GE Ready to Dim the Light on Appliance Biz
GE confirmed today the rumor that it was reviewing its options for its appliance business. According to a company release, it is considering "a strategic partnership or joint venture, a spin off or the sale of the business." The $7.2 billion business is responsible for bringing the most familiar forms of the GE brand to consumers--it's the 101-year-old unit that produces washers and dryers, stoves, refrigerators, toaster ovens, etc. that power our home chores. While it may comprise only a page (if that) of the GE portfolio--sales for the company as a whole stand at about $172 billion--the GE appliance biz as a brand recognition factor
or value indicator stands right there next to light bulbs, as few us are considering buying a jet engine or MRI machine. To GE, it's more a sentimental business unit that's slipping, and divesting of it can let the company grow in other areas.
The Wall Street Journal ran a story on the development yesterday, speculating that interested buyers of the appliance biz could include Haier (China) and BSH Bosch & Siemans Hausgerate GmbH (Germany). As has become rote in the sale of strong consumer brand names, any buyer would have the option to retain the use of the GE brand name on the goods.
So what is the marketing impact of the GE brand name on consumer appliances? For most, the GE label is synonymous with quality, longevity and goods are perceived as American-made.
How much marketing value is there in that? Divesting of equipment and hard goods will have a fair market value, but how much monetary value will the GE brand hold in any sale?
Comments
I believe that the G.E. brand is not something we as the youger consumer market have taken much thought about.
The new owners of the brand will have to do a better job of communicating its value to the future of the economy and society as a whole.
Maybe by starting a campaign on the history of the company and then making it cool and appealing to younger buyers can get the job done.
Posted by: Nono Pearson | June 1, 2008 3:16 PM
The value of the GE brand must be considered against the backdrop of the competitive appliance category(ies) in which its products and services compete, and the role of tangible performance attributes and intangible emotive attributes, along with price, in creating a perception of value for its brands compared to competitive offerings. Consumers have been learning that 'no name' appliances deliver good performance, and that often brand name manufacturers are using 'no name' overseas manufacturing to build their branded products. So, we've trained consumers to change their perceptions of the value equation, and therefore, choice, for appliance brands. Bottom line: the asset value of the GE brand in the appliance sector has diminished. Finally, compare the GE brand to the Whirlpool and Maytag brand strategies.
Posted by: Ron Strauss | July 6, 2008 8:43 AM
I have a GE clock radio that my mom bought for me as a teenager back in 1975. It is still working, and I often think what a great value it is to have products that last and last.
Especially today as we work to encourage cradle-to-cradle green product design, it is sad to consider that as GE has moved the major portion of its opperations "across the pond", it is also jetisoning its commitment to quality.
Anyone know where I can get used GE products? I'd especially like to have an old-fashioned coffee percolator. :-)
Posted by: cwebba | August 19, 2008 12:52 PM
Whirlpool has done a much better job recently of global differentiated product management and line management than GE, which has lost focus. A lot of this has to do with cultural changes and financial management of its businesses and less to do with the marketing function or creative brand management per se.
Product design (IDEO, Frog Design, etc.) are largely commoditized and the far east has caught up through outsourcing design to Germans and struggling US design firms. I believe it is just a normal part of the global product development lifecycle and a migration towards lower-cost producers ... the natural fate of GE's appliance business due to global competition.
Posted by: Al Leong | October 10, 2008 9:51 AM