A sustainable strategy for the Turkish market Willem Rozenberg CEO Philips Turkey

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A sustainable strategy for the Turkish
marketWillem RozenbergCEO Philips Turkey
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Introduction
Recent visit to Bodrum Common feeling
with all expatriates in Turkey Extremely
welcome Business is not easy
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A strong diversified industrial group leading in
health and well-being
Founded in 1891 Headquartered in Amsterdam, the
Netherlands Sales over EUR 22.2 billion in 2010
Growth geographies 32 of sales generated in
growth geographies Globally recognized brand
(world top 50)Our brand value doubled to 8.7bn
since 2004 117,000 employees Sales and service
outlets in over 100 countries 1.5 billion
investment in RD, 7 of sales
Note - All figures from the year 2010 onwards
exclude Television as it is treated as
discontinued operation
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The four global trends that are becoming
increasingly relevant
The rise of growth geographies
Aging population
Climate change and sustainable development
Increased consumer empowerment and sustainable
lifestyles
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Our focus on Health and Well-beingOur portfolio
leverages critical global trends
Aging population
Increased consumer empowerment and sustainable
lifestyles
Climate change and sustainable development
Rise of growth geographies
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We expect our markets to grow Most growth
expected to come in lighting and healthcare
markets

translating into expected market growth per
sector
Growth1 of markets in which Philips participates
vs. GDP growth
100
CAGR5 2010-2015
30
20
50
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Healthcare
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World
Consumer Lifestyle
Market size growth2
Lighting
GDP3
1. Excluding TV 2. Based on internal analysis
3. EIU estimates 4. Brazil, India, China 5. CAGR
Compound Annual Growth Rate
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Growth geographies are a key growth opportunity
driven by rapid expansion of the middle class

• Philips sales show a strong correlation with
  middle class
• The number of middle class households in key
  growth geographies will more than double until
  2015
• The total middle class income pool in growth
  geographies will almost double until 2015
• Our sectors will benefit strongly from the rise
  of the middle class in growth geographies
• Increasingly affordable healthcare which will
  drive demand
• Building of new and better housing and other
  infrastructure increasing demand for lighting
• Increasing demand for a higher quality, and
  healthier lifestyle

Middle class households growth in key growth
geographies Millions of households1
419
17 CAGR
2015
2009
Source Internal analysis CAGR Compound Annual
Growth Rate
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Sustainability as a driver for growth

• Success of EcoVision4
• Our Green Product sales represented around 30 of
  sales in 2009, 3 years ahead of our 2012 target.
  And we have completed our 2012 goal of cumulative
  EUR 1 billion of Green Investment in 2010.
• Launch of our EcoVision5 program
• A clear example of how we continue to drive
  business growth through Sustainability is the
  launch of our EcoVision5 program in 2010.
• Targets for the period 2010 2015
• To bring care to 500 million people
• To improve the energy efficiency of our overall
  portfolio by 50
• To double the amount of recycled materials in our
  products as well as to double the collection and
  recycling of Philips products

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A sustainable strategy for Turkey
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The market

• Characteristics
• 76 m people with large young population
• Increasing awareness
• Developing fast GDP growth / in 2010 7,1
• High growth potential, Expected to become the
  3rd largest European economy by 2050 (Goldman
  Sachs)
• Diverse public and private market
• Upcoming PPP, PFI, BOT models
• Centralization and e-tendering
• Privatisation investments
• Competition
• Almost everybody
• Large number of local players

Turkey the 17th largest economy in the
world Annual GDP growth 2003 - 2007 6.4
annual average 2008 0.7 2009 4.7 2010
forecast 7.1.
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Testing global trends in Turkey Aging and Health

• The age structure of Turkey is relatively
  younger compared to others, an increase of the
  elderly population in absolute numbers is
  noticeable though
• Population over age 65 will be 4.8 million in
  2010
• 7.9 million in 2025
• 17 million in 2050 (Source TURKSTAT)
• Health Indicators
• Life expectancy at birth M/F 71 / 75
  Turkey
• Healthy life expectancy at birth M/F 61 / 63
• Life expectancy at birth M/F 76 / 82 EU
  Average
• Healthy life expectancy at birth M/F 61 / 62

Total expenditure on health 6.7 of GDP (2009)
vs. NL 9.9 (2008)
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Testing global trends in Turkey Energy Climate

• Turkeys demand for electricity grows
• at a rate of 8 per year.
• Current energy import 60
• 2010-15 70
• 2020 80
• Since 1923, every 10 years Turkeys temperature
  has increased by 0.20C
• Source ENO Climate

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Testing global trends in Turkey Increased
consumer empowerment key growth areas

• Increased consumer empowerment, growing of middle
  and upper income segments
• Doubled RD expenditures in the past decade
  Source Worldbank.org
• Construction industry may achieve a growth of
  gt20 in 2010 with a regional focus
  SourceHürriyet Daily
• Strong governmental and private vision and
  commitment to health sector modernization Source
  Worldbank.org
• All in line with the Philips Market Stategy,
  which helps to reach a strong growth for us in
  Turkey.

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Philips in Turkey

• Founded in 1930
• Headquartered in Istanbul.
• Regional offices in Ankara, Izmir, Adana
• Employees
• 300 people in sales and service outlets all over
  Turkey
• Leading market positions
• - LED lighting, energy saving lamps, ambient
  solutions
• Medical Imaging (Cardiology, PETCT, MR)
• Fruit-Juicer , Irons, MP3 player and docking
  stations, high-end TV, shavers, hair-care
• Brand Image in Turkey
• 7th position (brand equity index Turkey)
• Long term commitment
• Reliable, innovative, outstanding quality

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Philips Index for Health and Well-beingA global
initiative - 31000 people across 23 countries

• Philips is a pioneer in developing and bringing
  to market
• innovations that shape our healthcare, our
  lifestyle, and who
• we are as a society. Doing so means we need to
  understand
• the mega-trends in society.
• These include
• What is the state of our health and
  well-being?
• What aspects of health and well-being are most
  important, and how satisfied are people
• with each of these aspects of our lives?
• What role does technology play in helping
  society maintain better health and well-being?
• How does people vary in terms of their
  attitudes and behaviors toward health and
• well-being?
• If we were to assign a particular index as an
  overall measure of health and well-being,
• what would it be and would it vary among
  different sub-groups of people

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Philips Index for Health and Well-beingSome
first results

• 1000 interviews in 12 cities conducted between
  Aug- Sept 2010
• Turkeys total index score is 46
• The majority of Turkish people (66) rate their
  health and well-being as very good or good.
• 65 of Turkish people experience some level of
  stress
• The economy is top of the reasons Turkish people
  are feeling stress(76).
• Healthcare costs are ranked as the third reason
  (66).
• 15 of the Turkish people are sleep deprived
• Technological equipment being update, improved
  and state-of-art technology is effective in
  Turkish peoples hospital preference (89)
• 78 of Turkish people believe that Lighting can
  have a significant effect on their sense of
  health and wellbeing
• Cancer, heart and vascular diseases and
  contagious diseases should receive more attention
  from the government.
• Spending time with family and children (37),
  spending time with friends (31) and relaxing at
  home (30) are the most popular ways to improve
  the feeling of well-being of Turkish people

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A granular approach
Hi-end / Sophisticated Specifications
Brand image
Local insight
Segmentation
Low-end economical solutions Price focused
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Specific market requirements
Price setting
Product specifications
Local insight
Brand image
Visibility
Logistics
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The LED Bridge between Europe Asia
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Thank you very much for this opportunity