May the fridge be with you: How Aqua is setting itself apart in white goods

The droid refrigerator is the centrepiece of the Star Wars product range, which includes busts of Darth Vader and a Stormtrooper that serve as single drink coolers, portable clothes-cleaning devices and a vacuum cleaner. All are positioned as collectors’ items and are as much a marketing initiative as a product one.

They don’t come cheap: the masks retail at around ¥43,000 yen (US$350), while the R2-D2 replica costs just over ¥1 million (approximately $8,000). A total of 1,000 R2-D2 units have been produced and are available for pre-order via a dedicated website, distributed via an ecommerce site, Tokyo Otaku Mode. The product is currently only available in Japan, but will trundle out to global markets once complex licensing issues are ironed out. Haier was unable to disclose how many units had been sold, but said the response since unveiling the initiative had been "very positive".

To be sure, numerous brands have jumped on the Star Wars bandwagon, including, perhaps most improbably, Campbell’s Soup. Is Aqua’s connection more credible? Yoshiaki Ito, the Tokyo-based chief executive of Haier Asia, is adamant that it is. A die-hard Star Wars fan who used to work in the film industry (he was an executive at Sony Pictures), he explained that he initiated the idea based on his own affinity for the films. But he also firmly believes that consumer electronics like white goods have the potential to be much more interesting and function as lifestyle products.

“Fridges are boring. Most of the time, you buy [appliances] because you need to, not because you want to...That’s why we came up with the Star Wars products. It’s about shifting the paradigm from need to want.” —Yoshiaki Ito, Haier Asia

Ito listed Haier’s three priorities as new business model development, innovation within consumer electronics products, and the creation of niche products. “Fridges are boring,” he said. “Most of the time, you buy [consumer electronics goods] because you need to, not because you want to. We thought, can we change that paradigm? That’s why we came up with the Star Wars products. It’s about shifting the paradigm from need to want.”

He hit on the idea for the R2-D2 refrigerator when watching a film in his home cinema. Annoyed by having to interrupt the viewing experience every time he wanted a drink, it occurred to him that a servile refrigerator—one that comes to the viewer—would be the solution. Aqua’s R2-D2, which holds up to six beverage cans, is operated by remote control, moves at a speed of one metre per second, and performs the exact same mannerisms and sounds as the original on demand. It is also fitted with a projector for screening movies.

The number of people in the market for an $8,000 novelty minibar might be limited, but the universe of Star Wars fans is vast, and Ito is optimistic that people will look at the product differently. Research by Lamplight Analytics across China, Japan and Korea ahead of the big screen debut of the film showed Japanese fans to be the most numerous and engaged, generating three times as many related conversations on social media as Chinese and Korean fans combined. “Everyone wants R2-D2,” he said. “If you think it’s a fridge, it’s expensive, but if you think of it as R2-D2, it’s not.”

Yoshiaki Ito and Alan Ng with Aqua's R2-D2

Ito said that while it’s important to make money from sales of the droid, the profit margin is relatively low given the cost of making it. It is entirely assembled in Japan and shows attention to small details, such as the use of premium Musashi paint, which he described as “the Ferrari of paints”.

Global innovation from Japan

The emphasis on Japanese production is a deliberate part of the PR strategy, which Ito characterises as “Japan awakens”. Aqua, while more premium than Haier, is not yet widely understood in Japan. It originated from the domestic brand Sanyo, which offers some reassurance to those sceptical of the quality of Chinese products. But Ito said people are still unclear as to whether Aqua is ultimately a Chinese or Japanese brand. Having worked at Lenovo, which also faced challenges in terms of its identity in the country, he is in no doubt that he wants Aqua to be seen as a global brand from Japan.

“The innovation we’re doing is not Japan-first but world-first,” said Alan Ng, Haier Asia’s chief marketing officer, who is based in Osaka. “To that extent we are trying to bring Japan back, to bring a new bright spot in terms of things that come out of this country.”

The bigger goal, though, is branding Aqua as a company that represents lifestyle choices and does things differently in a highly commoditised sector. Ito follows the principle, well-exploited by brands like Apple, that marketing to a niche audience first ultimately pays off by creating appeal in the mass market.

“The buyers will probably be Star Wars fans, but [aligning with the property] allows us to expand awareness of both our company and brand to the regular white goods audience,” said Ng. “We need to leverage niche products to break through the clutter.”

PR plays a very important role in Haier’s marketing strategy, along with retail support and shopper marketing. The percentage of an already tight budget spent on traditional advertising “is in single digits”, Ng said.

At a recent promotional event Campaign attended at the upscale Roppongi Hills Club restaurant in Tokyo, the response from the public to the R2-D2 replica was largely positive. Diners (often families with children) were invited to move the droid around the venue and pose with it for photos. Exclamations included “amazing”, “incredible” and “realistic”.

We are different to Panasonic, Sharp or Hitachi. They just see [Internet of Things] as a tool, but we see it as something that can help create new business models.” —Ito

In most cases, such a response, while encouraging, is unlikely to give way to sales. The main value of such events is brand association—but there will be some that do buy, and Ng is clear that all marketing activities ultimately need to make money.

“We have a lack of strong marketing funds,” he said. “That makes us more focused on using marketing activities to build sales rather than some of my counterparts, who might be spending a lot of money on just building the brand. That’s a point of difference for us: we need to use every cent we have in monetising. Over time, we still need to build the brand, and every activity should be operating against that objective, but not purely.”

Rethinking the CE model

It might be too soon to describe Aqua as the Apple of the white goods sector, but as a challenger brand with ambitions to overhaul its market, there are some similarities. Ito is realistic about the challenges: Sanyo lost money for 15 years, he said. Now, as Aqua, “it’s still bleeding” but things are looking up. Revenue for Haier Asia, including both the Haier and Aqua brands, stands at $1.1 billion in Asia as a whole. Ito hopes to double the ASEAN portion of that amount in the next three years. Asian market share for the combined brands reached 11 per cent during certain months this year, according to the company. 

Like many, Ito is inspired by the potential of the Internet of Things (IoT) to help achieve growth. But he feels most of his peers are missing the bigger picture.

“Connecting is just the process,” he said. “The value is how it can change the whole way of living, like when the fridge was first introduced. Since then, I don’t think the industry has changed that much...We are different to Panasonic, Sharp or Hitachi. They just see [IoT] as a tool, but we see it as something that can help create new business models.”

While nothing concrete is in the works, he is considering the possibility of offsetting the infrequent purchase of big-ticket items such as refrigerators with an IoT-based subscription model. The company produces connected refrigerators—the Aqua Digi line—that incorporate high-definition LCD displays on the doors. Ito sees it as just the beginning.

“We are the youngest leaders in this industry. Most CEOs and CMOs in this country are most likely over 65. What do they know? They haven't even used a smartphone. We should be leading IoT, not the grandpas." —Ito

“What if it were to become a subscription-based business?” he said. “People think it’s crazy, but what if that sort of fridge were free? People then download apps and if they like the service, they pay for it—say $10 per month. I believe consumer electronics companies should be that way instead of making transactional products.”

The business proposition is no different to the marketing one. “We’re looking at it for its monetising potential,” Ng said. “Whether we’re not going to charge, I have reservations—but there is potential there. The model needs to be less traditional. Is it really a refrigerator, or is it a family centrepiece?”

For Ito, the idea of a refrigerator becoming an interactive source of entertainment is not sci-fi-induced daydreaming: he sees the need for a new model as pressing. “No one’s making money,” he said, noting that legacy companies like Panasonic are shifting their focus to heavy industry. "If we’re going to survive in this category, we have to do something different.

“We are the youngest leaders in this industry. Most CEOs and CMOs in this country are most likely over 65. What do they know? They haven't even used a smartphone. We should be leading IoT, not the grandpas. Now, that might sound aggressive, but that’s the only way you can differentiate.”

This article has been updated to include market share.