Every so often comes an idea that will change the way in which people to do normal tasks. While one may feel their idea is not ground breaking, it can become one of the best inventions. People go through their daily chores and wish that had an easier, or better product that will help them get things done the way they feel. James Dyson felt the same way, as he wanted to make things work better. James Dyson is the make of Dyson Vacuum Cleaners. James Dyson and his research team helped to develop products that have grossed him over $10 billion in sales worldwide. To understand how this came about, this paper will provide an analysis over the Dyson Company taking a strategic and analytical view on the corporate strategy of the owner and the company. Looking to the corporate strategy will be to focus on the decisions of the company that includes their product scope, vertical scope, and their geographical scope. This paper will use company and financial resources in order to analyze Dyson’s position within the market including in relation to their competitors and environment, evaluate strategic options, and provide recommendations for a corporate strategy to implement for future growth.
James Dyson wanted to make products that would be better, solve people’s problems, learn from mistakes, and excel. In 1978, James Dyson realized while vacuuming in his homes that the bag in his cleaner was consistently losing suction power. The cleaner was clogged with dust that clogged the pores that blocked airflow. Knowing that he was not alone in this problem, he worked to solve this. After 5, years working to find a solution and over 5000 prototypes later he developed the first cyclonic bagless vacuum cleaner in the world. Going door to door to countless manufacturers to showcase his invention, each one turned him down. The $500 million vacuum market was content on selling vacuums that required bags. Dyson soon still feeling that he was onto something with his invention, he created his own manufacturing company. Striking an alliance with a Japanese Company to fund his research and development, James Dyson was able to create more innovative products and ideas. He infiltrated the mature vacuum market, and steadily began to gain market share that was dominated by Hoover, Oreck, and others. (Cuneo, 2004)
The design for a vacuum that used cyclonic separation that wouldn’t lose suction as it cleaned was created by using the ideas from his earlier product, the Ballbarrow that used air filters. With the help of the Japanese Company, Apex, he launched his product in Japan through catalog sales at a price of $ 3330.60 (US Dollars). Becoming a success, he won the International Design Fair prize in 1991, and obtained his first patent in the U.S for the product in 1986. In 1991 incorporated his company, Dyson LTD, based in Malmesbury, UK, and transferred his production to Malaysia while keeping R&D operations in Malmesbury. Since his incorporation, the products have become major successes outselling his closest competition, mostly companies that rejected his product, to become a household name. Despite selling fewer vacuums than his competitors, he has managed to outgain them earning over 100 million in profits compared to his largest competitor Hoover. Dyson is now a global competitor that distributes Dyson products in over 50 countries, which includes the biggest markets, the US, Japan, China, and his home UK. He is the market leader in the US market, even though his competition has sold more units, he has still managed to have the fastest selling vacuum cleaners ever in the UK. Although he has found considerable success becoming one of the richest self-made billionaires in the world, it all has not been roses. Dyson has to overcome several obstacles and setbacks, while James Dyson is continuing to develop innovative products to introduce to the market.
Company Strategy
Innovation, research, and development are the core of Dyson. Within his company, there are more scientists and engineers than any other field. He employs experts in mechanical, electrical, chemical, fluid, EMC, acoustic, software engineering, and thermal fields that help to develop new products and improve on existing ones. Dyson Ltd is a private limited company based in the UK, and has evolved as the market leader in the US, UK, Japan, Australia, and throughout Europe. While his mission and vision statement is not clear his purpose is, “To make things that work properly." (Osterman, 2010) His products have evolved from bag less vacuum cleaners to home appliances, bladeless fans, and hand dryers.
Dyson’s corporate culture starts with Dyson’s unique personality that encompasses a passion for problem solving through creative and innovative means. This attitude has transferred throughout the company as his main focus is on continual research, and spirit of revolution and evolution in each product. Although the company is run by CEO Martin McCourt since 2010, Dyson’s personality and purpose is still prevalent to the product promotion. Dyson’s UK headquarters revolves around close to 1200 employees with over 400 scientists and engineers, totaling 2500 people worldwide. Dyson also utilizes 20 specialist laboratories located near the headquarters, and their large testing facility that has over 120 testing stations in Malaysia. The people that work for the company must incorporate an attitude of fresh and inventive ideas. Dyson has said, “We want people who are creative and courageous—unconditioned fresh thinkers. We like to give people the chance to make a difference.”(Shepard, Fraser, 2011)
Products
In a continual effort to remain the market leader and have a competitive advantage, Dyson is consistently developing new products. The Dyson Vacuum Cleaner has evolved from the G-Force was a major success for the company he created others that he soon introduced into the market. The core products of the company are the vacuum cleaners. He developed vacuum cleaners that use a root cyclone and ball technology that can maneuver on all floor types at a high performance. He created the vacuums by combing a mechanism of centripetal separators by creating a cyclone. Improving on the cylinder machine, he created other models, with the Root Cyclone being introduced in 2001. The latest models include an upright cleaner, Dyson Handheld, slimmer versions of the vacuum cleaners, and smaller and lightweight upright ball vacuum cleaner, DC50.
Now Dyson has branched out into other products that instill their technology. These products include, the Dyson Airblade Hand Dryer invented in 2006. It was used in several public bathrooms, and considered the most efficient and most hygienic method of drying peoples’ hands in seconds. It was created using the world’s smallest fully integrated 1400W motors. (Dyson, n.d) The Dyson Digital Motor that operates on switched reluctance principle is used in several products and equipment, commonly in their handheld vacuum cleaners. The Bladeless fan, The Dyson Air Multiplier that provides a smoother airflow with no blades, and safer than conventional fans. The product received the Good Design Award in 2010 for their improvements to air dynamics. Dyson then developed the Hot Fan Heater using their Air Multiplier technology like the Airblade Dryer. Dyson developed the contrarotating washing machine, although discontinued now was a two counter-rotation drum washing machine, but were unprofitable. Each product uses innovative technology that makes it more efficient than most vacuum cleaners.
Competitive Environment
In order to keep ahead of the competition, Dyson continues to develop new innovative products. Dyson continually improves their vacuums, searching for more ways to create better suction, and a new cyclone system. They had a robot cleaner that can maneuver around with on its own, cleaning better than humans. In order to compete on a more worldwide focus they have penetrated markers in Korea, India, China, and other countries. The recent development and sales growth of the products have given the company a significant profitable and incremental market shares over their competition such as Hoover, Shark, Bissell, Kirby, Oreck, Eureka, and Maytag. There is even competition from Chinese manufacturers that have gathered strong relationships with large retailers in India. International imports are also increasing, costing lesser to manufacturer and offered at a cheaper price than Dyson products.
The problems that arise when there is competition is that competition is cheaper. Dyson offers high-end quality and high costs products that create a disadvantage when many people are cutting back on their consumer spending. Dyson and other competition create a huge price differences, where Dyson is mostly affected by recession. Dyson is also missing the opportunity to connect with single household, and the younger generation through social media. Where other competitors are focusing on social media, Dyson is catering to housewives through infomercials and magazines. Competitors have tried to emulate the designs of the products, and most have been unsuccessful in their attempts including Dyson having to sue Hoover for copyright infringement. (Kelion, 2013) The company is now suing Samsung over a vacuum that the company feels is a replica of their invention. (Kelion, 2013) The market in which they operate is very competitive and have reached over $10 billion in revenue. The competition of Dyson is continuing to take a large percentage of their market share in developing countries where Dyson is only dominant in UK, and losing share in the US market. Hoover is in the top position in the market of units sold, with Dyson behind. Several other major competitors have formed joint ventures with large manufacturers to break into the Asian market where Japan stands as the biggest manufactures and demand for vacuums. The key competitors and their products are listed below: (Shepard, Fraser, 2011)
Marketing Strategies
Dyson prides itself on being an innovative company and the market leader in major markets. They have achieved the success of filing a consumer gap with the invention of the bag fewer vacuums by targeting high-end customers. Word of mouth and recommendations from customers have helped to spur sales better than traditional advertising. With growing success, they have adopted a more informational approach in their ads that translates to their website that provides a sleek design, imagery, and content that highlights the technical to build up the innovative personality of their brand. Throughout the company history, they have signed multi-million dollar deals with advertising agencies to increase their advertising budget to market their products within the European market.
Strategic Strategy
Dyson has propelled its way to a competitive force by creating products that are allergen friendly, safe, quieter, and better than most of the competition. They compete in a competitive vacuum market where most of the competition develops bagless and bag vacuums. Dyson has to potential to penetrate several markets to continue their sales volume and growth rate. Dyson has successfully penetrated the UK, the US, Australia, and Japan markets. While they have a small market share throughout Europe countries such as, Spain, Sweden, Italy, Germany, Belgium, Netherlands, Denmark, Canada, Finland, Russia, Norway, and other countries. They have potential strategic growth in Eastern Europe countries and Arabian Gulf countries, where they have the opportunity to acquire market share through joint ventures and selective strategies in Spain, Germany, Belgium, Norway, Finland, and Denmark.
Imitation is also a major threat to the company, and many competitive companies are providing imitations of the products that take away revenue from the company. Dyson can earn back this revenue by providing products that use the technology but also use cheaper material so that products are available to more consumers.( Lütolf-Carroll, 2009) Dyson can also introduce sub-brands that offer trendier products to appeal to younger, and flashier generation. (Smeds, Boar, 2004) Providing superior service that is available not only on the website, but also through social media platforms that interact with customers to guarantee customer satisfaction. In the United States while Dyson leads as one of the several manufacturers that consumers are buying, they are following behind, as many consumers are cutting spending on products that are not a necessity. As mentioned earlier, the strategic options that are available for Dyson is to connect single households and younger parents that look to social media to influence their consumer spending. Dyson needs to offer new advertising campaigns that showcase the sleek design, and affordability of the products in order to attract more buyers. In the US market however, as more consumers are cost conscious, Dyson needs to develop vacuums that are less costly to appeal to a wider market. While they have gained success marketing to the high end market, they can increase their sales volume and profit by offering a cheaper model that will be sold at stores such as Target, Wal-Mart, and other discount stores. However, countries that still spend money on the higher end products such as Scandinavia and the Netherlands presents Dyson with strategic options to increase market share. They can also develop leverage within homogeneous markets such as Denmark, Finland, Belgium, and Norway to become a market leader. The options to go into China’s market is not wise until Dyson is able to provide a marketing strategy that will compete with the more mature market that offers cheaper products.
Strategy Implementation
In order to appeal to countries in Europe they must develop a marketing strategy by targeting housewives with income in the middle and high segments. Women in countries such as New Zealand, Singapore, and Canada in the higher income bracket. Target to women in Eastern Europe in the higher income bracket. Target housewives in the Arabian Gulf national countries with income in the middle and higher brackets. Products in the higher income brackets are more appealing and considered sophisticated. As consumer spending increases in these countries, Dyson must target them in order gain buying power. According to research on countries in the Arab Gulf nationals they consider western countries of higher quality. Concentrating on homogenous markets they can target consumers that appeal to high purchasing power, and those that are focused on quality. In order to implement these strategic goals there are several options that Dyson can take that includes setting up profiles on social media platforms, such as Facebook and Twitter that will appeal to the younger generation and also promote the sub-brands that Dyson needs to implement to sell their lower price products. This implementation won’t be quick, but instead they need to grow their customer base online by offering initiatives that attract the younger generations such as contests or promotions. Hire a PR firm that works solely with online media in order to gain traction on social media platforms.(Brown, Grundy, 2012) The PR firm will be able to adequately promote the company to a trendier more spending savvy generation that focuses on getting the best products at the best price. In order to compete in China’s market, Dyson has to form joint-venture agreements with China manufacturers in order to break into the market with cheaper and more established manufacturers. Dyson should also concentrate on developing innovative products that address issues such as power saving, water consumption, and noise reduction in all vacuums. Dyson should continue on focusing on making vacuums better by being better cleaners. Focusing on the needs of the customers rather than a sleeker design. Dyson should also take a global approach in marketing, by establishing their company brand, rather than cater to localized campaigns. (Wilson, Gilligan 2005) By iterating that they have smarter technology, and provide a world-class cleanness they should continue to sell at an increased volume.
Overall success of Dyson is remarkable. They have earned billions in revenue and will continue to grow as they owner James Dyson continues to make innovation and research their main focus. Their environment is competitive, and the markets they are penetrating will continue to be competitive as companies try to vie for market share. Dyson must adhere the changing climate of the economy, and the behaviors of the consumer. The strategic options for the company to gain market share in European and Arab Gulf nations is beneficial to their global success by continuing to showcase the benefits and quality in their strategy to increase customers, sales, and dominance in the market. If Dyson is to apply these strategic options it opens up to more customers and more revenue in the future.
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