Answer

Executive Summary

This report conducts a detailed audit for Dyson. The company is a British electronics brand owner specialized in designing, manufacturing and retailing vacuum cleaners among other household appliances. The report is divided into two sections. The first part conducts a detailed audit of the external and internal environment using PESTLE and SWOT analytical models. The models justify the need for Dyson to introduce a new product to leverage its market leadership position in the market for vacuum cleaners. This section further probes Dyson’s marketing strategy using the Ansoff Matrix where product development is noted as the dominant marketing strategy. In regard to performance, Dyson reported lower profit margin and revenues compared to rivals such as iRobot. Dyson’s competitiveness is derived from its ability to innovate and communicate the uniqueness of its products to customers. The second part rationalizes the necessity of producing an intelligent vacuum cleaner. The product will target youthful tech-savvy customers, residing in urban areas and with high disposable income. The marketing objective are clearly elaborated using SMART tool. The last section details the marketing strategy for the new product by evaluating its product features, place, promotion strategies and price. The product features of the intelligent vacuum cleaner justify a premium price of $800 which should be complemented with integrated marketing communication and multi-channel distribution network that coordinates physical stores and online retailers.

Table of Contents

Executive Summary  2

Table of Contents  3

1.0          Introduction   4

2.0          Environment Analysis  4

2.1          PESTLE Analysis  4

2.2          SWOT Analysis  8

3.0          Current Marketing Strategy and Performance   10

4.0          Dyson’s Competitive Advantage and USP   12

Part  13

5.0          Product Rationale and Specification   13

6.0          Segmentation, Targeting & Positioning (STP)  13

6.1          Segmentation   13

6.2          Market Targeting Strategy  14

6.3          Market Positioning  15

7.0          Recommend Marketing Objectives and Goals  15

8.0          Marketing Strategies  16

8.1          Product  16

8.2          Place   16

8.3          Promotion   16

8.4          Pricing Strategy  17

9.0          Conclusion   17

List of References  19

1. Introduction

The electronic goods industry in the UK is under immense pressure to compete against aggressive and properly leveraged international brands. This trend is worsened by the unpredictability of the macro environment. As a result, organizations are consistently required to evaluate their strategy to position themselves effectively against rivals. According to (Julius 2020), strategy is important in aligning the mission, vision, objectives and goals of the organization thus enabling it to optimize its strengths. One particular British organization that has contributed to strategize and compete against these rivals is Dyson.

Dyson Limited is a British electronic and technology company founded in 1991 by Sir James Dyson (Dyson 2017). The company designs, manufactures, markets and sells household appliances namely vacuum cleaners, hand dryers, bladeless fans, hair dryers, lights and air purifiers. Dyson has managed to curve a niche for its electronic goods brand. Having operated for the past 28 years, the company has mastered the art of differentiation and proper targeting of its products.

It is upon this understanding that this report integrates theories, figures and facts to conduct a full marketing audit of Dyson by performing an environmental analysis, evaluating current market strategies, competitive advantages and USP. The report further proposes the introduction and marketing of intelligent vacuum cleaners and outlines its product rationale, STP, marketing objectives, and marketing strategies.

Part 1

1. Environment Analysis
1. PESTLE Analysis

1. Political Factors

• Brexit debate has led to uncertainties across Europe. Leaving EU will shrink the UK market (Breinlich, et al., 2020). In response to these uncertainties, firms such as Dysn might be forced to relocate their operations.
• Because of the high operation costs in the UK, local firms are moving their operations to Asian countries (Schaverien 2019; Sandle, 2019). The trend is blamed on the high minimum wage rate which prompts firms to move operations to countries with cheap labour and low overhead costs.

1. Economic Factors

• In the case of Dyson, Brexit and COVID-19 have negatively affected the UK economy making it untenable (Breinlich et al, 2020. Reports by the OECD have downgraded economic growth forecasts for 2020 from 2.9% to 2.4%, as evident in figure 1 below (Jones, Brown & Palumbo, 2020).
• Apart from negatively affecting the gross domestic product (GDP), the pandemic is expected to cause fluctuations in exchange rate, which in turn, affects the supply chain.
• The consumer spending habits have equally shifted from purchasing shopping products to stockpiling convenience products especially foods. As a result, this brand is likely to report a drop in its sales volume during this financial period.

Figure 1: OECD Downgrades Economic Growth Forecasts for 2020 (Jones et al., 2020)

1. Social Factors

• A report by Foster (2018) shows that the UK has an ageing population. In addition, Brexit threatens to dissociate Britain from the wider European Union market. This will translate to a lower customer base for the electronic firms in the UK.
• On the contrary, the UK has noted an increase in the number of small households which are potential consumers of vacuum cleaners (Cabeza et al. 2018).
• This group of dual-income millennial youths with high disposable income, have adopted new lifestyles and consumer behaviour that encourages use of technologies such as vacuum cleaners.

1. Technological Factors

• The high labour costs in the UK have made it expensive to attract engineers and experts to help in research. This prompts technology firms such as Dyson to incur high costs of research and developing new technologies.
• The UK government has mandated that companies patent their technologies to safeguard them against theft. Dyson has to respond to this requirement by patenting its vacuuming technology (Dyson, 2017).
• The emergence of digital marketing technologies has helped lower costs of reaching customers. Brands including Dyson have benefited from free marketing and endorsements of its vacuum cleaners on social media platforms especially Twitter and Facebook (Julius, 2020).
• According to Dyson (2017), the UK lacks technological infrastructure to train quality vacuuming engineers. Companies are forced to incur high costs of training and development.

1. Environmental Factors

• Consumers are more informed and aware of the need for organizations in the electronic industry to adhere to environmental regulations. Gov.UK (2020) observes a trend where pro-environment customers in the UK are more willing to support organizations that comply with environmental regulations regardless of the prices charged by the companies as they implement environmental laws.
• Likewise, consumers are putting pressure on firms to reduce their carbon footprint, engage in sustainability reporting and ethical sourcing of their raw materials (Dyson 2017). All these factors contribute towards cleaner processes.
• The UK government is strict on regulating the environmental impact of electronic firms (Gov.UK 2020). For instance, the government has set mandatory requirements in terms of energy consumption of products which should be met by manufacturers such as Dyson.

1. Legal Factors

• Organizations in the electronics industry are required to adhere to regulations such as minimum wage, safety laws, trademark registration and patent requirements to safeguard their employees and technologies (Wadlow 2011). Adhering to these laws is mandatory for the firms to avoid conflicts with the authorities in the UK and other countries in which they operate.
• Unethical practices in the electronics industry have prompted the government to enact laws such as the UK modern slavery act (Dyson 2020b). The intent of these laws is to punish firms that subject immigrants to forced labour with meagre wage.
• The UK government has enacted additional laws to safeguard women against gender gap pay (Dyson 2020c). These laws are aimed at ensuring equality in the electronic firms which tend to side-line women.

1. SWOT Analysis

1. Strengths

Table 1: Dyson’s SWOT Analysis

1. Current Marketing Strategy, Position and Performance

An organization has to adopt competitive strategies to survive the intensive competition in the electronic products industry. According to Gurcaylilar-Yenidogan and Aksoy (2018), the Ansoff Matrix is the most suitable model to evaluate a firm’s strategy. The model is composed of four matrixes; market penetration, product development, market development and diversification. Dyson (2017) applies all the four strategies however, the most dominant strategy is product development. In regard to market penetration, Dyson has sought to reach new customers in existing markets by complementing its online outlets with physical stores. Since 2018, Dyson has introduced showroom stores in major markets to enhance its reach to customers without access to electronic commerce services. This includes demo stores in New York, Moscow, and 460 new stores in China (Peterson 2020). The stores enable customers to test, try and buy Dyson products

Regarding product development, Dyson is constantly introducing new products to its existing customer segments. This includes its failed attempt at Electric cars, hair curler, vacuum cleaners, and task lamp. According to Dibb et al., (2012), efforts at improving current products and developing new ones is driven by the intensive competition and the fear of stagnation as products reach different levels of the product lifecycle. In addition, the firm maintains a deep desire to innovate new product features and processes to maximize profitability. Dyson has been slow in pursuing the market development strategy. The firm has not seriously considered the prospect of selling its existing products to new emerging economies such as Brazil, India, Russia and South Africa (Elsenhans & Babones 2017). In terms of diversification, Dyson has endeavoured to introduce completely new products for new markets. This includes the failed attempt at producing an electric car.

Dyson positions its products as high quality thus attracting premium prices. These features have attracted high value customers, especially for the vacuum cleaners. As evident in figure 2 below, Dyson is positioned as having highest level of customer loyalty compared to brands in its league such as Hoover, Samsung, and Electrolux (Fernandes, 2018). It is also a highly successful brand coming second after Samsung.

Figure 2: Dyson’s Brand Position (Fernandes, 2018)

Dyson does not disclose much of its financial information to the public. However, reliable sources such as Craft (2020) report that Dyson made £378.9M revenue in fiscal, 2018. During the same period, the company reported gross profits of £32.6M, net income of £263.2M and a gross profit margin of 8.6%. A summary of Dyson’s performance since 2015 is shown in figure 3 below. The performance dropped in 2017 but recovered in 2018 (Craft 2020). A comparison of Dyson’s performance to its rivals such as iRobots shows that the former made more revenues of £1.2b and gross profit of £543.9m.

Figure 3: Dyson’s Performance 2015 – 2018 (Craft. 2020)

1. Dyson’s Competitive Advantage and USP

Dyson derives its competitive advantage from innovation. By introducing and patenting new products, the company has attracted high-value customers. According to Hodgson (2018), Dyson’s unique selling proposition is derived from its communication of the differentiated product features. For instance, it markets its vacuum cleaner as the bagless brand that ‘does not lose suction’ (Twyford 2014). This USP is unlike competitors like Hoover, whose USP is ‘it beats, as it sweeps, as it cleans’ (Hoover, 2020). At the moment, iRobot Roomba has a superior USP highlighted with its slogan “Truly game changing” as the brands vacuum cleaner are computerized to guide themselves around the home. Miele Compact prides in its extensive HEPA filtering as it optimizes air hygiene by locking irritants and allergens inside its canister. According to HVZ (2020), Miele is a better brand because it is both corded and cheaper than Dyson. Numatic Henry eco vacuum cleaner’s USP is its compact, easily movable and light design (Telegraph, 2020). In terms of positioning strategy, Dyson positions itself as an innovative and environmental conscious organization that produces energy efficient household appliances. In addition, it emphasizes the simplicity and functionality of its products.

Part 2

1. Product Rationale and Specification

From the previous section, particularly the opportunities section of the SWOT analysis it is noted that customers are increasingly attracted to automation and interconnected products, as part of the smart home’s movement. As a result, Dyson can embrace the opportunity to develop new products in line with findings in the Ansoff matrix. The proposed product is the reinvention of the vacuum cleaner product line by integrating artificial intelligence. The new product name is intelligent vacuum cleaner. This proposed product is rationalized by statistics showing that the future of home electronics is rapidly shifting in favour of automation (Fang 2019). One of the latest trends is the introduction of artificial intelligence which simulates human intelligence in electronics. The new product can be designed with features such as IoT, deep learning and cloud computing to enhance the accuracy of simulations while boosting functionality and efficiency (Fang 2019). Entrenching these technologies into the current Dyson vacuum cleaner will capitalize on the patented technology to improve the product and make it suitable for the new generation of tech savvy consumers. The key specifications to be introduced into the product include internet connectivity features and the ability to work autonomously.

1. Segmentation, Targeting & Positioning (STP)
1. Segmentation

Dyson should segment the target customers for the intelligent vacuum cleaners based on demographics, psychographic, geographic and behavioural attributes.

Table 2: Dyson’s Segmentation

1. Market Targeting Strategy

Dyson has experienced high success rates targeting customers in the urban centres in the Asia, USA and Europe. Because of this, market targeting strategy could be:

To reach tech-savvy youths and young adults from high income backgrounds that are highly interested to adopt new technologies in their everyday household products.

After marketing aggressively in Europe and North America, the brand should focus on Asia-pacific countries namely, Singapore, Malaysia and China, before considering other BRICS countries (Julius, 2020). The targeting process should be undertaken strategically until the product reaches al the 65 markets. The targeting process has to be complemented by intensive customer relationship management.

1. Market Positioning

Dyson will position the intelligent vacuum cleaner using the differentiation focus strategy. The differentiation aspect is derived from the way Dyson will introduce a product with unique, and quality features that contribute towards a superior value proposition. The focus element will be realized by the fact that the new product will be targeted at a specific market composed of affluent customers who are not price sensitive (Cao, 2016). The differentiation focus strategy will capitalize on high brand success and brand loyalty enjoyed by the normal Dyson vacuum cleaners.

1. Recommended Marketing Objectives and Goals

SMART objectives for Dyson are summarized as follows:

• Raising brand awareness by 12% in the first year after product launch. This objective will be achieved through intensive marketing campaigns using celebrity endorsements, and electronic word of mouth.
• Increase the market share for the new product from 0 to 50% in the first year after product launch and 25% growth in the subsequent four fours. Market share will be increased by enhancing brand visibility using posters, advertisements and billboards.
• The objectives for the sales team include breaking even in the first 10 months after product launch, then Dyson must sell 3,000 units of the intelligent vacuum cleaners each month to each of the three primary markets for the coming financial year.
• The objective for profitability is to increase revenues and profit margin by 20% in Asian markets, 50% in European market and 30% in North America in the first year of operations.

1. Marketing Strategies
1. Product

The intelligent vacuum cleaner offers the core customer value of providing automated vacuuming that is admirable for customers interested in smart and interconnected homes. Fang, (2019) says that an intelligent product should be simplistic but with sophisticated features. The intelligent vacuum cleaner, which will embody a simple design and embed features that enable interconnectivity to the internet. The product will be energy efficient and have high quality standards. It will be branded as Dyson intelligent vacuum cleaner (Fang 2019). The augmented product features will include offering a one-year warranty on the whole product, delivery and access to credit purchases, free after sale services during the warranty period, and free product support services.

1. Place

According to Cao (2016), Dyson has distribution networks in Europe, USA and Asia. Initially, the organization depended on electronic commerce sites such as Amazon, Walmart, Home Depot and Target to reach its customers. With the mounting pressure to embrace the customer relationship management theory, and the desire to demonstrate functionalities, and usage of Dyson products, the company introduced physical stores (Dyson 2020d). The stores are strategically located on high streets with affluent consumers. The intelligent vacuum cleaner could capitalize on these two distribution channels. Dyson only needs to expand the spread of the demo stores to reach more customers. In addition, it could sale the new products through established and reputable retailers such as Amazon and Walmart (Julius 2020). These approaches will foster stronger relationships with customers therefore nurturing loyalty and commitment to the brand.

1. Promotion

According to Dibb et al. (2012) promotion reminds existing customers of the product while informing new customers the value proposition of the brand. To reach more customers, Dyson should use an integrated marketing communication (IMC) strategy whereby it will combine social media, public relations and advertising. However, because of the novelty of the product, the promotions will use more of multimedia advertisements to create awareness. TV commercials can be used to demonstrate the product to many customers around the globe (Dibb et al. 2012). This strategy will entice customers capable of purchasing the new product to visit Dyson’s stores and purchase the product. The marketing campaign should also be shared across social media platforms. Battisby, (2020) reports that these sites connect 45 million users in the UK and 3.9 billion globally, thus creating a viral challenge will provoke electronic word of mouth.

1. Pricing Strategy

Dyson has a reputation of charging premium prices for its products because of the high level of differentiation and quality that surpasses its competitors. Given the intensive investments to be made in designing and manufacturing prototypes for the intelligent vacuum cleaner, it is certain the new product will be exorbitantly priced (Dibb et al. 2012). The listing price for the new product should be $800. This price is based on an estimation of the value added to the product during manufacturing. Using the right marketing channels will ensure the product reaches the valuable customers therefore increasing market share by 50% in the first year and 25% in subsequent years.

1. Conclusion

The first part of this report provides a detailed environmental analysis on Dyson. The environmental analysis uses PESTLE model to understand the external environment. The external environment is unfavourable at the moment because of Brexit and COVID-19. However, the demand for intelligent homes creates a need for the intelligent vacuum cleaner. The SWOT analysis evaluates the micro environment whereby, in spite of the intensive rivalry, Dyson capitalize on its strengths such as committed leadership and employees as well as its good reputation to exploit global markets especially emerging economies. The firm pursues the product development strategy. Dyson’s competitiveness is derived from its innovation and creative USP that emphasizes the superior features of its products.  The second section proposes the introduction of an intelligent vacuum cleaner. The product will involve a reinvention of the vacuum cleaner by integrating internet connectivity and machine learning. The product will target customers based on the four segmentation criteria such as behavioural, demographic, psychographic and geographic. The target customers will include urban dwellers with high disposable income, mostly households with dual-income, and tech-savvy in the age groups 23 – 45 years. The SMART goals include maximizing sales, profitability and market share. The marketing mix is used to analyse the most suitable marketing strategy. The product will have superior features worth a premium price. They will be distributed through online retailers and Dyson stores. IMC will be used to communicate to the customers on the value proposition of the intelligent vacuum cleaner.