Steve Holton is looking remarkably relaxed for a marketing director required to launch 300 new product models in one year and grow an already healthy 22 per cent chunk of the UK white goods sector to 25 per cent, pronto. And all that in addition to helping direct a massive corporate reorganisation.
It might be, that ever since he first arrived at Hotpoint’s Peterborough offices in 1995, he has been close to the centre of a whirlwind of activity designed to transform an ailing manufacturing giant into a vibrant, consumer-led company.
Holton was appointed to the job in 1995 by new-broom managing director Graham White. Having previously worked for him at Mitsubishi Electric, Holton landed in the middle of a dramatic White-inspired refocusing at Hotpoint. “I was brought into the business because the company had been losing market share for six or seven years,” says 44-year-old Holton, matter-of-factly. There were other challenges too. Profit margins in the white goods sector had been consistently eroded for ten years, the retail trade was stuck in a rut of selling products on price and features, and customers were demanding new products that matched their fast-changing lifestyles.
Holton started by examining perceptions of Hotpoint’s brand image. Research deemed reliability, quality and trustworthiness as strengths; and technology, design and style as weaknesses. These findings reinforced the impressions he had already formed. “I was surprised at how dated a lot of the products were, particularly the laundry range, even though it is our biggest product sector. Basically, Hotpoint was a brand that was stuck in the Seventies.”
Holton doesn’t level criticism at the design team responsible for those products. “I think we had and have the best industrial design © team in the business,” he claims. “The talent was here, what was lacking was the direction to create design-led, marketing-led products.”
The start of the design and marketing revolution focused on the issue of colour on and in products. “The company did once lead in these areas. Hotpoint had three core colours in all its ranges, laundry aside, for 15 years,” says Holton. Hotpoint’s merger with Schreiber Furniture in the Seventies led Hotpoint to create products that coordinated with its kitchen furniture. Hotpoint produced its goods in brown, cream and white. The problem was the company didn’t keep up with the times and those colours began to look very dated.
Some hard questions had to be faced by the board. “There was a fundamental decision to make. We had done three core colours for 15 years. We had put those colours into millions of homes, so our problem was, what happens when a customer wants to replace one of our products? They’ll want something to match, but we as a company wanted to – and needed to – move with the times and introduce new colours. We had to make the decision to throw away the past and move on to something new. The key lesson we learnt there was that we must never, never again stick with something because it’s safe ground. We can’t afford to do that, we must evolve the products and the colour.”
This blossoming of colour at Hotpoint was internally driven by Holton, but by the time the initial forays were coming off the production line he realised they needed to go further and to bring in a colour expert. Haydon Williams International was appointed and set about explaining the options open to the company, including a guide to which colours would be in vogue in 1998. “I took a spur of the moment decision – we hadn’t researched it, nothing,” says Holton. “I said, ‘we’re going to go with these [the fashion colours], and we’re going to do it within a year.’ We did and we have.”
The most high-profile result of this is Casatta, a palette of three colours that effectively forms a sub-brand stretching across some existing Hotpoint product ranges, from dishwashers to fridges, freezers, washing machines and dryers. Sales were only part of the motivation behind the range. The collection, as Hotpoint calls it, was presented to the retail trade as a radical shake-up of how to sell white goods. Sales people have been required to engage in a conversation with customers that is design- and style-led rather than focused on prices and features. “If we can achieve that in the marketplace I’ll be very happy,” says Holton, “because it is reversing ten years of price-oriented selling.” After some resistance, the trade has taken to it. “As far as we were concerned it wouldn’t have mattered if we only sold a handful of Casatta products; it was the statement it was making about the image of Hotpoint. In fact, sales have exceeded our expectations. I think a big lesson has been learnt in the industry; colour and style can be turned into a premium price advantage.”
Hotpoint has clearly given Casatta a role as an experimental vehicle. For example, it has just signed a licensing agreement for the brand to be extended into small appliances, a deal that should see Hotpoint making money purely from the value it has built and not from manufacturing – an enormous development for what was a classic “making things” company.
The introduction of colour on white goods to this extent develops the notion of built-in obsolescence in hard products beyond functionality and into aesthetics. Hotpoint expects customers to tire of their appliance’s appearance well before it stops freezing, cleaning, drying or whatever. Colour is not the only differentiator, however. From software to buttons to handles, the new ranges of products demonstrate a commitment to considered user-interaction based on a progressive attitude to research. “We’ve been implementing qualitative research that is much more behaviour-orientated,” says Holton. “We want to look at what people actually do. Talking about concepts and doing focus groups and so on is fine, but the reality is that you don’t get to what they really do. I find it’s better to have a researcher in someone’s home and literally observe what they do and ask them why.”
Such research feeds into cross-discipline working groups made up of both internal and external teams. “We’ve learnt that if you don’t put work in at the front end, you spend three times as much effort sorting it out later. You need a whole set of skills to do that which we don’t necessarily have in-house.” Thus, along with the highly rated Haydon Williams, Holton uses a number of outside specialists. Cambridge Consultants, for example, is employed on a number of product definition, product orientation and user interface software projects.
With product design consultancies prompting manufacturers to look hard at their internal design teams, it is interesting to note that Holton sees Hotpoint’s in-house industrial design abilities as not just a core competence but as a competitive advantage. No doubt pulses have been racing within the design team recently, for Hotpoint has been undergoing a quiet merger with fellow General Electric-owned company Creda. The merger, which was announced this week, has created General Domestic Appliances, a white goods super-company that will have three brands – Hotpoint, Creda and Cannon. Graham White will lead the commercial part of the group, Creda managing director Brian Wolfe will lead the technical side.
The combined group will have massive clout, with its 32 per cent share of the white goods market in the UK putting it some considerable distance ahead of the next largest group, Electrolux, at 16 per cent. In some product sectors GDA will have more than half the market. One major development to emerge from the group is the formation of a design centre of excellence. Based at the group’s Blythe Bridge site, near Stoke-on-Trent, this will house the combined design and engineering teams from Hotpoint and Creda. Significantly, the industrial designers will fall under the umbrella of the technical department but will report into marketing, a structure that underlines the new priorities at large within the group.
Holton is likely to be rewarded with a high profile role within GDA, possibly leaving Hotpoint to head up an entirely new venture. For now he remains bullish about the new design-led, customer-focused Hotpoint. “We are in an expansionist mood as a company. We’re recruiting heavily, particularly in the areas of technical and design, and we are determined to continue to grow. I passionately believe that we have one of the best industrial design teams in the industry and that, if we develop that core skill, it will help to create a difference between us and our competition.”
Hotpoint and GDA’s market share
Hotpoint boasts a 22 per cent market share of the UK white goods sector. Brand by brand, Zanussi and Bosch are its nearest rivals, at 9 per cent and 7 per cent respectively. Creda at 6 per cent, Whirlpool at 5 per cent, Hoover at 4 per cent and Candy at 3 per cent make up the next biggest brands.
GDA now dominates ownership within the white goods sector. Its brands have a 32 per cent share, with Electrolux Group at 16 per cent, Candy/Hoover at 8 per cent, Bosch Siemens at 7 per cent, Whirlpool at 5 per cent, Merloni 4 per cent, own label 3 per cent. Others; 25 per cent.
1903 Californian electricity meter reader Earl Richardson invents an electric iron that gets hot at the point first. Hotpoint Heating Company goes on to merge with General Electric in the US
1921 Hotpoint Electric Appliance Company starts to trade in the UK as a selling agency for US-made products
1928 Company joins AEI group and starts to manufacture its own products
1950-60s Rapid expansion
1968 AEI taken over by GEC
1974 Hotpoint merged with fellow GEC company Schreiber Furniture
1983 Schreiber Furniture demerges, Hotpoint remains wholly owned subsidiary of GEC. Hotpoint now white goods market leader
1989 Hotpoint part of a joint venture between GEC and GE of America
1993 Management reorganisation begins
1998 Hotpoint becomes part of joint GEC and GE of America-owned group, GDA, along with Creda and Cannon