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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 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

• Introduction

The electronic goods industry in the UK is under immense pressure to compete against aggressive and properly leveraged international firms. This trend is worsened by Brexit which has stirred uncertainty on the future of cooperation between the UK and other EU countries (Breinlich, Leromain, Novy and Sampson, 2020). In addition, the global economy is crushing as a result of COVID-19 which has triggered a lock-down of countries (Bénassy-Quéré et al, 2020). As a result, there is inconsequential business activities around most countries. In spite of these challenges, Statista (2020) notes that the UK consumer electronic goods industry has reported sales of $12,871 million in the first quarter of 2020 and is expected to register an annual growth rate of 4.1%. This will translate to market volumes of $15,122 million by 2024 and an increase in penetration rate of electronic products from 42.2% to 53.2% between 2020 and 2024. According to YouGov (2020), the UK consumers prefer international electronic goods to the local brands. This is evident with the popularity of international brands such as Sony, Samsung, Panasonic, LG and Toshiba among others. Nonetheless, 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.

Part 1

• Environment Analysis
  • PESTLE Analysis

1. Political Factors

The political conditions in the countries where Dyson operates has a direct and indirect impact on its operations. The Brexit debate has led to uncertainties across Europe. It is speculated that leaving the EU market will shrink the current market available to UK brands such as Dyson (Breinlich, et al. 2020). In response to these uncertainties, Dyson is considering moving its headquarters to Singapore which has lenient tax regulations, proximity to firms producing advanced electronic products and a relatively higher comparative advantage (Sandle 2019). Likewise, because of the high operation costs in the UK, most local firms have moved their operations to Asian countries as a cost saving strategy (Schaverien 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

Fiscal and monetary policies introduced by the government as well as other externalities could impact the availability of money and the spending habits of the customers. 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

This factor evaluates the demographic characteristics of customers. 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 electronic products such as hairdryers, fans and vacuum cleaners (Cabeza et al. 2018). This group of dual-income millennial youths also have a high disposable income which makes them attractive to Dyson.

1. Technological Factors

Technological advances help organizations develop competitive advantages. The rise of Dyson is credited to the uniqueness of its products. Today, the company invests 25% of its revenue in research and development (R&D) initiatives with the intent of differentiating and lowering supply chain costs. Dyson has patented its technological systems such as the bag-less vacuuming technology, thus deterring rivals from copying its advancements (Dyson, 2017). Regardless, emerging rivals such as Telecope use leaner processes thus producing smaller and cheaper vacuum machines that rival Dysons.

1. Environmental Factors

Environmental factors assess issues related to management of raw materials, pollution, carbon footprint and mission of greenhouse gases. The focus on promoting environmental quality is advocated by the CSR theory which encourages firms to balance the triple bottom line, namely; profit, people and planets (Perez & del Bosque 2016). Dyson has made a commitment to achieve set environmental goals. Its CSR mission is to go “above and beyond” in making a positive environmental impact by designing environmentally friendly technologies. In addition, Dyson engages in lean engineering and responsible sourcing to reduce exploitation of raw materials. As a result, it produces electronic products that adhere to government regulations on energy efficiency as dictated under the UK National energy Efficiency Action Plan and the Climate Change Act enacted in 2008 (Dyson 2020a). Adhering to local and international environmental laws has endeared Dyson to customers locally and globally.

1. Legal Factors

Legal factors concern local and international regulations governing business operations. According to Dyson (2020), the company has made proactive steps in eliminating unethical business processes. This includes generating annual reports dubbed ‘Dyson Slavery and Human Trafficking Statement’ in line with the UK Modern Slavery Act. Additionally, Dyson generates the Gender Pay Gap Report to communicate its commitment to eliminating disparities in gender pay (Dyson 2020b; Dyson 2020c). These reports affirm Dyson’s commitment to both the UK and international laws.

• SWOT Analysis

1. Strengths

Dyson has a reputation of manufacturing differentiated, quality and innovative products. According to Phadermrod et al. (2019) Dyson has partnered with universities in the UK to encourage innovations. This includes the Imperial College of London which partnered with Dyson in 2015 to design and manufacture a household robot. Prior, it partnered with the University of Cambridge. Dyson allocates a significant portion of its revenue to R&D initiatives to create new processes and products that are environmentally friendly, functional, affordable and differentiated (Kodama 2017). Some of the latest projects include production of an algorithmically controlled task lamp.

Strong leadership and committed employees. James Dyson is not only an inventor, but also an entrepreneur and an industrial designer (Kodama 2017). He is credited for inventing the dual cyclone bagless vacuum cleaner. Because of his acumen in business management, he has led the company into becoming a global brand. As the Chairman of Dyson, he ensures the company attracts and retains highly motivated and creative employees who contribute to its innovativeness.

1. Weakness

High prices for its electronic products. Dyson charges premium prices for its products. This is unlike its rivals who use low cost and competitive pricing strategies. The premium pricing strategy is justified by the intensity of R&D projects conducted by Dyson (Kodama 2017). It therefore charges high prices to recover the high costs of innovation. However, rivals copy its technologies and develop cheaper products to win over price sensitive customers. An example is 1985 when Dyson sued Amway and Qualtex for alleged copyright infringement (Wadlow 2011). This example affirms that in spite of patenting its technologies, rivals often find a way to steal ideas.

1. Opportunities

Expansion into emerging economies. The BRICS composed of China, Russia, South Africa, India and Brazil are not only populous, but also have a youthful population. These economies have high disposable income and high propensity to spend on electronic products (Elsenhans & Babones 2017). The markets are mostly underexploited thus likely to be productive when properly targeted.

Secondly, Dyson could explore opportunities in hiring a multicultural and globalized workforce. According to Tanius and Abdullah (2018) multicultural and diverse workforces present new ideas and knowledge, essential in creating new innovations. By producing creative products, Dyson will continuously reinvent its product lifecycles therefore achieving sustainable competitive advantage.

1. Threats

Intensive rivalry in the electronic products industry. The British market is dominated by international and global electronic brands such as Samsung, Sony, Whirlpool, and Electrolux among others (YouGov 2020). Most of the rival brands are manufactured in Asia, which has a comparative advantage in terms of low labour costs and favourable government policies to promote the electronics products industry (Torsekar & VerWey 2019). This is unlike the UK which has high production costs that translate to high prices.

Ageing British population. According to Foster (2018), the UK has a large ageing population. On the contrary, modern electronic products are embedded with features such as machine learning, artificial intelligence (AI), cloud computing and internet of things. Most of these features are suited for the tech-savvy millennial consumers. An ageing population shrinks the local market therefore lowering prospects for optimizing sales.

• Current Marketing Strategy 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 who cannot use its electronic commerce services. This includes demo stores in New York, Moscow, Tokyo, Paris, Toronto, London, Shanghai, Beijing and 460 new stores in China (Peterson 2020; Dyson 2020d). The stores enable customers to test, try and buy Dyson products

Regarding product development, Dyson is constantly working on introducing new products to its existing customer segments. This includes its failed attempt at Electric cars, Dyson Corrale straightener, hair curler, and Dyson’s task lamp. According to Dibb et al (2012), the 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 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 2 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 2: Dyson’s Performance 2015 – 2018 (Craft. 2020)

• 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 vacuum cleaners have bags and tend to lose suction after prolonged use. 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

• Product Rationale and Specification

In pursuit of the product development strategy discussed under the Ansoff Matrix, it is essential that Dyson introduces a new product to target either the existing or a new market segment. 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 Internet of Things (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.

• Segmentation, Targeting & Positioning (STP)
  • Segmentation

Dyson segments customers based on four elements; demographics, psychographic, geographic and behavioural attributes. Demographic segmentation categorizes customers based on attributes such as gender, income, age, annual income, ethnicity and education (Dibb et al. 2012). Dyson should target the new product to educated, high income, tech-savvy customers in the age group of 23 to 45years. Its customers should include men and women from all ethnic groups. Because of the high pricing of this product, it will be most attractive and affordable to households with dual-income.

Psychographic segmentation considers characteristics and personality of consumers. This includes attributes such as personality traits, values, lifestyles, beliefs, and psychological influences (Išoraitė 2016). For the new product, Dyson’s could reach tech-savvy consumers interested in technologically advanced vacuum cleaners. The personality trait for these customers can range from introversion to extroversion. The customers for the new product should value sophisticated technologies. The product is likely to appeal to people with hippie lifestyles and a motivation for a high social standing.

Third, behavioural segmentation considers actions of the customer by analysing their spending and purchasing habits. The intelligent vacuum cleaner should appeal to customers interested in specialty and shopping goods since it is a sophisticated product (Dyson 2017). The customers should have a high propensity to spend on luxury. Fourth, geographic segmentation categorizes clients based on physical location. Given the busy urban lifestyles, it is certain that the new product will entice customers in the cities and urban towns across developed economies such as UK, and USA.

• Market Targeting Strategy

Dyson has experienced high success rates targeting customers in the urban centres in the Asia, USA and Europe. Because of this, it is viable for the brand to reach out and communicate to the dual income, and tech-savvy customers in these countries (Julius 2020). 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.

• Market Positioning

For the past 28 years, Dyson has positioned itself as a market leader in manufacturing and retailing the dual-cyclone vacuum cleaner. Because of its high-quality products, the brand has established a reputation of innovation (Cao 2016). These sets of values have enhanced the brands equity and image. According to Hooley, Piercy and Nicoulaud (2012), such attributes should be exploited when introducing a new product such as the intelligent vacuum cleaner.

• Recommend Marketing Objectives and Goals

It is important that an organization sets SMART (Specific. Measurable, Achievable, Realistic and Timely) goals. Dyson’s first objective should focus on 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. The second objective is to 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.

• Marketing Strategies
  • Product

Dyson has the reputation of designing, manufacturing and retailing innovative products. The firm’s success is attributed to its ability to analyse consumer needs and invent solutions. Statistics show that in the coming five years, most of the household electronics will be automated and interconnected (Fang 2019). This statement justifies the viability of the intelligent and autonomous vacuum cleaner. The product design will be simple, interconnectible and energy efficient (Fang 2019). These features will endear the product to the tech-savvy pro-environment customers in the age group of 23 to 45 years.

• Place

This element of the marketing mix refers to the distribution channel used by an organization or a brand. 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 reach of the demo stores to reach more customers. This approach will foster stronger relationships with customers therefore nurturing loyalty and commitment to the brand.

• Promotion

Dyson understands the need to promote its products. According to Dibb et al. (2012) promotion reminds existing customers of the product while informing new customers the value proposition of the brand. Dyson uses the integrated marketing communication (IMC) strategy where it combines social media, public relations and advertising. The intelligent vacuum cleaner will be promoted using IMC. However, because of the novelty of the product in the market, the promotions will be complemented by multimedia advertisements that target potential customers. 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. These sites connect many youths, thus creating a viral challenge will provoke a mass following and electronic word of mouth.

• Pricing Strategy

Pricing is an important element of the marketing mix. According to Išoraitė (2016), this element not only communicates the value of the product, but also determines the willingness by consumers to purchase a product. 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. Using the right marketing channels will ensure the product reaches the valuable customers willing to pay the price for the product.

• 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. The SWOT analysis evaluates the micro environment whereby, in spite of the intensive rivalry, Dyson capitalize on its strengths such as committed leadership and reputation to exploit global markets especially emerging economies. The firm pursues the product development strategy. Its performance falls short compared to iRobot. 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 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.