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Accelerate! at work in the Markets

Bret Furio, Chief Market Leader

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Key takeaways

• Accelerate! is moving decision-making

and accountability closer to the markets

– stimulating entrepreneurship, speed

and local relevance

• Our new operating model will strengthen

capabilities in markets, as we deploy

our transformation deeper into our

organization

• Our End2End initiative is delivering

results with consumers and customers,

as we transform into a market-driven

company

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Transforming into a market-driven organization Key to reaching our full potential – growing sales, profit and share

• Fast, agile and

entrepreneurial in

local markets

Customer

Centricity

Accelerate!

Resource to Win

End2End

Culture

Operating Model

Market impact

• Deeper understanding

of local consumer

needs and trends

• Partnering with our

customers to grow

categories together

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We are implementing Accelerate! across our markets

Creating stronger

marketing and sales

teams and tools

Eliminating silos and

teaming-up

Moving decision-making

and accountability

closer to markets

• Empowering commercial

organizations to react

fast to market dynamics

• Embedding strong

performance-based

management to drive

results

• Sharing insights and

best-practices to

accelerate our

transformation across

markets

• Being entrepreneurial to

identify and react to local

opportunities

• Building our brand with

local consumers, and

partnering with our

customers – with a keen

focus on ROI

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Moving decision-making and accountability closer to markets

Empowering local teams and driving performance

• Robust monthly and quarterly

process to review market

performance with line-of-sight to

CEO

New operating rhythm and

performance management

• Appointed Chief Market

Leader

• Clearly aligned share,

sales and profit targets by

BMC

• Implemented new

operating rhythm and

performance

management

• Granular understanding of

short-falls to pro-actively

address and successes to

replicate

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Creating stronger marketing and sales teams Entrepreneurial, locally relevant, ROI-driven

• Launching more market-specific

campaigns to win with local

consumers

• Piloting tools to optimize

Advertising & Promotion across

BMCs

Developing local campaigns and piloting

Advertising & Promotion effectiveness tools

• Shifting our mix towards more

effective emerging media

• Pilots deliver over 20% more

gross margin for same

Advertising & Promotion spend

• Created Marketing Director

roles in all markets

• In China, built teams to

develop local products in

Shaving, Mother & Child

Care, Air; and expansion to

lower tier cities in 20

provinces

• Developing local

campaigns and piloting

Advertising & Promotion

effectiveness tools

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Eliminating silos and teaming-up Sharing best-practices, scaling-up our transformation

• North America Sonicare

success is underpinned by

dental professional (DP)

endorsement; 60% of

purchases are DP-influenced

• We are scaling and refining this

model to be relevant to other

countries such as DACH, China

and UK

Sharing and scaling sales

and marketing best-practices

• 7 End2End pilots globally

to transform our markets

and businesses

• Established a Market-To-

Order network

• Sharing and scaling

sales and marketing

best-practices

• In DACH, 30 dental

professional sales

representatives hired and

celebrity endorsement activated

(>40% annual growth achieved)

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Key takeaways

• Accelerate! is moving decision-making

and accountability closer to the markets

– stimulating entrepreneurship, speed

and local relevance

• Our new operating model will strengthen

capabilities in markets, as we deploy

our transformation deeper into our

organization

• Our End2End initiative is delivering

results with consumers and customers,

as we transform into a market-driven

company

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End2End is a key part of Accelerate! Led by our markets and businesses to achieve our transformation

Customer

Centricity

Accelerate!

Resource to Win

End2End

Culture

Operating Model

End2End Approach

• Transforming our

business to grow, be

more effective and

efficient

• Optimizing our

End2End customer

value chain we will

win from competition

• Defining how to win

in our local markets,

with projects running

globally

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We look through three lenses to identify opportunities Define changes needed to our business and deliver results

Philips Customer Consumer

How will we transform our business?

How will we partner with our customers to drive growth?

How will we win with our consumers?

More effective

Sales Profit Time to

Market Inventory

Cost of

non-quality

Customer

service

Market

share

More efficient

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Consumer: Identifying new groups for incremental growth

Consumer

Untapped consumer groups and unmet

needs

How will we win with our consumers?

• A more granular view of

the market identified

untapped consumer

groups, new and different

unmet needs:

– Younger users,

Hispanic and African

Americans, baby

boomers

– Close-shave, styling,

on-the-go

• Delivering significant

incremental sales and

profit opportunities for the

Male Grooming category

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Customer: Partnering to support their strategies and grow the category

Customer

Partnering with Walmart to support their

strategies

How will we partner with our customers to drive growth?

• Help Walmart

achieve their “Store

of the Community”

strategy via unique

product offerings,

new merchandising

solutions, in-store

education, etc.

• Resulting in more

trips to store,

higher category

productivity,

improved inventory

efficiency

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Philips: Transforming our business to grow And become more efficient based on consumer and customer needs

Philips Streamline our End2End value chain

How will we transform our business?

• Idea-to-Market: Faster,

more regular innovation to

boost consumer interest

and deliver sustained

category growth

• Market-to-Order: Local

insights team driving

local-for-local product

development, marketing

and communication

• Order-to-Cash: More

reactive to consumer-

demand driving lower

inventories (18% reduction)

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We are rolling out our End2End approach and learnings globally

We have now 7 pilots ready for roll-out in 2013

North America

Male Grooming

Italy

Coffee

North America

Oral Healthcare

DACH

Oral Healthcare Russia

Kitchen appliances

China

Male Grooming

China

Mother & Child Care

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Key takeaways

• Accelerate! is moving decision-making

and accountability closer to the markets

– stimulating entrepreneurship, speed

and local relevance

• Our new operating model will strengthen

capabilities in markets, as we deploy

our transformation deeper into our

organization

• Our End2End initiative is delivering

results with consumers and customers,

as we transform into a market-driven

company