Dyson Marketing Audit

EXECUTIVE SUMMARY

Dyson is a technology company that designs and manufactures heaters, bladeless fans, hand dryers and vacuum cleaners. It was founded in 1978 by James Dyson and has grown to be the leader in its industry with thousands of customers in over 100 countries worldwide. The first product offers by Dyson is the bagless dual-cyclone vacuum. Vacuum cleaners are among few household products which still have potential in the era of recession and its aftereffects. Dyson is a market leader in vacuum cleaners. It has gained thrust mainly through innovation. It is held by the company in which cost saving is utilized in research.

Dyson brand identity have a huge impact in Dyson success. Dyson brand identity is clear articulation of Dyson persona as intelligent company and customer feel they can trust Dyson to deliver next-level technology. Dyson tone and voice are based on clever, meticulous, innovative and forward-thinking.

MACRO ANALYSIS

PESTEL

PESTEL analysis is conducted to understand the impact of external factors on the operation of Dyson for any international market.

• Political
  Political factors in UK and other countries can affect the business of Dyson. Being a UK based company, the political law in UK has been very easy for Dyson. It has been seen that throughout the UK and the US the political factors remains merely in the favour of the home companies. Change in political law have impact on Dyson such as the vested regulations like the EU experts have imposed restrictions on the desired power used by the machines such as the vacuum cleaners (Al-Hakim and Memmola, 2009). This resulted in the declination of the sales and this type of the bureaucratic laws merely forces the different companies to keep pace with the innovations by the expansion of the competition. Dyson being a company founded with innovation focus helps is this.
• Economy
  Economic factor like interest rate, exchange rate and growth rate can affect the business of Dyson in different market. With Dyson’s product positioning as premium luxury product, the growth of economy a country is high, that market is expected to give increase of sales to Dyson. On the other hand, with high inflation rate, it can reduce the buying power of consumers and may reduce the sales for Dyson.
• Social
  The social factors create a great impact on the execution of the business process of any of the company. Nowadays, customers are very much aware of what they need so it is very important for Dyson to fulfil the demands in terms of product quality and customer service. The increase of consumer who either aware of Dyson technology or living with lifestyle provided by Dyson will have huge impact on Dyson’s sales in a country.
• Technology
  Dyson is all about technology and innovation. It is very important for Dyson keeps on adapting to latest technological trends and be a head of their competitors to ensure Dyson’s sales and growth. Most of the Dyson product are not very easy to copy due to their constant technological advancement. However, more competitors starts to sells cheaper machines that have copied its bag-less technology.
• Environmental
  Environmental awareness has increased and there is an increasing need for energy efficient and effective vacuum cleaners. By providing more information regarding Dyson products and investing in project involving ecological investments, they will be able to increase their sales as consumer are more aware and they expect the companies t also play their roles in saving the environment.
• Legal
  In this particular sector, the desired fight for the infringement for securing the design as well as the technology of the different vacuum cleaners was common for the companies.  The facts reside that in the year 2010, the company significantly lost the legal case against one of the well-known company VAX Limited.  Therefore, there is a crucial need for each of the companies of any field to execute their respective business processes as per the rules and the regulations of the government (Ehrhardt and Brigham, 2011).

SWOT

SWOT Analysis is a framework for analysing organization's strengths and weaknesses, and the opportunities and threats.

Strategic Formulation: Porter’s Generic Strategies

Porter's generic strategies describe how a company pursues competitive advantage across its chosen market scope.

To evaluate how Dyson’s strategies pursues competitive advantage across the global market in spite of their high prices, the porter’s generic strategies is relevantly used. Dyson is applying a differentiation strategy by providing unique and high quality products in the market. Heavy investment in continuous innovation through research and development makes this strategy work for Dyson to be stay competitive. Innovation continues to build competitive advantage for Dyson.

Dyson also have a apply cost saving strategy by moving production to cheaper alternative. In 2007, Dyson signed a partnership with a Malaysia company VSI  who undertake an extensive production plan to supply finished products to Dyson's destination markets and also to ensure an uninterrupted and optimal level of stocks at each market to meet Dyson's global sales forecast.  This bringing down the operating cost and allowed for the money saved to be re-invest back into research and development, once again maintaining the focus on innovation.

Program Formulation and Implementation: McKinsey’s Elements of Success

McKinsey 7s model is a tool that analyses firm’s organizational design by looking at 7 key internal elements: strategy, structure, systems, shared values, style, staff and skills, in order to identify if they are effectively aligned and allow organization to achieve its objectives.

• Skills
  Highly skilled and innovation oriented engineers.
• Staff
  Every staff member is focused towards bringing new ideas whether it is for innovative design or superior customer service.
• Style
  Dyson’s success is attributed to the corporate culture that flows directly from the founder’s personality that is problem solving through creativity and innovation, research orientation, no complacence when it comes to product features and quality and an unremitting spirit of evolution and revolution.
• Strategy
  Dyson strategy to   maintain and build competitive advantage over the competition is maintain the differentiation strategy by continuously producing innovative product through research and development. Dyson believe unique selling proposition (USP) and loyal customer following is all that is needed to be successful in the marketplace.
• Structure
  Dyson has a flat organization structure because Dyson believes in face to face communication.
• Systems
  Procedures and systems are clearly defined at Dyson. For example, every new model has to be checked through various tests like dropping on the floor to check breakage, run thousands of kilometres to check the quality and life span of machine.
• Shared values
  Dyson hiring of creative staff with a passion towards engineering and problem solving serves as the basis of a team that is all about customer orientation.

MICRO ANALYSIS

Competitive Force – Porters

Porter's five forces are the desired framework which will help in recognizing the competition level within a particular industry. Moreover, it helps in the development of the business processes of the organization.

• Buyer power
  The power remains in the hands of the buyer. The availability of the more options having low-end cost prices brings out discouragement for the customers.  The customers can bargain from the variety of the products available and there are other companies available who provide the similar products with similar features.   There is the wide variety of the retail point of the purchase.
• Supplier power
  Dyson produces premium products, which may need parts that are difficult to locate, therefore for Dyson suppliers have the power to determine the price of materials   In order to increase the selling of the products, the company in 2007 formed a partnership with Malaysia electronic manufacturer industry (VSI) to take on a major role in Dyson’s supply chain from raw material sourcing and production to distribution.
• Threat of the new entrants
  A new entry within the market segments critically increases the competition level for the existing companies.  On the other hand, there is less amount of threat for Dyson as there is difficulty in the research and development for  innovation. It becomes very hard for competing with the brand presence as well as the quality of the products. High capital is required to enter this market as most of the business spends tremendous amount on research and development for innovation.
• Threat from the substitutes
  There are uncertain economic conditions for the Dyson Company. The increment in the design and technologies in the field of vacuum have created the potential threat for the respective products of Dyson. There are substitutes available from the different companies and this creates a tough penetration within the new market segments where the brooms are used instead of the vacuums. Position as premium product makes Dyson at high risk of substitute cheaper product.
• Competitive rivalry
  There are some of the main competitors within this industry having the similar scale and strength which competes for the larger marginal growth areas.  The implementation of the advanced technologies as well as the innovation provides the desired competitive edge to Dyson as compared with that of the other companies.  Dyson’s high innovation capabilities makes the competitive rivalry low.

Innovations

At Dyson, all activities is conducted around continuous innovation. Innovation can yield a number of benefits such as higher revenues per customer, more customer touch-points, and closer and longer relationships, higher margins, reduced cost of goods sold, mitigated risks and  supply chain resilience and control. Huge investment in research and development, combined with high skilled workforce has added to the continued success of the company. The strengthening of its internal activities with innovation thinking is a beneficial for Dyson to convert strategic thinking in development process into very real competitive advantage for the company.  

Dyson has competitive advantage over competitors because of closed innovation. According to Oakey (2013), open innovation involves internal and external contribution. Whereby closed innovation involves internal workforce only. Dyson is very secretive with their innovation and this gives them an advantage over their competitors.

Business Models

A business model defines how the enterprise delivers value to customers, gets them to pay for that value, and converts those payments to profit. There are for basic types manufacturer, distributor, retailer and franchise. Dyson business model is manufacturer. As manufacturer, Dyson takes raw materials and creates a product. With continuous innovation, the product manufactured is high-tech yet very beautiful. This puts Dyson at a very competitive position in industry.

Prospects / Customers

The targeted prospects  for Dyson’s product is men and women between the ages of 25 and 45. Dyson are appealing to consumers who want a high performance vacuum, beautiful product and are interested in energy efficient products.

Profitability

Dyson Incorporated is a privately owned and operated company, therefore sales and profitability are not public records. It is estimated, based on market share (23% of a $4 billion vacuum industry), that Dyson vacuum sales are approximately $920 million each year. Based on market share rising each year, it is predicted that vacuum sales will also continue to rise. This makes the company financial standing is strong and growing.

MARKETING STRATEGY

Segmenting-targeting-positioning (STP)

The target market segment for Dyson’s product is men and women between the ages of 25 to 45. Dyson are appealing to consumers who want a high performance, beautiful and are interested in energy efficient products. Their products are appealing to the new generation that wants the new technology, when it comes to their purchases. The consumers that are more likely to buy Dyson products are consumer that do not mind a higher price for a better product and understand spending more money now, save money in the future. Dyson are always improving and staying ahead of their competitors.

Dyson targeting affluent consumers. Dyson commands a price premium because it differentiates itself based on innovative technology. It primarily markets to affluent customers who can afford the products. Specifically, Dyson targets affluent customers who are interested in cutting-edge technology. In addition, the environmental consciousness embodied by the company and its products attracts affluent customers with a green lifestyle.

Dyson positioning their product as a premium, high quality and luxury product. Consumers view Dyson products as being high-quality luxury items that are modern, creative, sleek, and sophisticated. Dyson products are established as being so reliable and efficient that customers are willing to pay a premium price.

Branding

Dyson is using umbrella branding for their products. Dyson is known for its innovative product design. Dyson’s core strategy is to invent and improve. The brand has successfully building their value  globally. The essence of Dyson brand shows it is intelligent and can be to deliver next-level technology.

Dyson brand core values is innovation. The company also look at other values like design aesthetics, functionality, creativity, reliability, and luxury. As an example with Dyson vacuum cleaner, the advantages of changing (no bag, better performance), outweighed the higher cost and learning how it worked. The product also have is aesthetically beautiful. But in that case the benefits were extremely clear, and, most importantly, marketed very well. Dyson have choose to use  a “straight-talking” approach to advertising. It is simple yet effective.

Diffusion Strategy

Dyson diffusion strategy is targeting the innovators and early adopters. Leveraging on the online and social media reach, Dyson creating awareness and interest months before the product actually release. As an example, for bladeless fan, Dyson revealed the details in 2009. The product hit the market in 2010. In between Dyson keep engaging with public who curious about the product. As the product of Dyson are different from the other product in the market, releasing the details early and engaging the public create a good word of mouth marketing by the time product hit the market.

MARKETING TACTICS

Crossing the chasm and 7Ps

Crossing the chasm is important to business for growth and sustainability. The first chasm is between the innovators and the early adopters as shown in Figure 2. It is a gap that occurs when a hot technology product cannot be readily translated into a major new benefit.

Dyson is an innovation based company. Dyson product are all innovative and with high-tech features. The product also design with beautiful aesthetic that look simple and appealing. Dyson communication which providing essential information in straight-forward way is an important factor is crossing the chasm. This become the brand identity and persona for Dyson. Short and snappy taglines used throughout marketing messages and advertising, like “Designed to move”, or “The vacuum that doesn’t lose suction”, might not be the most creative phrases in the advertising world, but they’re still effective at sharing the brand purpose with the masses. (Hodgson, 2019). The clear communication with a beautiful aesthetic of the product, is a powerful combination for word of mouth from the market.

• Product
  Dyson offers a wide range of innovative appliances such as vacuum cleaners that are all about innovation, hand dryers that are quick, energy efficient and certified hygienic, and the technologically safe and easy to clean fan without blades and grills that does not produce unpleasant sounds. Dyson also looks into aesthetics, functionality, creativity, reliability, and luxury when designing their product.
• Price
  Dyson product price range is at the premium range. This is align with the product positioning as innovative, premium and luxury product.
• Placement
  Dyson machines can be shopped online from online merchants sites like Amazon and ebay, its own website, social media, specialty electrical retailers and supermarkets.
• Promotion
  Dyson have multiple promotion. Besides traditional promotional techniques like Television advertisement, Dyson also heavily promoting online on websites and social media. Trade and sales promotion also heavily apply by Dyson. Dyson believe that the best way to market is to provides opportunity for customer to experience Dyson technology.
• People
  Dyson, hiring of creative staff with a passion towards engineering and problem solving serves as the basis of a team that is all about customer orientation. Dyson believe the engineer is in everyone. Company encourage every staff to think like a engineer. Taking things apart and put them back together again but better in all field be it marketing, customer service or financial. Every staff need to challenge assumption and tackle the inefficiencies others ignore.
• Performance
  The financial performance for Dyson is on increase pattern year-on-year. In 2018, Dyson reported a total yearly revenue of 4.4 billion pounds, increasing from 3.5 billion one year prior. With a growing market of middle-class consumers, the Asia-Pacific region was integral to this increase in revenue, with the region accounting from more than half of Dyson’s overall sales. The company’s strategy moving the headquarter to Singapore reflects the importance of this market.
• Process
  All activities are perfectly aligned to live up to the Dyson formula. From Drawing of machine design, to rigorous testing and dropping at premises, to testing by employees at home, competitions of employees to give them a chance to invent, all have the same spirit of problem solving through continuous innovation and perfection. Dyson have a consistent branding across communications. This branding flavour is also seen in their product design and marketing. The communication always carrying these flavour clever, meticulous, innovative and forward-thinking.

Disruptive Tactic

Disruptive tactic seeks to break through the noise of modern marketing and truly hit home with customers. Dyson apply a disruptive tactic with innovative incremental breakthrough. The Dyson product, are products that have readily available in the market, but Dyson will innovate and release the product with innovative solution such as vacuum with no bag and good suction power. It is the world’s first ever bag-less vacuum cleaner. The design process at Dyson appears to be based on a structured approach to the rapid evaluation of evolving iterations or prototypes. Dyson products don’t do something that no one else does, they just do it better. Their innovation is about continuous incremental improvement until they have a product that is so improved that it has a disruptive effect on the market.

RISK MANAGEMENT

Dyson is business that heavily invest in innovation through research and development. The main risk to manage is the product diffusion into the market failed. This long process requires good risk management to ensure the investment is worth it. At Dyson the process of discovery and experimentation, hundreds of small, incremental innovations are made to the product until it is a high-functioning and thoroughly tested item. Over time, this process has allowed the Dyson brand to develop a reputation for producing a well-considered and quality products, whilst becoming a disruptor.

Dyson’s early success can be attributed to perseverance, but also to a commitment to continuous innovation and development. These attributes are now a core part of the Dyson business model and culture in the form of structured and incremental innovation, which has allowed Dyson to continue innovating, disrupting markets, and outpacing the competition. This structured and incremental innovation makes the risk more manageable. By thinking laterally and re-structuring conventional notions about how products work, Dyson has been able to reimagine mundane domestic appliances in order to spectacularly enhance their utility. Innovation doesn’t get much more revolutionary than that.  

CONCLUSION

Dyson is a company that designs as well as manufactures vacuum cleaners, bladeless fans hand dryers and the heaters. The company has given priority to the advancement of the designing and the technical advancements of the machinery. The company executes its business process globally throughout the world.  There were several competitors in this particular industry related to the designing and manufacturing of the vacuum cleaners.  This study reflects the strategic analysis of Dyson’s business processes.

Recommendations

The company needs to work on the quality and the pricing satieties of its products. Moreover, the priority should be given to the use of the innovative tools and techniques in order to keep pace with the other competitors. The engineers need to increase their skills in order to bring out innovation in the products.