House Beautiful

Appliance makers are serving upscale goods and brand-conscious promos. Will it curb consumers’ appetite for price deals?

Appliance sales are strong as new-housing construction rises and homeowners sock more spare cash into high-end housewares. Upscale line extensions, homey technology (new halogen ovens cook eight times faster than your mom’s General Electric), and new categories like healthcare keep juicing appliance sales.

U.S. marketers will ship nearly 61 million major appliances this year, down slightly from 1999, projects the Association of Home Appliance Manufacturers, Washington, DC. Shipments rose eight percent last year from ’98. Housing starts, meanwhile, hit an 11-year high in ’98 with 1.6 billion units, and home ownership hit a record 67 percent in ’99, reports the U.S. Department of Housing & Urban Development.

Major appliance marketers will spend an estimated $200 million to $250 million this year on consumer promotion including rebates. Most are layering value-added promos on top of their price deals. The biggest drive behind promotion strategy is price deflation. Prices are slowly falling as manufacturers goose volume to use excess factory capacity. They then make up the difference in profit with high-end line extensions.

Discounts and rebates are still main ingredients. After all, there’s always something on sale at Sears. But “with regular prices dropping, it makes it harder for promotional pricing alone to be compelling,” says Kenmore brand manager Ed Keller.

Still, retailers like the power they get from rebates, which they administer. “It’s a tough business controlled by a handful of retailers,” says Ken Harris, partner with consultancy Cannondale Associates, Evanston, IL. “There’s a fine line between consumer and trade promotion. As gray as it is with packaged goods, it gets far more blurred with appliances.”

TWIN PIQUES

Marketers eager to stand out are using more promotion events. Maytag ran a two-pronged twins campaign last March to launch its dual-oven Gemini range. The Newton, IA, company ran a contest to find the “twin” of its long-time spokesman, Ol’ Lonely. (The company sought a doppleganger for its more recent jobless repairman, Gordon Jump, not original actor Jesse White.)

The March-through-August contest got 150 entrants. Maytag sponsored the annual Twins Days Festival in Twinsburg, OH. A panel of twins judged the top three entrants, who strutted a walkway in repairman garb with the Bassett hound that keeps Ol’ Lonely company on TV spots. Top prize was $5,000 and an oven.

Maytag also hosted a cooking contest for festival-goers favorite family recipes. Twenty sets of twins cooked their entries in Gemini ovens. Winners got a full kitchen, but entrants were so enthusiastic that Maytag execs decided on the spot to give a Gemini to each one. Ad agency Leo Burnett USA, Chicago, handled both contests as part of Gemini’s estimated $30 million launch.

Maytag puts its muscle behind major product launches each year. This year, marketing for a high-tech refrigerator unveiled at the January International Builders Show kicks off in spring. In ’97 to ’98, the Neptune energy-efficient washer got two plugs. Maytag gave washers to residents of a drought-stricken Kansas town and tracked water usage through the summer. (It fell 40 percent.) A ’98 stunt outside the New York Stock Exchange invited passers-by to throw in a load to celebrate the performance of Maytag’s stock.

Over in Louisville, KY, General Electric has stepped up retail events for its launches. GE is on a new-product binge, launching more than 20 in ’99 and planning to keep up that output for at least three years. Marketing will keep pace under sales veteran William Bickens, promoted in December to oversee all of marketing. GE more than doubled ad spending last year, out-laying nearly $20 million through September versus $11.4 million in calendar ’98, per Competitive Media Reporting, New York City.

GE’s October launch of the lightning-fast Advantium halogen oven was “the largest commercialization project in our company’s history,” says spokesperson Terry Dunn. The company insisted retailers demo the oven in-store. That pinched distribution a little, but retailers “wanted Advantium to drive traffic and put them at the cutting edge of technology,” Dunn says. Sears made the biggest commitment, he adds. GE trained its own sales force but also hired an outside company to do in-store demos. A year’s worth of demos at trade shows, food expos, and fairs preceded the launch.

GE rolled out the Triton dishwasher and the Spectra oven in September without demos, but pushed hard to get them onto selling floors quickly, Dunn says. BBDO, New York City, handles ads; Shandwick, New York City, handles promos and p.r., with an assist from Power Creative, Louisville, KY.

WHIRLPOOL CLEANS HOUSE

Whirlpool Corp. revamped its operations last year to focus on brands instead of appliance functions, merging marketing and sales for all 27 brands worldwide including flagship Whirlpool and KitchenAid.

“We decided to stop being a manufacturer that happens to market appliances and become a marketer that happens to manufacture appliances,” says Brian Maynard, director of integrated marketing for KitchenAid. Whirlpool put small-appliance veteran Ken Kaminski in charge of the KitchenAid brand to extend value-added promos pioneered with mixers and food processors to major appliances. The small-appliance division has been a renegade group whose innovation raised the bar for Whirlpool’s major appliance brands.

KitchenAid launched cookware in November via a gift-with-purchase deal: Consumers who bought a food processor got a free skillet. The brand let cooks sample the cookware while driving KitchenAid’s momentum against Cuisinart. “In a category with an entrenched competitor, you have to think outside the box,” Maynard says. A New York promo gave food processor buyers a free class at Peter Kump’s cooking school. Product placement on cooking shows gives KitchenAid a “magic apron” without official celeb chef endorsement.

Image-building promos will extend to KitchenAid major appliances as execs break a major ad campaign next month, set promo strategy for 2001, and mull new distribution points. “Why couldn’t we sell cooktop at Bloomingdale’s?” muses Maynard. The company is talking with department stores about adding major appliances, starting with microwaves.

Ads breaking in March are the first work from N.W. Ayer since Whirlpool consolidated all KitchenAid marketing with Ayer and sister agencies Clarion, Greenwich, CT, and direct-marketing shop DialogueWorks, New York City. Bold, irreverent ads continue KitchenAid’s long-time theme, “For the way it’s made,” and give small and major appliances the same image for the first time.

KitchenAid still does a price promo or two each year. “Rebates have been around a long time,” Maynard shrugs. “Whether we rely on them a lot in the future remains to be seen.”

Whirlpool’s flagship brand gives away premiums – like six months worth of Cascade detergent with a new dishwasher – but continues rebates. Next month, Whirlpool bows its first gift basket-with-purchase. Contents aren’t set, but will be “something pleasing to our target audience,” like specialty soaps or teas, a spokesperson says.

Sears is also stepping up efforts to shift Kenmore’s promotion mix to fewer price deals and more added-value offers such as free delivery and gifts with purchase. Private-label Kenmore shows up under Sears’ corporate umbrella promos, like its WNBA sponsorship (through ’02) and the six-year-old Sears National Champion Football Trophy tour and presentation at the Sugar Bowl. “We want people to remember Sears and Kenmore together,” Keller says. That means putting Kenmore goodies in the prize pool for shooting contests at WNBA games and the like.

Sears straddles the fence as the only retailer selling the top six appliance brands, including Kenmore, which takes a prime position in all promo plans. The chain’s appliance department marketing manager juggles national brands, Sears events, and Kenmore promos.

The next big, er, wave will be high-speed washers now popular in Europe, predicts Cannondale’s Harris. Trouble is, they require special detergents. That could spur joint promos with soap marketers like Procter & Gamble, Lever Bros., and Colgate-Palmolive.

Also, watch for emerging small-appliance segments like home healthcare: Sunbeam, Ft. Lauderdale, FL, has stepped up R&D in its Health at Home division in response to research that shows growing consumer interest in health products like air and water filters.