UNIVERSITY OF NEW YORK IN

European Business Administration

MARKET ANALYSIS OF HOME APPLIANCES IN THE AND THE SLOVAK REPUBLIC

2018 PETR NOVOTNÝ

UNIVERSITY OF NEW YORK IN PRAGUE

European Business Administration

MARKET ANALYSIS OF HOME APPLIANCES IN THE CZECH REPUBLIC AND THE SLOVAK REPUBLIC

by

PETR NOVOTNÝ

2018 Mentor: WILLIAM PATTISON

Statutory Declaration / Čestné prohlášení

I, Petr Novotný, declare that the paper entitled:

Market Analysis of Home Appliances in the Czech Republic and the Slovak Republic, was written by myself independently, using the sources and information listed in the list of references. I am aware that my work will be published in accordance with § 47b of Act No. 111/1998 Coll., On Higher Education Institutions, as amended, and in accordance with the valid publication guidelines for university graduate theses.

Prohlašuji, že jsem tuto práci vypracoval/a samostatně s použitím uvedené literatury a zdrojů informací. Jsem vědom/a, že moje práce bude zveřejněna v souladu s § 47b zákona č. 111/1998 Sb., o vysokých školách ve znění pozdějších předpisů, a v souladu s platnou Směrnicí o zveřejňování vysokoškolských závěrečných prací.

In Prague, 22.04.2018 Petr Novotný

Acknowledgements

I would like to sincerely thank my advisor, Mr. William Pattison, who supported me not only during my research for this final project but also during all the classes that I had the honor of having him as my instructor. Thanks to his knowledge I was able to grasp many concepts of marketing that extremely helped me in my career life.

Furthermore, I also want to thank my girlfriend who has always been here for me and my parents who have given me the possibility to study at this university, supported me my entire life and helped me every time I needed it.

Table of Contents

1. Introduction ...... 1 2. History of Czech and Slovak home appliances market ...... 2 3. Market overview – CZ&SK ...... 2 4. The theoretical basis for research ...... 3 4.1. 4 Ps of Marketing ...... 3 4.2. Product ...... 4 4.3. Price ...... 5 4.4. Place ...... 5 4.5. Promotion ...... 6 5. Research methods ...... 7 5.1. Analyzing the product ...... 8 5.2. Analyzing the price ...... 8 5.3. Analyzing the place ...... 9 5.4. Analyzing the promotion ...... 10 6. Primary research analysis – Product ...... 10 6.1. Cooling ...... 10 Combined ...... 11 Freezers ...... 13 Side-by-Side Refrigerators ...... 14 6.2. Washing Machines ...... 16 Front-Loading washing machines ...... 16 Top-Loading washing machines ...... 18 Washer-dryers ...... 19 6.3. Tumble dryers ...... 20 6.4. Dishwashers ...... 22 60 cm dishwashers ...... 23 45 cm dishwashers ...... 25 6.5. Built-in Ovens ...... 26 6.6. Hobs ...... 28 Gas Hobs ...... 28 Electric Hobs ...... 29 Induction Hobs ...... 30 6.7. Hoods ...... 31 Chimney type hoods ...... 31

Island type hoods ...... 32 7. Primary research analysis - Price ...... 33 7.1. Cooling ...... 33 Freezers ...... 33 Combined static fridge-freezers ...... 35 Combined No-Frost fridge-freezers ...... 36 Cooling Category summary ...... 37 7.2. Washing Machines ...... 38 6kg Washing machines ...... 38 7kg Washing machines ...... 39 8kg Washing machines ...... 41 Washer-dryers ...... 42 Washing machines category summary ...... 43 7.3. Tumble dryers ...... 44 7kg Tumble dryers ...... 45 8kg Tumble dryers ...... 46 7.4. Dishwashers ...... 47 60 cm Dishwashers ...... 47 45 cm Dishwashers ...... 49 Dishwashers category summary ...... 50 7.5. Built-in Ovens ...... 51 Built-in ovens, 60 cm height ...... 51 7.6. Hobs ...... 52 Gas Hobs ...... 53 Electric Hobs ...... 54 Induction Hobs ...... 55 7.7. Hoods ...... 55 Chimney type hoods ...... 56 Island type hoods ...... 57 8. Primary research analysis – Place ...... 58 8.1. Washing Machines ...... 58 8.2. Tumble dryers ...... 60 8.3. Dishwashers ...... 61 8.4. Cooling ...... 62 8.5. Built-in Hobs ...... 63 8.6. Built-in Ovens ...... 64

8.7. Hoods ...... 65 9. Primary research analysis – Promotion ...... 66 9.1. Point of sale advertisements ...... 66 9.2. Catalogues ...... 68 9.3. Billboards, CLVs and metro advertisements ...... 69 9.4. Celebrity sponsorships ...... 71 9.5. Events ...... 72 9.6. Television and radio commercials ...... 73 9.7. Aftersales ...... 74 10. Research recommendations ...... 75 11. Conclusion ...... 76 12. Bibliography ...... 78 13. Works Cited ...... 82

Abstract

The purpose of this thesis is to analyze the market of major domestic appliances in the

Czech Republic and and recommend solutions to inefficiencies that are found.

By analyzing the industry and marketing sources, I gathered enough data to create an overview of the situation in both markets in relation to the 4 Ps of marketing – price, product, place, and promotion. Through primary research that included personally visiting brick and mortar stores in both countries, I contrasted the findings from the industry sources with my findings and found several differences between the two markets. The results indicate that while both countries offer virtually identical selection of domestic appliances with promotions that are of similar quality across both markets, there are differences when it comes to price (to some extent caused by the exchange rate of EUR/CZK) and place (brick and mortar stores and kitchen studios are slightly more popular in Slovakia). Because of these disparities between the two markets, I have come up with several recommendations to remedy the negative impacts that could influence the proper functioning of companies in both markets.

MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 1

1. Introduction

Czech Republic and Slovakia have recorded a steady rise in the home appliances

(namely white goods) sales in the past four years. (Bárta & Čuchna, 2017) Market analysis is an appropriate tool to measure what caused this trend but also to assess the key differences between the two countries and the respective factors that influence this growth. Especially now, when the economic gap between Slovak and Czech home appliances-oriented businesses seems to be shrinking, it is essential to be aware of the fundamental characteristics that both markets share or are differentiated by.

For this thesis, I aim to analyze the four P’s of marketing – product, price, place, and promotion as a theoretical basis for extensive primary research that analyzes each of these elements of the marketing mix. Based on this analysis, I will propose recommendations for the issues or anomalies that might occur during the process that might restrict the companies that are present on the Czech and Slovak markets.

As this topic relates to a work I do every day as a product manager at Czech

Republic I decided to carry out a rather extensive analysis that will assess the differences between the Czech and Slovak market as our company is currently undergoing a fusion of the Czech and Slovak branch and therefore it is necessary to analyze the situation and the difficulties it might present. While I have a personal and professional reason for choosing this topic for my thesis, there is also relevance to be found for every home appliances business in these two markets. Without the knowledge of the specifics of Czech and Slovak markets, it is not possible to act accordingly when the market changes and therefore leaves businesses unaware of the potential threats and ways to improve the functioning of the company on the market. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 2

2. History of Czech and Slovak home appliances market

After the separation of Czechoslovakia in 1993, two distinct markets were created.

While the selection of home appliances on the Czech market did not quite match the western world, Slovak market followed a route that led to a market with a wide selection of home appliances that were however mostly the low-end models available at the time in western countries of Europe.

Czech market followed mostly the same pattern as Slovakia did, however, the influence of the western home appliances market got to the Czech Republic sooner. In the past ten years, selection of home appliances has improved rapidly not only because of higher- end appliances being available but because more brands (even the most expensive ones like or ) decided to offer their products for sale and promote them heavily.

Right now, Slovakia is on a similar level to the Czech Republic, and the two markets almost do not differ when it comes to the selection of the available products. (Which is still not a standard in some other European countries) This has caused another evolutionary change that is underway in many companies on Czech and

Slovak markets – merging the two branches. It is possible to observe this trend because the two markets got to such a similar state, that it is not financially viable to have two distinct departments for both Slovakia and the Czech Republic when the market is similar not only in the products available but more often than not in the mindset of the buyers as well. (A. Bouma, personal communication, April 13, 2018).

3. Market overview – CZ&SK

When analyzing the situation on the local market, it is crucial to be aware of the brands that are currently the most successful. In case of the Czech Republic and Slovakia, there MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 3 is a fierce competition in almost every product category of major domestic appliances, and that translates to a very similar market share for many of the brands.

However, the main percentage of sales on Czech and Slovak market comes from 11 brands of domestic appliances that can be divided into two groups according to their market share. The first group hovers around 10% and includes Beko, Whirlpool, Mora, and while the other group includes brands that have around 5% of market share – AEG, Bosch, , , Samsung, Indesit and

Though all these brands hover around 4-10% market share depending on the category, it is important to note that different brand does not equal different company. For example,

Electrolux, AEG, and Zanussi are all part of the Electrolux group. However, for this thesis, the analysis will focus on brands and not the groups that these brands belong to as brands belonging to the same group still have differences when it comes to all the aspects analyzed in this thesis. (Euromonitor International, n.d.)

4. The theoretical basis for research

4.1. 4 Ps of Marketing The main features that distinguish various major domestic appliances brands on both

Czech and Slovak market can be described by the four “P’s” of the marketing mix that were invented by Edmund Jerome McCarthy in his book called “Basic Marketing: A managerial approach” in 1960. Marketing mix, together with marketing strategy and marketing environment are a concept which, when translated to real-life market conditions, helps set a path to a satisfied consumer/buyer. It consists of four “P’s” where each “P” represents a part of the marketing mix – product, price, place, and promotion. As this concept is still used today, it will serve as a theoretical basis for my MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 4 practical observations an analyses of home appliances market for both countries. (Dibb,

Simkin, Pride, & Ferrell, 2001)

4.2. Product A product is an item or a service that is provided to the customer. In this case, it is a tangible product – a home appliance product that provides value to its buyer. For every analysis of a product portion of the marketing mix, it is important to grasp the essence of the product means in the sense of marketing. The textbook about marketing strategy” by Ferrel, Hartline, Lucas, & Luck (p. 96. 1999) offers an excellent definition:

“It is important to remember that products in and of themselves are of little value. The real value a product provides is derived from its ability to deliver benefits that enhance the buyer’s situation.”

In the market of home appliances, this means that the consumer is not buying the because it is a washing machine but because they need their clothes washed. Additional features and premium specifications that guarantee better user experience and increase the user satisfaction are an important part of a buying decision as they constitute a higher amount of benefits and increase the likelihood of a successful purchase.

As mentioned in the previous paragraph, the product does not have to be only a tangible item. In fact, it can be a tangible product (an item that is physically present), intangible product (an item that is not physically present, but its existence is felt indirectly) or a service (not an item but creates benefit for the buyer). While each of these categories represents a product, their costs and benefits vary according to the needs of the customer. Because of the varying benefits, providing a so-called “unique selling proposition” that differentiates the products of one company from another is an MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 5 important factor in this category. Unique selling proposition represents a feature that is exclusive to the product or a range of products and thus differentiates from the competition and adds value to the product in the eyes of the buyer.

4.3. Price The price represents pricing policies that ultimately determine the final product prices.

As Dibb, Simkin, Pride & Ferrell (p.23, 2001) note “Price is a critical component of a marketing mix because consumers are concerned about the value obtained in exchange.” In most cases today, the price is used primarily as a competitive tool that allows the brand to position their products to different price levels and thus influence the perceived brand prestige on the market and establish certain product image.

However, pricing strategy has its place in the marketing mix not only because it creates a certain image but also because it can be a valuable tool to the company (and not only to the marketing department). In comparison to the product or promotion, pricing has high flexibility which means that the changes can be made quickly and react to the events that are happening on the market. While the strategic pricing also takes time to develop, it is still significantly less time consuming than with the other elements of the marketing mix.

Usually, there are several so-called product lines offered by every brand to acquire a larger portion of market share and by appealing to the buyer’s sense for the first impression that arises from their perception of the product’s price point on the market.

As customers often associate higher priced products with quality, the pricing policies of the company can influence what type of customer the brand wants to gain depending on the brand image they create by the set price brackets of the products.

4.4. Place MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 6

Also known as placement or distribution part of the marketing mix, place represents how the product is delivered to the customer. Depending on the product sold, the place can be a distributor, wholesaler, internet shop or a retailer, each having its advantages and disadvantages that influence how the product will be successful as it needs to reach the correct target audience at the right time. (Dibb, Simkin, Pride, & Ferrell, 2001)

It is also worth looking at the different types of distribution channels to understand how the product gets from a producer to a consumer and how it affects the efficiency of the process. The first possible way of distribution is so-called direct distribution, where the producer directly sells the product to the consumer. This type of distribution usually occurs when the producer owns all the elements of the distribution channel all the way through to the consumer (producer sells to the retailer that is part of the same group which then sells to the consumer) and that way keeps a larger share of the profit.

(Cleverism, 2018)

Another commonly used type is an indirect distribution which uses a wholesaler or a retailer to sell the product to the consumer which has an advantage of potentially reaching a wider audience (by using more retailers) but a significant drawback of lower profits. The last distribution type is a dual distribution that combines the direct and indirect methods which combine the positives of both distributions but presents a risk of a channel conflict where one channel might not want to sell the product if their competition does as well. (Cyrenne, 2011)

4.5. Promotion Promotion is the last part of the marketing mix and represents all tasks connected to the communication with the consumer about the product’s specifications and features and presents an answer to “What will this product bring me?” question that consumers have about the buying decisions. By using promotions, the company targets and attracts the MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 7 customers to motivate them to buy the product by addressing their needs and wants.

(Kareh, 2018)

There are various objectives that the promotion seeks to achieve, such as reaching a higher brand awareness on the select market which most often occurs when starting a new company or rebranding an already existing one. Another function of promotion is to create interest in the customer (explain the benefits the product will bring) and provide information about unique features that might differentiate the marketed product from the rest of the market.

It is important to note that the promotion can be divided into five elements that make the promotional mix. The first element is advertising, which is what we see every day – billboards, television commercials, brochures and other common types of advertising.

The second element is PR and sponsorships which serves the purpose of increasing the positive brand recognition and increases the brand's credibility in the eyes of the consumer. Personal selling is a third element which focuses on building a relationship between a client and the brand itself by connecting the representatives of the company with the consumer. The last two elements are direct marketing, which targets specific users via customized advertisements and sales promotions that represent the well known

“buy one get one free” sales promotions and various discounts or free samples. (Dibb,

Simkin, Pride, & Ferrell, 2001)

5. Research methods

The research in this analysis will be divided into four parts where each part reflects the situation on Czech and Slovak market in home appliances industry. The theoretical basis researched from the previous chapter serves as a guideline for the market analysis as I investigated the four elements of the marketing mix – product, price, place, and MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 8 promotion. The data for this analysis were gathered from several visits to Czech and

Slovak brick and mortar stores and kitchen studios in addition to personal communication with people from the industry on both markets with many years of experience throughout different brands. Additional information was gathered from online sources such as price aggregators and brand websites that are relevant to the home appliances industry.

5.1. Analyzing the product The first section of my marketing mix analysis focuses on products available on the

Czech and Slovak markets and their specifications, features, and technologies which might attract the consumer and are currently the most popular. The data for this analysis were gathered by me in the last seven months by visiting brick and mortar stores and kitchen studios throughout the Czech Republic and Slovakia but also using price aggregators, internet shops and websites of the numerous brands that can be found on both markets to give as detailed overview as possible.

It is important to note that the products offered on both markets have changed significantly in the last ten years and if there was a tendency towards selling cheaper products with a lower number of features on the Slovakian market, this tendency is not observable today. This chapter also does not investigate the packaging of the products because there is not any particular reason why. While the packaging exists, in the category of major domestic appliances it is only a simple cardboard box which houses the product and polystyrene to protect it during shipment and therefore offers no way of differentiation between the brands.

5.2. Analyzing the price The second section analyzes the price as one of the elements of the marketing mix.

While there could be an analysis of price brackets that various product lines occupy, my MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 9 opinion is that that would not bring any new findings as the product selection on both markets is remarkably similar. Therefore, I decided to research the price variations between the two markets when comparing the same products.

After gathering the data from brick and mortar stores, kitchen studios and online shops

(over 600 samples) I calculated the price differentials between the two markets for each brand separately as it allows an insight into the pricing decisions and policies of different brands in almost every product category that is present on the market.

However, even though I did my best to gather as large sample size as possible (at least three models analyzed per brand), it is possible that seasonality did affect the results slightly in some of the categories.

5.3. Analyzing the place Analyzing the place element of the marketing mix was the most difficult as there is no way for an external observer to gather data that would indicate how many products get sold through different channels. Because of this I analyzed the numbers for home appliances channel distribution from Euromonitor International and combined the numbers for all the brands analyzed to form several product categories that show how the product distribution differs between the Czech and Slovak market.

Important note for this chapter is that while the numbers should represent the reality of the market very closely, every market database partners with only several shops in each distribution category. Therefore, if a retailer provides data for a database, it can skew the market results slightly depending on how different the retailer’s data is from the rest of the market. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 10

5.4. Analyzing the promotion For the analysis of the last “P” of the marketing mix, I decided to gather information about possible marketing strategies that most brands operate with today in both markets.

As with the analysis of the product, the differences between the two markets are almost nonexistent as the advertising material is usually prepared by the brand’s headquarters and is only translated for local use.

To gather information that would be relevant not only for one brand but for as many of them as possible I interviewed my colleague from Beko Czech Republic who has worked for three different brands in the last fifteen years on marketing and product positions and therefore has the knowledge necessary to evaluate which marketing strategies are used most often, which work the best or which are not used at all.

6. Primary research analysis – Product

The Product analysis of seven different product categories of major domestic appliances on Czech and Slovak market will focus on the technical specifications that play a major role in each of the categories. Not only I will focus on the specifications that different brands share but primarily the technologies that brands on both markets utilize to gain the upper hand from the product and marketing perspective. As all products that are attainable on the Czech market are also present on the Slovak market, this part of the analysis would not benefit from comparing the differences between the two markets, as there are none.

6.1. Cooling For the product analysis of cooling category, I will research three different categories of refrigerators and freezers – Combined refrigerators, Freezers and Side-by-Side refrigerators. Each of these categories could be divided further – e.g., by height, width, MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 11 and energy class but these variables do not influence the technologies used and technical specifications of the appliances and therefore will not be considered for this analysis.

Combined Refrigerators The category of combined refrigerators is the largest cooling subcategory present on the market that accounts for almost 30% of overall cooling products sold every year

(Euromonitor International, n.d.). It is present in almost every household in the form of a that includes a freezer as well and therefore is the most multipurpose of the products in the cooling category.

The primary technical specifications that play a role in this category are the height of the refrigerator, which can vary from 85 cm to 200 cm, and width, which usually ranges from 54 cm to 70 cm depending on the volume needs of the market. Another specification that plays a significant role in customer buying decision is the energy class of the appliance that is calculated based on testing of the products energy properties according to the regulations established by the European Union (European Commission,

2018). The energy class is presented to the customer in the form of an energy label, that specifies the energy class of the product (ranging from G class to A+++ class). The last three specifications that are to be looked at when buying a refrigerator are The noise level (described in decibels – dB and analyzed in a sound laboratory according to the procedure set by the EU). The freezing capacity (how many kilograms can the refrigerator freeze in one day) and the temperature rise time (for how long can the appliance maintain a set temperature when there is no power supplied to the refrigerator)

As for the various technologies used that can be found throughout this category, the most common one is LED lighting (often presented with a marketing label such as MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 12

PowerLED) that can be located on the inner sides of the refrigerators (either one or both) or on the ceiling of the refrigerators. For the premium models, some brands offer

LED light even in the freezer compartment to appeal to the customer's perception of easy to use products.

Other technologies that are more visually appealing rather than having a significant impact on the cooling/freezing performance of the appliance are the metal back wall inside the refrigerator, optional wine-racks, sliding shelves and LED/LCD displays on the doors of the refrigerators or inside the refrigerator itself (so-called TRIM displays).

As for the currently most used technology that almost all the brands share but differentiate themselves with marketing names (NeoFrost, Active Dual Cooling, All

Around Cooling) is the ability of the refrigerator to defrost the freezer compartment and to keep the dry air inside the freezer without it getting to the cooler compartment.

Therefore it extends the amount of time that certain groceries (primarily fruits and vegetables) appear as fresh:

 Static – the freezer needs to be defrosted in the amount of time set by the

manufacturer to keep the efficiency on the declared levels and prevent the ice

from generating on the walls of the freezer; no circulation of air between the

refrigerator and the freezer

 No Frost – the freezer inside the refrigerator includes a ventilated system to

prevent the ice from generating inside the freezer, and therefore no maintenance

is needed to keep the efficiency of the appliance at the declared levels, ventilated

system allows dry air to enter the cooler compartment and shorten the lifetime of

food stored MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 13

 Active Dual Cooling No Frost – combines the advantages of No Frost systems

with separate ventilation systems for the freezer and cooler compartments and

therefore does not shorten the lifetime of the food stored

The last technology that plays a significant product marketing role in combined refrigerators are the so-called crispers. Found under a variety of marketing names

(EverFresh, NatureFresh, BioFresh, etc.) these crispers maintain as ideal conditions as possible for stored fruits, vegetables, and meat products by maintaining a set range of temperatures and controlling the percentage of humidity inside the crisper. Crisper drawers often include a controller for the customer to use in case they need to modify these parameters according to the food stored. They can also contain LED lights of different colors that supposedly prolong the time the food can be stored inside and help the fruit and vegetables to contain as many vitamins as possible.

Freezers The category of freezers shares almost all the basic specifications with the combined refrigerators – Energy class (the range is also the same, G -> A+++, G representing the highest consumption of energy and A+++ the lowest), freezing capacity and noise. The temperature rise time is not evaluated for this category as it describes the ability of a cooler compartment to stay at the set temperature, rather than describing it for the freezer.

As for the physical dimensions of the freezers, there are two main categories:

 Chest freezers – freezers that have the height limited to around 87 cm, and the

volume is created by the width of the appliance that can range from around

60cm to more than 160 cm MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 14

 Tall freezers – unlike the chest freezers, tall freezers share the dimensions with

combined refrigerators, but their whole volume is dedicated to the freezing

compartment

The technologies used are: LED lighting (although on less expensive models it is not uncommon to see an ordinary bulb yellow light). NoFrost freezing (no advanced variants exist as there is no need for humidity and advanced temperature control in the freezer) and displays, which are in most cases LED-based with several indicators but no precise digital display in the form of a seven-segment display.

Side-by-Side Refrigerators The Side-by-Side refrigerators (commonly also known as American style refrigerators) share many similarities with combined refrigerators, yet it is worth looking at the differentiating features. While the technologies and most of the technical specifications are the same, the Side-by-Side refrigerators differ primarily in their dimensions and the resulting usable volume.

The traditional style SBS refrigerators are wider than the combined refrigerators and the width can go up to 100 cm, but the height of SBS refrigerators can also reach up to 200 cm. There are three different types of SBS refrigerators that wary in the way the different compartments are set up:

 Traditional Side-by-Side – traditional SBS refrigerators have the freezer on the

left side of the appliance while the cooling compartment occupies the right side

of the refrigerator. That way, both compartments have a smaller width than the

traditional combined refrigerators, but the volume is made by the height, as both

compartments go from the ground up and are not divided by any other

compartment. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 15

 Four-door Side-by-side – A refrigerators of similar dimensions as traditional

Side-by-Side refrigerators but further divided horizontally to create three

individual compartments. Bottom two serve most of the time as freezer

compartments, and the upper one presents a large open cooling space that is

however accessible by two sets of doors.

 French door Side-by-Side – The cooler compartment of French door SBS

refrigerators has the same concept and dimensions as four-door SBS, but the

freezer compartment is merged into one horizontal shelf-type compartment

rather than having two individual compartments as the four-door style SBS has

As for the technologies used, they are mostly the same as for the combined refrigerators but with two exceptions. As Side-by-Side refrigerators offer more space on the front door due to their size, manufacturers use them to promote certain technologies that are only feasible in this type of refrigerator:

 Samsung uses the size of front doors to place displays of sizes reaching 22” that

act like built-in tablets to control the flow of the household. While for most

people this represents a design-only technology, it could hold a significant

advantage for use with IoT and therefore provide a competitive advantage

 LG uses two layers of front doors that are see-through and allows users to knock

on the doors itself that cause the inside lighting to power up and let the

customers see what is inside the refrigerator without opening the doors (and

wasting the cold air and electricity)

 Beko uses one of the freezer compartments in four-door refrigerators to act as a

multifunctional zone that can be adapted to suit the needs of the customer. It can

serve as a freezer, cooler or zero-degree zone (to store meat and dairy products) MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 16

6.2. Washing Machines For the category of washing machines, I will analyze two different types of washing machines based on the way that the laundry gets loaded into the appliance and one type of washing machine that combines the two first types with dryer capability as well. As with cooling category, washing machines could also be divided by their dimensions, but as that has no relevance to their specifications and technologies used, the different dimensions will be referenced in the relevant categories.

Front-Loading washing machines Front-loading washing machines are the most common type of washing machines sold on both Czech and Slovak market as they represent 73% of washing machines sold on these two markets (Euromonitor International, n.d.). As the name suggests, the laundry gets loaded into the appliance from the front and because of that, front-loading washing machines are much wider than their top-loaded counterparts.

The dimensions of front-loading washing machines are 85 cm tall (can be lowered to 82 cm to fit under the kitchen unit depending on the brand) and 60 cm wide with varying depth from 34 cm to 78 cm depending on the maximum load of the washing machine.

The specifications again include an energy class rating expressed in the form of an energy label, noise level measurement is an important part of the specifications as well

(although it consists of two values, as it needs to show the noise for both washing and spinning). The most important specification is the maximum load that the washing machine can effectively wash (most commonly from 6-11 kg) and the second most relevant parameter is the spinning speed (most often ranging from 1000 to 1600 rotations per minute) which influences how much residual water can is present in the laundry. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 17

As for the most common technologies and features that are present throughout the different brands, so-called XL doors are the most typical feature (highlighting the large diameter of the door) together with different shapes on the side walls that are supposed to support the washing machines for higher stability (and lower noise levels). LCD/LED displays or indicators that show how much time remains until the end of the washing/spinning cycle and indicate what program is selected and if other auxiliary functions are on.

Most washing machines nowadays have around 15 different washing programs designed specifically for various types of clothing according to the material used. Other programs that often are included in a washing machine are designed to save time, and it is not uncommon to find programs lasting only 14 minutes or even less. While these programs are not suitable for large loads or stain removal, they are attractive to people who do not want to wait and are in a hurry.

As for the technologies that are used throughout all the brands under different marketing names, most brands today concentrate on various steam programs and steam refresh auxiliary functions that help prevent the creasing on the laundry by injecting a small amount of steam into the clothing at the end of the cycle. Another technology that made its way into the premium and the high-end segment is so-called stain removal function that adjusts the washing cycle to remove the predefined stains on heavily stained clothes

(ranging from everyday stains from dirt to stains from motor oil).

Another technology marketed with washing machines is inverter motor (or Direct Drive motor in case of LG) that indicates that the brushless motor with digital control is present. That means that in theory this type of motor has a longer life, produces less noise and is more energy efficient than its less expensive counterparts. Most MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 18 manufacturers use this with a 10-year warranty on the parts for the motor to promote the long life of their products.

Some washing machines also use a different way of filling the drum with water, which uses a spray nozzle to evenly distribute the water with a detergent more evenly throughout the clothing. The last and somewhat common technology that is used to market the gentle way to wash your clothes without damaging them is to have as smooth surface of the drum as possible to prevent any micro damage to the clothes during the washing and spinning cycles (Diamond drum, AquaWave drum, etc.)

Most of the washing machines also allow the user to choose how many rotations per minute they want to set during the spinning cycle (fewer rotations = less crease) and the temperature that the laundry should be washed at (ranging from cold to 90°C).

Depending on the price range of the washing machines, the steps are controlled at varying levels – some washing machines only allow for the predefined settings to be used while higher-end models allow the user to control these washing specifications manually.

Top-Loading washing machines Top loading washing machines represent 21% of the Czech and Slovak market, but their market share is decreasing every year (Euromonitor International, n.d.) in favor of front- loading washing machines and washer-dryers. The main advantage of top-loading washing machines is their width which always at 40 cm, and therefore these models are ideal for placement in smaller flats that do not have as much space to offer. The main disadvantage is the significantly lower load capacity when compared to the front- loading washing machines and the higher noise levels caused by, the lesser stability of the appliance. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 19

Specifications and technologies are the same as with their front-loading counterparts, but due to their limited width, the top-loading washing machines cannot offer as broad feature set or technologies (although AEG and Electrolux started to offer top loading washing machines with steam programs in Q1 2018). Apart from their size, there is no advantage from getting a top-loaded washing machine that are also offered at comparatively higher prices than front-loaded washing machines on both Czech and

Slovak market.

Washer-dryers The category of washer-dryers represents a small but fast-growing part of the market that specifically serves one purpose - saving space while offering a washing machine and dryer capabilities in a form-factor of a common front-loading washing machine. At the beginning of 2017, washer-dryers occupied 5% of market share in washing machines category while in the last quarter of 2017, this number already rose to 6% of market share on both markets (Euromonitor International, n.d.) which signifies a trend of growing demand for these appliances.

While the technical specifications and technologies remain mostly as with regular washing machines, what differentiates them from regular washing machines are its dryer capabilities. One of the main differences from the standard washing machines are the specifications for the maximum load which is now specified with two numbers (e.g.,

9/6 kg) which implies the maximum load for washing the clothes and drying them.

Washer-dryers also differ slightly in the program selection which offers not only common washing programs but also combined programs for fully automatic washing and drying depending on the capacity and express programs which can wash and dry a certain amount of clothes (most commonly 1 kg) in one hour. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 20

It is important to note that the principle on which the washer-dryer operates during its drying cycle is different from a separate appliance of a tumble dryer. While tumble dryers operate with hot air and condensate the residual humidity from the laundry, washer-dryers use a heating element that warms the air to up to 85°C and use water to cool the parts of the washer-dryer. That can significantly increase the households water and energy consumption (tumble dryers do not need any water connection to operate).

Washer-dryers also use a slightly different structure of the washing drum (as it needs to be functional for both washing and drying cycles) which results in the laundry being more prone to creasing. Because of this, the recommendation of washer-dryers comes mostly for the space-saving purposes, and the two separate appliances are always a better choice if the budget and space requirements allow it.

6.3. Tumble dryers The category of tumble dryers could theoretically be divided into two categories.

Ventilation dryers ventilate the humid air into its surroundings and therefore are not suitable for placement in living spaces. Condensation dryers condensate the humidity into a tank that can be emptied while often ventilating less than 10% of the total humidity into the air. However, as ventilation dryers are almost nonexistent on the market today, this analysis will only investigate the condensation dryers.

The dimensions of condensation dryers are the same or very similar to front-loading washing machines as they have a most typical height of 85 cm (which, however, cannot be lowered as with the washing machines) and width of 60 cm. What differs the most is depth, that ranges from 46,5 cm in the case of ultra slim dryers to 68 cm for the dryers with maximum load reaching 9 kg.

One of the most important technical specifications in the category of tumble dryers is whether the dryer uses a heater or heat pump to generate the temperature needed to dry MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 21 the clothes. While using the heater guarantees faster drying cycle, it often requires two times more energy for each cycle than the heat pump equipped dryers do. Because of this, heat pump dryers are considered to be very economical and therefore are the most sold type of dryers in both markets with 65% market share (Euromonitor International, n.d.). The use of heat pump also influences the energy class of the appliance where heat pump dryers have no problems reaching the highest ranking of A+++, whereas the traditional dryers occupy the classes ranging from G to B.

The rest of specifications include primarily the noise levels produced by the dryer that in this category are especially important for consumer’s buying decision as the noise levels can be quite excessive even reaching nearly 70 dB. The condensation efficiency which shows how much of the total humidity gets condensed into the tank rather than emitted into the surrounding air is another important specification.

Programs of the dryers that can be found on the market today are designed based on the material of clothes that needs to be dried, and there are very few other programs. (e.g., refresh program that uses cold air to get rid of smells in the otherwise clean clothes) All the programs operate with only three variables:

 Drum rotation – how many times the drum rotates in one minute and with some

better-equipped models if the drum rotates backward as well to minimize

possible creasing and remove the humidity more efficiently

 Temperature range – the range of temperatures that are used for drying the

clothes efficiently and effectively without the risk of damaging the fabric or

shrinking the clothes; in most cases, it is a range of 10°C, e.g., 55-65°C MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 22

 Remaining humidity – how much humidity is left in the dryer after the cycle

ends; many programs are made to leave the humidity percentage a little higher to

simplify ironing and reduce creasing

As for the auxiliary functions, the most presented today are steam programs that inject steam at the end of the drying cycle and therefore reduce the wrinkles created throughout the drying process and aromatherapy functions that use fragranced capsules to replace fabric softeners (as they can damage the parts of the dryer). In the premium category, hybrid tumble dryers are starting to appear which offer so-called express function, which uses a small heating element that consumes more energy but takes approximately 30% less time to finish the drying cycle. Because the heating element is used only as an auxiliary function, it does not affect the energy rating of the appliance and therefore makes it more appealing to the consumers.

The most common of the auxiliary function is the automatic anti-crease functions which rotate the drum of the dryer after the cycle is finished to reduce the creases created on the clothes. Another technology that can be found mainly in the premium segment is the self-cleaning filter that provides the consumer with a reduced need for maintenance. As the consumer does not need to clean the filters at all, compared to the dryers with traditional filters that need to be cleaned after a few drying cycles, the solutions currently available on the market also suffer from issues with clogging filters. These issues need to be serviced and therefore are not recommendable for someone who requires longevity from their dryer.

6.4. Dishwashers For this analysis, the dishwasher category will be divided into two sections based on the width of the appliance – 45 cm and 60 cm. While both could be divided further by separating the freestanding dishwashers from built-in dishwashers, the differences are MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 23 only in their positioning within the household space and therefore have no impact on the technical specifications or technologies used in these appliances and would add no additional value to this analysis.

60 cm dishwashers Dishwashers with a width of 60 cm (also called full-size dishwashers) occupy 70% of market share on both Czech and Slovak market (Euromonitor International, n.d.) for both the freestanding and built-in variants of these appliances. Their main advantage is the increased space for the additional sets of dishes (as much as 16 plate settings) and lower price when compared to the 45 cm slimline dishwashers.

As mentioned in the previous paragraph, the essential specification in the category of dishwashers is the number of plate settings which shows how many plate settings can the customer physically place inside the dishwasher without losing the effectivity of the washing cycle. Another important technical specification is the energy and water consumption (needs to be stated per annum but can be stated per cycle) and the noise levels in decibels.

There are three different form factors in which dishwashers can be bought according to the needs of the customer:

 Freestanding dishwashers – A category of dishwashers that are primarily

manufactured to be placed outside of the kitchen unit. Their controls are on the

front panel, and they are most commonly made in white or inox color options

(their looks cannot be changed as they are not made to mimic the look of the

kitchen unit)

 Fully built-in dishwashers – unlike the freestanding dishwashers, fully built-in

dishwashers are made to be placed into the kitchen unit and act as a part of it. A MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 24

desk in the design of the kitchen unit needs to be secured to the dishwasher, and

all the controls are always found inside not to disrupt the design of the kitchen

unit

 Built-in dishwashers with a panel – sometimes also called semi-built-in

dishwashers, are essentially the same as fully built-in dishwashers, but their

control panel (or display) is placed outside above the desk with the kitchen unit

design

Most programs in dishwashers available today are designed to offer a large variability based on what type of material are the dishes placed in the dishwasher but primarily how greasy and dirty the dishes are. That way, most dishwashers offer programs lasting from thirty minutes up to four hours depending on the needs of the customers. There are also so-called “ECO” programs which aim to consume the lowest amount of energy and water possible at the expense of washing time and “EXPRESS” programs that are the exact opposite of “ECO” programs.

Many technologies can be found inside dishwashers on both markets. One of the most common are the foldable plate supports in the lower basket which ensure greater variability of the dishwasher. Another practical feature is the height adjustable upper baskets that help place tall glasses into the upper basket that might not otherwise fit into the dishwasher or place large plates into the bottom basket that would not fit if the upper basket was not lifted. Some other technologies and auxiliary functions found in the dishwashers are:

 LCD displays (depending on the form-factor of the dishwasher) that shows

remaining time and selected programs MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 25

 Delay timer that allows the user to set as much as 24 hours of delay before the

washing process starts to take advantage of cheaper power or clean the dishes

during the night

 An automatic half-load function that analyses how full the dishwasher is and

shortens the selected program accordingly

 An auto function that determines not only how full the dishwasher is but also

how dirty are the inserted dishes (made possible by light refraction inside the

water)

 Additional spraying arms for heavily soiled pans and pots

 Functions that analyze the hardness of water and take appropriate measures to

protect the glasses from potential damage

 Inverter motor which is more energy efficient produces less noise and has a

longer lifetime than traditional motors

 AquaStop hoses that prevent the leakage of water in case of the water leaking

before reaching the dishwasher

 Self-cleaning filters which reduce the required maintenance frequency for the

customer

45 cm dishwashers The slimline dishwashers are mostly the same as their wider counterparts when it comes to program selection, technologies, and auxiliary functions. Because of their narrowness, they are ideal for a consumer who does not have much room to spare. Other than that, there is no added benefit, and the sacrifices in the form of a smaller number of place settings and higher price make it difficult to justify the buying decision for any other reason than space saving. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 26

The market share of slimline dishwashers for the fourth quarter of 2017 was at 28%

(Euromonitor International, n.d.) which is a 1% decrease from the previous year and from a long-term perspective the observable trend is that more consumers choose the 60 cm dishwashers rather than their slimmer counterparts every year.

When observing the technical specifications in detail, the largest difference when compared to full-size dishwashers arises in the number of place settings which is around

10-11 in this category. The water consumption, as well as the energy consumption, does not differ by more than 10% when comparing the annual consumption of both categories in the same energy classes. The second most observable difference after the number of place settings from the customers perspective are the noise levels, which are significantly higher (in some cases even by 3dB, which stands for double the noise) than in the full-size dishwashers due to the lower amount of space for better sound isolation.

6.5. Built-in Ovens The category of built-in ovens consists of two categories: Full-size ovens, which have some deviations in their dimensions that however do not differ much across different brands as they are purposefully made to fit into kitchen units. And compact ovens, which are lower in height to fit into smaller kitchens that could not fit the full-size models but their dimensions are more consistent as there is not as strong demand for the compact ovens compared to the full-size models and therefore the investment into different dimensions is not feasible for any of the brands today.

The general dimensions of full-size ovens are: width of 60 centimeters, depth of 55 centimeters and height of 57 to 60 centimeters depending on the overall volume of the unit and on the other appliances that might interfere (most often built-it hobs). The dimensions of compact ovens are generally the same as with the full-size models, but the height is lowered to 45 cm to save space in the kitchen unit. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 27

The specifications themselves in the category of built-in ovens are not as important for consumer buying decisions because the ovens do not generate much noise and their power consumption does not matter to the ordinary customer as much as the fit of the oven for their baking needs. What matters the most in the choice of an oven are the programs available, the different ways that food can be prepared inside (functions and technologies), ease of use for the consumer and oven volume (45-85l). The technologies and auxiliary functions commonly found in the ovens today are:

 Hot air generated by the circular heater around the fan in the back wall of the

oven (so-called traditional baking) that most recipes are built around

 Telescopic extensions that can slide out, so the consumer does not have to reach

inside the oven

 3D baking that uses all the heaters available inside the oven for as uniform

distribution of heat as possible

 Pyrolytic cleaning function that operates at temperatures around 500°C and

burns all the built-up dirt inside the oven into ash and therefore the appliance

does not require any cleaning from the consumer

 Boosters that shorten the time needed to preheat the oven at the expense of

energy consumption

 Microwave functionality – most commonly found in the compact ovens to save

more space in the kitchen, the compact oven can double as a as

well

 Automatic recipes that guide the consumer throughout the baking process with

predefined programs

 Automatic turnspit for preparing meat of fries without oil MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 28

 Displays that can act as a photo frame, special coating on glass door for easy

cleaning

6.6. Hobs The category of hobs can be divided into three groups based on the way the heat is conveyed into the pots and pans. These three groups are gas, electric and induction which cover 99% of Czech and Slovak market with following market share: Induction hobs 42% (3% increase from the year 2016), Electric hobs 34% (did not change YoY) and Gas hob 23% (3% decrease from the year 2016). (Euromonitor International, n.d.)

While there are physical differentiations throughout these three categories (primarily the width of the hob itself) as the specifications and functions are the same, there would be no added benefit for this analysis to include the physical dimensions comparison.

Gas Hobs The category of gas hobs still preserves its popularity as evident by the market share it covers in the Czech Republic and Slovakia. This popularity emerges from two sources – tradition, as many people are simply used to cooking on gas hobs and have the gas connection available and the subjectively higher quality of cooking on a gas hob when compared to an electric hob (without induction capabilities). The second argument arises from the direct contact with flame and therefore better uniformity of heat distribution.

The most common dimension of gas hobs are 60 cm, 70 cm, 80 cm and 90 cm of width, the length of the appliance is in most cases in the range of 55-60 cm and depth depends from one model to another as electronics, and other components take up various amounts of space. The number of gas burners depends on the width of the hob itself, but usually, there are four burners for 60 cm hobs and 5 for wider types. The maximum heating power of each burner is stated in Watts but is not an important parameter to the MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 29 consumers buying decision. The design of the gas hobs is similar and often offer a choice of stainless steel color option or colored glass design (either black or white).

However, there are some auxiliary functions that can bring additional value to the consumer or make the usage of the appliance easier:

 Cast iron pan supports – unlike enameled pan supports, cast iron supports are

sturdier (but also more expensive) and can support more weight

 Gas burners with high efficiency – gas burners that are designed to use less gas

to achieve the same heating results

 WOK burners – can be found in higher-end gas hobs and is ideal for wok pans

as the nozzles of the hob allow the heat to reach not only the bottom side of the

pan but also the sides of the pans

 Precise control of the heating levels – in the premium segment of gas hobs, some

brands offer increased control over the heat generated from the flame for more

precision

Electric Hobs The category of electric hobs shares the dimensions with the category of gas hobs.

However, there are almost no auxiliary functions or features that would set models from different brands apart. The only function that is present on more expensive models is the extended zone (a zone which is designed for larger pans and conveys more heat). The electric hobs still have a considerable lead over gas hobs in market share, but their popularity is lowering as more people are starting to shift towards induction hobs which are more efficient and are very similar to gas hobs in the quality of cooking. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 30

The electric hobs have a heating element below the top glass that heats up and conveys the heat throughout the glass into the pans, which causes heat loss in the process and therefore higher energy consumption to heat up the same amount of food than on gas or induction hobs.

Induction Hobs Induction hobs are currently considered to be the best way to cook as their design prevents any heat loss. The principle of conveying the heat in the induction hobs is similar as with the electric hobs, however, the main differentiating feature is that the induction hobs do not use the heating element placed under the glass but use an induction coil instead. This coil transfers the heat directly into the pans with minimal waste, and so it is the fastest and most economical way of cooking. Because of this, there is no risk of burns as the heat would not transfer to the skin and therefore cannot cause any damage.

Their dimensions are the same as with two previous categories; the only difference is in the built-in depth needed as the additional electronics need to be cooled by a fan that removes the heat from the hob itself. The number of cooking zone varies as it is not defined by the number of circular zones on the hob itself but rather than by the number of induction coils placed inside the induction hob. The most basic low-end hobs are equipped with four induction coils which translates to four cooking zones, however, the high-end models often have up to eight induction coils that can recognize the shape of the pans for the heating process to be fast and efficient.

The additional features include:

 Flexible cooking zones – zones that can be used as individual heating zones but

can also be connected to create one large zone MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 31

 Slider controls – more precise controls for selecting the amount of power needed

 Booster functions – faster heating up of the zones at the cost of additional

electricity

6.7. Hoods The category of hoods will be divided for this analysis according to the way the hood is attached in the kitchen – to the side walls for the chimney type hoods and the ceiling for the island type hoods. The division into these two categories was selected based on their market share, as chimney type hoods have 39% and island type hoods 22% of market share on Czech and Slovak markets (Euromonitor International, n.d.). While there are many more types of hoods, these two types were selected as they are the most sold and represent other types of hoods as well when it comes to technical specifications and features.

Chimney type hoods The most common hoods are so-called chimney type, which means that they are attached to a side wall in the kitchen directly over the hob above the kitchen unit so that the steam coming up from cooking can be moved out or filtered as efficiently as possible. No dimensions in this category are set as the hoods can have a varying height, width and depth to fit perfectly into the kitchen and match with other appliances.

Two most important specifications are the power of the hood, which is described in m3/h and represents what volume of air can the hood ventilate in one hour. The other specification is the noise levels which are usually presented in three to four different figures according to the speeds settings of the hood itself. The last specification that plays a role in buying decisions is the energy class, which can vary significantly throughout various models depending primarily on the type of motor used and usually spans from D to A+. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 32

When it comes to functions and technologies that can be found inside hoods (both chimney and island type) most of them can be found primarily in premium models as low-end and mainstream hoods are differentiated mainly by their power and not their features. However, some functions are influential to consumers buying decision:

 Inverter motor – as with some of the previous categories, inverter motors can be

found in hoods as well and for the same reasons as they generate less noise and

offer energy efficient operation than regular motors

 Automatic air cleaning – turns on the hoods every hour for a select time to

refresh the air in the kitchen automatically

 Recirculation mode – offers a way to use the hood without the need to have a

pipe leading outside as it only filters the air in the kitchen and then releases it

back

 Remote control – allows the consumer to control their hood remotely

Island type hoods The island type hoods are similar or even the same as chimney hoods in all aspects – specifications are the same as are the functions and technologies. Two main differences make this category stand out. The first is that they can be placed freely in the kitchen space as they do not require to be placed on the walls but are attached to the ceiling which also allows them to take up more space and therefore house a more variety of motors. The second differentiating feature is the price as island type hoods are often two times as expensive as their chimney type counterparts and so are considered a premium category. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 33

7. Primary research analysis - Price

The second analysis in this thesis revolves around price. To gather enough data for the analysis, I spent a week in Slovakia by analyzing all the products and their prices (in electronics retailer and kitchen studio stores) and gathered over 700 photos on almost every major domestic appliance that is available on the Slovakian market. Then I compared the pricing of products with the same models sold on the Czech market (and within the same sales channels when possible) and divided the products into product categories reflecting the categories in the previous chapter. The exchange rate used for this analysis is 25,635 CZK per 1 Euro as it is still relevant today as when I started my analysis (6th December 2017)

7.1. Cooling For the category of cooling on both markets, I decided to analyze three different subcategories from the cooling and freezing product ranges that reflect the differences between both Czech and Slovak market. Each subcategory includes various numbers of models and brands as for some categories there were not enough samples to ensure that every brand is represented in every category with the same number of products.

Freezers In the cooling category, the first product group I focused on are standalone freezers.

Due to the fact, that this category is relatively small in sales volume, I could analyze only 22 different models from 8 brands. However, it still yielded interesting results. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 34

CZ vs SK market - freezers brand overview 1 500,00 Kč 1 325,14 Kč

1 000,00 Kč 488,88 Kč 500,00 Kč 378,72 Kč 90,48 Kč 210,06 Kč 0,00 Kč Beko Philco Liebherr ECG Candy Gorenje Romo -500,00 Kč -273,27 Kč -283,19 Kč

PRICE DIFFERENCE PRICE -1 000,00 Kč

-1 500,00 Kč

-2 000,00 Kč -1 674,87 Kč BRAND

Graph 1 - Freezers brand overview

On the Graph 1, it is possible to observe the price disparities when it comes to the freezers product group. When the price on the graph is positive, it means that the Slovak market has on average lower price by the given amount for the brand than on the Czech market. It is possible to observe sizeable disparities when it comes to price in this product group, and there is one factor that did influence this. Since there are “only” 22 different models analyzed for this product category, the sample size is not large enough to provide a sufficiently objective overview. When we have a look at the graph not counting the brands that only had one or two models, we get the following result:

CZ vs SK market - Freezers brand overview (revised) 1 000,00 Kč 378,72 Kč 500,00 Kč 210,06 Kč 0,00 Kč Beko Candy Gorenje -500,00 Kč -283,19 Kč

PRICE DIFFERENCE PRICE -1 000,00 Kč BRAND

Graph 2 – Freezers brand overview (revised) We can see on the Graph 2 that after deleting the brands that could negatively influence the data value of the analysis, we are left with three brands – Beko, Candy, and Gorenje MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 35

– all of them with relatively same value on both markets. That can be accounted to the lowering exchange rate and minor differences when it comes to sales decisions of retailers. Other than that, this category proved to be relatively stable when compared to other categories that are analyzed further.

Combined static fridge-freezers Another category that I focused on in the cooling section of my research were

Combined Static Fridge-freezers. I compared 99 different models from 11 brands and carried out the analysis in the same way as with the freezers. This group is a very budget oriented product category that has been widely popular because it offers fridges in the lowest sections of price ranges and because of this, the results on average price differentials between the two market are unexpected.

CZ vs SK market - Combined static fridge-freezers brand overview 2 000,00 Kč 1 659,25 Kč

1 500,00 Kč

1 024,44 Kč 1 000,00 Kč 527,77 Kč 712,91 Kč 511,06 Kč 344,21 Kč 500,00 Kč 249,34 Kč 295,54 Kč 191,43 Kč PRICE DIFFERENCE PRICE -95,25 Kč -220,65 Kč 0,00 Kč

-500,00 Kč BRAND

Graph 3 – Combined static fridge-freezers overview As it is possible to observe on Graph 3, the average price difference in this product group cannot be an object to “not enough data available” phenomenon, and there are at least three brands that have curiously varying prices when we compare the Czech and

Slovak market. Romo has an average price disparity of 1659,25 CZK, Bosch 1024,44 MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 36

CZK, and Whirlpool 712,91 CZK – these in favor of Slovak market (= less expensive than on the Czech market). The difference of this extent cannot be simply attributed to an exchange rate and are a pointer to the different pricing decisions from the brand’s management – especially when we can see that brands like Beko or Gorenje have a very similar pricing level on both markets.

Combined No-Frost fridge-freezers In this category, I analyzed 61 different models of combined No-Frost fridge-freezers among eight brands, and the results were not a surprise after having a look at their static counterparts.

CZ vs SK market - Combined No Frost fridge-freezers brand overview 3 500,00 Kč 2 952,14 Kč 3 000,00 Kč 2 500,00 Kč 2 000,00 Kč 1 766,24 Kč1 739,75 Kč 1 500,00 Kč 1 310,30 Kč1 241,84 Kč 1 259,74 Kč 1 000,00 Kč 474,97 Kč 365,94 Kč

500,00 Kč PRICE DIFFERENCE PRICE 0,00 Kč -500,00 Kč Beko Bosch Electrolux Gorenje Indesit LG Samsung Whirlpool -1 000,00 Kč BRAND

Graph 4 - NoFrost fridge-freezers brand overview The findings in this category seem to follow the fridge-freezers in the static category with the addition of even higher price disparity. We can observe on Graph 4 that Bosch products are on average almost 3000 CZK more expensive on the Czech market than in

Slovakia. None of the brands researched in this category were less expensive in the

Czech Republic than in Slovakia which leads to a question “why.” My assumption is that because No-Frost fridges are at their peak sales both in volume and value on all the western markets, retailers and brands are trying to find an optimal price at which they MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 37 can still sell their products. A possible explanation is that people in Slovakia are more price sensitive than their Czech neighbors and react more negatively to higher prices.

Cooling Category summary

CZ vs SK market - Cooling summarized

3 500,00 Kč

2 500,00 Kč

1 500,00 Kč 1 217,74 Kč 883,12 Kč 869,87 Kč 661,96 Kč 556,70 Kč 465,72 Kč 421,55 Kč 120,15 Kč 242,07 Kč

PRICE DIFFERENCE PRICE 500,00 Kč 50,22 Kč 63,42 Kč

-500,00 Kč

-1 500,00 Kč BRAND

Graph 5 – Cooling summarized When we look at the Graph 5, we can clearly see that there are only three brands that use very similar prices on both Czech and Slovak markets – Beko, Philco, and Candy.

On the other side of the imaginary barricade are Bosch, Samsung and LG where you pay on average around 1000 CZK more only for shopping in the Czech Republic when compared to Slovakia. These findings lead me to the same theory as in the No-Frost combined fridge-freezers category – brands and retailers charge more in the Czech

Republic because people are willing to pay more for the same product, which may not be the case in Slovakia.

MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 38

7.2. Washing Machines In the category of washing machines, there are four primary categories that I analyzed

for this price analysis – 6kg washing machines and 7kg washing machines, that are

mainly aimed at budget-oriented customers and customers who do not have much space

at home. 8kg washing machines category contains both the basic models but also

advanced ones together with washer-dryers, that combine a washing machine with a

dryer – category, which is picking up speed because of the ease of use and space saving

properties. The way of analyzing the price differentials on both markets is made in the

same way as with cooling and with the same exchange rate (25,635 CZK per 1 Euro).

6kg Washing machines The first product group that is part of my washing machines analysis is 6kg washing

machines. While this product group is widely popular because it offers some of the

cheapest models available on the market today, it also does not offer a wide selection of

products. I analyzed 35 models from 9 different brands which offer some interesting

findings.

CZ vs SK market - 6kg washing machines brand overview 2 500,00 Kč

2 000,00 Kč

1 500,00 Kč 1 184,09 Kč 1 216,01 Kč

1 000,00 Kč

688,05 Kč 736,33 Kč PRICE DIFFERENCE PRICE 500,00 Kč 236,21 Kč 131,71 Kč 211,39 Kč 51,85 Kč 68,78 Kč 0,00 Kč Beko Candy Electrolux Gorenje Samsung LG Philco Whirlpool Orava BRAND

Graph 6 – 6kg washing machines brand overview

MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 39

As we can examine on the Graph 6, the brands that offer the cheaper models without any extra features that would make it stand out from the rest of the competition – Beko,

Candy, Electrolux, Gorenje and Orava – are the ones that have the average prices at almost the same level on both Slovak and Czech markets. However, more premium brands like Samsung, LG, and Whirlpool are not afraid to differentiate their products even in this very price sensitive category by offering same product that is more expensive in the range from 700 CZK to 1200 CZK on the Czech market than in

Slovakia. One exception to this is Philco, which is known to be a very budget oriented brand that does not offer extra features but in this category, they are selling their products for a bigger premium on the Czech market than even Samsung does.

7kg Washing machines Another category is 7kg washing machines which offer a middle ground between 6kg and 8kg by offering the newest technologies at more affordable prices than their higher load counterparts. This category is also widely popular because dryers in the 7kg category are one of the cheapest on the market and this makes the 7kg washing machines an ideal match for them. My analysis focused on 36 models from 9 brands – this is where we do not see brands like Orava (lowest prices) but more known brands that have a higher market share. Partially because of the sets of washing machines and dryers that most of the time, people want to be from the same brand, so they match design-wise, and the programs on the washing machines and dryers match for the best user experience.

MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 40

CZ vs SK market - 7kg washing machines brand overview 2 000,00 Kč 1 455,20 Kč 1 500,00 Kč 1 301,05 Kč 1 116,14 Kč 959,32 Kč 933,36 Kč 1 000,00 Kč 830,61 Kč 569,02 Kč 423,82 Kč 500,00 Kč

0,00 Kč PRICE DIFFERENCE PRICE Beko Whirlpool Electrolux LG Bosch Gorenje Samsung Candy -500,00 Kč -627,37 Kč -1 000,00 Kč BRAND

Graph 7 – 7kg washing machines brand overview It is possible to observe on Graph 7 that in this category, price differences are mostly in favor of Slovakia, where all the brands offer the same models for much lower prices except one brand – Siemens. From my analysis, I think that this is only a short-term occurrence, where the prices might have been shifted because of the models that have been in so-called „old stock “(models that have been in the warehouse so long, that the company or retailers are forced to sell them out at a lower than normal price). To support this theory, we can look at the result of Bosch, which is part of the same company as Siemens – BSH group. While Bosch is positioned as a cheaper alternative to Siemens, they sell their products at much higher prices here in the Czech Republic than in Slovakia. And while that might be because of the brand awareness in the Czech

Republic being at a better level for Bosch that Siemens, old stock, in this case, seems to be the likely cause of this difference with higher probability than brand awareness.

Nevertheless, it is interesting how most of the brands in this category decided to sell products at much higher prices (from 424 CZK to 1455 CZK) in the Czech Republic.

MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 41

8kg Washing machines In this category, the brands do not compete as much in volume as in the lower load categories. This situation has occurred because 8kg washing machines are often more expensive but also because of how scattered this category is. In this analysis, where I examined 31 washing machines from 8 brands, the price ranged from 7900 CZK to almost 20000 CZK. And that is only for the differences in brand, features, and design; the load is always the same – 8kg. This variety creates big enough room for all the brands to fit in and differentiate.

CZ vs SK market - 8kg washing machines brand overview 2 000,00 Kč 1 376,27 Kč 1 500,00 Kč 948,13 Kč 937,68 Kč 1 000,00 Kč 708,53 Kč 761,64 Kč 549,74 Kč 500,00 Kč 325,13 Kč 0,00 Kč Beko Bosch Whirlpool Candy Gorenje LG AEG Electrolux -500,00 Kč

PRICE DIFFERENCE PRICE -1 000,00 Kč -1 500,00 Kč -1 429,24 Kč -2 000,00 Kč BRAND

Graph 8 – 8kg washing machines brand overview We can notice on Graph 8, that all of the brands except for one have higher prices set in the Czech Republic than Slovakia except one brand – Beko. There is one potential reason for this situation on the market, and that is that AEG and LG have poured in serious amounts of resources to advertise their washing machines on the Czech market, which is not exactly the case in Slovakia. And Beko, as number two on the Czech market (Euromonitor International, n.d.) needed to respond. The result of this analysis it seems is that Beko answered to this heavy marketing from its competitors by reducing the prices of their competing products to drive more volume while lowering the sales MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 42 value. The rest of the market seems to follow what our analysis has shown for all the categories so far – people in the Czech Republic need to pay more for the same products when compared to Slovakia.

Washer-dryers In this final washing machines category, we will have a look at the situation with washer-dryers. This product group is starting to become interesting for more customers for two main reasons – it is much more compact than having a washing machine and a dryer, and it is also less expensive than buying two separate products. Here I analyzed

27 models from 6 brands in varying loads (there are not enough models with the same load to create enough data for analysis for each group).

CZ vs SK market - Washer-dryers brand overview 5 000,00 Kč

4 000,00 Kč 3 731,06 Kč

3 000,00 Kč 1 878,29 Kč 2 000,00 Kč 1 150,45 Kč 1 000,00 Kč 583,83 Kč

0,00 Kč

PRICE DIFFERENCE PRICE Beko Candy Electrolux Samsung LG AEG -1 000,00 Kč -229,45 Kč -2 000,00 Kč

-3 000,00 Kč -2 451,64 Kč BRAND

Graph 9 – Washer-dryers brand overview

As we can see on the Graph 9 there are some anomalies that we can again observe –

AEG seems to be leveled on both markets price-wise but what caught my interest the most is the price levels for LG washer-dryers. LG overall sells their products for more money on the Czech market, but this category seems to be an exception to this. Their MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 43 washer-dryers are on average about 2500 CZK cheaper here when compared to

Slovakia, and it is worth pointing out that this seems to affect all their models in this category (no product varied significantly from the calculated average). That could mean that it is an interesting brand strategy meant to probably pierce the market of washer- dryers by selling cheaper than competing companies do when comparing the two markets.

It is a completely different story with Samsung, which sells its models on average 3700

CZK higher on the Czech market. This pricing model can again be observed on all of their models, and it is my theory that they are trying to raise their brand value on this market (as can be observed as well in categories like mobile phones, where Samsung has been raising the price of their flagship phones every year by a considerable amount)

Washing machines category summary

CZ vs SK market - Washing Machines summarized 1 600,00 Kč 1 430,04 Kč 1 400,00 Kč

1 200,00 Kč

1 000,00 Kč 787,01 Kč 800,00 Kč 723,26 Kč 609,48 Kč 587,93 Kč 600,00 Kč 441,08 Kč 364,36 Kč

400,00 Kč PRICE DIFFERENCE PRICE

200,00 Kč 84,49 Kč 133,13 Kč

0,00 Kč Beko Candy Electrolux Gorenje Samsung LG Siemens Bosch AEG Whirlpool -200,00 Kč BRAND -1,77 Kč

Graph 10 – Washing Machines summarized

When we have a look at the washing machines category summary on Graph 10, we can see that this category full of extremes. Three brands have on same average pricing on

Czech and Slovak market – Beko, LG, and Siemens. When comparing this summary MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 44 with the results from individual categories, it is clear, however, that it is not because they have prices leveled in every category. All three have extremely expensive categories when comparing the Czech market to Slovak market and vice versa – this then amounts to these three brands being seemingly leveled on both markets.

All the remaining brands are selling for higher prices in almost every washing machine category on the Czech market with the average varying from 360 CZK (Bosch) to 1430

CZK (Samsung). It is clear that if one were to choose on which market to buy a washing machine, by buying in Slovakia they could save sometimes a very significant amount of money when buying almost any brand on the market.

7.3. Tumble dryers Tumble dryers are the fastest growing category on both markets today (Euromonitor

International, n.d.) and because of that, their prices are the most volatile. (Pressure to push pricing down to penetrate the market as much as possible) For this analysis, I will investigate two most commonly sold categories of tumble dryers – 7kg and 8kg of load as they represent over 70% of tumble dryers sold on both markets (Euromonitor

International, n.d.) and use the exchange rate of 25,635 CZK per 1 Euro. I will analyze six most significant brands on both markets and use a sample size of 4 tumble dryers per brand.

MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 45

7kg Tumble dryers

CZ vs SK market - 7kg Tumble dryers brand overview 2 000,00 Kč 1 414,88 Kč 1 500,00 Kč

1 000,00 Kč

500,00 Kč

0,00 Kč Beko AEG Bosch Candy Whirlpool Gorenje -500,00 Kč -307,96 Kč -383,43 Kč -548,42 Kč -660,12 Kč PRICE DIFFERENCE PRICE -1 000,00 Kč

-1 500,00 Kč

-2 000,00 Kč -1 928,27 Kč -2 500,00 Kč BRAND

Graph 11 - 7kg Tumble dryers brand overview Curiously enough, as it is possible to observe on Graph 11, this category of tumble dryers is a complete opposite of every other category in these two markets. Every brand

(with the exception of Bosch) is on average cheaper on the Czech market, and while not by a considerable margin, it is a consistent phenomenon throughout the entire analysis.

When looking at the two outliers – Bosch and AEG – there is a clear reason why both brands came up with such an extreme result. AEG is trading blows in this category with

Beko over the position of number one in tumble dryers on the Czech market, and so it is a plausible explanation that the prices got much lower in the Czech Republic because of this. Bosch is much more expensive in the Czech Republic when compared to Slovakia for two reasons – they charge a premium on their products as they are trying to present themselves as a premium brand and some of their tumble dryers were the most sold in

Slovakia last year, whereas they are not as successful in this category on the Czech market. Therefore, prices get pushed much lower in Slovakia because of the popularity of Bosch tumble dryers. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 46

8kg Tumble dryers

CZ vs SK market - 8kg Tumble dryers brand overview 0,00 Kč Beko Bosch AEG Candy Whirlpool Gorenje -200,00 Kč

-400,00 Kč -331,50 Kč -329,44 Kč

-600,00 Kč

-800,00 Kč

-813,94 Kč PRICE DIFFERENCE PRICE -1 000,00 Kč -939,97 Kč -1 060,94 Kč -1 200,00 Kč

-1 285,05 Kč -1 400,00 Kč BRAND

Graph 12 - 8kg Tumble dryers brand overview The category of 8kg tumble dryers is the most affected by the tough competition on fast-growing markets, and since the Czech Republic has noticed a much bigger “boom” in this category than Slovakia did, the price differentials between the two markets reflect that.

As it is possible to see on Graph 12, the 8kg category offers results that indicate that the

Czech market offers the same products as Slovakia but for much lower prices (as much as almost 1300 CZK) consistently across all the analyzed brands. Only two brands that were significantly more neutral when analyzing the difference in pricing were Bosch and Candy. The reason for Bosch being almost on the same price level in both countries is the same as in the previous category. However, Candy has a similar pricing position as Bosch but for a different reason. Candy presents itself as a budget brand that everyone can afford, and because of that, their prices are already so low, that the difference between the two markets virtually cannot exist or is very small. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 47

7.4. Dishwashers Dishwashers are a category, which can be divided into two major groups – 60 cm and

45 cm wide. These two groups can be then divided into two categories – Freestanding of Built-in. For this thesis, I will be analyzing only the first two groups – 60 and 45 cm.

The price and product variations between the freestanding and built-in dishwashers are simply not big enough to warrant a division into more groups in which we would get mostly the same price differentials, and by doing so, we would lower the sample size which could negatively skew the results. For this comparison, the exchange rate of

25,635 CZK per 1 Euro will again be used to convert the Slovak prices.

60 cm Dishwashers

For this category, I analyzed 62 models of dishwashers that are 60 cm wide for both built-in and freestanding categories. The results presented are for 13 different brands and represent a very significant portion of both Czech and Slovak market – 60 cm dishwashers are by far the most popular category. The reason is that their slimmer counterparts at 45 cm offer less space for a higher price and worse technical specifications for the sole reason of saving 15 cm of width. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 48

CZ vs SK market - 60cm dishwashers brand overview 4 500,00 Kč 4 056,56 Kč 4 000,00 Kč 3 500,00 Kč 3 000,00 Kč 2 787,04 Kč 2 500,00 Kč 1 739,12 Kč 2 000,00 Kč1 603,38 Kč 1 600,90 Kč 1 500,00 Kč

PRICE DIFFERENCE PRICE 1 085,85 Kč 1 073,09 Kč 1 000,00 Kč 785,96 Kč 736,24 Kč 575,53 Kč 669,04 Kč 433,07 Kč 500,00 Kč 255,93 Kč 0,00 Kč

BRAND

Graph 13 – 60cm dishwashers brand overview Dishwashers analysis on Graph 11 shows that all of the brands that have their models of

60 cm dishwashers featured in this analysis sell their products at a higher price on the

Czech market than in Slovakia. It is worth noting that the results for the brands AEG and are based on the two models from each brand that were part of this analysis and therefore might now be an accurate representation of the situation on the markets.

As for the rest of the brands, all of the models examined in this analysis were more expensive in the Czech Republic than in Slovakia, and there is no objective reason to assume that this is due to seasonality or special promotions as I investigated this category for two months before performing my analysis. It is probable that this higher price point for the Czech market is caused by the decision of the brands to create a higher value for the brand in the Czech Republic.

MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 49

45 cm Dishwashers

CZ vs SK market - 45 cm dishwashers brand overview 2 000,00 Kč 1 581,49 Kč 1 500,00 Kč 1 246,39 Kč 1 274,10 Kč

1 000,00 Kč 668,55 Kč 567,18 Kč 500,00 Kč 350,54 Kč 268,88 Kč 69,49 Kč 0,00 Kč ECG Gorenje Amica Electrolux Bosch AEG Beko Candy Whirlpool PRIFE DIFFERENCE PRIFE -500,00 Kč

-1 000,00 Kč -928,52 Kč

-1 500,00 Kč BRAND

Graph 14 - 45 cm dishwashers brand overview As it is possible to observe on graph 12, the difference between the Czech and Slovak prices are not as significant as with full-size dishwashers, however, there is one exception to this, which is Amica brand. On average, their products are cheaper on the

Czech market by almost 930 CZK when compared to the Slovak side. This anomaly can again be part of some promotion from the side of Czech distributors or simply a decision of the market itself (if the brand is not as successful in the Czech Republic, prices might be lowered to achieve bigger market penetration).

Overall, this category still follows the set trend of the Czech market being more expensive on average than the Slovak market. Namely, ECG, Electrolux, and Beko have the biggest difference of between 1250 CZK and 1582 CZK, while Whirlpool sells the

45 cm dishwashers for almost the same on both markets with AEG following not far behind.

MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 50

Dishwashers category summary

CZ vs SK market - Dishwashers summarized 2 500,00 Kč 2 162,72 Kč

2 000,00 Kč

1 438,74 Kč 1 500,00 Kč 1 044,83 Kč1 078,51 Kč 1 000,00 Kč 826,51 Kč 727,25 Kč 571,29 Kč

500,00 Kč PRICE DIFFERENCE PRICE

0,00 Kč Beko AEG Bosch Amica Gorenje Electrolux Candy Whirlpool -500,00 Kč -247,72 Kč BRAND

Graph 15- Dishwashers summarized Looking at the graph 13, we see that the situation in the variability of pricing between the two countries is similar if not worse than in the previous category of washing machines. The only brand that manages to be less expensive on the Czech market is

Amica that is on average 247 CZK cheaper in the Czech Republic. Other brands are at least 500 CZK less expensive in Slovakia, with the most notable examples of AEG

(2163 CZK on average) and Beko (1438,7 CZK on average).

The recommendation for this category is very similar to the washing machines (as the results are similar as well). By buying in Slovakia, one can save a significant amount of money when buying the same product – the most probable cause of this situation could be the boom of the dishwasher category (while not as apparent as the demand for tumble dryers today, still very relevant). The demand for dishwashers was at its peak last year when it comes to the historical units sold and sales value as well (Euromonitor

International, 2018). Because the Czech Republic has a higher GDP per capita (OECD,

2018), it is possible to theorize that more people in the Czech Republic can afford a MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 51 dishwasher (and probably a better one as well). Because of that, the demand is higher, and prices reflect that.

7.5. Built-in Ovens For this thesis, I will analyze only the most common of ovens for both markets. That means that only built-in ovens with a height of approximately 60 cm will be analyzed as they represent more than 50% of the market in sold units (Euromonitor International,

2018). The other categories that could be analyzed are compact ovens and microwave ovens, but because of the negligible market share of compact ovens and low per piece value of microwave ovens, the differences between the two markets would be negligible and not suitable for this thesis.

Therefore I will only analyze the most common built-in ovens of all the price categories because my sources indicate, that the built-in ovens market is separated into 5 categories when it comes to pricing, which all share about 20% of the market and for this comparison, an exchange rate of 25,635 CZK per 1 Euro will be used to attain the price differentials.

Built-in ovens, 60 cm height

CZ vs SK market - Built-in ovens, 60 cm height brand overview

3 500,00 Kč 2 919,55 Kč 3 000,00 Kč 2 500,00 Kč 2 000,00 Kč 1 500,00 Kč 511,64 Kč 1 000,00 Kč 494,97 Kč 558,53 Kč 446,62 Kč PRICE DIFFERENCE PRICE 465,67 Kč 483,26 Kč 500,00 Kč 333,55 Kč 0,00 Kč Beko Bosch Electrolux Gorenje Mora Siemens Candy Whirlpool BRAND

Graph 16- Built-in ovens, 60cm height brand overview MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 52

As it is possible to observe on the graph 14, every brand on these two markets has a very similar approach how to differentiate between the two markets. Except for one brand, every other brand has a price difference of about 500 CZK that Slovak consumers can benefit from as they can buy less expensive products with the same value. The only exception in this category is Siemens, and it’s built-in ovens, which are on average almost 3000 CZK more expensive on the Czech market.

One of the reasons why this anomaly appears on the market could be the result of a brand positioning. As Siemens and Bosch are a part of the same group (BSH – Bosch and Siemens Home) and Siemens is considered as the more premium of the two, it is possible that Bosch reacts to the market with price fluctuations whereas Siemens holds its prices on the same level. While this could worsen their yearly results (which is doubtful, as Bosch is the more sold of the two anyway), the higher prices for Siemens product positively reflect their desired brand image of premium products for the premium price.

7.6. Hobs Another category that I will analyze from a pricing perspective is the category of hobs.

For this analysis, I will divide them into three groups depending on the way that heat is conveyed into pots, pans, and other kitchen accessories. These three groups are – Gas,

Electric, and Induction as all of them are well represented in both markets.

While it would be possible to sort these categories even further, according to their width, it would not influence the results in any manner, as the hobs with 60cm width are the most represented on the market and are most prone to price changes – be it seasonal or natural decrease. As with every other category, the exchange rate used will be 25,635

CZK per 1 Euro. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 53

Gas Hobs

CZ vs SK Market - Gas Hobs brand overview 1 400,00 Kč 1 295,87 Kč

1 200,00 Kč

1 000,00 Kč

800,00 Kč

600,00 Kč

PRICE DIFFERENCE PRICE 364,52 Kč 400,00 Kč 286,89 Kč 171,56 Kč 200,00 Kč 125,48 Kč 105,41 Kč 64,71 Kč

0,00 Kč Amica Bosch Electrolux Mora Whirlpool Beko AEG BRAND

Graph 17- Gas Hobs brand overview From the graph 15, it can be seen that with the exception that is the average for Bosch gas hobs, every other brand is similarly priced in both markets and only slight fluctuations are present. Electrolux and Beko brands are slightly more expensive on the

Czech Market but not to the extent that would seem statistically important.

The reason why Bosch is more expensive on the Czech market by such a large margin can be assigned to their overall market pricing. While gas hobs serve as the cheapest products for most of the brands, Bosch markets their products as “German engineering” and therefore charge higher prices. This analysis leads me to believe that Bosch could have more fluctuating prices simply because they sell their products with a larger profit and therefore have more room to negotiate their prices, leading to the differences between these two markets due to the headroom available when evaluating the price levels for their products.

MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 54

Electric Hobs

CZ vs SK Market - Electric Hobs brand overview 350,00 Kč 331,35 Kč

300,00 Kč

250,00 Kč

200,00 Kč 179,84 Kč

150,00 Kč 119,59 Kč 103,57 Kč 100,00 Kč PRICE DIFFERENCE PRICE 57,66 Kč 50,00 Kč 34,75 Kč 3,54 Kč 0,00 Kč Amica Bosch Electrolux Mora Whirlpool Beko Candy BRAND

Graph 18 - Electric Hobs brand overview Looking at the Graph 16, we can see that the pricing situation in both markets is very similar to the previous paragraph devoted to gas hobs. With electric hobs, the markets are even less divided because the highest average difference on the market is 331 CZK

(Bosch). Other brands are around 100 CZK cheaper on the Slovak market while for example, Beko is almost at zero difference between the two markets.

I determined that this outcome is the result of electric hobs being the same

(technologically-wise) among all the brands with no marketable features that would separate them from the other electric hobs by other brands. This way, the only aspect that makes the difference in pricing would be the brand of the hob and the ratio of supply/demand on the market.

MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 55

Induction Hobs

CZ vs SK Market - Induction Hobs brand overview 700,00 Kč 620,76 Kč 600,00 Kč 556,08 Kč

500,00 Kč

400,00 Kč 377,35 Kč

287,85 Kč 300,00 Kč 271,85 Kč

PRICE DIFFERENCE PRICE 200,00 Kč 97,81 Kč 100,00 Kč 64,23 Kč 0,39 Kč 0,00 Kč Amica Bosch Electrolux Mora Whirlpool Beko AEG Gorenje BRAND

Graph 19- Induction Hobs brand overview On the Graph 17 that shows the price differences between the Czech and Slovak market in the induction hobs category, we can see that while the differences are more pronounced than in the previous two categories, they are also not as high as one would think. Given that the various features induction hobs have and different brands with various marketing strategies that are active on the market, based on the results in other categories a more significant difference could be expected.

AEG and Electrolux are the more expensive in the Czech Republic than in Slovakia and although not drastically, they have the biggest differential out of this category – coincidentally, AEG and Electrolux are the part of the same group, so it is possible that the results are an outcome of brand strategy on these two markets.

7.7. Hoods The last category in my price analysis is hoods. While there are many different shapes, designs, and specifications that this category could be divided by, I decided to create two separate categories – chimney hoods and island hoods. The main difference MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 56 between the two is the way they are attached to the parts of the kitchen (chimney hoods are attached to the wall, whereas island hoods are attached to the ceiling. The exchange rate used is 25,635 CZK per 1 Euro and eight different brands are analyzed with each one having at least three different models to ensure that possible extremes do not negatively influence this analysis.

Chimney type hoods

CZ vs SK Market - Chimney type hoods brand overview 2000 1755,285

1500

991,40 Kč 1000 788,21 558,535 500 298,56 273,16 180,285

0

Beko Electrolux Gorenje Mora AEG Whirlpool PRICE DIFFERENCE PRICE

-500

-1000

-1250,94 -1500 BRAND

Graph 20 - Chimney type hoods brand overview Graph 18 shows that the category of chimney type hoods is a varied one. While brands like Elica and Whirlpool are much more expensive on the Czech market than in

Slovakia, other brands like Mora, Electrolux, and Beko are practically the same price in both markets.

One big outlier for this category is Gorenje, which is on average almost 1251 CZK cheaper in the Czech Republic than in Slovakia and it is the only brand in this hood analysis that got negative results in comparison of average price. The only reason that is MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 57 possibly responsible for this phenomenon is supply/demand, as Gorenje does not position itself as premium or overly cheap and therefore we can reject the possibility that they would manipulate the price to appear more exclusive.

Island type hoods

CZ vs SK Market - Island type hoods brand overview

3 500,00 Kč 3 282,10 Kč

3 000,00 Kč

2 465,84 Kč2 441,79 Kč 2 500,00 Kč

2 000,00 Kč

1 497,36 Kč 1 500,00 Kč 1 148,51 Kč

PRICE DIFFERENCE PRICE 1 001,29 Kč 1 000,00 Kč 634,63 Kč 500,00 Kč 76,48 Kč 0,00 Kč Beko Electrolux Elica Faber Gorenje Mora AEG Airforce BRAND

Graph 21 - Island type hoods brand overview As the category of Island type hoods is a very expensive one (the least expensive of island hoods are still above 10 000 CZK), it allows for the differences between markets to be quite significant. As seen above on Graph 19, some of the brands are on average even over 3000 CZK more expensive on the Czech market (Elica) and others are following as well (Faber – 2465 CZK more on CZ market, Gorenje – 2441 CZK more on CZ market).

The only brand that does not differ in pricing when comparing the Czech and Slovak market is Airforce, which is on average only 76,48 CZK more expensive in the Czech

Republic. I suspect that this is because Airforce is a relatively new player on both MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 58 markets and so far, the demand is on the lower side especially when compared to the big and well-established brands as Elica. This would mean that there would be little to no pressure to push pricing down and therefore a relative balance between the two markets.

8. Primary research analysis – Place

For the analysis of the “place” part of the marketing mix, I will analyze the data reflecting the home appliances market done by Euromonitor International that relates to the sales channels where all the product categories are sold. By analyzing every product category and different brand market shares separately for both Czech Republic and

Slovakia, I will be able to compare the differences in sales channels between the two countries and make a conclusion as to how both countries are similar or different in this particular “P” of the marketing mix.

The different channels analyzed for this analysis are Electronics Retailers (on Czech market those retailers like Expert Elektro or Datart), Mass Merchandisers

(Supermarkets, etc), Kitchen Specialists (which can be both kitchen studios or stores like Ikea) and Internet shops (e.g., Alza.cz).

8.1. Washing Machines

Washing Machines sales channels overview 50% 43% 40% 40% 31% 28% 30% 30% 23% 20%

10% 2% 3% 0% WM UNITS SOLD PERCENTAGE WMUNITS Electronics Retailers Mass Merchandisers Kitchen Studios Internet shops SALES CHANNELS

CZ SK

Graph 22 - WM sales channels overview MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 59

Analyzing the category of washing machines in the Czech Republic and the units sold

YoY in the third quarter of 2017, there is a clear lead for electronics retailers as they sell slightly over 40% of washing machines on the Czech market closely followed by internet shops with 30% and supermarkets with 28%. Kitchen studios sell under 2% of washing machines, and while it seems like a low number compared to the other channels, it is important to note that the only washing machines sold in kitchen studios are mainly built-in and those represent a negligible part of the market.

When looking at the numbers for Slovakia, they are very similar to the Czech market.

Electronics retailers sell 43% of washing machines followed by internet shops that account for 31% of washing machines sold. Mass merchandisers are responsible for

23% in this category and kitchen studios collected 3% of the washing machines sold.

While the numbers seem similar for the most part, the important difference lies in the kitchen studios sales numbers. While 1% does not seem large enough to warrant attention from an overall percentage perspective, in raw sales data 50% more built-in washing machines are sold by kitchen studios in Slovakia when compared to the numbers generated by kitchen studios in the Czech Republic.

By analyzing the data from graph 22, we can observe that the Czech washing machines market relies more heavily on mass merchandisers whereas Slovak market has a lead in all the remaining categories. The number of units sold online is also higher in Slovakia, which supports my hypothesis that one of the reasons for higher prices in most categories analyzed in the Czech Republic can be the smaller amount of competition when compared to the Slovak market. That factor could influence the prices in Slovakia to decrease when compared to the Czech market. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 60

8.2. Tumble dryers

Tumble Dryers sales channels overview 45% 40% 39% 40% 35% 36% 35% 30% 25% 25% 25% 20% 15% 10% 5%

TD UNITS SOLD TDPERCENTAGE UNITS 0% 0% 0% Electronics Retailers Mass Merchandisers Kitchen Studios Internet shops SALES CHANNELS

CZ SK

Graph 23 - TD sales channels overview Analyzing the category of tumble dryers in the Czech Republic for the same quarter as the category of washing machines (Q3 2017) yields similar results but with two exceptions. Electronics retailers are responsible for 35% of washing machines sold on the Czech market at the expense of internet shops with 40% of units sold and mass merchandisers with almost 25% of the washing machines market. Kitchen studios are under 0,1% (statistically insignificant) because tumble dryers are almost never meant for built-in purposes and therefore in most cases, not integrated into the kitchen units by kitchen studios.

The numbers for Slovakia again copy the results from Czech market, as electronics retailers are responsible for almost 36% of units sold, mass merchandisers for 25% and internet shops for 39%. Kitchen studios also have numbers below one-tenth of a percent as the products offered are the virtually the same in both markets. The numbers are remarkably similar which I suspect is due to the “boom” that the market of dryers registered in the last three to four years although it is more noticeable on the Czech market. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 61

8.3. Dishwashers

Dishwashers sales channels overview 35% 33% 31% 30% 27% 25% 25% 23% 22% 19% 20% 20%

15%

10%

DW UNITS SOLD PERCENTAGE UNITS DW 5%

0% Electronics Retailers Mass Merchandisers Kitchen Studios Internet shops SALES CHANNELS

CZ SK

Graph 24 - DW sales channels overview The category of dishwashers on the Czech market is equally distributed among all the four channels, as built-in dishwashers are present in many kitchen units today and thus the kitchen studios have very comparable numbers of units sold as other sales channels.

The electronics retailers are responsible for 23% of sales of dishwasher units, mass merchandisers for 25%, kitchen studios for 19% and internet shops for 33%. The only significant outlier in this analysis is internet shops, which are responsible for a third of all the dishwasher sales. This is not surprising as the internet shopping has become a convenient way to shop and numerous electronics retailers offer online shops as well.

The Slovak market is similar to the Czech market as 27% of dishwashers are sold by electronics retailers (4% more than in the Czech Republic), 22% by mass merchandisers

(3% less than in the Czech Republic), 20% by kitchen studios and 31% by internet shops. Because the numbers for both markets are so similar, the only conclusion that can be made is that there are no major differences in this category except for the rising MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 62 popularity of internet shops that however influences all the product categories and therefore has no underlying meaning for the category of dishwashers.

8.4. Cooling

Cooling sales channels overview

45% 42% 39% 40% 35% 30% 30% 27% 28% 25% 20% 20% 15% 8%

10% 6% CL UNITS UNITS SOLDCLPERCENTAGE 5% 0% Electronics Retailers Mass Merchandisers Kitchen Studios Internet shops SALES CHANNELS

CZ SK

Graph 25 - CL sales channels overview As it is possible to observe on graph 25, the sales channels on the Czech Market in the cooling category are varied as consumers interested in refrigerators and freezers often want to see the appliances before they buy them. Because of that, electronics retailers have a strong lead with 39% of the overall units sold, followed by internet shops with

28% and mass merchandisers with 27%. Kitchen studios have significantly lower numbers of units sold as they have only 6% of overall cooling sold.

Numbers from Slovakia are a bit different as electronics retailers are responsible for over 42% of the overall number of units sold and internet shops for 30% of units sold.

While kitchen studios have 2% lead over the Czech kitchen studios, it is interesting to note that mass merchandisers have a sizeable deficit of 7% and as apparent from other categories it seems that this sales channel is not as popular in Slovakia. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 63

8.5. Built-in Hobs

Built-in hobs sales channels overview 40% 35% 35% 33% 32% 29% 30%

25% 21% 20% 16% 17% 17% 15%

10% HOBS UNITS SOLD HOBSPERCENTAGE UNITS 5%

0% Electronics Retailers Mass Merchandisers Kitchen Studios Internet shops SALES CHANNELS

CZ SK

Graph 26 - Hobs sales channels overview In the category of built-in hobs on the Czech market, there is a clear lead of kitchen studios (29%) and internet shops (33%) while electronics retailers (21%) and mass merchandisers (17%) are left behind. There are two main reasons for the kitchen studios and internet shops to have such an advantage – the low prices and comfort of online shopping (as in every other category) and the ability to see the hobs inside the kitchen unit in kitchen studios. Often consumers buy hobs only when renovating their kitchen units and therefore they are more likely to buy the appliance in the kitchen studio where they buy the unit as well.

In Slovakia, the market is similar in its sales channels percentages, however, the lead between the two groups of sales channels in this category is even more pronounced.

Mass merchandisers are responsible for 17% of units sold, and electronics retailers have a much worse position even when compared to the Czech market as they have only

16%. Kitchen studios are again very popular in this category as they are responsible for MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 64 over 35% of built-in hobs sold (6% more than on the Czech market) and internet shops are strong with 32% of units sold as well.

8.6. Built-in Ovens

Built-in ovens sales channels overview 35% 30% 30% 30% 28% 27%

25% 23% 22% 21% 20% 19%

15%

10% OVENS UNITS SOLD PERCENTAGE OVENSUNITS 5%

0% Electronics Retailers Mass Merchandisers Kitchen Studios Internet shops SALES CHANNELS

CZ SK

Graph 27 - Ovens sales channels overview The category of built-in ovens and its sales channels is surprisingly different from the category of built-in hobs. On the Czech market, electronics retailers are responsible for

30% of units sold, internet shops for 28% and mass merchandisers for 23%. What is, however, most surprising is the oven units sold by kitchen studios at only 19%. The category of hobs on the Czech market registered 10% more than this category, and the only plausible explanation is that more people buy ovens separately from their kitchen units than in the category of built-in hobs.

On the Slovak market the situation is similar although the kitchen studios are responsible for 22% of units sold, mass merchandisers 21% of units sold and electronics retailers 30%. The internet shops are at 27% which is lower than in the Czech Republic MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 65 but justifiable when looking at the difference in the sales of kitchen studios in both markets.

8.7. Hoods

Hoods sales channels overview 38% 40% 35% 32% 35% 30% 30% 25% 19% 19% 20% 16% 15% 11% 10% 5% 0%

Electronics Retailers Mass Merchandisers Kitchen Studios Internet shops HOODS UNITS SOLD HOODSPERCENTAGE UNITS SALES CHANNELS

CZ SK

Graph 28 - Hoods sales channels overview The last category in the analysis of sales channels are hoods which are usually bought with new kitchen units. Because of this, the sales channels on the Czech market reflect this and are even more pronounced than in the category of built-in hobs. Kitchen studios in the Czech Republic lead in the number of sales with 35% followed by internet shops with 30% of units sold. Electronics retailers with 19% and mass merchandisers with

16% have considerably lower numbers that reflect the buying habits of the consumers.

On the Slovak side, kitchen studios are responsible for 38% of units sold and internet shops register more sales than in the Czech Republic with 32%. Electronics retailers have the same percentage in both countries at 19%, but mass merchandisers dropped in

Slovakia to 11% which reflects the findings throughout this analysis that Slovak market is not as accepting to them as to the other channels. However, the 5% difference between the two markets is profound and should be analyzed separately to determine which factors are responsible for this discrepancy. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 66

9. Primary research analysis – Promotion

In this last chapter of home appliances market analysis, the primary focus is on the most commonly used promotions on Czech and Slovak markets that influence the consumers buying decisions. For the simplicity purposes, this chapter will be divided into seven sections, each of which will describe one of the commonly used marketing techniques in both markets. Each of these sections will focus only on the market of major domestic appliances and marketing activities connected to them.

9.1. Point of sale advertisements Point of sale advertising (sometimes called Point of purchase) serves the purpose of attracting the attention of the consumer and influencing their purchasing behavior at the place where a transaction is made. While this type of advertisement can be used for many product categories (from chewing gum to cars) the concept remains the same.

(Cannon-Bonventre, Quelch, 2018)

The benefits of POS advertisements are:

 The low costs – fractions of what traditional advertisement in television would

cost with the same reach

 Support for salespeople – even though POS advertisements are targeted at

consumers, salespeople often use them as backups for important marketing

information about the products

 Fast and accurate evaluation – the effect of in-store advertisements is easily

measured by the rise of products sold

 Precise market targeting – as opposed to other kinds of advertisements, point of

sale ads are custom made for each market and therefore can promote what is

important for the local consumers MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 67

As for the market of home appliances, the most widely used examples of POS materials

are:

 Leaflets – in A5 format and often foldable, leaflets are used to show the

premium products that a brand offers together with marketing information for

the consumer, their advantage is that they can be taken home by the consumer

 Stickers with marketing information that fit into or on the appliance itself

highlighting the technologies that the particular product offers

 Customized stands or customized parts of the shop – attract the attention of the

consumer, make the products stand out and often contain marketing information

 Specialized promotions – an example from Beko dryer campaign – drying racks

were positioned into stores of Beko partner retailers so that they would restrict

the movement of consumers and point out how much space the consumer can

save by buying a Beko dryer

Picture 2 - Customized Beko leaflet for Elpos elektro Picture 1 - Example of customized Samsung stand [Digital Image]. (n.d.). [Digital Image]. (2017). Retrieved from Retrieved from http://i0.wp.com/www.elpos-elektro.cz/wp- http://www.setbuild.co.za/images/Exhibition%20Gallery%20Shop%20Fitting content/uploads/2017/02/Letak-Beko-1_2017-v2- %20POS/Samsung%20Washing%20Machine%20Double%20POS%202012.j ONLINE_001-2.png pg MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 68

9.2. Catalogues Although catalogues are slowly dying in the current world of marketing, they still play a significant role in home appliance businesses as they combine all the current product information and marketing technologies of the brand. Because of this combination of practical information with differentiating features, catalogues are a perfect way for a consumer to choose an appliance that satisfies their needs perfectly. It also serves as a training guide for salespeople as they can reach for the catalogue every time they need information about a product. An example of Beko catalogue of freestanding home appliances for the year 2016 can be found here:

Picture 3 - Page from Beko catalogue [Digital Image]. (2016). Retrieved from https://issuu.com/bekocr/docs/beko_katalog_fs_2016_online https://issuu.com/bekocr/docs/beko_katalog_fs_2016_online

MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 69

9.3. Billboards, CLVs and metro advertisements Billboards are outdoor advertising spaces which are placed near areas where there is high traffic and are meant to capture the attention of drivers by combining bright colors with one or two pictures and a clear and short message. In the home appliances industry, billboards are often used with in conjunction with partners (retailers, e-shops, studios) so that the driver observes what to buy, where to buy and for how much. Although there has been a lot of debate whether billboards are still effective, the studies have shown that 71% of people often look on billboards along the road and 37% of people reported that they look at billboards every time they pass by one. (Duncan, 2011)

Picture 4 - An example of a billboard [Digital Image]. (n.d.). Retrieved from https://static1.squarespace.com/static/558da9f1e4b005e2996715dc/55999197e4b01787e524dace/559991bfe4b0b038 40121125/1446493756415/a124-ref_billboard_BEKO.jpg?format=500w City-Light advertisements (so-called CLV – City-Light vitrína) are widely used throughout both Czech Republic and Slovakia, however, they are usually located in large cities as CLVs are most often found on public transit stations or in shopping malls.

They serve a similar purpose as billboards but focus on people waiting for public transport or not being in a hurry and as such, they can include more information about a MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 70 product as consumers have more time to read it. Although harder to measure, CLVs also promise a relatively inexpensive reach as many people walk by them.

Picture 5 - An example of CLV [Digital Image]. (n.d.). Retrieved from https://www.barth- media.cz/data/Images/galleries/big/556d95c08e94788.jpg Lastly, metro advertisements have become very popular as they offer a very visible advertising space that can potentially reach many people (everyone who uses metro in

Prague) and is relatively inexpensive, where one advertisement costs about 1000 CZK per month according to the AIPT agency website. (AIPT, 2016) As with the billboards, metro ads are often implemented not only by the brands but in cooperation with retailers and e-shops not just to inform the consumer but to create a theoretical offer.

Picture 6 - An example of metro advertisement MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 71

9.4. Celebrity sponsorships Sponsorships in the category of home appliances are very common on the Czech and

Slovak markets. Almost every major brand employs at least one local celebrity and leverages their influence on the perception of the brand’s credibility and quality in the eyes of the consumers. Since most of the brands are similar when it comes to products and brand values on both markets, the influencers are contracted for use on both the

Czech and Slovak market.

Several examples of brand ambassadors in both markets are:

 Samsung uses athlete Roman Šebrle and singer Dara Rolins to promote their

lines of home appliances products in several videos (Šajtarová, 2017)

 Italian brand Candy uses a well-known (in the Czech Republic and Slovakia)

Italian chef Emanuele Ridi to promote their kitchen appliances (Candy-Hoover,

2018)

 Brand Beko uses a renowned Czech chef and advocate of healthy and quality

groceries Roman Vaněk

Picture 7 - Emanuele Ridi as a face of Candy-Hoover [Digital Image]. (n.d.). Retrieved from https://www.kuchynestach.cz/novinky/emanuele-ridi-predstavuje-italske-spotrebice-candy MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 72

9.5. Events Next in line of the promotions analysis are events. These events are not organized by home appliances brands themselves but rather by wholesalers and retailers to act as a platform for B2B marketing and product communication between the brand and its customers. Apart from serving as a showcase for new product lines, these events also serve as a way to sell out older models and to make special offers for business partners to incentivize them to buy more products and therefore increase turnover. Some of the most known events are:

 FAST day – organized by a wholesaler FAST ČR, this event happens in April

and is one of the biggest home appliances events in the Czech Republic with

over 400 companies attending it every year

 K+B Expert expo – K+B Progress wholesaler and their partner retailer Expert

Elektro organize an expo every year in September with a similar concept to

FAST day

 FAVIA DAY – a Czech wholesaler focusing primarily on kitchen appliances has

their expo that takes place every May in Prague

Picture 8 - FAVIA DAY expo [Digital Image]. (2013). Retrieved from https://scontent-frt3-1.xx.fbcdn.net/v/t1.0- 9/946168_387740664672349_444971452_n.jpg?_nc_cat=0&oh=e519cdf99c48dc35d16e326ea901793f&oe=5B4FE 803 MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 73

9.6. Television and radio commercials Even though television and radio commercials are by many considered obsolete and not relevant for capturing the attention of target audience, for home appliance businesses in the Czech Republic and Slovakia they are still essential for improving the brand penetration on the market. And while it is true that TV advertisement is not as effective in achieving promised GRP numbers (Gross Rating Point – quantity of impressions on the target population), it is still effective with some of the television groups on both markets – particularly Prima group as it offers acceptable results for tolerable prices. (A.

Bouma, personal communication, April 13, 2018)

However, to achieve the desired effectiveness it is necessary to combine television campaigns with other forms of endorsements. Most often, TV advertisements are combined with retailer campaigns as the brand, and the retailer share the costs of the campaign with positive marketing results for both parties. Other ways of supporting radio and television commercials include billboards and leaflets whose costs are usually shared between the brand and select partners as well.

Picture 9 - A TV commercial from Beko and Datart [Digital Image]. (2016). Retrieved from https://www.youtube.com/watch?v=UOgOSVDyWOk MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 74

9.7. Aftersales The last area of promotion analysis focuses on aftersales marketing as every brand currently present on both the Czech and Slovak market extensively uses it to improve the consumer’s relationship with the brand. Most common techniques of aftersales marketing include an extended warranty for inverter motors and compressors and extended warranties for a select number of appliances from the product range. Extended warranties do not only make the brand look better in the eyes of the consumer (typical thinking of “long warranty equals superior quality”) but also supports sales, as extended warranty is often provided for products that would otherwise have subpar sales numbers.

It is important to note, however, that when it comes to extended warranties for products themselves, market leading retailers do not look kindly on these services as they lower the sales of extended warranties that retailers provide in the form of product insurance which makes up a considerable amount of retailer’s revenue.

Picture 10 - An example of 10-year motor warranty [Digital Image]. (n.d.). Retrieved from https://www.vestavne- spotrebice.cz/aktualita-gorenje/1/ MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 75

10. Research recommendations

In my research, there have been some observations that could be valuable for most of the home appliances companies that exist in these two markets. When it comes to price, more often than not the fixed exchange rate for EUR/CZK conversion is used not only by the companies that sell the appliances to the shops but also to the shops themselves.

This rate has been sitting on approximately 27,5 CZK for 1 Euro which was understandable because of the restrictions that Czech National Bank imposed on the market for many years. Now, however, the situation has changed, and the exchange rate has been sitting at around 25,5 CZK for 1 Euro. Fluctuations aside, this has a negative impact on the Czech market because it appears as overly expensive when compared to the Slovak one. Most of the big players when it comes to retailers – Datart,

NAY/ElectroWorld, and others operate on both markets and do not look kindly at

Czech branches of the home appliances brands when they have to buy the same products for a different purchase price.

Another recommendation that could be made is regarding promotion and price. Apart from some exceptions to this (Samsung), on these two markets, promotions are handled in a very old-fashioned way. This means that the main tools for advertising are TV commercials, flyer commercials, POS materials, and sponsorships. Almost no company uses guerrilla or viral marketing, and there is a big opportunity for companies that start investigating this route. There is also a big push for selling the so-called "action models" that hover anywhere from 4999 CZK to 5999 CZK. While these models generate a sizeable turnover, and every company is excited about the number of products sold, no one seems to bother with what brand image this creates. By pushing for the cheapest of available products, the brand value devaluates as well and hurts the company in long-term. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 76

Lastly, when it comes to products, they are similar across both markets and in this aspect, there is not much to recommend except for one part of this element of the marketing mix. That part is packaging – as mentioned before, major domestic appliances do not have any packaging that would serve a marketing purpose. My recommendation is to use packaging that is similar to what small domestic appliances are already doing – using packaging as a POS stand after the appliance is unpacked.

While this would mean additional costs on the packaging, in some product categories it might extremely improve the image that these appliances have in retailer showrooms and stores.

11. Conclusion

The purpose of this thesis was to analyze the market of home appliances in the Czech

Republic and the Slovak Republic to evaluate the key differences and propose solutions to the disparities found that could affect the effective functioning of home appliance businesses on both markets. By using the four P’s of the marketing mix as a theoretical foundation for my research, four categories have been analyzed for both markets – product, price, place, and promotion.

The analysis of product on both markets has been relatively straightforward as both markets offer a nearly identical offering of products. By visiting stores in both countries, I analyzed the main features of home appliances across seven distinct product categories and determined the most promoted features on both markets that play a significant role in consumer’s buying decisions. The inefficiencies have been found primarily when it comes to packaging as all the brands do not use it for marketing purposes and therefore are missing out on potential visibility. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 77

The price analysis has proven to be the most expansive as the results of my investigation suggest that there are severe discrepancies when it comes to pricing on the

Czech and Slovak markets. In eighteen out of twenty analyzed categories, the products on the Slovak market have been found to be significantly less expensive when compared to the product on the Czech market. One possible reason that I have found to influence this disparity is the exchange rate of CZK/EUR which has registered a significant change in the last year as the Czech National Bank changed its decision on monetary intervention. While the real exchange rate has changed, many of the brands and retailers continue to use the older exchange rate and therefore the products on the

Czech market often seen more expensive when compared to Slovakia.

The last two analyses focused on place and promotion elements of the marketing mix.

While the analysis of place has been conducted purely by secondary research as there is no chance for an outside observer to gather primary data, it still provided interesting data as to the comparison of both markets. From the data analyzed it seems that the

Czech population prefers e-shops and mass merchandisers for the purchase of major domestic appliances whereas Slovakian consumers prefer retailers and kitchen studios.

The analysis of promotion focused primarily on the most often used strategies when it comes to home appliances advertisements in both markets. Because the brands headquarters coordinate the marketing strategy on both markets, the design and concept of promotions are the same. My recommendations for promotion on both markets suggests that brands should try to use guerilla and viral marketing as it presents an opportunity to increase the visibility of the brand at minimal costs. MARKET ANALYSIS OF HOME APPLIANCES CZ&SK 78

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