Businessmodel of Philips

Customer Segments

Operating through three distinct business segments, Philips serves a broad spectrum of customers. Its Healthcare segment targets clients across the medical and healthcare sector, including hospitals, primary care facilities, specialist clinics and physicians. Similarly, the Company’s Consumer Lifestyle segment is focused on developing products for the general consumer market.

Philips’s Lighting segment has a broader customer base, serving clients across sectors including:

• Consumers, including energy-saving home lighting solutions;
• Public Sector and Government, including sustainable lighting networks and systems for roads and public spaces;
• Commercial and Corporate, including lighting systems for offices, hotels and restaurants, and retail spaces; and
• Industry, including lighting systems for industrial facilities and sites. Philips’s largest markets are North America, Asia Pacific and Western Europe. The Company, however, also serves customers across Central and Eastern Europe, Asia Pacific and India, Australia and New Zealand, Latin America, and Africa.

Value Propositions

Philips provides value to its clients in the following ways:

• Its brand reputation and recognition, with the Company being one of the most established and well-known electronics companies in the world, particularly across Western Europe, with a name associated with reliable services and solutions;
• The quality and breadth of its product portfolio, with the Company providing a wide range of popular products applicable across multiple business sectors and within the consumer market;
• The expertise of its personnel, with the Company employing specialist personnel across its three operating segments; and
• Its sales and marketing reach, with the Company’s products and solutions available to customers globally through a network of sales and distribution channels. ### Channels

Philips operates a website at www.philips.com, through which it provides information to customers on its various products and services. The Company also operates a number of regional websites that are published in local languages. Philips operates an online store where customers can purchase a range of consumer products. The Company’s products are also available through various online and physical retailers, including internet marketplaces, electronics chain stores and department stores.

Philips’s healthcare and lighting sales are primarily made through the Company’s own in-house sales force, which are divided both by operating segment and jurisdiction. The Company has sales and service outlets in around 100 countries worldwide, through which its relationships with major clients are managed. Philips also makes a proportion of its sales through a network of resellers, distributors, and independent sales agents that work alongside the Company’s international sales organisation.

Customer Relationships

All of Philips’s consumer-focused products are available on a self-service basis through the Company’s own online store, as well as through a network of online retailers and chain stores worldwide. These sales do not require any interaction with members of the Company’s sales team; however, customers that make purchases in physical retail outlets can receive a greater degree of personal care.

Sales made by Philips’s Healthcare and Lighting segments are completed through the Company’s direct sales teams, providing a tailored service to clients that focuses on specific customer briefs. These customer relationships are often on a project-by-project basis, with others being more long-term.

Philips provides contact details for its three operating segments across all of its operating jurisdictions, enabling clients to receive a personal response to any technical or sales enquiries. The Company also provides quick help guides, user manuals and troubleshooting guides to clients through its website.

Customers are also able to stay up to date with Philips’s business activities through its news portal, as well as through its social media accounts with Facebook, Twitter, Pinterest, YouTube, and Google+.

Key Activities

Philips is an electronics and health and well-being company.

It operates through three business segments: Healthcare, comprising of the development and sale of imaging systems, healthcare informatics, services and solutions, patient care and monitoring solutions, and customer services; Consumer Lifestyle, comprising the development and sale of consumer products spanning personal care, domestic appliances, and health and wellness solutions; and Lighting, comprising the development and provision of light sources and electronics, spanning professional lighting solutions and consumer luminaries.

Philips is also engaged in the innovation, group and services sector, operating a research and development arm, and providing global shared business services spanning procurement, finance, human resources, information technology and real estate.

Key Partners

Philips collaborates with a range of customers throughout the process of developing, distributing and implementing its various solutions and products. The Company’s partners can broadly be organised into the following categories:

• Healthcare Partners, comprising medical innovation and development partners such as hospitals and medical technology companies that assist the Company in producing effective and innovative healthcare solutions;
• Value Added Partners, comprising service partners that are authorised to provide services on Philips’s behalf, principally for the Company’s Lighting segment;
• Channel Partners, comprising distributors, resellers, retail chains, and independent sales agents that extend the Company’s sales and marketing reach; and
• Technology and Development Partners, that provide assistance in the form of resources, tools and expertise during the process of developing the Company’s solutions. Philips includes lighting companies Lumasense, Architainment Lighting, and Citeos; medical companies and organisations Banner Health, Georgia Regents Medical Centre, and Karolinska University Hospital; and technology companies Apple, Salesforce, and Cisco.

Key Resources

Philips’s key resources are its technologies and intellectual properties, its design and development facilities, its sales and marketing channels, its partnerships, and its personnel.

The Company’s intellectual property, which is material to its ongoing business activities, is protected by various international patents and trademarks.

In 2015 alone, Philips filed 1,750 patents. Searches of records published by the US Patent and trademark Office identified numerous patent applications filed in the name of Philips, including applications entitled ‘Electrocardiography device’, ‘Optical sensing system for determining the position and/or shape of an associated object’ and ‘Light source with quantum dots’.

Cost Structure

Philips incurs costs in relation to the development of its products and solutions, the operation of its design and development facilities, the management of its sales and marketing channels, the maintenance of its supply chain, the management of its partnerships, and the retention of its personnel.

The Company employs around 113,000 members of staff worldwide, representing significant costs in the form of salaries and benefits, and operates an international network of offices and service outlets, accruing fixed costs in the form of rent and utilities.

Revenue Streams

Philips generates revenue through its three operating segments:

• Healthcare, including revenue derived from the development and sale of medical imaging equipment and healthcare equipment;
• Consumer Lifestyle, including revenue derived from the development and sale of consumer electronic products, including male grooming equipment, computer accessories, and audio equipment; and
• Lighting, including revenue derived from the Company’s lighting-as-a-service solutions for commercial, consumer and government projects. The Company also derives a small amount of revenue from its business services, such as IT, finance and human resources services.

In 2015 Philips generated €24.24 billion in annual revenue, an increase on the €21.40 billion recorded in 2014. The Company’s Healthcare segment is its largest revenue generator, accounting €10.91 billion of the Company’s total revenue for the year, while Consumer Lifestyle and Lighting accounted for €5.35 billion and €7.41 billion respectively.