goods Sector, which is one of the longest, durable consumer goods sub-sectors in use, covers a large and diverse group of goods. Some sources of electrical appliances, some of which are covered by durable goods, the White Goods Sector has a wide range of products due to its different technologies. These products are mainly; basic products such as refrigerators, washing machines, dishwashers, ovens, cookers and vacuum cleaners are also products such as deep freezers, air conditioners, water heaters, water heaters and water purifiers. The white goods sector in Turkey has significant contributions to the Turkish economy in terms of developing technology, increasing daily production, export capacity and expanding subsidiary industries, services, dealer networks and employment opportunities. In this context, the white goods sector provides about 500 thousand people's subsistence. The quality competition and competitive environment that started with the increasing awareness of the consumer and the increase in the importance given to the research and development studies, has enabled the white goods sector to record big steps in the last 10 years.

There are many factors that are effective in the growth rate of the white goods sector. The most important of these are the first purchase requests and renewal-change requests. The total demand resulting from these two components determines the dynamics of the market. Besides, it is effective in campaigns that offer effective and consumer friendly opportunities in the growth of the market.

(  ZDEN, 2010)

Working Places

We can collect the working areas of the Whirlpool company in 5 main areas.

    Washers and Dryers

    Kitchen Appliances (Refrigerators, Ovens, Microwaves, Dishwashers etc.)

    Other Products (Air Conditioners, Water Heaters etc.)

    Featured Innovations (Hybrid Care Dryer, Smart Laundry)

    Home Appliance Parts & Accessories

When we review these titles we can say that this company has made many productions in kitchen

and home. These products are provide comfort to the people in this areas when they use.

THE WHITE GOODS INDUSTRY IN THE TURKEY

PRODUCTION

    In 2015, White goods production in Turkey has increased by 8.7% compared to the previousyear, reaching 24.6 million. When examined on a product basis, while the most production took place in the washing machine, the fastest growing product was the dryer.In the other product groups except dryer and washing machine, it is seen that the growth in production is below the sector average growth.

    The average annual growth rate of white goods production during the period 2010-2015 was 6%.In this period, annual average growth rate of all products except refrigerator (1,6%) is above the sector average.In the same period, production increased with time in all products; only refrigerator production decreased in 2013 and 2014.

Table 1: Production in White Goods Sector (Department, March-2016)

Graph 1: Annual Change of White Goods Production (March, 2016)

While Ar  elik is in a leading position in the white goods market; Sersim and Vestel companies have the highest sales abroad.

Whirlpool is not in a position like Ar  elik in Turkey. That   s why, Ar  elik company is Turkey oriented and Whirlpool is a global leader.Since Whirlpool has not focused directly on Turkey, its market share has remained low since there is not a sufficient distribution channel in Turkey as much as Ar  elik.Due to low market share and global prevalence, Whirlpool has not yet achieved sufficient level of awareness in Turkey, so it has brought its middle class brand (Hotpoint) and low class brand (Indesit) instead of the high class brands that it has.This is because its awareness is low, so high-priced products that appeal to high class will be offered for sale with low profits for marketing purposes and the required efficiency can not be taken in this process.

WHITE GOOD SECTOR IN TURKEY- DEVELOPMENTS WITH LEADING FIRMS

AR  EL  K: While continuing to focus on Southern European markets in 2014, In Germany, has performed particularly well in small home appliances sales. The company aims to consolidate its presence in Germany and Northern Europe under the Grundig brand in the upcoming period. The

company is working on investments in sales of white goods in the US as well as in Europe with the Beko brand.In the US, it is stated that the company's option of buying the company is considered to increase its market share.In addition, it has been stated that Beko, which is established in Thailand as a production and sales-marketing company, is going to test production at the end of 2015.

In February 2016, Ar  elik announced that the Japanese Toschibo group was in talks to buy home appliance division.

VESTEL: Since January 2015, a license agreement has been signed with Japan's Sharp for 5 years in Europe for production, product development, sales and marketing.It is estimated that Sharp brand sales in 2015 contributed 150 million euros to the company's capital.

WHIRLPOOL:The US firm bought 60% of Indesit shares and entered the Turkish market. They starting to production of washing machine Manisa in 2014 now they are planning to shift production of washing machine to Italy.

The company recently announced the Whirlpool and Maytag brands of white goods; the built-in KitchenAid brand in the market in Turkey and 2 years in the market to increase the number of stores from 450 to 800 announced plans. Positioning Turkey as a strategic market for the Middle East and Central Asia, Whirlpool stated that they could continue their investments in retailing with Whirlpool brand besides their Hotpoint name in Turkey.

INTERNAL DEMAND

Domestic Sales in White Goods Sector

2015 Domestic Sales Annual Change (%)

Washing Machine 2.026.292 6,8

Refrigerator 1.976.199 3,6

Dishwasher 1.483.435 3,4

Bakery 951.231 9,6

Deep Freeze 571.160 6,7

Dryer 81.734 26,9

Total 7.090.051 5,7

Domestic white goods sales increased by 5.7% compared to the previous year and reached 7 million people in 2015. When the product is examined on the basis of the most sales is in the washing machine, while the product with the fastest sales has become the dryer.

    The average annual growth rate of domestic sales during the period 2010-2015 was 5.5%. The average annual growth rate of refrigerators, dryers and dishwashers in this period is below the sector average. In 2011, the highest growth rate was observed in domestic sales during the same period.

    Domestic sales of the sector are expected to grow by 5% in 2016 in line with population growth and new residential sales.

According to Porter   s 5 forces

1- Threats of Rivalry

is among the five strengths of Porter used to determine the density of competition in an industry.

According to researches on durable consumer goods, the market has reached the saturation in some products and in some product groups it is seen that the market is still open to investment. Accordingly, refrigerators, TVs and irons are the products with the highest saturation level respectively.

How Whirlpool avoid the industry rivalry? They have to protect their brand.

Indesit; Becoming a customer alternative as a new brand. They have different designs in products. Their industry knowledge and experience,  and have expert staff at all levels helps to reduce the industry rivalry.

According to this approach, countries' competitive power rather than calculating firms' competitiveness is more consistent will result. International in the globalizing world firms are effective in determining the competitive power. Again, according to this, the basic element of the firm's competitiveness is product and innovation in production systems. (Porter, 1990)

One of the most important features of the white goods sector in our country except for the price issue, the competition in this market has reached its peak. Over time, producer companies will were

able to compete with each other to catch up with each other. Therefore, the Turkish white goods sector, enters the market with brand-new and quality products in every year. In this context, one of the advantages offered to consumers warranty period. Our country is the white goods manufacturing

industry despite being at a competitive level with developed countries, white goods use rate has not yet reached the same level in these countries. (Forum, 2001)

When we look at the competitors in the field of white goods, we see that they are facing more than one powerful company. Ar  elik, Profilo, Vestel, Beko, Bosch, Miele, Samsung and there are many white good manufacturers.Competition is rising by increasing the market share in the white goods sector. So when the market share increases, the industry concentration increases and as a result the rivalry increases.

In addition to these, Whirlpool, Hotpoint (Indesit) brand in Turkey, day to day investments in the past and visible growth in many brands have been able to get ahead of. Become a well-known brand in

our country and is entitled to enter among certain brands. Increasing their production day by day, opening up new stores enables them to be in front of their competitors in terms of easy accessibility.

Whirlpool is the first or the first three in Europe. In Turkey, after Ar  elik or BSH or Vestel, it is fourth. The target is to make sales in Europe from production based in Turkey. Turkey is now a very big producer of white goods.According to recent years, the rates of marriage and divorce in our country are increasing steadily.  (We will touch upon to this point in PESTEL analyses.) When viewed from the point of view of this data (refrigerator, laundry, oven and dishwasher sales), this is half of the market.

Whirlpool and Vestel collaborated in distribution marketing. Since the beginning of 2006, Whirlpool appliances and built-in products have started to be sold at Vestel stores. Thereby minimizing the competition in the sector, while at the same time Whirlpool has succeeded in increasing the brand recognition in Turkey.  (H  rriyet)

As the Whirlpool brand; They continue to direct themselves by analyzing the strength and potential of their competitors. They are trying to be different from their competitors by bringing new digital features alongside their ever-growing field of white goods.  (G  k  e, 2015)

Turkey;  Compared to Italy, France and Russia, we have a large population potential.  Moreover, the countries around it are potent and powerful. When you think about the countries around Turkey, you reach a population of 150-200 million people, a very large market. And Turkey has the power to become a real hub in accessing these markets. On the other hand, Turkey is a wonderful production center; There is a strong work ethic, a talented workforce. Whirlpool, Indesit integration; innovation, technology and brand awareness. In this procurement decision; They said that the success of the operation in Turkey was a big part of the performance of the Indesit Company Turkey team, besides being a great production center with a great population potential in and around Turkey. They express sincerely that our strong business ethics and professional abilities we have and our business results are very influential on them. (   Bankas  , 2016)

2- Threats of Entry

There are 4 major players: Whirlpool, Electrolux, General Electric and Maytag. (About 93% of market share)

Agility of the Asian markets forecasts the shift in business as usual. And new major competitors depend on: Cost efficiency and Price Competetiveness.

Although a new entry into the white goods sector seems not very difficult, there are risks in the long run. In order to develop in the sector, it is necessary to constantly follow other brands and make a difference to focus on their innovations, campaigns and the technologies they create and to emphasize themselves. Monopolistic competition is dominant in the sector. There are many companies and the products in these companies are separated by technology, design with small details.

In the industries where the monopoly market dominates, the current goods must be interesting, preferable and indispensable. Even if we assume that group products in this industry at two different

points, both Major domestic appliances (MDA) and small domestic appliances (SDA) are quite similar on the market. They are trying to add technological privileges, to provide price advantage, or to increase the possibilities most of the time, according to the competition in the sector. For example: It gives the advantage of washing capacity of 11 kg in the washing machine. Or it is like producing a super quiet washing machine which has low decibel. To give an example from another product group; By putting active oxygen technology in the refrigerators, it is possible to stop fruit vegetables for a long time and to get rid of the discount opportunities in the competition and change the privileges of the consumer. Every day in the market there is follow-up and innovation in terms of technology and design.

This is why it does not seem very difficult when entering this sector. Companies with

sufficient capital and production capacity think they can spread easily. Unfortunately, this sector does not recognize the same chances in the long run.In the long term, you have to have a strong brand to be recognized in this sector. Because people trust brand loyalty and go as far as they know it. It's not as easy as it seems to attract people to a brand new one.You want to grab as many customers as you can with advertisements, campaigns and discounts to attract their perceptions to

his own brand. At this point you have to be a company that is strong enough to survive with a low profit rate.Of course, everything does not end with it. To give confidence to the customers you introduce at the first stage, the customer service, the assembly team and most importantly the products must have full equipment. Otherwise, if there is a problem, the customers will return to the

brand they have been linking for years. So, entering a new sector requires serious challenges. Most important is a serious budget and pr support. The new firms that aware of these difficulties usually combine their brands with a strong brand and feed them from the brand's reputation.

New entrepreneurs entering the white goods sector are not limited to these problems. If you are going to create a new brand in the white goods sector, you have to have a factory with enough capacity in addition to the capital. When we think of the current size of a standard white goods product, of course we can not expect it to be in the same capacity with classic factories. If you produce even a single white good, it requires a serious space in terms of pieces. That's why he wants a busy workforce with capital. Moreover, their distribution channels must be developed because white goods have a product scale that is both costly and loaded in terms of unit. Each product must have been carefully prepared and transported in the form of ready-to-distribute products, as they have Higher costly. For these reasons, it is necessary to have a truck capacity above normal when considering the location of the car. Production area, preparation, work force, transportation do not end with these. White goods customers are customers who are in constant contact and product technical service must be equipped for long-term satisfaction. You need to provide a crew and vehicle to reach everywhere as needed. Moreover, you need to provide a call center to direct this team. For all these reasons, a person who will enter the white goods sector should know that this sector is a sector that requires capital, facility area and distribution plan compared to fast consumer goods.

3- Threats of Buyers

The presence of powerful buyers reduces the profit potential in an industry. Buyers increase

competition within an industry by forcing down prices, bargaining for improved quality or more services, and playing competitors against each other. (Porter M. , 1998)

And it can be said to, if the number of suppliers is large and the buyer can fold and change the supplier with very little money. (It is called switching costs)

A switching cost can manifest itself in the form of significant time and effort necessary to change suppliers, the risk of disrupting normal operations of a business during a transition period, high cancellation fees, and a failure to obtain similar replacement of products or services. (https://www.investopedia.com/terms/s/switchingcosts.asp)

The definition of this phenomenon, also known as the cost of replacement, can be briefly described as the non-pecuniary cost of a product or brand when it is replaced. So, did Whirlpool produce white goods with the most powerful system up to this time? No. Only we were designed with the newest features according to the consumer and everything was thought of. It was very easy to learn washing machines, ovens, refrigerators, it was easy to use, the problems like pushing the wrong places in the products with fewer keys were lost or decreased. In addition, the design of white goods is very simple and Whirlpool has put an end to the mistake made by most home appliances makers by that time and has emerged with a new model to the market. A washer-dryer. Almost everyone who uses a washing machine now does not want to change the product. Because the problems that may arise when you switch to a new machine and the time to get used to that product are growing in your eyes. This cost is the switching cost.

To better explain, a user familiar with Whirlpool's touchscreens, easy to use, does not want to easily switch to a different brand because they think that white goods will not be easy to find and that they will be unhappy. This is why the Whirlpool's transit bar, Whirlpool's ease of use, the facilities it offers, and the image of the product. This barriers are not easily overcome and the user does not go to another product because the barriers are high.

The following are some examples of what is known as a barrier to transition:

    Product design

    Product ease of use

    The price of the product

    Extensive technical service network

    Post-Purchase - Post-sales support for any product related problems

    Extra benefits offered to the user

With the development of technology, products that have new features are emerging the other day. Many factors affect the consumers when purchasing white goods, such as the presence of many brands, the excess of product variety, and the price difference confusing the consumer's mind, but also the reliability, performance, technical features, appearance and warranty period of products. If we look at J.D.Power's "Kitchen Appliance Study" and "Laundry Appliance Study" survey in 2016, when consumer satisfaction of Whirlpool Company is examined consumers are happy with the freezer, built-in oven, oven cooker, dishwasher and overhead washing machine.

According to this research, Whirlpool Turkey satisfaction level is 6%. It has a much higher level of customer satisfaction worldwide than Turkey. (Ar  kan, 2016)

4-   Threats of Substitues

Fear of substitute product is low, but it is important to keep up with the industry's change.

When a new product or service meets a customer's similar needs in different ways,the profitability of the industry is compromised. Whirlpool in the world, try to establish competition among the current competitors to avoid damage to this total snow pool. It does this by trying to be more service-oriented than product-oriented, trying to understand the basic needs of the customer, not what the customer gets.The general functioning in the white goods sector continues with the finding of the market open,filling it with R&D,and building similar technologies and designs in line with other brands . Whirlpool Turkey is not getting away from being an unlucky zone in this pool of profitability. Its share in the sector is quite small, because it can not bring in the perfect strategies and technologies that it has developed in the world. Whirlpool is exposed to similar products and similar technologies in each product group and there are not many options in Turkey to distinguish brands from other brands in terms of brand technology. Leaders with similar products in every spot on the market are a threat to Whirlpool. (https://strategiccfo.com/threat-of-substitutes-one-of-porters-five-forces/)

Let's take a look at the category of washing machines with a large market share in Turkey. In the year 2006, no company can get close to Ar  elik, and this situation is changing in 2017.Now, Other brands provide the same techology that Ar  elik offered. Now,The BOSCH brand of BSH has a leading sales performance in the 9kg washing machine. Bosch's weight capacity and performance in washing machines have further increased the Whirlpool   s  mischance. If you want to make a big impact compare to your competitor   s substitutes products as a brand, you can make a difference by offering a product like Samsung's "add-wash" technology.  Samsung made a system that could add laundry in the last minute even when it was washed with the extra cover design on the cover making  by taking advantage of the space in the market. Therefore, similar technologies of companies with this brand awareness, or the remarkable technologies of brands like Samsung, are a serious threat to Whirlpool. The same problem applies to the built-in category. Whirlpool (also Hotpoint brand) the new built-in ovens that have been provided in recent years are divided according to the sector. The vertical flame system called "Direct Flame" Uniform heat to enhance the flavours of every recipe. Although Whirlpool makes such a difference,It did not make a big impact and similar products were definitely found in different brands such as Ar  elik, Vestel, Teka and Profilo, causing Whirlpool to remain in the backplane and threatened in Turkey. The same product similarities and options apply within the cooling category. Many brands with  different names and different ways of telling the consumers the technologies that enable the vegetables that Whirlpool named  Active Oxygen  to stay in the same freshness and vitality for a long time. That is, Whirlpool   s cooling substitutes are too many and threat to Whirlpool. The company, which is under threat of similar products in dishwashers, has made a difference by offering regional cleansing with "Zone-Wash technology", but has not been able to prevent its consumers from purchasing substitute dishwashers with small differences in brands such as Vestel, which are trusted by consumers. There is a category of SDA in which the bigger mischance is not already well developed and it has a weak product range. Since its own products are low and inadequate, Whirlpool can not prevent brands with high brand consciousness that have similar technologies in the Turkish market and every brand has threatened a serious profitability for it because it is behind the companies that will get the patent of turkish coffee such as Ar  elik in small household appliances (SDA).

To summarize, Whirlpool has always been exposed to threats in an industry with full of subtitutes and competitors, and is passive compared to other known firms.

5-  Threats of Suppliers

The presence of powerful suppliers reduces the profit potential in an industry. Suppliers increase competition within an industry by threatening to raise prices or reduce the quality of goods and services. As a result, they reduce profitability in an industry where companies cannot recover cost increases in their own prices. (Porter, M. Competitive Strategy. New York: Free Press. pp. 27-29., 1998)

The Supplier Financing System is a financing model that enables the early payment of bills in exchange for the disposition of the term receivables of the supplier companies and the long-term, uninterrupted procurement of the buyer's business by meeting the supplier's operating capital needs. In other words, the supplier communicates with the relevant institution, guaranteeing the company a meaning and providing financing with the interest rate below the market conditions. The institution sends financing to the supplier immediately under market conditions. Thus, the cash flow of the company is not deteriorated and the supplier company continues production. So everyone in this system is winning. The system is based on win-win principle...  In the Supplier Financing System, the suppliers that were in need first were factoring by invoice assignment. Indesit Company acknowledged that it was not looking very warm to the transfer process, but did not want its suppliers to get in trouble. Two months ago, global project work started in this direction. In this sense, Indesit Company became a first in Turkey. They think that the Supplier Financing System is a means of providing the suppliers with the extra financing they already have to use, easier and less costly. Indesit began this project by listening to the needs of the suppliers one at a time when the effects of the crisis were felt the most. The present situation has strengthened the relationship with the most visible beneficial suppliers. Operational sense has provided great benefits to the company. The operational benefit he provided is measured by himself. In the past, this process, which took a half day for a staff member, was greatly reduced thanks to the facilities provided by the Supplier Financing System, and it saved considerable savings from the work force. (www.beysad.org.tr)

PESTEL ANALYSES

PESTEL analysis is a kind of analysis made by looking at the external influences used in marketing.

It is an analytical tool that helps the operator to identify the great picture of the environment in which the business operates and the factors that can be perceived as opportunities and threats for the business in this environment. When analysis is performed, the external environment is analyzed according to various sub features;

    Political

    Economical

    Socio-cultural (Socia-cultural)

    Technological

    Environmental

    Legal (Legal)

Political: Do the industry and worth some countries present protectionist measures. As so, there is a need to joint-ventures or other investments when entering certain markets. Reallocate manufacturing may imlpy home countries de-investment and unemployment what can jeopardize the brand recognition and appreciation on those markets.

Economic: Regular consumer market suffers from the oscillation in financial markets (consuption retraction) and clearly linked with the economic issues, thus being a market that will be severaly harmed in case of any crisis linked real estate.For more and more working families, from heating food, to wash clothes and dry them, everything as a mechanical help that provides time to the family.

References

1- (Porter, 1990, p.77)

2- (Economic Forum, 2001: 47-48)

3- http://www.karar.com/ekonomi-haberleri

4- Table 1 & Graph 1: Beyaz E  ya End  strisi (Economic Research Department - March 2016)

5- http://www.hurriyet.com.tr/whirlpool-ile-vestel-anlasti-3381853

6- http://www.aksam.com.tr/deniz-gokce/yazarlar/beyaz-esya-deyip-gecme-dijital-devrim-yasandi/haber-440781

7- http://dagitimkanali.com.tr/45-whirlpool-corporation-olarak-artk-turkiyedeki-rakiplerimizden-cok-daha-gucluyuz.html

8- http://dergipark.gov.tr/download/article-file/3203

9- https://kurumsal.fiyatimbu.com/blog/musteri-memnuniyeti-en-yuksek-beyaz-esya-markalari--i_227

10- Competitive Strategy. New York: Free Press, pp. 24-27.

11- https://strategiccfo.com/threat-of-substitutes-one-of-porters-five-forces/

12- http://fernfortuniversity.com/term-papers/porter5/analysis/895-whirlpool-corporation.php

13- http://www.hurriyet.com.tr/2-milyar-ytl-lik-camasir-makinesi-pazarinda-kilo-ve-hiz-kapismasi-5219003

14- http://www.hotpoint.com.tr/

15- https://www.arcelik.com.tr/ankastre-ocak/ov-800-tsi-ankastre-ocak.html

16- https://www.hotpoint.co.uk/built-in/gas-hobs.html

17- https://www.amnesty.org/en/countries/europe-and-central-asia/turkey/report-turkey/

18- www.beysad.org.tr

19- Porter, M. (1998). Competitive Strategy. New York: Free Press. pp. 27-29.

...(download the rest of the essay above)

About this essay:

This essay was submitted to us by a student in order to help you with your studies.

If you use part of this page in your own work, you need to provide a citation, as follows:

Essay Sauce, . Available from:< https://www.essaysauce.com/essays/marketing/essay-2017-11-28-000DfN.php > [Accessed 24.10.19].