This report presents a strategic marketing plan for Dyson to introduce a new type of cordless vacuum cleaner. It will be a highly efficient and long-lasting battery powered “travel” vacuum. Its value proposition of convenience, innovative technology, and high quality is described. The value proposition will be evaluated and used in combination with a SWOT risk analysis to provide an overall perspective on the situation. The market will be analyzed to determine if there is a point of entry to this specific niche and determine the need for the product. The product in development is unique and offers an opportunity to establish itself in the cordless vacuum market as well as drive forward the consumer adoption of such devices. No significant threats were determined as long as the company adheres to quality and regulation.
A comprehensive marketing plan will be outlined with components that would allow Dyson to achieve its strategic business objectives with the new product. An approach will be developed to introduce the product to customers, including the target audience, advertisement, and commercial aspects. This will be used to determine the most effective marketing techniques and an application-based strategy that can be used to promote the product. It includes a strong brand development around the product which would appeal to audiences through focus on aesthetics and revolutionary technology. Business aspects to be discussed include positioning, pricing, and distribution strategies. Dyson will position itself as the “Apple” of vacuum cleaners, driving it forward through high-quality products. Pricing will remain premium at $600 to accommodate high development costs and maintain the luxury brand. The distribution strategy will gradually shift from brick and mortar locations to direct to consumer online sales to encompass consumer trends. Finally, a financial analysis will be provided to calculate the basic costs of development and production, that will be to determine a break-even point for sales. An implementation schedule outlining the product lifecycle will be presented with appropriate controls and contingency for risk management.
Dyson is an international technology company founded by James Dyson in 1987. It first specialized in the production of vacuums and had since expanded to a variety of household appliances and technology projects. The company has built all aspects of its business from within, choosing to employ in-house rather than outsource aspects of its operations, including marketing and public relations. This has created an extraordinary work ethic and empowerment within the company culture, fostering creativity, pragmatic thinking, and the free flow of ideas. Dyson as a company has never been focused on maintaining a brand but instead chooses to focus on its consumer products. Its mission is to create, produce, and sell the highest quality vacuum cleaners at an available price through evolving its technology and product designs. In recent years, the company has shifted its vision towards modernization. It seeks to embrace efficiency, sustainability, and innovation, which are reflected in its consumer product line, engineering practices, and company growth (Dyson, n.d.).
The goal is to introduce a new cordless vacuum cleaner that can operate remotely for at least one hour on battery power while maintaining the efficiency and powerful suction of its wired counterparts. It should be available for home and potential commercial uses. The product should be lightweight for ease of transportation and versatile to have an extended reach. It should essentially become a “travel” vacuum in both size and exploitation. This mobility concept should make it a groundbreaking product in the vacuum industry due to its independence from being reliant on the presence of a power source at any given location. Its technological capacity should offer distinctive features, such as cleaning many surfaces and being able to pick up various types of material. Furthermore, the product must be designed with interchangeable parts in mind, giving users the option to switch out battery packs for prolonged use.
Slogan Statement: Dyson’s new vacuum takes you where you want to go.
The value proposition offered by Dyson through the introduction of this product lies in ensuring the reliability of the vacuum to fulfill any cleaning needs with cordless convenience and swappable battery technology. It will seek to tackle any potential obstacles to cordless vacuums and make it a widely available tool to be used for home and commercial purposes.
- The convenience of a travel vacuum, reaching difficult places or taking it with you on a trip. It is lightweight and does not require an outlet.
- Aesthetically pleasing, with a lack of tangled cords.
- Powerful and long-lasting, combining perfected Dyson vacuum suction with the innovative technology of rechargeable batteries.
Table 1. SWOT Analysis. (self-generated).
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Dyson should focus on rapid entry into this niche market share by developing a high-quality product that would be better than and distinguishable from competitors. Furthermore, the company should focus on customer acquisition, particularly if it is attempting to expand into the commercial vacuum market. Dyson should attempt to drive down the price point of this and other products to become more accessible, especially in developing markets that are gaining purchasing power for innovative appliances. Competitors remain the most significant threat and present a critical challenge to Dyson’s growth, which requires the company to focus on customer acquisition by developing a brand around the new product.
It is critical to investigate market conditions before committing to long-term product development and release. This section will outline the state of the market for cordless vacuum cleaners.
A vacuum cleaner is defined as a tool that uses an air pump to create suction that can be used to extract dirt and dust from a surface. The collected material is stored in a specialized section and can be disposed of after the cleaning process. Vacuuming is considered to be one of the most effective and convenient ways for cleaning, picking up small particles, purifying air quality, and decreasing allergic reactions. The industry is mostly dominated by well-established consumer appliance companies, including Dyson, Hoover, LG, Bissell, Oreck, and Electrolux. The market has significant barriers to entry for new competitors and even innovative products due to the tight control that the major industry players have in this market. The market has and will continue to experience stringent regulation from governments, particularly in developed regions. Regulations focusing on electrical safety, particle filtration, and energy consumption require significant development costs and investment into research and development to ensure compliance (Global Market Insights, 2017).
External Environment Scan
Table 2. PESTEL Analysis. (self-generated).
|Political||As a UK company, Dyson is faced with high corporate tax rates and the recent tax rate hike on research and development expenditures. There are also increased bureaucratic hurdles in place in practically all global markets as governments seek to require accountability from large firms.|
|Economic||The consumer appliance market is seeing fluctuating growth, which makes it difficult to rely on financial forecasts. Any business growth or introduction of new products is increasingly expensive and takes years before the investment is recouped. There are high demands from company stakeholders.|
|Social||Although consumer spending is increasing, people choose to make large purchases without great consideration and comparison due to the availability of information on the Internet. There is also a much lower rate of replacement for appliances since modern technology makes them long-lasting. It is necessary for Dyson to stand out from its competitors and maintain a high level of satisfaction to attract new consumers. More resources should be invested in determining consumer demands from the market.|
|Technological||Technological competition is especially close in this market. Dyson has one of the leading engineering teams and an innovative environment. Customers have more demands and expectations that new vacuums must fulfill. Complex branches such as robotic vacuums are considered to be the future of the industry. However, companies like Dyson which heavily invest in new technology lose out to cheaper alternatives that use a low-quality copy of the design.|
|Environmental||Regulations in the EU on vacuum cleaners have complicated the process of product release, requiring additional expenses for development and certification while decreasing sales of older products. Dyson is committed to its mission of being environmentally friendly by introducing clean manufacturing processes, packaging material, and reduced energy usage in vacuums.|
|Legal||The industry is faced with continuous attempts to replicate the technology of competitors. Dyson must focus on ensuring legal protection of its patented designs and prevent lost sales to copies. Additionally, many countries including the UK have been focusing on worker protection. Dyson must ensure compliance with all laws and regulations.|
Table 3. Porter’s Five Forces Analysis. (self-generated).
|Porter’s Five Forces Analysis|
|Industry Rivalry||The industry is dominated by several large consumer and home appliance corporations that share the market space. Dyson and Hoover are considered the leading vacuum-focused companies, particularly for upper-end and technologically advanced products.|
|Buyer Power||As a consumer appliance company, Dyson is strongly dependent on sales. The availability of information and a variety of alternatives leaves the final purchasing decision with the consumer. The company and its products must seek to attract and satisfy its customers in order to continue being profitable.|
|Supplier Power||Dyson is well known for conducting all development and production “in-house” without significant dependence on external firms that might jeopardize the quality or manufacturing capability of the company.|
|Threats of New Entry||Threats of new entrants are rather low in this industry since it is such a competitive market with all leading technology and designs being developed by leading companies. The nuances of customer acquisition, quality control, and market trends would be difficult and expensive for new entries.|
|Threats of Substitutes||There is a medium threat of possible substitutes for this product or any of Dyson’s other technologies. However, as Dyson patents and protects its designs, there is a threat of legal action against copiers. Despite that, copying may still result in lost sales as the small-scale companies implement the technology at the much lower quality and drive prices down. This may be particularly relevant in emerging markets with little regulation. A big threat of substitutes in the current vacuum market comes from robotized products. Robot vacuums are becoming increasingly popular due technological effects which have significantly improved, making the vacuums more efficient at both cleaning and human convenience (ability to program cleaning schedules or routes). Meanwhile, their price point is dropping, with the most luxury robot vacuums costing the same as the newly released Dyson cordless device.|
Market Size and Growth
In 2015, the size of the household vacuum cleaner market was valued at $12 billion with 75.9 million units sold. It is estimated that the market will have a compound annual growth rate (CAGR) of 4% leading up to 2024, exceeding $17.4 billion with 130 million units sold annually by that time (Global Market Insights, 2017). Increased purchasing power and disposable income, especially in emerging markets, will lead to a greater demand for vacuum cleaners. As standards of living improve and trends of urbanization continue, there should be an increased demand for household vacuum cleaners that can fulfill a wide range of consumer demands (Global Market Insights, 2017).
There are currently several growing trends among consumers of vacuum cleaners. First, there is the aspect of robotization and automation (Bora, 2018). Even if the vacuum cleaner is hand-held, consumers are looking for a high level of automation and intuitiveness when using the product. Furthermore, the trend for this industry has become a convenience. The vacuum cleaner must be compact, which allows for more accessible storage and more accessible transportation. A focus on cordless options allows for efficiency and ease of access while cleaning. In addition, a focus on eco-friendly technology that reduces energy consumption has become a trend in light of the gradual rise in electricity prices (Bora, 2018).
Since Dyson is a highly innovative company, its target market share is aimed at consumers who value products that are technologically advanced and exceed quality expectations. Therefore, they are willing to pay the high price point for the level of performance and convenience. There is a significant target audience to whom the ecological friendliness of the new product would appeal. Dyson products boast a highly efficient suction and HEPA particle filtration mechanism, a bagless storage system, and reduced energy consumption. All these factors may be appealing to market the product for commercial purposes since it will be seen as a cost-effective long-term investment in high-efficiency equipment.
The vacuum cleaner market remains most profitable in the established markets of Europe and the United States. These regions will maintain a stable CAGR growth of 4% annually. However, areas such as the Asia-Pacific region have the most substantial growth rate and are expected to keep the lead for the foreseeable future. Markets such as Latin America and the Middle East have shown promising growth. Out of the various types of vacuums, canister-based appliances have the largest market share at 40%. Upright vacuums hold about 4% of sales. Cordless vacuums took up a 9% share, which is expected to climb gradually. However, robotic cleaners have already exceeded $1 billion in sales annually, and sales are expected to grow exponentially (Global Market Insights, 2017).
The primary customer base for Dyson consists of household consumers. The population consists of families and individuals, ranging in age from young adult to senior. Most demographic groups would be impacted by the new product and benefit from its features. Purchasing a high-end vacuum cleaner is usually a family decision, however, which would require appealing to the household as a whole. The purpose of the new product’s design is to address the critical need for more extended battery power in cordless vacuums. The most recent Dyson cordless device lasts less than 10 minutes on high power boost settings and approximately 40 minutes on low power, leading to the inconvenience of having to charge the battery in the middle of ongoing cleaning (Gibbs, 2016). A larger charge capacity and the ability to swap the battery can resolve the inconvenience with cordless vacuums and increase consumer demand for the product.
The marketing strategy uses information about the company, consumer demand, and market realities in order to formulate an effective approach to releasing this product. It will help to outline every aspect of marketing that is involved in releasing the new vacuum cleaner to the public.
With this product and the company as a whole, Dyson is attempting to set itself apart from other companies in the industry. The primary marketing objective is to relay to consumers the mission and vision that Dyson is attempting to establish for its product line as visionary and innovative for the industry. The company has historically been more product-oriented instead of focusing on marketing concepts, choosing to let the quality speak for itself. However, in the modern world of media exposure and e-commerce, it is critical to clearly present a particular image to the public that would highlight the key selling points.
Therefore the marketing strategy must fulfill several objectives that would establish the product and the company’s public image, leading to tangible results:
- Analyze and modify the company’s traditional marketing techniques that have been ineffective.
- Differentiate Dyson as the “Apple” of vacuum cleaners: highly innovative and ahead of its competitors.
- Use this product as the cornerstone for the next generation of battery-powered vacuum cleaners.
- Communicate the quality and benefits of the product’s design.
- Appeal to a wide variety of market segments, demographics, and purposes to gain market share.
- Promotion to affect consumer trends and behavior, leading to increased sales for the company.
Positioning in marketing refers to the establishment of a product’s uniqueness in comparison to the competition. Dyson will attempt to target specific market segments and demographics with an introduction of a cordless vacuum cleaner that is long-lasting, reliable, and multi-functional. Through an innovative development process and a customer-oriented approach, the company will overcome technological challenges to cordless vacuums and provide the best consumer alternative on the market. The company will sustain and grow its leadership position on the market through a practical approach to the new vacuum cleaner, ensuring that the investment leads to sales. Dyson has built its company history through disruptive technological innovations in the industry, with each product offering a unique set of features. These technological concepts are used in many appliances besides vacuum cleaners (Sidhu, 2010). This focused approach has allowed Dyson to perfect the capabilities and design of its products, which sets it apart from the competition.
Product and Branding Strategy
The company owner James Dyson has recently revealed his vision for the company to become more than a consumer appliance producer, but instead a massive technology company. This has led to the investment of billions into various research programs, mainly aimed at battery technology. According to Dyson and many leading technological experts, batteries will be essential for powering appliances for the foreseeable future as the industry transitions to cordless vacuum cleaners. Furthermore, this will aid Dyson in becoming a leader in consumer electronics and appliances, as in the current age of incremental upgrades, it is difficult to change the status quo (Kuang, 2015). This is the brand image that Dyson seeks to adopt: innovative, ingenious, and above the quality or practical level of its competitors.
This image would be implemented with the new vacuum cleaner by making it a complete reflection of the company’s best design, engineering, and quality control practices. James Dyson has repeatedly stated his commitment to product development and has chosen to maintain a marketing strategy where the product advertises itself through its quality. While this approach is honest, it has failed to capture the attention of many potential customers who are not aware of the brand at first. Marketing can remain focused on the product while clearly outlining the numerous features that the new product will offer and highlight its innovative aspects. The focus on the future in all aspects of product branding, from advertisement to packaging, will attract the attention of both media and customers since innovation leaders are idolized, as the example of many global technology companies shows. However, a critical point to consider is that the technical jargon of innovative technology should be simplified for the understanding of ordinary household consumers who are seeking to purchase the product of the “future.”
Dyson products have traditionally been on the higher end of the price spectrum. Unfortunately, this is necessary for Dyson to recoup its development costs, break-even on production, and gain profit. The highly technological features of Dyson’s product make it appealing to audiences seeking the best quality and who are therefore willing to pay a higher price for both early adoption and elite design. The new product will be sold at a retail price of $600, which is on par with newly released high-level cordless vacuums from competitors in the industry. The value has been determined in consideration of approximate development costs, potential manufacturing expenses, and additional costs to promote the product. This will allow the company to break even within the first fiscal year of the product’s release based on projected sale targets.
The established pricing point is based on the perceived value that the product holds for a variety of consumers and applications. Before release, company executives can re-evaluate the price by offering the product for a limited test run or conducting customer surveys. Dyson can continue to differentiate itself from its competition by focusing on creating value for consumers through offering features rather than attempting to attract them based solely on the pricing point. In order to maintain support for the company value of innovation, which requires significant financial input, Dyson will continue to sell at a premium price of $600. It is based on the positioning strategy of luxury-focused home appliances that Dyson has developed over decades. While development costs are a consideration in establishing a pricing strategy, the unique technological design and the brand value (which suggests high-quality), are inherent for the high price point of the new product. While this may close the product out of some market segments, it is justified by economic conditions and projections for the industry. In the long run, this benefits the company as better profit margins result in growth.
Distribution and Supply Chain Strategy
As the leading vacuum cleaner manufacturer in the world, Dyson has to maintain a complex global supply chain that reaches into practically every regional market. A company’s supply chain affects its ability to deliver products and overall financial performance. It is also costly to keep up, and any disruption can lead to considerable loss of profit. The company has recently decided to re-engineer its logistics and supply chain mechanisms (Marle, 2014). It will now harness a control center that will use advanced logistics technology and software to manage all aspects of distribution. The software will use a three-tier system to track transportation, implement risk management by suppliers, and evaluate efficiency by using shipping data. Dyson’s supply chain consists of two billion shipped parts from 300 suppliers that are delivered to and from four large factories (Marle, 2014). By focusing its innovative approach on supply-chain management, Dyson can increase its competitiveness in the market by ensuring the reliability and promptness of product delivery.
Distribution of consumer appliances has traditionally occurred through retail stores. The company has used a selective distribution strategy, so its products are available for sale in specific locations and department stores. The company conducts sales from its website and partners with consumer appliance or general shopping websites. However, with the significant rise of e-commerce, Dyson needs to focus on platforms that allow direct to customer delivery. The strategy may be costlier at first, since there may be a drop in economies of scale and initial expenses may include developing new online or shipping infrastructure. However, the distribution strategy should prove beneficial by cutting fees paid out for brick and mortar location, and it guarantees the company will not be left out of an emerging market segment. It also allows for collaboration with the new supply chain system that has been revamped to be centered on a ‘built-to-order’ model.
Integrated Marketing Communications Strategy
The key for Dyson’s new marketing communications strategy is to relay the company’s mission and values. It should be made clear that the company is product-oriented with a focus on innovation and development, which leads to consumer satisfaction. This message allows it to be distinguished from competitors who are mainly profit-oriented corporations. A goal of marketing in this campaign would be to establish clear channels of communication with customers to advertise, educate, and impact the consumer market in the industry. It will seek to increase sales by stirring demand for the new product and its features.
In addition, it will create public awareness of the brand identity, which will also drive sales of this product and further releases. Integrated marketing communication is critical to driving the message to the customer. A sub-brand can be developed for this product that would be recognized as the overall Dyson trademark but have a unique feel. That can include the style of advertisements, slogans, and commercial aspects. Advertising using a variety of media integration would be a primary tool for customer acquisition. The new device can be visually demonstrated on television while digital advertisements will have to be simpler and grabbing attention by highlighting the technology and aesthetics of the brand. Afterwards, using appropriate customer support tools and managed targeted marketing, customers can be attracted to making additional purchases directly from the company.
As a business, Dyson is interested in its commitment to this project bringing financial benefits that will justify the costs of development and satisfy company stakeholders.
The new vacuum should first be released on a small scale in order to see the market’s response as well as the demand for the product. This will allow the company to adjust its strategy in a timely manner without risking cost overruns for unusable inventory. The new product is going to be technologically superior to that of any competitor, mainly due to the extended charge and switchable battery packs. Although the market niche is presently limited, it is beginning to expand into more households as people make long-term investments into high-tech appliances. The price point may deter sales, but it is necessary to maintain it at this level in order to recoup costs through profitable margins. However, Dyson has aggressively maintained its positioning strategy as being the luxury brand of home appliances, which justifies the price point. The forecasted number of units sold during the first quarter is estimated to be 16,250, which is 65% of the production batch. This estimate seems reasonable for a newly introduced product with innovative features that have been actively marketed to the public. Based on the forecast, the revenue from the product should exceed $9 million.
Table 4. Expense Forecast. (self-generated).
|Item Description||Price ($)|
|Research and Development||$1,200,000|
|Total Fixed Costs:||$3,400,000|
|Material and Parts Cost||$140|
|Packaging, Shipping, and Tariffs||$35|
|Additional fees and taxes||$50|
|Total Variable Costs:||$350 per unit|
|Total Expenses per Batch (25000):||$12,150,000|
Table 5. Break-even Analysis. (self-generated).
|Average Unit Cost of Production||$240|
|Average Unit Sale Price||$600|
|Number of Units per Batch||25,000|
|Revenue (Sale Price x Units Sold)||600 x 16,250||$9,750,000|
|Total Fixed Costs||$3.4million|
|Variable Costs per unit||$350|
|Unit Contribution Margin (Sale price – variable cost)||600-350||$250|
|Break-even analysis (Total expenses = units sold x price) |
(For the first batch of 25,000 only)
The break-even analysis shows that with the first batch of 25,000 cordless vacuums, the variable production costs per unit should range around $350. The sale price of $600 should present a unit contribution margin of $250. In order to recoup development and fixed costs of $3.4 million as well as variable costs for the first batch of 25,000 units ($8.75 million), it would be necessary to sell 20,250 units at the price of $600 at which point the company would break even.
Implementation and Controls
The launch of a new product is a complex process that requires oversight and a carefully developed plan for implementation. The amount of resources that the company is committing to development requires that tangible results be produced in a timely and efficient manner. Implementation is critical to the achievement of strategic objectives and the success of the business project.
Table 6. Schedule Implementation. (self-generated)
|Quarter 1||Quarter 2||Quarter 3||Quarter 4|
|Stage I: Research and Design||X|
|Stage II: Concept Development and Testing||X||X|
|Stage IIa: Product Evaluation||X|
|Stage III: Formulating Marketing Strategy and Business Analysis||X|
|Stage IV: Active Production Phase||X||X|
|Stage V: Test Marketing and Active Media Advertising||X||X|
|Stage VI: Release and Commercialization||X|
The development and release cycle of the new product development process consists of various stages that are implemented progressively. The first stage is essentially a brainstorming stage that generates and filters through ideas to address company objectives in fulfilling market needs. After a concept is finalized, it must be developed into a working prototype and designed as a commercial product. It must undergo rigorous testing and obtain any technical certifications that may be required. This report is part of the next stage, which focuses on marketing strategy and business analysis. It highlights the value of the product for the company, creates a marketing angle, and presents financial analytics, all of which are used to make an executive decision about whether to go through with the product release. The product is then adapted for mass distribution and enters an active production phase. At this point, the product begins to undergo test marketing and receiving customer feedback, which will be used for positioning advertising and marketing campaigns. The last stage is the product being released to the public and undergoing a commercialization process. Critical decisions are made on the timing and region of the release as well as the mechanisms for wider distribution (Claessens, 2015). The implementation schedule ensures that all operations and strategic activities occur at a predetermined time and sequence.
As part of the product development cycle, it is critical to establish controls to serve as benchmarks to evaluate the progress of the plan set up by the schedule. The use of controls by management in the product development lifecycle helps to establish quality control and provide oversight over the use of financial expenditures. The management of product development allows for a streamlined process from design to commercial sales. A variety of techniques can be used for the exercise of strategic management. Most frequently, deadlines are established for stages in the project as both a motivational and time-management mechanism. This is necessary since time in the development cycle produces significant expenses that are not balanced out until the product is released and sales begin to bring in profit. Another technique is to use milestone review, which is meant to reevaluate the project at major steps in its development, thus creating an opportunity to refocus the development strategy before the next massive influx of resources. This will allow for an evaluation of impacts and challenges that may not have been clearly evident at earlier stages of the project. The use of strategic monitoring can be implemented to determine which small-scale objectives are critical to achieving the best success for the product. Therefore careful management of these milestone periods would prevent setbacks that can derail the schedule in the long run (Stark, 2015).
Contingency planning is a necessary part of a marketing plan that seeks to provide mechanisms to mediate unforeseen events in the process of introducing the product. However, contingencies are difficult to predict and are often outside the company’s control. Therefore, contingency planning is a process of risk assessment and impact management for the product lifecycle.
Table 7. Contingency Planning.
|Research and Development|| |
Bora, R. (2018). Global household vacuum cleaners market size to hit USD 17 billion by 2024. Web.
Claessens, M. (2015). The new product development process (NPD) – Obtain new products. Web.
Dyson. (n.d.). Our DNA. Web.
Gibbs, S. (2016). Dyson V8 Absolute review: Finally a cordless alternative to an upright. Web.
Global Market Insights. (2017). Household vacuum cleaners market size by product (cordless/stick, upright, canister, central, drum, wet/dry, robotic), industry analysis report, regional outlook (U.S., Canada, UK, Germany, Japan, India, China, Mexico, Brazil), application growth potential, price trends, competitive market share & unit forecast, 2016–2024. Web.
Kuang, C. (2015). James Dyson on his company’s high-powered, portable future. Web.
Marle, G. (2014). Dyson re-engineers its supply chain with a control tower to ‘create logistics magic’. Web.
Sidhu, I. (2010). Profiles in doing both: How Dyson blew away the vacuum market. Huffington Post. Web.
Stark, J. (2015). Product lifecycle management. Cham, Switzerland: Springer.