Dyson’s development of a new version of a cordless vacuum cleaner requires a solid marketing plan, to transform the research and development efforts deployed in its development to business and consequently to profits for the company. The first milestone of this project evaluated the external and internal environments of the business. In the analysis, we will apply the PESTEL, Porter’s five forces, SWOT analysis and important considerations will be made during the implementation of the marketing plan. On the external environment, we will consider the legal and political aspects of the market since there is a change in the legal and political regime due to Brexit and other legislations. The second milestone will aim at unearthing possible consumer buying behavior. The vacuum cleaner will also address certain needs. On this note, the concept of efficiency, ease of use, convenience and performance are strong points that the company should focus on. The product performance in the market is heavily influenced by the prevailing economic conditions. The third milestone looks at the segmenting, targeting, and positioning. The new vacuum cleaner fits the high-end market and as such, the market should be segmented and targeted considering this concept.. The fourth milestone focuses on the value of the product to the consumer, while the fifth milestone focuses on the marketing mix of the company. The sixth milestone focuses on the financials where data used to generate the figures presented came from historical sources and extrapolated to the future.
Table of Contents
Milestone 1: PESTEL, Porter’s Five Forces, and SWOT Analysis 5
Porter’s Five Forces Analysis 8
Milestone 2: Consumer Buying Behavior 11
Needs Being Met by the Cordless Vacuum Cleaners 11
Influencers, Buyers, and Users 12
Milestone 3: Segmenting, Targeting, and Positioning 15
Milestone 4: Innovation and its Value Proposition 18
Milestone 5: Marketing Mix Strategy 20
Milestone 6: Financial Analysis 24
Understanding the external and internal environments of a company is critical before making or implementing marketing plans. This section of the paper will look at both the external and internal forces that impact on Dyson’s with a special emphasis on our target product – the cordless vacuum cleaner.
As explained by Frue (2017), PESTEL analysis is important to Dyson as a market evaluation tool since it has the ability to identify, analyze, and monitor the political, economical, social, technological, legal, and environmental factors that might have an impact to the company’s operations both in the short-term and in the long-term. The following is the PESTEL analysis for the company.
The UK is relatively stable when it comes to the business environment but this is being put to test by the current Brexit politics. It remains unclear what such a politically charged decision will have to the business community. The World Bank indicated that the average political stability index in 2016 was -0.4 with significant swings between politically stable and instable countries (The Global Economy, 2016). These statistics indicate that the global political situation is fluid or controversial and this has an impact on the company’s global sales. Efforts of the company’s R&D department should be encouraged since there is a strong enforcement of intellectual property rights across the globe as indicated by Gurry (2012). This will ensure the uniqueness of the company’s products is protected and possibly earn the company sufficient reputation and income. Having mentioned the R&D department, it is common knowledge that R&D efforts are expensive in terms of finances and time. To beat this challenge, Dyson, out of the good Britain-Japan relations, was able to forge a deal with a Japanese company and partner in research and development.
The current economic situation in Britain and other potential markets for the high-end cordless vacuum cleaner looks bright. As it can be seen from the graphs below from Financial Times (2018), the British economy is expanding while the average income per capita is also increasing. The employment rate is also rising while unemployment is going down. This indicates that there is increased purchasing power. It also important to note that, a slight negative change in the economic abilities of the consumers might lead to significant decline in the sales volumes.
Figure 1: Economic Analysis of Britain
Customers are often aware of what they need and they are quick to say what their experiences regarding a given commodity, thanks to the multiple communication channels such as social media. Agnihotri, Dingus, and Hu (2016) explain that, social media has changed the interaction between buyers and sellers. Social media influences the behavior of buyers and it is important for Dyson to maintain a product quality that will appeal to majority of social media users. The current household trends is that there is an increased appetite for home appliances that automate tasks and with increasing purchasing power, and a rising global population, it is expected that the sales volumes are likely to increase.
Dyson has a good grip on innovation especially through its partnerships with industry leaders. This has helped the company stay ahead of competition. The success Dyson has had should not be a reason to slow down on innovation since the cordless vacuum cleaner can be copied. Other cheaper machines can infiltrate the market and scoop the price sensitive customers. Competition is coming up with bag-less technology, which is a strong selling point that should worry Dyson.
The current population is knowledgeable on environmental factors. As such, the need for energy efficient and effective electric appliances is prevalent. The production ethics of the company should also be assessed to ensure that they are conversant with the maxims of a sustainable environment.
The development of innovative technologies is likely to provide a platform for legal issues. Trademarks and patents are likely to come up and challenge the current registration procedures since there is a likelihood that the innovations are ahead of the regulators. For instance, the company has already challenged the UK trademark appeal process. According to Euromonitor (2017), the wattage of vacuum cleaners manufactured and sold in the European Union was reduced from 1,600 to 900 watts and Dyson needs to adjust in accordance to this legislation. On this particular legislation, Dyson is trying to catch-up as indicated in the following graph.
The following table sums up the Porter’s five forces that Dyson has to contend with.
2.1.2.3 Porters five forces
The following part will provide an overview of Dyson’s behavior using Porter’s five forces.
Figure 2: Porter’s 5 force analysis for Dyson
The following table presents a SWOT analysis of Dyson
| Strenghts | Weaknesses |
| Its products have high performance efficiencyProducts are highly energy efficientEnvironmentally responsible engineeringProduct positioning in the market is highPrevious success in the market has earned Dysons sufficient reputation in the market. | The product is of high quality thus targeting the high end market. This locks out other segments of the market. High reliance on the European market is likely to lead to negative effects after Brexit. Product development takes a considerable amount of time. If competitors unveil their product before Dysons, it will reflect wrongly on them. |
| Opportunities | Threats |
| Consumers have a high regard for high quality Dysons products and they are willing to pay more. Acceptance of energy efficient products is highPartnership with other companies brings in much needed expertise which is critical in development of market oriented products. | Bag-less technology is likely to impact negatively on the new productThe rate of innovation change is high and the need to keep up is rifeThere is a glaring need to keep up with the rapidly changing consumer needs. Mistakes in design and marketing are likely to be amplified by consumers’ use of social media. |
Table 1: SWOT Analysis
Making a buy from the perspective of a consumer involves factoring in several considerations that revolve around the product in question. Understanding the buyers’ behavior and considerations is critical in designing the product and the approach to be used while presenting the product to the customer. The needs and wants of the customers are important and failing to get the point might turn against Dyson.
Ease of use even on hard to reach areas. Cordless vacuum cleaners, from the consumers’ point of view, should be light enough to allow the user the ability to access hard to reach points when using the corded vacuum cleaner. In domestic environments, these areas include behind and between sofas while in commercial environments, they include areas such as complex and limited spaces between machinery and machine parts. Another element is that is should be a lightweight machine, to allow users to move up the stairs and be movable by even the elderly.
Space and ease of mobility: The size of the cordless vacuum cleaning machines should be small enough to give the users the advantage of being easy to carry around given that they are not limited to areas close to power sockets. The compact size of a vacuum cleaner should allow easy storage in closets, laundry room, a kitchen cabinet, or in any other place where a user would find appropriate. Being small, consumers in smaller living spaces will find the equipment useful since it does not occupy a lot of the available space.
Versatility: A user of cordless vacuum cleaner is interested in versatile equipment. They want equipment that will be able to fit many attachments to clean different kinds of surfaces. The kind of vacuum head that is used for cleaning a wooden surface is different from that which cleans sofas and carpets. Consumers want a tool that presents them with endless possibilities in as far as cleaning different areas is concerned.
The people who influence the purchase decision of the cordless vacuum cleaners are mostly females or mothers in domestic scenarios. Females, in most cases, do not like it when they have to deal with electronics. Since it mostly lies within their internal configuration to maintain tidiness, they will mostly prefer equipment that involves less procedures. The need to maintain hygiene increases if there is a chance that a household has a child. This means that women in childbearing age are prime targets for this products. Domestic workers are also part of influencing these decisions since they are the ones who do the actual job. They will therefore be in positions of making recommendations to their bosses and influence them into buying.
In commercial settings, administration, production, or maintenance managers are most likely to be tasked with the responsibility to maintain cleanliness and order of premises and equipment. As such, supervising staff and the actual workers on the ground are in positions to influence the buy decision through making recommendations to their bosses. In the current open workplaces, workers are likely to be listened to before considering what to buy. As such, the need to factor in their concerns, which range from battery life, versatility, and other user needs as described above, exists.
The distribution channel of this product can be categorized into two broad categories; traditional distribution and online distribution channels. Positioning the product as a premium is important to maintain a respectable distribution channel, one that portrays the product, as it is (premium), and one that ensures that the product is always within reach of the consumers. The first distribution channel that the company should consider is having select outlets, which according to Ene&Ozkaya (2014) is necessary to maintain a strong corporate image, satisfy customers, and brand image. In this case, the most appropriate distribution channel includes the retail stores that are widespread and well positioned in the market such as Asda, Tesco, Sainsbury’s and Morrisons, as well as Argos, Lewis, and Eurostat. The other distribution channel should be online selling. On this, ecommerce distribution channels such as Amazon, Ebay, and Alibaba can be very instrumental. The sales prospects from the company’s website are also feasible since some consumers want to buy from the source.
The purchase of high-end electronic consumer goods moves with the economic cycles. If the economy performs well, Dyson will see an increased level of sales and viceversa. According to an article published on This is Moneyon September 2014, it captures the graph below which shows sales driven by retail sales of vacuum cleaners.
If the graph above is compared with the economic performance at this specific time, it becomes apparent that sales of vacuum cleaners are highly correlated to economic performance. To evaluate this relationship, we shall consider the general economy GDP growth rate and then split the same to respective driving sectors of the economy as shown in the two graphs below. It is evident that as the economy grows, there is tendency for consumers to purchase the vacuum cleaners. The manufacturing sector (indicated by the blue line), which is where Dyson falls, is reacting to the same rhythm.
Source: Statistica.com Source: The Telegraph
Market segmentation is not an easy task. A lot of information and hard statistics is necessary for a large area of populations, which can extend to all the six continents as explained by Sun (2009). To segment the market, the use of geographical segments is advisable especially for a physical product. Geographical segmentation research would reveal the most appropriate and optimum distribution pattern to use, warehousing decisions, and positioning of manufacturing and assembly plants. Market research would be conducted along the lines of language to ease the process of designing and targeting adverts and promotions.
The second item that will require research is the demographic qualities that describe populations in specific regions. Demographics of populations help in the understanding of population growth, ages that are economically active, the income distribution, consumption patterns, and tastes and preferences. Demography of populations will help in segmenting them along behaviors such as purchasing patterns, for instance, are they online shoppers, what kind of marketing fits them, what is important to them in terms of product features, and the kind of after sales services that they would require from Dyson’s.
Third, the level of understanding of the new Dyson’s vacuum cleaner. Some markets might not be used to automated cleaning mechanisms, or the Dyson’s brand. They will thus require induction through intense advertisement and promotion of the product. Other markets might already be aware of the product. As such, the market will require little convincing and will eventually adopt the innovation without hesitation. Determining the level of awareness in the market will require a research question that will require a solution.
Explain how you would select a target market or markets for the product offering. These can be domestic markets, international markets, or both.
Target markets would be understood from two sides – the international markets and national markets. In the international markets, targeting would be done with a clear understanding of the national consumption behaviors, capabilities, and willingness to use the new vacuum cleaners. Some markets on the international level have the willingness and eagerness to try new innovative products while others are conservative. This product would first be presented to those markets that are receptive of innovation. Internationally, some territories are protected using trade laws or other legislations. For instance, this paper has found out that in the EU, cordless vacuum cleaners need to be operating on less than 900 watts. Other markets might not necessarily have this requirement. As such, the EU would be targeted as a single market with a product that is in synchronization with its legal requirements.
Nationally, targeting of the product would follow the principles of high and low-end marketing. The product on offer is a high-end product. With this in mind, the high-end of the market will get the attention of the company. The high and middle-ends market has the need for the product to begin with. They have the furniture, surfaces, and components that require the use of the cordless vacuum cleaner. Second, the high and middle-income markets have the economic ability to acquire the product in question. The other aspect of this market that will appeal to the company is that it is not price sensitive. This means that the company’s pricing strategies fits the target market.
In addition, explain the process of positioning the new Dyson vacuum cleaner relative to the competition.
Positioning of the product on offer relative to the market is necessary. It will allow the company to curve its own niche in the market. To position itself, the company needs to produce a product that beats competition. The product needs to be lightweight, durable, and have the best quality in the market besides being convenient to use. The capabilities and performance of the new vacuum cleaner needs to be impeccable and outshine competition. When the products are being taken to the market, there is need to have them presented in a quality package that gives the customers a reason to check and buy.
The next thing that should be done to position the product is to have a reliable distribution network that provides sufficient coverage in terms of geography. Since the product is a high-end product, the distributors need to be select to retain the image of the product and that of the company. The distributors can adopt approved advertisement and promotional campaigns that will see the product get the attention it deserves from the market. On this note, the promotion and advertisement strategies that are adopted by the company needs to befit that of a high-end product.
The company needs to give customers after sales services that will be sufficient in terms of heightening the confidence of the consumers. To do this, the company should design a warranty program, which should be actionable and easy on the part of the customers. Other after sales services such as servicing should be within the reach of customers.
According to McAllister (2018), the process of innovation is a two-step process that; one, requires the asking of the right questions and second, going ahead to look at all the existing and potential problems that can be solved. In this case, the right question would be, why should vacuuming remain inconvenient to use, plugged in, and limit movement? Naturally, this question leads to a focus on the problems that exist and those that have the potential to show up with time. It is clear that there are other vacuum cleaners in the market and it is necessary to look at what they are not doing. The list of what is currently not being achieved by the existing vacuum cleaner is as follows.
To solve the problems described above, there should be innovations, which should address the problems with the new cordless vacuum cleaner. The innovations should be as follows.
Dyson needs to implement a set of well thought out procedures to deliver the product to the market, have it absorbed, and finally get the company to reap the rewards for its consistency and innovation. To do this, a set of marketing tools need to be developed to achieve marketing objectives are achieved. The following levels of decision-making will be considered- the product, price, place, and promotion.
Dyson’s cordless vacuum cleaners need to be lightweight, durable, and have the best quality in the market besides being convenient to use. The product needs to be packaged in such a way that it stands out from competition in the market. The product needs to be developed in response to customers’ wants, which should be evaluated using surveys from customers as evaluated by Kumar et al., (2010). The product in question should deliver value to customers and not conflict on this aspect since Dyson’s want to position the product as a high-end product meaning that the product will be costly that other similar products.
The product needs to be defined by the consumer as sleek, durable, compact, and lightweight for it to meet the standards of a high-end product. The charging system should further not be complex and inhibiting. As such, the product, when being bought by the customer should have multiple batteries, which are replaceable during the cleaning operation within a few minutes. The vacuum cleaner should be capable of indicating to the user when the bin is full and as such, have it emptied to avoid damaging the internal components. Lastly, the product, by using different vacuum cleaning heads, should be capable of brushing, suction, and mopping depending on the kind of surface the user is working on.
Dyson’s has already curved a niche in the market. The market has already formed a perception, which seems to favor the company. Consumers perceive Dyson’s products as the best, with longer durability, and a company that delivers what they want. The customers, in all the countries where the company has made a debut, are willing to pay a premium for the high quality products. It is, therefore, important to retain the company’s already established position in the market and if possible drive it higher with the new product. According to Nagle and Müller (2017), a marketer should understand the position of the company and the product in the market so as to develop a sophisticated pricing strategy that will deliver the intended results.
With the above considerations in mind, it is easy to determine the price of the new vacuum cleaners. The production department should table their manufacturing costs along with the research and development department and have the costs summed up. The breakeven price should be determined considering the desired breakeven period. In this case, it would be appropriate to consider two years breakeven period, as new technologies are coming up. At the beginning of the marketing campaign, the new vacuum cleaner should be priced using the skimming strategy to ensure that significant costs of research and development are recovered. At this time, competition should be catching up. When competition makes a debut in the market, the pricing strategy should change to premium pricing to ensure that the impression created by the product is not eroded with time. These two pricing strategies are maintained due to the confidence earned from the market since the market segment targeted is not price sensitive.
The place or distribution is the place where the customer will buy the product. Place affects the positioning of the product and Dyson needs to make a choice whether to have the new vacuum cleaner available either from brick and motor stores,online stores, or both. Through assessment of the product capabilities, it is better to have the product in both physical and in online stores but with an emphasis on its positioning in the market.
To go by the positioning of the product as a premium product as it has been mentioned before, the product needs to be availed into the market through select distributors. This aspect of choice of place should not be a reason to have stock outs. The selected distributors need to be already in the market and with good flow of clients to sustain the business. The brick and motor stores include Asda, Tesco, Sainsbury’s, Morrison, Argos, John Lewis, and Eurostat. The other distribution channel should be online selling. On this, distributors such as Amazon, Ebay, and Alibaba can be very instrumental.
In other countries, the company should consider distributors such as Walmart, The Home Depot, Costco, Target, Carrefour, Lidl, Woolworths, and many other countries that the company wants the new product featured. There should be a significant analysis of the market and the knowledge of distributors selected to do the distribution of the new equipment. Online presence in each market is critical since the consumer preferences are changing and shifting towards digital spaces. As evaluated by Nguyen, Pantano, and Dennis (2016), home and office appliances are increasingly being shopped online due to the convenience and ease the same brings to the consumers.
To deliver effectively a successful promotion plan, the influencers, buyers, and users need to be understood. Earlier in this marketing plan, it has been identified that cleaners at homes and offices have a very high influence on the buy decision. Other than that, women, especially at homes will most likely do the actual buying while administration, production or even the maintenance managers are likely to make the actual purchase in a commercial setting. The users are employees at home or in offices.
After identification of the influencers, buyers, and users, the next question should be which channel(s) is/are most likely to touch on all of the mentioned people? The first guesses are TV, social media, and technology magazines. The necessity to place an advert on TV, especially during family time should be considered since majority of the influencers will most certainly be watching TV with their families at one time or another. The advert should stimulate a discussion that would lead to the need to know more and ultimately buy. Cisco (2014), predicted that by the end of 2018, 84% of online content will be videos. People always congregate online on social media sites such as Facebook, Twitter, YouTube, and Instagram among many others. This brings out the need to produce promotional videos. To guarantee that the videos will be watched, there is the need to ensure that they are hilarious and educative. On technology magazines, the new product should be properly advertised with all its capabilities and features outlined to attract positive reviews.
According to The Telegraph, Dyson’s sold 15 million units of vacuum cleaners in 2016 out of which 80% or 12 million were cordless. As such, this analysis will assume that the new product will in 2019 sell 40% of the sales in 2016 (4.8 million units) and grow the sales volumes by 15% the first two years and thereafter sustain a sales increase of 10% every consecutive year. The projected sales increase is possible given that the 2017 revenues were a 45% increase from 2016 (Tovey, 2017). Considering that the total turnover of the company in 2016 was £2.51 billion and profits were £631 million, it therefore, means that the company’s costs stood at 75% of the revenues. This analysis will assume the same cost ratio for the first 2 years and reduce the costs to 70% in the third year and 65% thereafter. Forbes record that price of the vacuum cleaners starts at £425. Since this product is new, improved, and targeting the high-end market, the price will follow the skimming strategy, start at £600 for the first 3 years, and then go to the premium pricing at £500 thereafter. All manufactured units are assumed to be sold every year. The following table shows the financial analysis of the product.
| Year | Units | Avg Unit Cost | Total Annual Costs | Avg Unit Price | Annual Sales | Annual Profits |
| 2019 | 480,000 | £ 450.00 | £ 216,000,000.00 | £ 600.00 | £ 288,000,000.00 | £ 72,000,000.00 |
| 2020 | 552,000 | £ 450.00 | £ 248,400,000.00 | £ 600.00 | £ 331,200,000.00 | £ 82,800,000.00 |
| 2021 | 634,800 | £ 420.00 | £ 266,616,000.00 | £ 600.00 | £ 380,880,000.00 | £ 114,264,000.00 |
| 2022 | 698,280 | £ 325.00 | £ 226,941,000.00 | £ 500.00 | £ 349,140,000.00 | £ 122,199,000.00 |
| 2023 | 768,108 | £ 325.00 | £ 249,635,100.00 | £ 500.00 | £ 384,054,000.00 | £ 134,418,900.00 |
| 2024 | 844,919 | £ 325.00 | £ 274,598,610.00 | £ 500.00 | £ 422,459,400.00 | £ 147,860,790.00 |
| Totals | 3,978,107 | £ 1,482,190,710.00 | £ 2,155,733,400.00 | £ 673,542,690.00 |
To manufacture the new vacuum cleaners, the company incurs fixed costs amounting to £100,000,000.00, which are inclusive of the research and development costs. The table below shows the breakeven points in terms of units for each of the six years. To get the Break-even point (units), this formula was used, BEP=Fixed Costs/(Selling price-Variable Cost)
| Year | Units | AVG Unit Cost | Fixed Costs | Variable Costs per Unit | Avg Unit Price | BEP (Units) |
| 2019 | 480,000 | £ 450.00 | £ 100,000,000.00 | £ 241.67 | £ 600.00 | 279,070 |
| 2020 | 552,000 | £ 450.00 | £ 100,000,000.00 | £ 268.84 | £ 600.00 | 301,969 |
| 2021 | 634,800 | £ 420.00 | £ 100,000,000.00 | £ 262.47 | £ 600.00 | 296,270 |
| 2022 | 698,280 | £ 325.00 | £ 100,000,000.00 | £ 181.79 | £ 500.00 | 314,259 |
| 2023 | 768,108 | £ 325.00 | £ 100,000,000.00 | £ 194.81 | £ 500.00 | 327,665 |
| 2024 | 844,919 | £ 325.00 | £ 100,000,000.00 | £ 206.65 | £ 500.00 | 340,884 |
| Totals | 3,978,107 |
| Year | Milestone (Sell more than) | Major Task | Responsible | Metric of Success |
| 2019 | 279,070 Units | Introduce the product | Global Sales V.P | Sales that are more than 50% of the target |
| 2020 | 301,969 Units | Sustain product information | Global Sales V.P | Sales that are more than 60% of the target |
| 2021 | 296,270 Units | Solidify the market | Global Sales V.P | Sales that are more than 70% of the target |
| 2022 | 314,259 Units | Expand the market | Global Sales V.P | Sales that are more than 80% of the target |
| 2023 | 327,665 Units | Expand the market | Global Sales V.P | Sales that are more than 90% of the target |
Should the sales target fail on two successive quarters, the Global Sales V.P should come up with a concrete report detailing why the targets were not attained, and remedial actions which should take effect the following quarter.
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