Industry Dominant Traits of US Major Home Appliances

Economies of Scale

All the major home appliance manufacturers were trying to gain economies of scale by renovating and building production facilities in order to improve quality and reduce material costs.

Market size

73.3 million Home appliances market and 2.6 million commercial major appliance makes up market size

Growth rate

In US major home appliance industry is expected to grow at about 1.9 % annually.

Number of rivals

Major rivals who shared 99% of the market share were Whirlpool, General Electric, and Maytag, AB Electrolux. Others who shared 1% of the market share were Bosch-Siemens, Haier, Emerson Electric, Sub-zero, Viking and Wolf.

Scope of competitive rivalry

As major home appliance industry became increasingly global it became difficult for global and domestic major home appliance companies to survive independently in the competitive environment.

Degree of product differentiation

In US major home appliances industry firms differentiated themselves on the basis of quality and cost.

Product innovation

As a result of high competition and rivalry companies were always in search of innovation.  Huge amounts were being spent on R&D in order to replace current technologies with more efficient one. For example use of microwave energy in clothes dryers so that clothes could be dried faster, at low temperature. This technology was not marketed as it needed further improvement. Another example of innovation is that silent, vibration-free refrigerator instead of the noisy, energy-consuming compressors. The cooling apparatus consisted of wheel containing gadolinium powder moving through a high powdered, rare earth magnet.

Buyer needs and requirements

National chain stores and mass merchandisers – they only sold the most well-known and private brands. Department stores, furniture stores, and discount stores – pressure on manufacturers to sell in large quantity and at low price. Builders – they were cost conscious, they liked to buy at the middle to low end of well known appliance brand. The basic requirements thus were cost savings, product improvement, environmentally safe products, and SMART appliances with increasing sophisticated electronic control and diagnostics features.

Supply/demand

Since the market is at maturity so demand for the product is not much whereas on the supply side products besides being available in the outlets companies used their own websites to market their products and provide consumer-related information. Companies like Maytag introduced online appliance shopping to enable consumers to purchase online from dealers. Bosch-Siemens Hausgerate, AB Electrolux and Whirlpool formed a business-to-business (B2B) electronics market place.