Dyson Company’s Marketing Strategy Research Paper

INTB 4050 - International Management

Executive Summary

This document is a marketing plan for Dyson Company to sell home appliances in New York

State. The proposal is part of a larger marketing plan to expand the company’s North

American business, given that its operations are mostly domiciled in the United Kingdom

(UK) and Europe. Dyson’s value proposition is based on its innovative and technological

capabilities.

The convenience and high-quality attributes associated with the company’s products are also

supplementary value streams that are expected to improve its overall market success. An

approach will be developed to reach the target customer group, which is comprised of

middle-income earners in New York.

In this plan, Dyson will position itself as a premium brand home appliance business with

products that have extensive functional features unlike any other in the business.

Supplementary elements of the marketing plan that will be highlighted in this report include a

discussion on projected sales revenue, analysis of the competitive environment, and

implementation control mechanisms.

Situation Analysis

Founded in 1993, Dyson Company has grown from a small business specializing in the

production and distribution of vacuums to a global enterprise with a growing market presence

in other product areas, including hairdryers, desk fans, air purifiers, and LED lights. The

company’s products have mostly been developed through internal research and development

competencies with little input from outside parties (Tani, 2017).

This in-house strategy has also permeated its marketing strategy, where little attention has

been paid to conventional promotion strategies, like magazines and television, and the focus

directed towards word-of-mouth communication. The in-house product promotion strategy

has allowed the company to nurture an extraordinary work ethic among its employees, which

has been premised on dedication, commitment, and a culture of excellence.

Dyson’s business philosophy traces its roots to the work ethic demonstrated by the company’s

founder, James Dyson, who focused more on creating superior brands as opposed to

advertising. Therefore, for many years, the company has relied on developing disruptive

products by setting a new level of product design that competitors have to match.

Therefore, Dyson’s employees consider themselves market-leaders and pioneers in their

different fields of engagement (Tani, 2017). Nonetheless, recent market developments have

forced the company to seek newer ways of cementing its dominant position in the home

appliance business by having a strong brand presence internationally. This vision necessitates

the current marketing plan aimed at expanding the fledgling business to the US market.

Value Proposition

Dyson promises to offer its customers high-quality products and excellent after-sales services

via its brick-and-mortar and online business models. Particularly, the firm’s cordless vacuum

cleaner is expected to provide its clients with a convenient way of cleaning their houses,

devoid of the limitations of movement associated with the conventional vacuum cleaner.

The company intends to use the most advanced battery technology to achieve this goal,

thereby giving its customers long hours of service without additional time lost or offset due to

the lack of a cordless power source. Overall, the list below outlines key value propositions for

the company’s home appliance business.

1. A sleek product design that is aesthetically pleasing due to the cordless feature of the

vacuum cleaners, which offers better utility advantages to customers

2. The convenience of having a cordless vacuum that can be safely used in remote

locations without any utility value lost due to the lack of a corded power source.

Additionally, the cordless and bagless vacuum cleaners will allow users to access

hard-to-reach places. Its lightweight feature also adds to its mobility and the lack of

an outlet sets it apart from the competition

3. High-quality products because the vacuums are long-lasting and durable compared to

substitute brands. The technology used to develop these features include a powerful

vacuum suction and adequate battery time that rivals, if not better than, the

conventional power source

SWOT Analysis

The following SWOT analysis aims to identify key strengths, weaknesses, opportunities, and

threats associated with Dyson’s operations and that could be impactful to the current

marketing plan.

Table 1. SWOT Analysis

Strengths

• Dyson has a strong brand image because

it has established itself as one of the

leading players in the home appliance

business in the UK and Europe

• The company’s products are of superior

quality, long-lasting and durable

• Availability of adequate resources, in

terms of human capital and research and

development processes

Weaknesses

• A premium pricing strategy which limits the ability

of the company to expand its market presence due to

income limitations among households

• Having a cordless vacuum cleaner is not unique to

Dyson company as competitors also have access to

the technology and are currently working on

techniques to improve the battery lives of their

products as well

• Dyson’s key market focus has been in the home

appliance business. This means that it has little

experience selling commercially

Opportunities

• Expand its global market presence,

especially in the North American market

• Address pressing market needs through

innovation and technological

Threats

• There is an increasing number of competitors in the

market, which limits Dyson’s ability to expand its

market share

• Possibility of product malfunctions due to third-

development

• Promote and enhance the company’s

brand identity through alternative digital

marketing techniques

• Benefit from improved economies of

scale due to market expansion

party actions, such as a supplier providing poor

quality batteries

• Poor emphasis on brand management, thereby

limiting people’s awareness of the brand’s existence

Market Analysis

Competition

Innovation is the key element driving Dyson’s competitive advantage in the home appliance

industry in the United Kingdom (UK) and around the world. However, competition in the

sector still exists and it is described in various forms below.

• The first type of competition that Dyson Company faces is from other companies that

also produce innovative home-appliance products. For example, Techtronic Floor

Care Technology Limited, Irobot Corp, and Electrolux AB are three major

competitors that have adopted the company’s business model of innovation in

developing their products, thereby posing significant competition in this regard (Craft

Company, 2021)

• Internationally established brands, such as Samsung, Bosch, and Whirlpool define the

second group of competitors for Dyson Company. Some of these corporations have

been in the home appliance business for a longer time than Dyson and not only

engage in the production but also the distribution of electronic goods (Craft Company,

2021). Consequently, they enjoy immense advantages in leveraging their international

market expertise to outwit their rivals and to the detriment of upcoming businesses.

Figure 1 below highlights the gap in market share that Samsung, one of these

established brands, has over conventional home appliance companies, such as Bosch.

Figure 1. Market share analysis of Samsung Electronics and Bosch

• Dyson company also faces competition from venture capitalist firms which engage

produce alternative home appliance products through contract electronic

manufacturing

Products and Services

Innovation: Dyson is known as one of the most innovative companies in the home appliance

business through its disruptive products, including vacuum cleaners, hand dryers, desk fans,

air purifiers, and LED lights. Therefore, the uniqueness of these products is attributed to their

innovative feature because they reflect this key area of competency. For example, the bagless

vacuum cleaner is one of the most distinguishable innovative products that has come from the

company. This means that Dyson’s focus on innovation is the key driving force that has made

it popular among its target market.

Market Research: In line with its innovation strategy, Dyson Company also engages in

extensive market research on key fundamental areas of operation, such as research and

development. In other words, it collaborates with other players in this field, including

universities, industry leaders, and companies in linked sectors. For example, in 2014, Dyson

collaborated with the Imperial College of London to develop better models of robotic vacuum

cleaners – a process that led to the enhancement of its product design and functionality

features (Dyson College of Design, 2021).

Keys to Success

Focus on Innovation: As highlighted in this document, Dyson Company has differentiated

itself from the competition by developing innovative products in the home appliance market.

This attribute has largely been responsible for the firm’s current market success.

Premium Branding: By presenting itself as a premium brand to its core customers, Dyson

has been able to sustain a premium pricing plan, which is responsible for its profitability over

the years.

Network of Partnerships: Dyson Company enjoys a vast network of partnerships with

companies and institutions within and outside the home appliance market. These ventures

have improved their research and development capabilities and aided in market expansion.

Critical Issues

The most critical issue affecting the operations of Dyson Company is strict regulations that

hinder the company’s performance by enabling competitors to have an unfair advantage

through brand positioning. For example, prevailing European Union (EU) regulations that are

responsible for regulating the energy efficiency of vacuum cleaners have caused legal issues

between Dyson and some of its rivals.

For example, in 2018, the firm sued Bosch and Siemens for misleading its customers about

the energy efficiency and performance ratings of their machines due to faulty EU regulations

(General Court of the European Union, 2018). Dyson believes that regulatory loopholes have

made it possible for rivals to brand their machines as better performing than their rivals do,

while the opposite may be true. Therefore, the lack of a streamlined regulatory framework to

govern operations in the sector is one of the major critical issues affecting Dyson Company.

Historical Results

Within a short time after establishment, the Dyson Company has grown from a small business

enterprise to one of the largest corporations in the United Kingdom. Today, it controls more

than 50% of the UK vacuum market (Craft Company, 2021). Moreover, it is estimated that

the Dyson Company outsells its rivals about five times more than its closest rival does (Craft

Company, 2021). These statistics suggest that the firm has had a positive financial

performance throughout the years.

Macro environment

The macro-environment of the Dyson Company affects different aspects of its operational

performance, including profitability, product design, and market reception. Three issues

characterize the microenvironment and affect these aspects of operational performance. First,

technological development has influenced various aspects of operational performance,

including product designs, pricing, and distribution services.

Secondly, uncertainties in the global market due to the COVID-19 pandemic, which has

caused disruptions in global supply chain management, have also affected the company’s

bottom-line performance (Safa, Sharma, & Zelbst, 2021; Sinha, Bagodi, & Dey, 2020).

Thirdly, geopolitical issues and economic concerns surrounding “Brexit” and the ensuing

policy concerns on engagement with EU-member states have also had an impact on the

company’s overall performance (McEwen & Murphy, 2021).

Marketing Strategy

A company’s marketing strategy is ideally supposed to enhance its key competencies and

leverage them for better market performance. Given that innovation is Dyson’s key

competency, it should be leveraged in new markets to improve the probability of market

success. Relative to this goal, Dyson will focus its marketing strategy on one key product

segment – bagless vacuums. The target market is vast because it is comprised of homeowners

around the state. According to the United States Census Bureau (2021), there are about 8.4

million such units in New York.

Mission

The mission statement for the Dyson Company is rooted in its innovation-led growth model.

According to Dyson-Indeed (2020), the company’s mission statement is centered on

providing innovative solutions in areas other companies have ignored. The company’s

engineering and testing operations that are domiciled in different parts of the world allow the

enterprise to fulfill this mission through the development of radically innovative solutions in

the home appliance industry (Dyson-Indeed, 2020).

Marketing Objectives

Become a Market Leader: Subject to Dyson’s key competencies of innovation and

technological development, the firm strives to become a market leader in the vacuum

cleaning and home appliance business.

Adjust Existing Marketing Strategies. Part of Dyson’s core marketing objectives is to

modify existing marketing strategies to better align with internal and external environmental

dynamics for better performance

Increase Market Size: Dyson’s products are commonly known to be popular within the

high-end market of vacuum cleaning and home appliance business. However, the current

marketing plan aims to expand this market outreach to include middle-income households in

New York as well.

Financial Objectives

• Increase the sales revenue to £6 billion by 2025

• Sustain the company’s revenue growth by about 25% for the next five years.

• Increase the gross profit margin to 60% by 2025

Target Markets

Subject to Dyson’s key competencies identified in this report, the target market needs to

appreciate innovation as a key attribute of its home appliance products. Consequently, the

proposed marketing plan is intended to target middle-income households in New York.

Positioning

A company’s positioning strategy is focused on identifying a unique gap in the market that

can be exploited to meet unique customer needs. Stemming from this fact, Dyson will attempt

to target middle-income households who have a knack for innovative home appliance

products, such as bagless and cordless vacuum cleaners. This vision stems from the

company’s historical performance, which is pegged on the success of introducing disruptive

products in the market

Strategy Pyramids

Dyson’s strategy will be focused on one key area of expertise – the development of

innovative products. There is plenty of competition from other home appliance brands, but

the company strives to maintain its position as a market leader in the development of

disruptive products. Some of the techniques that will be employed to realize this goal include

enhancing key strategic partnerships in research and development, integrating customer

feedback in product design and development, and enhancing expertise-based marketing

strategies.

Marketing Mix

Dyson’s marketing mix plan will be a combination of word-of-mouth communication and

digital marketing techniques. The latter approach is premised on the need to identify

customers who have a liking for innovative products. A more comprehensive overview of the

marketing mix strategy is outlined below.

Products Offered

Dyson’s products will be unlike others in the market because they will contain innovative

designs and features. For example, the home vacuum appliances are cordless and bagless,

unlike others provided by competitors. Similarly, its appliances will be reliant on battery

power as opposed to coded electricity power sources, in line with the vision of the company’s

founder to make Dyson’s products more functional and adaptable to the consumer’s home

environment (Dyson-Indeed, 2020). Therefore, the overall product strategy will be innovative

and ingenious to allow customers to spot the difference between Dyson’s products and those

of the competition.

Price

Dyson’s pricing strategy will still be based on the premium model due to the costs and

resources used when developing the company’s products. This pricing strategy is justifiable

because customers would be enjoying unique product features, unlike any other in the

business, from purchasing the company’s appliances.

Promotion

Word-of-Mouth: For a long time, Dyson Company has developed a self-advertisement

promotion plan whereby quality products are supposed to sell themselves. This type of

promotion strategy has been modeled on the word-of-mouth communication framework,

whereby customers who have had a pleasant experience from using the company’s products

tell their friends about it and they, in turn, make a purchase. However, this marketing strategy

has failed to meet the company’s marketing objectives because it has failed to work in an

environment where consumers are unaware of the company’s existence in the first place.

Therefore, there is a need to have a robust promotion strategy aimed at reinvigorating this

critical mass in the market. Consequently, the digital promotion plan is proposed as a

supplementary strategy.

Digital Promotion: A digital promotion strategy will be adopted to create strong brand

awareness among consumers via various social media networking sites. The digital

promotions plan is selected as the best framework for implementing this aspect of the

strategic planning process because studies have affirmed a link between consumers who

prefer to use innovative products and high rates of social media engagement (Alaimo et al.,

2020; van Wijk et al., 2019). Therefore, by pursuing this strategy, Dyson aims to enhance its

target marketing strategy with its innovative appeal to create a critical mass of customers

which would further spur its promotion strategy.

Place

The concept of place strategy, as depicted in this study, refers to physical or virtual stores

where customers are going to access their products. In light of the adoption of recent

technological developments in product distribution and supply chain management, customers

would have two options for gaining access to their products: physical and virtual stores. This

plan means that customers would be able to buy products in physical stores, such as Walmart,

and have an alternative option of having the products sent to them through a product

distribution subsidiary. In this plan, the customers can simply buy products online and have

them shipped to their houses. Overall, Dyson Company will have a dual place strategy based

on online and offline platforms.

Marketing Research

There is a need to underscore two critical areas of market research in Dyson’s marketing plan.

They are outlined below.

Demographics: It will be integral to understand the demographic characteristics of the target

market when developing the marketing plan. Doing so will help to estimate the market size

potential and growth forecasts for the coming years. The demographic characteristics to be

gathered may include the average household incomes for households in New York, the

distribution of gender with these households, and the average age of the typical New York

resident. These demographic characteristics of the target market will help to define different

elements of the marketing plan for better market effectiveness.

Channel Marketing: There is a need to understand aspects of channel marketing that are

most impactful to the target market and would be relevant to the proposed marketing plan.

This information would be critical in understanding current trends in channel market

distribution as well as emerging opportunities for cost-saving that could be exploited to

Dyson’s advantage. Doing so will also help in understanding key players in the target market

and the extent of their involvement in the home appliance business to have a better prediction

or understanding of their influence on the proposed marketing strategy. Given that the present

marketing plan will include a virtual distribution strategy, such knowledge will be critical for

Dyson because it would enable its marketers to better understand the potential for scaling its

plan and integrating the digital strategy in other aspects of marketing operations.

Financials

According to figure 2 below, in 2018, Dyson reported £4.4 billion in yearly revenue, which

translates to bout €5.1 billion. As highlighted in this document, one of the main marketing

objectives for the current plan is to increase this annual revenue to £6 billion by the year

2025. According to the trend highlighted below, this is an achievable goal.

Figure 2. Annual Revenue of Dyson Ltd between 2010 and 2018

To attain the above-mentioned goals, there is an expectation that Dyson’s revenue should

grow by about 25% for the next five years and the gross profit margin increase to 60% by

2025. Supporting these projections is the assumption that there will be a steady decline in the

cost of sales as digital marketing techniques are adopted and technology-based solutions are

used to supplement operational activities. Additionally, it is expected that the innovative

capabilities integrated into the company’s products will pay off in reduced operational costs

as the competitors’ products remain relatively expensive.

Moreover, the adoption of digital marketing techniques in the company’s overall plan is

expected to cause a decline in marketing expenses as a percentage of the company’s sales

numbers. The 60% target set as the gross profit margin is ambitious but historical data has

shown that it is achievable given that this figure hit 50% in the year 2019 (Statista, 2021).

Nonetheless, with the adoption of the digital marketing strategy, there is an expectation that

marketing costs should not exceed 10%o the total expenditure.

Break-Even analysis

Given that Dyson’s US business is largely based on a direct export strategy where products

are manufactured in the UK and sold in the US, there is an expectation that the break-even

point for the business will be achieved early in its inception stage. Based on the above-

mentioned operational strategy, Dyson has an unusually low overhead cost, which is about

40% of the total expenses. With the implementation of a digital marketing strategy, this

percentage is likely to decline further. Table 2 below shows the break-even forecast for the

business.

Table 2. Break-even Analysis

Sales Forecast

The sales forecast for the first year is expected to be $1 million and increase to $5 million in

the fifth. These figures are aggressive but they are supported by the positive brand image that

Dyson’s products have in the US. Most US consumers deem it a durable brand compared to

all others in the market due to its high quality. The sales projections outlined above are also

supported by the plan to include more partners who will be included as part of the research

and development team. The goal of increasing annual revenues from the current £4.4 billion

to £6 billion by 2025 is dependent on the monthly total sales numbers provided in figure 3

below.

Figure 3.

Monthly sales forecast for year 1

A comprehensive and tabulated result of the sales forecast is highlighted in table 3 below.

Table 3. Sales Forecast

Year

2021

2022

2023

2024

Brick and Mortar

700,000

1,500,000

2,000,000

Online

300,000

500,000

1,500,000

2,000,000

Total Sales

1,000,000

2,000,000

3,000,000

4,000,000

Direct Cost of Sales

Distribution

65,000

155,000

250,000

345,000

Commissions

20,000

80,000

100,000

120,000

Digital Marketing

10,000

15,000

20,000

25,000

Administrative Expenses

5,000

10,000

Subtotal Direct Cost of Sales

100,000

260,000

390,000

500,000

Sales Breakdown by Model of Business

As highlighted in this report, the marketing plan will be implemented in two forms. The first

one will be based on the brick and mortar business model, while the second one is premised

on the online framework. The two models will be the main sources of revenue as highlighted

in table 3 above.

Sales Breakdown by Segment

Most of the sales revenues for the first year of operation are expected to come from the

vacuum business. This is because Dyson Company is better known in the US for its quality

vacuum products. In the second year of operations, about 30% of the sales revenue is

expected to come from the hairdryer business and the revenue for subsequent years is

projected to come from the air purifier businesses. Therefore, revenue from the hairdryer and

air purifier products is supposed to complement those from the main vacuum business.

Sales Breakdown by Region

The sales projections outlined in table 3 above are expected to come from 10 regional zones,

which are described in figure 4 below as the ten regional councils. They include Western New

York, Finger Lakes, Southern Tier, Central New York, Mohawk Valley, North Country,

Capital Region, Mid-Hudson, New York City, and Long Island.

Figure 4. Sales

breakdown by region

Initial sales revenues are expected to be generated from the New York City region, which is

the most highly populated market. This sales region is comprised of the Bronx, Kings, New

York, Queens, and Richmond.

Expense Forecast

There are four key areas of spend that will characterize the marketing operations of Dyson

Company. They include administrative costs, distribution expenses, digital marketing, and

commissions. Administrative expenses are expected to plateau from the second to the fifth

year after setting up the distribution infrastructure in the first year.

Commissions will mainly be attributed to the brick-and-mortar business model whereby sales

agents will be compensated based on their performance. The digital marketing strategy is also

another key area of spend that is expected to complement this revenue stream but due to the

inexpensive nature of the strategy, the sales expenditure is expected to be consistently less

than 30%of the total expenses.

Expense Breakdown by Partner

As highlighted in the expense breakdown in table 3, four core areas of spend will characterize

Dyson’s marketing plan: administrative, digital marketing, distribution, and commissions.

Dyson’s employees will manage administrative and digital marketing operations, thereby

negating the need to involve outside partners. However, their distribution and sales plans will

involve partnerships with third-party actors. For the sales plan, commissions will be paid to

individual entities and groups that will be part of the promotion team. Alternatively, the

distribution plan will involve transportation and logistics companies that will deliver products

to customers.

Expense Breakdown by Segment

The total expense breakdown is mainly linked to general market expenses as opposed to

specific areas of revenue growth. This strategy is justifiable because Dyson’s brand value and

reputation are more important than specific product categories, which may be modified or

rendered obsolete due to innovation. Nonetheless, it is expected that the digital marketing

strategy will generally reduce overall marketing expenses and eventually replace all forms of

alternative marketing techniques currently being used by the company.

Expense Breakdown by Region

As highlighted in this report, the New York City region will be the focus of the marketing

plan because it is highly populated. Therefore, it is projected that most of the sales

expenditure will be directed to this market, at least in the first two years of operations. To

recap, this market is comprised of the Bronx, Kings, New York, Queens, and Richmond.

Linking Expenses to Strategy and Tactics

There is a strategic link between the adoption of the digital marketing strategy and the

expected reduction in marketing expenses. This is because online marketing is an inexpensive

marketing strategy. Therefore, it is forecasted that as sales revenues increase, overall

marketing expenses will decline. Additionally, there is a strategic link between the adoption

of the digital marketing strategy with the desired target demographic. Stated differently,

Dyson’s employees are assumed to be tech-savvy and conversant with digital methods of

marketing communications and operations.

Contribution Margins

The contribution margin is expected to increase steadily within the forecasted five periods of

analysis. Primarily this is because of two factors.

1. The cost of marketing is expected to decline as the brand establishes itself in the new

market. Furthermore, as highlighted in this document, administrative expenses are

expected to stagnate from the second year of operation, and expenses for the digital

marketing strategy projected to decrease over time due to their inexpensive nature.

2. Once a critical mass of clients is established in New York City, word-of-mouth

communication and the creation of online communities are expected to increase sales

further with minimal involvement of company staff. This goal is likely to be realized

from the third year of operation. Therefore, towards, the fifth year of assessment, the

contribution margin is expected to peak.

Given the two factors highlighted above, the net overall contribution margin is expected to

increase from 30% in the first year to 60% in the fifth year.

Controls

The success of a robust marketing plan depends on how well it is implemented. As

highlighted in this document, the overall goal of this marketing plan is to improve the

marketing strategy of Dyson Company and make it better to sustain growth momentum in its

US business. In this section of the report, key segments of the implementation program will

be highlighted.

Implementation

The implementation plan will be employed in two phases. The first one will be a monthly

review of the project milestones to make sure that each aspect of the marketing plan is being

carried out, as it should. The second assessment process will be based on an annual

evaluation, which will seek to find out whether the yearly targets are being met, and identify

strategies that could be adopted to further improve the outcomes.

Marketing Organization

The marketing plan will be spearheaded by the Dyson marketing department, which is headed

by the senior brand manager. As a team, the main task of the marketing department is to work

on strategy and delivery of brand new technology. The senior brand manager has two senior

staff tasked with helping him to realize the above-mentioned objectives. They include the

after-market project manager and assistant manager. The assistant manager will mainly be

tasked with the responsibility of implementing the digital marketing strategy, while the after-

market project manager will have the responsibility of overseeing the brick-and-mortar

business model.

Contingency Planning

The most anticipated change in the overall marketing plan is an increase in website traffic

that will mainly be buoyed by the adoption of the digital marketing strategy. Alternatively,

emphasis will also be made to bolster other aspects of the digital promotion plan, including

website and email marketing as supplementary techniques for supporting the overall digital

marketing goals of the business. In the first year of operation, the company is expected to

derive its market appeal from the positive brand reputation it enjoys in the market for being

innovative and of superior quality.

Linking Expenses to Strategy and Tactics