Washing Machine Analysis

Executive Summary When ACME considers entering into the automatic washing machine markets in the United States, United Kingdom, and Germany there are plenty of consumer behaviors and opportunities in the market they should observe. As competitors develop machines with new and attractive features, ACME must weigh the advantages and opportunities to enter this very competitive market. Consumer preferences and buying habits will be examined in this summary. More than 80% of households in the U.S. (Holst, 2020) 98% in the U.K. (Holst, 2021) and over 90% in Germany own an automatic washing machine (Holst, 2021). Entering into the United States and United Kingdom market with a machine that is affordable while being large enough for an entire family and also being energy efficient would be a slam dunk for ACME. These are all noted in a study conducted in a Morning Consult poll where respondents have taken energy efficiency into account when purchasing electric appliances however there is data to suggest that a customer would not be willing to spend a significant amount more on an energyefficient appliance than a traditional one (Bracken, 2021). In Germany however, the company needs to be an already established player in the market as German consumers do more research on products than that of any other country (Germany: Reaching the consumer, 2021). German consumers are willing to pay more for a better-quality product, detailing the use of advanced technology in their appliance purchases. But with other players already developing innovative new technology in their machines it would be difficult to break into the German market. There is evidence to suggest that entering into all three of these markets would be a wise business decision. The analysis recommends that ACME only enters into the United States and United Kingdom markets. These machines can be cost-effective while also being energy efficient without the use of many added innovative features. German consumers are willing to spend more but it is noted that a new addition to the market may not fare as well as an already established company. Introduction As ACME debates whether to enter the washing machine market in the United States, United Kingdom, and Germany, the following will be examined: buying habits of the consumers, consumer preferences and needs, and where and when a customer will purchase a new washing machine. Competitors in this industry are all currently developing new washing machines with attractive features. This report will provide research on the feasibility for ACME to enter into the washing machine market. Since the introduction of the first automatic washing machine built for domestic use in 1937 and the commercial release of the first electrically powered dryer in 1938, both the washer and dryer have continued to be a staple across households in developed countries. Worldwide the washing machine market has sold over 161 million units in 2019 (Holst, 2020). Consumer buying behavior analysis in the United States More than 80 percent of households in the United States own a washing machine (Holst, 2020). American’s hectic schedules between work, family, and social life, they are always looking for ways to save time. Of the more than 1,000 Americans ages 18 and over who participated in a survey commissioned by LG Electronics USA, 93 percent admit they mixed items just to avoid a second load of laundry and 31 percent said they had to leave clothes out of the wash because everything just wouldn't fit (LG Electronics, 2018). Other notable findings in this survey were that 1 out of 4 people do not know how to properly maintain their washing machine and four out of five do not trust a washing machine with their most prized clothing possessions (LG Electronics, 2018). According to Consumer Reports, a recent survey conducted by the National Association of Home Builders revealed that most potential homebuyers in the US prefer to have their laundry appliances on the main floor of the house rather than the basement. This is one of the reasons that make it key to have low-noise appliances (What do consumers look for in a washing machine? 2015). In a Morning Consult poll, 76 percent of survey respondents who said they have taken energy efficiency into account when purchasing electric appliances cited saving money on their electricity bills as a major reason for doing so. Nearly half of adults cited lowering the greenhouse gas emissions of their personal consumption as a major reason to consider efficiency in buying electric appliances. More than 80% said they have considered energy efficiency when buying electric appliances, including 44% who said it was a major consideration and 56% of respondents said they would not be willing to spend more on an energy-efficient appliance than they would for a conventional one, with a third citing their budget as the reason (Bracken, 2021). The majority of consumers in the United States are families, and when shopping for a washing machine the consumers in the US are most often likely to buy from an authorized retailer of a brand that they have previously done online research as 81% of retail shoppers conduct online research before buying (Anderson, 2021). The overwhelming majority of retail consumers start their journey with online research. It would be wise for brands to build trust in online purchases and somehow make the online experience of purchasing a washing machine more favorable than going to a brick-and-mortar outlet (Pappas, 2016). Recommendation for the United States With Americans being more conscious of their budget when purchasing a washing machine, ACME should develop an energy-efficient machine that is priced competitively. It would be beneficial for them to enter the U.S. market. “The residential washing machine market is valued at nearly $56million. With work from home becoming a reality, at least for the near future, many consumers have started investing in consumer durables to enable them to multitask better. The sales of appliance categories, such as dishwashers, washing machines, and big-sized refrigerators, have doubled. Companies, such as LG, witnessed an increase in sales of their home appliance ranges in July and August 2020 “(Residential Washing Machine Market: 2021 - 26: Industry share, size, growth). There can be a real opportunity for ACME in the U.S. market if the manufacturing cost of a machine with a large capacity and energy efficiency can be achieved and priced competitively. Consumer buying behavior analysis in the United Kingdom Washing machine ownership in the United Kingdom is nearing 100%, after increasing in 201718 for the first time since 2011. Washing machine ownership reached 98 percent in 2017-18, an increase of seven percent since the turn of the century (Holst, 2021). Households with one adult, or those retired and mainly dependent on state pensions comprise most of the other 2% who do not own a washing machine. 87 percent of such households do not have a washing machine. Low-income earners are also less likely to own a washing machine (Holst, 2021). Consumers in the UK, like the US, value time savings when using a washing machine as they also lead busy lives. Also, when searching for a washing machine, more than half of British consumers consider the energy efficiency when making a purchase and many said they would be willing to make changes to their lifestyle including putting off washing clothes to save the environment. Carolyn Anderson, LG head of marketing, commented: “From the study, we can see that cost and reliability are no longer the only key factors when it comes to purchasing home appliances” ('Consumers want energy-efficient white goods,' 2016). However, when choosing appliances for a new home, some consumers place little or no value on energy efficiency in appliances, while others value it highly (Sandler, 2018). In 2018 more than half of the large appliances were purchased through store-based retailers although the share taken by online-only merchants has grown increasingly. Builders and construction merchants contributed 9% of sales (Mordor Intelligence, 2021). Recommendation for the United Kingdom Just like the United States, the same principles apply. The United Kingdom consumers are looking for a time-saving machine when considering their automatic washing machine. More so than in the United States, however, they prefer a more energy-efficient machine so there can be an opportunity here for a smaller-sized washer that is more environmentally friendly. ACME should enter this market as it is a major market as seen with the percentage of households with a machine already and consumers needing an efficient machine that is competitively priced. Consumer Buying Behavior Analysis in Germany There is a steady growth predicted for Germany. The factors responsible for this growth could be due to the improving lifestyles of consumers, improvement in the purchasing power, and migration of rural population to the urban areas (Germany Consumer Appliances Market Size Report, 2018) Over 90% of households in Germany own a washing machine (Holst, 2021). Again, like consumers in the UK and the US, the need for time-saving is paramount. However, Germans tend to like the use of advanced technology more than the previous two. Before making a purchase, beyond the price, German consumers like to learn as much as possible about other similar products, features, provenance, etc. German consumers are among the most demanding in the world. Some consumers are willing to pay more for a better-quality product (Germany: Reaching the consumer, 2021) In 2020 home washing machines were among the categories negatively affected as financial uncertainty arising from COVID-19 led German households to postpone big-ticket purchases, particularly during the first half of the year. The usage of these appliances increased as a direct result of the pandemic, with Germans who already tended to be quite hygiene-conscious seeking to reduce potential exposure to the virus by washing clothes more frequently, especially clothes worn outside the home (Germany Washing Machine Market: 2021 – 26). Because Germans do more research, they are more likely to visit an electronics retailer to purchase their washing machine and because of this, some retailers will open their own storefronts to sell their products directly to consumers. Recommendation for Germany ACME should wait to join the German market for washing machines. German consumers like to conduct their own research before purchasing any new appliance and without any history, it will be difficult for ACME to break into that market. Also, the features that German’s are looking for are already being developed by other companies. New and smaller companies have increased their market presence by innovation, Samsung launched a new range of washing machines with artificial intelligence and Panasonic have equipped their top-load washing machines with built-in heater technology and bacteria elimination (Residential Washing Machine Market: 2021 - 26: Industry share, size, growth) Value Proposition At ACME we care about your busy lives and are making laundry quicker and easier with a class-leading capacity in our Energy-Star washing machine and with 24/7 connectivity you never have to worry about getting your laundry done on time. Yesterday’s dirty clothes don’t have to be today’s problem with our washing machine.