An Upscale Spin for Washing Machines
Following laundry-toting moms and dads around with a video camera and stopwatch wasn’t part of Greg Schweir’s job description when he joined Whirlpool Corp.
In an increasingly competitive North American market, though, the nation’s No. 1 appliance maker decided that was the best way to learn what Americans love and hate about washing clothes.
“We really wanted to understand the amount of time people were putting into getting their clothes clean . . . instead of just guessing,” said Schweir, who works in product development and research for Whirlpool.
“We watched people take bed sheets off, get kids off to school and scurry around the house and get laundry and dump it all in the hamper.”
Schweir’s research is part of a new focus at Whirlpool. The company and its chief competitors, General Electric and Maytag, have expanded their product lines to include upscale appliances with big profit margins.
Because most American homes already have major appliances, manufacturers can no longer rely on sales volume to boost their profits. So they’ve developed sleek, space-age refrigerators, ovens that cook food faster than ever and super-stain-fighting washing machines for consumers willing to pay top dollar for convenience.
There are plenty of willing buyers.
“I love to cook, and I like plenty of refrigerator space,” said Susan Marciniak of Rogers, Ark., who is spending more than $7,000 on appliances, including a five-burner stove to create the kitchen of her dreams.
*
Besides developing premium products to attract customers like Marciniak, Whirlpool is spending hundreds of thousands of dollars on advertising and marketing to boost its brands, which include KitchenAid, Bauknecht and Roper, as well as Whirlpool.
Affluent consumers are more concerned with image than price, so a strong marketing message--something Whirlpool has lacked--is critical, according to Christie Nordhielm of Northwestern University’s J.L. Kellogg School of Management.
“Maytag has consistently hammered home a single message of reliability . . . the lonely repairman,” she said. “Whirlpool is doing some marketing, but whatever it is does not come to mind the same way. They certainly don’t have a single message, and that’s . . . a serious disadvantage.”
Demand for Maytag’s $1,100 Neptune washing machine was so great when it was introduced nearly three years ago that there were waiting lists. Maytag also has the Gemini, a $1,400 standard-size range with two ovens, marketed to busy consumers who want to simultaneously heat two dishes at different temperatures.
Whirlpool’s plans to introduce a new fast-cooking oven this year come several months after Maytag and General Electric introduced similar appliances that sell for more than $3,400 and $1,300 respectively.
At least seven new Whirlpool appliances, including the fast-cook oven, are scheduled to premiere in North America this year. The company will also sell air conditioners that cool faster, quieter dishwashers and a fabric-care system that gives consumers an alternative to dry-cleaning.
Prudential Securities analyst Nick Heymann says he’s especially interested in Whirlpool’s Vanguard, a new washing machine that will compete with the Neptune.
Sophisticated computer software has accelerated new product design. Catalyst, an $800 stain-fighting washer, went from the drawing board at Whirlpool to the factory within 18 months. Sears already sells Catalyst, and a Whirlpool-branded version is on its way to stores.
KitchenAid, owned by Whirlpool, has an $850 dishwasher with an antibacterial rinse cycle. There’s also new line of stainless-steel appliances, which start at $1,000, including a range that features a gas stove top and a convection oven.
*
The Whirlpool brand of kitchen appliances is also spiffing up its offerings, although they are aimed at a broader market and tend to be cheaper and not as fancy.
The company’s financial picture is healthy. Earnings were up 36% in the fourth quarter and 31% for 1999.
But the growth has come with some pain. Nearly three years ago, Whirlpool reorganized its operations worldwide, closed some plants and laid off 7% of its work force. The company also sold its financial services subsidiary and closed some plants.
About 46% of Whirlpool’s sales come from overseas, so international economic downturns the past few years have hurt earnings. Problems in a new software system installed in September delayed deliveries to some North American retailers.
Whirlpool’s e-commerce ambitions appear to be on hold. The company is a partner in brandwise.com, a Web site that rates home appliance products with the Good Housekeeping Institute, but there are no immediate plans to sell its large appliances online.
Analysts say such direct sales to the public might alienate Sears, which accounts for 20% of Whirlpool’s business. Sears sells appliances made by Whirlpool but marketed under the Sears and Kenmore brands.
The fight for market share will be tough. There will always be consumers who prefer value to glamour.
“I’m willing to spend money depending on how well it works,” said Maria Witte of Jenison, who recently bought a $400 Whirlpool dishwasher. “But to spend $800, the dishwasher would have to take the dishes out of the sink and load them itself.”
