F&P faces uphill battle in US with top-loading drier

By Duncan Bridgeman

Friday 11th April 2003

Brand positioning is a core element of any successful marketing strategy. Dunedin-based Fisher & Paykel Appliances would do well to have this in mind when it unveils the world's first top-loading clothes drier in Florida tomorrow.

While the company is a household name in this country, it is almost completely unknown in the US. Throw in the geopolitical environment over the last two years and many of the 280-odd million people who live there tend to want to buy their own country's products.

Add to that the cost of media in the US making it almost impossible for a small company to build an advertising campaign and launching any product there at the moment is a tough assignment.

So where does that leave an innovative New Zealand company that has devoted the past five years and about $7 million to developing its drying idea?

According to managing director John Bongard, F&P is positioning itself completely differently for its latest new release.

"We're not looking for market share in the US," he said from Chicago this week. "We are unashamedly targeting the high end of the market."

F&P has held a dominant position in New Zealand and has long had a strong innovative focus. It has a relatively strong brand here, even though it has never had a memorable tagline, catchy jingle or strong signature. Instead it has relied on the hero-status of its engineers to drive its products.

In the US F&P does have a good customer base to start with.

It has already found good success there with its high-tech, religious-friendly DishDrawer dishwasher and more recently its new cookware products.

The company has just over 2100 retailers in the US, all focused on the high end of the market.

Mr Bongard said finding retailers was not as easy as it might seem. "A lot of these guys are huge organisations and unless you can offer them a good margin and a product that is genuinely different, you haven't got a bolter's show of getting a start."

F&P will start selling the new product later this year, making it available with a new matching Smart Drive washing machine. New Zealanders will have to wait until the middle of next year.

The dryer, which opens from the top like most washing machines, is able to run on gas or electricity and can dry a full 8kg load in less than an hour.

"From an ergonomics point of view it means people are not having to bend down and put their clothes in," Mr Bongard said.

The stumbling block was that the dryer drum needed to rotate horizontally, which appeared to make a top-opening machine impossible, he said.

"Our engineering team figured out how to do this and also how to rotate the drum forward and backward to give superior drying performance."

With only a limited marketing budget, the company would restrict advertising to "upmarket" architects and trend setters through publications such as Home and Garden, Mr Bongard said.

Despite being a small player with little advertising clout, the company has had some unexpected good PR in the US in the past. Time magazine featured the DishDrawer late last year as one of the 15 things that the modern American home should have in the kitchen.

It also featured on the high-rating Oprah Winfrey Show in October exactly the kind of exposure F&P needed in the US, given that middle America tends to move on just about anything Oprah endorses.

But investors have been cautious about the stock, which has seesawed erratically in recent months, mainly due to the rising Kiwi dollar and increased competition at home.

The company's share price came back this week on news it had sold more than a million units in March, up 11.5% on a year earlier.

Over half of its sales are in Australia but Mr Bongard sees the US as the company's fastest growing market. The company now earns about $540 million in annual export revenues.

Mr Bongard said F&P Appliances was committed to a policy of continuous product development, which had so far produced four major breakthroughs.

"The US is a big market, in more ways than one. The market is big and the appliances are big but US consumers are also pretty conservative and big supporters of their local brands.

"But the end that we are after is perhaps not as prone to those kind of emotions."

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