Carolina Tang / Javier Bengoa Commercial Laundry Strategy.

CORPORATIONRPORATION

Carolina Tang / Javier Bengoa

Commercial Laundry Strategy

AgendaCORPORATIONRPORATION

•Whirlpool Background

•Industry Dynamics•Growth Opportunities•Competition Environment

•Segmentation•Macro•Micro

Administrative Center at Benton Harbor, Michigan, USA Founded in 1911 by Lou Upton at Benton Harbor Employees: 59,000 split into the following regions:

– NAR (North American Region)– LAAG (Latin American Appliance Group)– Whirlpool Europe– WAAG (Whirlpool Asia Appliance Group)

Manufacturing, Marketing and Sales of home appliances 25 brands world-wide (including affiliates)

Whirlpool Corporation

Whirlpool Background


#1 in North America

#1 in Latin America

#3 in Europe

#1 Western white goods manufacturer

Whirlpool’s global position today...



North AmericaNorth America 17,755,000 units17,755,000 units EuropeEurope 9,774,000 units 9,774,000 units Latin AmericaLatin America 4,817,000 units 4,817,000 units AsiaAsia 1,644,000 units 1,644,000 units OthersOthers 42,000 units 42,000 units

TotalTotal 34,032,000 units 34,032,000 units

Whirlpool CorporationUnits Shipped in 1998



19.5 19.221.2

23.325.4 26.4 27.8 28.9

34

0

5

10

15

20

25

30

35

millions

1990 1991 1992 1993 1994 1995 1996 1997 1998

Unit Volumes

Whirlpool Sales…



$6.4 $6.6$7.1 $7.4

$7.9$8.4 $8.5 $8.6

$10.3

$00$01$02$03$04$05$06$07$08$09$10$11

Billions US$

1990 1991 1992 1993 1994 1995 1996 1997 1998

Net Sales


CORPORATIONRPORATIONWhirlpool Sales…

Every Home...EverywhereEvery Home...Everywhere

withwith

PassionPassionPerformancePerformance

PridePride

Whirlpool Vision….





•Industry Dynamics•Growth Opportunities•Competition Environment


Industry Overview

•Commercial laundry is often a family owned business of highly independent entrepreneurs

•Very competitive industry. •Price and margin erosion•Manufacturers are focused on cost cutting and economies of scale


Industry Dynamics

Industry Overview

•Customers do not perceive a compelling difference among manufacturers

•Price is still the main driver for making decisions

•Consumers do not request/ask for a particular brand of products

•No brand loyalty•Low satisfaction / Low willingness to spend more money


Industry Dynamics

Growth Potential

0

500

1000

1500

2000

2500

1999 2000 2001 2002 2003

Units

•Market for commercial laundry will remain stable in the future*# of households w/o washer remain stable*# of apt. units per machine served is slightly decreasing

•Slight growth in multi-housing offset by coin stores•Breakthrough opportunities:*In-unit laundry offers clear consumer benefits (opportunities for domestic lease and/or pay per use domestic)*Pay per use domestic products attractive alternative to single households*Shifting life style encouraging outsourcing fabric care - Drop-off service for Laundromats

•Export opportunity a bonus


Industry Dynamics

Product Line Maytag Speed Queen GE Whirlpool

Brand Reputation Excellent Average Good Below Average Average second Tier Brand

Recent Prod Innovation High End Front Load, New Electronics Front load and Good Electronics None New Electro-Mechanical

Price Position +15-20% +10-15% -5% Base

Distribution Strong and Improving Stronges t but weakening Phas ing Out Significant in Route

OrganizationDedicated Team in Commercial Products

Division, Poised for growthDedicated commercial Laundry

companyCasual

Partial Focus , Informal bus iness

team

Market share (Trend) 31%+ 45%- 3%- 15%-

Route Distributor 30%(+) 50%(-) 4%(-) 16%(-)

Route Distributor32% 40% 2% 6%(+9% Kenmore)(-)

CompetitionCORPORATIONRPORATION

Industry Dynamics



•Industry Dynamics•Growth Opportunities •Competition Environment


Macro Segmentation

MHL Coin

OPL

Industrial

Con

sum

er I

nter

face Low

High

Product Type

Small Load Large Load

Entering OPL (On Premise Laundry) and Industrial requires significant investment and produces less synergy with Brand Value Creation strategyLow risk approach is to enter and dominate MHL and Coin before entering OPL and industrial


Segmentation

Micro Segmentation

•Familiar and non-chain laundromats

•Laundry owners who are the decision makers

•Laundromats with Domestic-type washing machines (non large chassis washing machines)


Segmentation

Market ParticipantsM

anuf

actu

rer Route

Operator

Distributor

Property Owner/

Management

Property OwnerOperated Ldy.

Laundromats

Mul

ti-h

ousi

ng/

dorm

itor

ies

resi

dent

s

Single Family House Hold

Trade Partner Customer Consumer


Segmentation

Decision Makers

•Value from affordable high quality•Speed, Large capacity•Low acquisition cost•Smart Cards & Coin scalability•Low life-cycle cost.•Fast repairing (15 min)•Easy, fast service installation (12 minutes)•Duraprint finish console (looks new)•Complete support & Service for commercial trade partners•Availability


Segmentation

Coin Stores:

•30,000 Laundromats

•52 machines per store

•1.6 to 1.8 million installed machines

•7.5% to 15% replacement rate

•150,000 to 200,000 units/year

Market Size CORPORATIONRPORATION

Segmentation

Coin Stores

•Total # of coin stores: 30,000-35,000*Average turn per day: 4,7*New construction slowed by heavy hook-up fees imposed by local government, increasing pressure on water reuse*National/Regional chain emerging with mixed result, multi store ownership increasing*Industry image improving, promoting as fabricare center, adding service such as drop-off, folding, etc…*Owners handle most of maintenance/services, good loyalty to distributors*Biggest problem: high utility cost (15-25% of total expense)


Segmentation

Coin Store Product Mix

•Top load washer still biggest, but is losing quick•Front load washer gaining share, leading by Maytag High Efficiency model•Product mix varies across regions, with northeastern leading the trends to FL•Whirlpool competes in top load, and #18 dryer market, total about 42% of installation and about 115K new purchase

35 lb+26%

18 lb42%

25-30 lb32%

Topload35%

Dryer40%

Frontload25%

Front load

50 lb+8%

18 lb18%

30 lb74%

Dryer


Segmentation

Distribution Channel

Coinmach40%

Web15%

Mac-Gray9%

Others36%

•Market size: 200k•Fragmented market, over 280 in total, mostly family owned•Big companies trying to grow by consolidation/geographical expansion, resulting in increasing # of locations•Exploring new opportunities such as domestic lease, Laundromat, distributorship•Targeting owner operated laundry (20% of MHL) as growth opportunity

Route Operator:


Segmentation

Distribution Channel

Coin Stores80%

Owner Op. MH20%

Dom. Type76%

Large Chassis

24%

•Very Fragmented market, about 350 specialized dealers, mostly family owned, local•Some big retailers and multi-housing distributors carry commercial laundry products, competing more on owner operated segment•Specialized dealers usually offer full service to customers, including arranging financing, design, location, selection, brokerage•Strong customer loyalty to distributors•Trade margin: TL 12-15%, FL 25-30%


Segmentation

Positioning StatementCORPORATIONRPORATION

Segmentation

Whirlpool delivers long term performance through manufacturing quality. We provide value from affordable high quality, easy and fast installation setup and maintenance.

Q & A


Carolina Tang / Javier Bengoa Commercial Laundry Strategy.

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