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Dyson Vacuums' Brand Internationalization - Case Study Example

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This case study “Dyson Vacuums’ Brand Internationalization” evaluates brand’s perspective to expand the geography of its presence not only in the UK, the US, Japan, and Australia but in China as well. The author investigates the Dyson distribution strategy in the US market…
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Dyson Vacuums Brand Internationalization
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Case Study Report: Dyson Vacuums 1. Until now Dyson has concentrated its efforts in the United Kingdom, the United States, Japan and Australia. In your opinion, which new international markets should be allocated more marketing resources, in order to develop them into future Dyson growth markets? Why? At the global level, the vacuum market represents a $2.4 billion market which consistently witnesses drops in sales from 2004-2009, mostly due to changing buyer trends and a strained global economy impacting consumer sales (Mintel International Group, 2009). Because this is a highly mature market, it is becoming more and more difficult to sell vacuums, especially in an environment where there is heavy, saturated vacuum competition from companies like Electrolux, Hoover and Whirlpool. The current market environments where Dyson products are sold, with highest sales in the USA and United Kingdom, have companies finding it more difficult to sell product because of the positioning and promotional strategies of current competition. It is because of this market maturity that Dyson needs to re-examine their current strategies and begin moving Dyson vacuums into other regions in Asia, specifically China and India. Many of Dyson’s vacuum cleaners are priced at a price point which is much higher than other competition, most of this being based on positive reputation, positive word-of-mouth advertising for Dyson brands, and the ability of the company to position its products to have superior benefits over existing competition. However, during a time where there is economic instability across the globe, which is impacting the volume of products that consumers purchase, these current markets are quickly moving to the end of their life cycles unless new and innovative marketing can be used. This is why the new Chinese and Indian market environments are more suited for heavier investment, because this represents new market opportunities and the ability to create a wholly-new reputation for Dyson vacuums. For example, there is a growing luxury market consumer in China who has the finances available and the willingness to purchase high end products, and Dyson’s higher-priced models fit this luxury category, especially if they can be positioned in buyer’s minds as retaining superior benefits and can appeal to social culture in these groups. In China, the traditional concept of the housewife role does not largely exist, as women, at the social level, begin making decisions in a variety of different demographic households (slideshare.net, 2007). In China, the country leadership is “rushing to diminish the disparity between rich and poor, urbanizing its lower tiers of agrarian countryside and moving blue collar labour up the ranks to service workers” (O’Leary, 2007, p.12). What this means is that there is a rising middle class who are being trained in new skills and technological advancements, therefore the concept of middle class buyers is becoming commonplace in China. With women having growing influence in making household purchases, Dyson can use different promotional materials in this Chinese market to appeal to cultural values and create a positive brand reputation in the process. Because women are becoming liberated in this country as decision-makers, and their households are experiencing higher increases in financial capability, Dyson can change its focus from male advertising to female advertising, using cultural heritage in positioning strategies to outperform competition. Moving products into China would not be that difficult, especially since Dyson already manufactures products in Malaysia, therefore distribution in these areas would actually be simpler and more cost effective than the extended movement into Europe through ship or ground transport. Dyson already experiences lower payroll obligations by having low-cost international labour build its vacuums, therefore it makes financial and marketing sense to shift vacuums into China to create a strong brand presence in this emerging market group. “Corporate reputation has positive influence on both customer trust and customer identification” (Key and Xie, 2009, p.732). Therefore, Dyson would benefit from creating a brand awareness strategy in China by spotlighting Dyson vacuum products in different luxury carpet manufacturer expos and trade shows, and using concentrated magazine and other publication-style advertisements, to simply make the brand recognisable before launching into China. The decision to move products into China is based on the growing middle class and incomes available to these market groups, which can be supported by growing sales in luxury brands such as Louis Vuitton and Hennessy cognac, very luxury brands (Curtin, 2009). This growing taste for high end, Western products in China makes this a new market opportunity to reach wealthy consumers or those who fancy themselves upscale buyers. By connecting Chinese culture and heritage with the Dyson brand, rather low cost promotional activities can occur prior to launch so that the Dyson name is remembered and able to be recalled by Chinese buyers. The decreasing gap between rich and poor citizens in China makes this a great opportunity for improving market share internationally for the Dyson brand. Chinese buyers also consider Western brands to be iconic in terms of their ability to create perceptions of democracy because of their point of origin (Dong and Tian, 2009). Theorists offer that “Western brands are shaped by macrolevel, sociohistorical forces to motivate consumers’ responses to them as political action tied to nation making” (Dong and Tian, 2009, p.504). What this means is that there is already a positive perception of Western brands because of their ability to create connections with a growing democratic culture in China. Using Chinese actors or advertising content which promotes these desired traits in Western brands linked to heritage and culture, Dyson can reinvent itself for the Asian consumer to promote how well Chinese consumers have progressed to take their role in Western culture and commerce. In India, the culture is highly collectivist, meaning that decision-making is often made at the social level based on group consensus rather than through individual expression (Mathis and Jackson, 2005). India is also a market environment that is experiencing explosive growth in areas of technology and service, therefore new commercial infrastructures for distribution exist in this country to make shopping and exposure of Dyson brands easier. This infrastructure allows goods to be moved to more rural regions of the country, into the hands of individuals looking for progressive lifestyle enhancements such as new vacuum cleaners to improve household living. Growing consumer incomes in India, due to higher education backgrounds and better job opportunities, make many different demographic market groups able to buy products that improve living. There also appears to be a similar mindset as in China, especially in relation to culture and self-identity. India is moving toward becoming a major player in consumerism and global trade/commerce, therefore this is an excellent opportunity for international sales improvements and brand identity in new Asian markets. In India, buyers are less rigid than in other countries, meaning that they are willing to make faster decisions when there is uncertainty. In other countries, such as Japan, individuals do not like to make decisions which could lead to risky outcomes, therefore they strongly scrutinise their decision-making to ensure that the end result is favourable. The Indian cultural tendency to make snap decisions could serve as another sales benefit for Dyson products, as they would not over-analyse the decision about which vacuum to purchase so long as Dyson can minimise risks. For example, Dyson can spotlight its durability record or its ability to outperform other cleaning models in its Indian advertising, therefore reducing perceptions of risk post-purchase. Even though there is lack of superstore outlets in India available for mass market consumption, there are smaller, more specialised retail stores in which these models can be highlighted and partnerships created for door-to-door salespersons that can represent the Dyson models. With sales declining in current markets that are highly mature, finding new buyers will require moving products into new international market environments and create a new brand image in these countries. Dyson has used multiple positioning efforts and brand strategies to outperform competitive marketing in the USA and United Kingdom, therefore exhausting many of the brand’s innovations in this area. By extending product into the emerging economies of India and China, and using cultural heritage and concentrated preliminary advertising, Dyson will already have established a positive name for itself in these areas making it easier for market entry to occur. By creating buzz and excitement about the models prior to launch, consumers should be placing advanced orders and awaiting the launch of these models to ensure they get a Dyson product quickly. With enough investment into an entire integrated marketing communications campaign in these two countries, early advertising before launch can build excitement in many different mass market groups similar to that of the release of new iPods or other frenzied market products. 2. In the US market Dyson achieved its market share by moving into the mass retail channels, like Electric City and Best Buy. Some industry specialists are critical towards this long-term strategy for Dyson’s high-priced product. Evaluate the Dyson distribution strategy in the US market. Dyson, in the US, takes advantage of the high volume of mass market stores available to give the brands more exposure in mass market groups. Fortunately, in the United States, vacuum sales are regular and can be generally predicted based on review of historical sales records and patterns of consumption of vacuum products. It is stores like Best Buy and others where Dyson can make use of their internal talent to act as sales representatives for the vacuum, therefore avoiding heavy door-to-door sales or other marketing efforts which can be highly risky in terms of whether sales successes will occur. These large-scale retailers have well-developed infrastructures of distribution, therefore it makes financial sense to deliver mass-market focused products to mass market stores and distributors. Says Best Buy’s senior buyer, Jason Spry, “Consumers are now more interested in purchasing higher-end vacuums” and “Best Buy targets specific markets in the country: Larger cities with more condominiums and apartments” (Rudnik, 2007, p.1). Essentially, Best Buy is already a well-established retailer with the ability to promote and the know-how to make marketing successful. Since Best Buy understands that urban markets will have the need for cleaning materials for apartment and condo living, Dyson simply capitalises on Best Buy’s strengths in promotion to make their products attractive to these mass market groups. This is a strength in strategy which avoids having to hire internal talent as sales representatives. Another reason why mass market distributors is a quality strategy for Dyson is due to the amount of time it takes for new vacuum models to emerge from the research and development stage. “Dyson’s fluid dynamics engineers spend four years running hundred of simulations to precisely measure and optimize the (vacuum’s) Air Multiplier technology” (dyson.com, 2009, p.1). As with most products used in the household, consumers look for new innovations or benefits which make one product more attractive than other in the competitive market. Since Dyson cannot simply launch new models without considerable research and testing, mass market environments are more suited for the brands because innovations in technology do not make other models obsolete for many years. Therefore, there is not a need to spotlight ongoing innovations on a regular basis for new brand model launches, making these products mass-market focused rather than catering to niche markets looking for the latest and greatest improvements in vacuums. Vacuum purchases are intended to last for many years before replacement, therefore these are investment purchases which do not require specialised sales expertise or exposure in unique, niche market stores. This is a low-cost distribution strategy which seems to be working in the United States. There also seems to be a unique consumer attribute for the US consumer, especially in relation to how they respond to different sales techniques. Other vacuum companies have used door-to-door salespersons or those hired to spotlight features in different public exhibitions in order to improve brand reputation and sales volumes. In the US, consumerism is often tightly confined to these large-scale retail stores, like Best Buy, and consumers reject door-to-door sales or other in-your-face guerrilla marketing tactics. This is supported by the growth of the Do Not Call Registry List in the United States which actually makes it a seller’s crime to call someone who has registered to avoid cold-calling sales over the telephone. This change in what consumers find acceptable for personal sales and cold calling again supports Dyson’s strategy to keep vacuums confined to mass market stores which get the highest consumer traffic volumes of other retailers in this market environment. When considering whether Dyson should launch its own retail outlets for sale of Dyson vacuums, the cost of these stand-alone stores can be very expensive at the operational level. Dyson has already established a strong brand reputation in the United States and has managed, through innovative advertising and television promotion, to make consumers believe that these products can outperform competition in terms of aesthetic design and cleaning function. With this positive brand identity, the launch of these Dyson-only sales outlets would likely create more financial investment than what is actually returned in terms of sales volumes. Many consumers in the United States are drawn to the mass market retailers as part of one-stop shopping, therefore avoiding the need to travel from store to store to make the majority of their household product purchases. This can be seen with stores such as the Wal-Mart Supercenter and other multi-department stores. It is likely that consumers would reject the idea of Dyson-only stand-alone retailers, if the company decided to change its current distribution strategy, simply because they have become convenience-focused buyers who like one-stop shopping. The decline in the growth of small business retailers in the United States supports that consumers prefer these supercenter businesses for their shopping needs. A stand-alone retailer to enhance distribution would likely not provide quality sales results due to consumer trends in buying and shopping. Consumers in this area are also making more purchases online to enhance the convenience of shopping, where items are delivered directly from the manufacturer/distributor to their households. Rising ability of rural and urban areas in the United States to gain access to Internet creates new demand for online shopping. Dyson, however, does not seem to invest enough effort or financial investment into promotion for the online sales environment to reach different niche groups. Research did not uncover any evidence of extensive buzz marketing online for Dyson vacuums, rather simple spotlights of sales successes or product features. Growth in the use of the Internet by different mass market groups, such as the over-60 consumer, makes this an incredible opportunity to adjust distribution strategy in the US. Using advertisements on sites such as FaceBook or Twitter, Dyson can create low cost, entertaining videos which show Dyson products in more humorous or socially-important scenarios. The Internet provides many different opportunities for promotion and Dyson should consider this strategy when determining how to sell products in the US. Generally, advertising in this medium is inexpensive, yet if strategically placed, maintains the ability to reach many consumers who do not normally frequent big box retailers such as Electric City or Best Buy. To enhance sales of Dyson vacuums in the US, the company should take advantage of street team marketers, people who can be hired at very low cost who maintain the expertise necessary to build consumer interest, and send these individuals into different professional or social environments to promote the brand. There is no aspect of guerrilla marketing or street marketing evident in Dyson’s distribution strategy, where individuals can make a purchase quickly and because of the talent’s of different low-paid promoters. Dyson should extend its products into different business environments, guerrilla style, simply to improve the brand reputation of the products prior to launching a new model. These street teams, using an interesting or eye-catching script and actors, can highlight Dyson product benefits in real-time, appealing to consumers of mass market preferences. These could include small-ticket incentives, such as 20 dollars off the purchase of a new Dyson, to improve the sales successes. The business cannot rely solely on the foot traffic and marketing expertise of large retailers like Best Buy in order to improve sales volumes. Such street team marketing, if delivered to the right audiences, could improve consumer sentiment about the brands and invite future purchases. All-in-all, Dyson’s distribution strategy in the United States makes use of a qualified infrastructure for moving products across the country inexpensively and into areas where the highest volume of consumers are likely to visit. The entire United States commercial system is set-up with large retailers dominating market share over smaller retailers in almost every location in this large market environment. Dyson simply has made logical choices regarding distribution to avoid high costs of stand-alone retail stores that carry only Dyson products and also to reach the most consumers who frequent these types of stores over small business shopping. 3. Do you think that James Dyson can repeat the international vacuum cleaner success with the new washing machine? Why? Why not? (20 Marks) There is little to offer that Dyson can achieve the same successes with the new washing machine models, largely because of the current economic conditions which are causing less disposable income for consumers across the globe. When consumers are experiencing rising costs in areas of staple products such as food, housing and clothing, this provides less money for larger, more luxury purchases such as the high-priced Dyson washer. The case study provided that Dyson washers are priced twice as high as many other washers sold in the United Kingdom, therefore pricing is a major factor for finding interested buyers. Dyson used advertising and positioning strategies which some of the company’s competitors felt was nothing but spin and has been deceiving customers about the ability of Dyson products to outperform competition. This has created animosity with other manufacturers who have resorted to using similar spin tactics in their promotion to somewhat discredit the research findings and statistics offered by Dyson about its performance capabilities. This growing voice of dissatisfaction with existing competition has caused some problems with the brand reputation of Dyson products. Additionally, the concept of post-purchase evaluation is important to decide whether or not Dyson maintains the ability to sell washers with the same success the company has found with its vacuum brands. Dyson products sell, sometimes, for hundreds of dollars more than other competition, therefore the purchase is an investment purchase designed to last for many years before needing replacement. However, when consumers actually buy the product and test it in their own real-life home environments, post-purchase results and their impression of these supposed benefits will definitely impact future sales intention in different mass market and niche market groups. A brief review of several different blog entries made by different post-purchase consumers of Dyson vacuums indicated that many were not as pleased with the results as they had originally hoped for. Though this only reflects the opinion of a very small sample or cross-section of the consumer population, there is definitely some evidence that Dyson’s claims are not received with equal excitement provided by Dyson-style promotion and other advertising. This brand damage caused at the consumer level might impact washer sales if post-purchase vacuum holders have had bad experiences or any form of negative post-purchase evaluation. The Financial Times (2006) reports that Dyson originally marketed its vacuum models to men, a new innovation in marketing of these products. Men, therefore, contributed much of the sales profit in the first years of sales of Dyson products, especially in the UK and the United States. The washing machine, however, is typically a female-inspired household device where many of these purchases are made by homemakers or other professional women looking for quality cleaning and benefits in washer technology. Dyson will need to reformulate its current marketing focus toward men market groups and seek the female buyer, which is something that Dyson is not famous for and likely does not have the research knowledge to pull off successfully. Therefore, in order for Dyson to successfully market washing machines internationally, new market focus is necessary to capture the attention of different buyer groups not usually targeted by Dyson advertisements and promotions. This will involve considerable market research to find out what these female groups prefer (though some men will definitely buy the washers also) in order to find sales successes. Dyson might find better sales success in marketing washing machines by seeking out different strategic alliances or short-term partnerships will well-known and trusted cleaning brands in order to use dual-branding to draw more interested consumers. In the United States, brands of cleaning products used in washing machines such as Tide, a respected brand with genuine cleaning outperformance, could be targeted for dual branding. By attaching the brand name of a respected cleaning product with the new washing machine promotional strategy, consumers can find personal association with the new product because of its relationship with quality cleaning brands. In other countries, similar partnerships with different brands in this fashion is a win-win scenario for Dyson and its cleaning brand partners. One of the main selling points of Dyson products has been its ability to prevent the loss of suction with different models as a competitive strategy. This has been using promotion to show consumers that the company is very innovative in vacuum technology and improvements. It is this factor which has driven many of its sales successes in different Western markets by targeting people who are frustrated with vacuums which always lose the ability to clean effectively over time. The new Dyson washing machine would need to develop a marketing strategy that focuses on specific outperformance features and then promote these in order to build the same brand frenzy that the company experienced in its first years of exposure in vacuum markets. For example, Dyson, in the research and development stage, would need to fit these products with different cleaning features or improve overall reliability of these products to gain the same consumer fascination the company once experienced. If the product is not unique and does not have features not commonly found on competing brand models, consumers will likely reject the new Dyson washers in favour of other competing brands. Because this is a wholly-new product and does not involve branding strategies used for vacuums, Dyson will be starting from scratch in terms of knowledge, experience, and product variety. Dyson does not have a reputation outside of vacuum cleaners and would need to, rather quickly, build a sort of brand loyalty for the washing machines by trying to rely on its positive reputation under the Dyson name. Consumers will likely be sceptical about the Dyson machines, especially with such a hefty price tag, simply because they do not have experience with any other type of Dyson products other than vacuums. This could be a significant challenge for Dyson in selling washing machine products because the company will not only have to give the brand credibility for new technologies, but also invest considerably into concentrated advertising in order to build buyer interest. The costs of international marketing campaigns, custom-designed for different mass and niche market groups, might very well be more costly than the sales gains achieved because of changing consumer preferences and tightening budgets at the household level. The original launch of the Contrarotator machine experienced very low sales results, even though the technology used in cleaning was innovative and involved two drums spinning in opposite directions (Case study, 2009). Dyson experienced some of its vacuum sales success on aesthetics, with colourful designs and attributes that made the products fit with consumer preferences for aesthetics in household product purchases. Dyson will need to create certain visual aesthetics on the washing machine models that cater to consumers who value the look of their washing machine products and the way that it can visually enhance the household environment. However, much to the difficulty of Dyson, these aesthetic improvements are not inexpensive at the manufacturing level and will only push the price upwards on these Dyson washers. Again, with pricing being an important issue in many international buyer groups today, in order to recover the costs of new innovations and aesthetic design improvements, setting a higher price than that of competition becomes necessary. Dyson may find that its washer brands spend too much time and financial investment for research and development, along with concentrated promotion, that this new product investment is not worth the long-term results in sales volumes. Adding even more difficulty to the process of selling new Dyson washers, Dyson is working in a highly competitive market with some manufacturers that have been in business for many, many decades, such as Whirlpool and other trusted international brands. Some buyers of these products have been loyal to these long-standing retail brands since they were children and their grandparents or parents have instilled word-of-mouth loyalty in these groups. It is very difficult, even for an up-and-coming manufacturer, to undo years of loyalty that occurs at the inter-generational level in different family units. Some households, based on experience and upbringing, will always favour their traditional family washer brands and not defect even if the benefits of Dyson products are promoted much better. Undoing reputational support for existing competition could be very costly and be more difficult than the company realises with fickle and ever-changing market preferences across the globe. Dyson must remember that other brands, such as Whirlpool, have such a dedicated following that only hefty price reductions would change their buying preferences. However, with the innovations in design and aesthetics needed for Dyson to compete, pricing too low will only cause financial harm in the long-term. It is safe to say that in order for Dyson to effectively compete in this brand new washing machine market environment, the company will require heavy investment into research into different demographic groups before launching an international branding strategy. Buyers in different international households have many different beliefs and needs in relation to these high investment product purchases and Dyson will need to consider them all in order to be successful at the promotional level. The marketing mix, for Dyson, relies strongly on promotional materials in order to find sales success and in this case, Dyson will experience high financial investment into such advertising in order to gain consumer following. Dyson might also benefit from spotlighting the Dyson washer in different types of expositions or trade shows so that consumers of multiple demographics can actually try out the washer themselves or view it being demonstrated so that they can personally relate to the brand. Dyson will have difficulty simply developing mass market awareness of the Dyson washers, much less the investment it will take for concentrated international promotions to build loyalty or some sense of consumer satisfaction toward the new Dyson washers. The odds of success in marketing the new washers are stacked highly against Dyson for all of the reasons described in the report. Pricing is the largest factor, especially when consumer incomes are down due to economic conditions. Unless Dyson can revolutionise its delivery of positioning to many different mass market groups, sales success in this area seem to be rather minimal. References: Case Study. 2009. Dyson vacuum cleaner: Shifting from domestic to international marketing with the famous bagless vacuum cleaner. Curtin, M. 2009. China’s taste for luxury. Wall Street Journal, 21 October, p.C16. Dong, L. and Tian, K. 2009. The Use of Western brands in asserting Chinese national identity. Journal of Consumer Research, Gainsville. 36(3), p.504. Dyson.com. 2009. Say goodbye to the blade. No blades. No buffeting. http://www.dyson.com/press/default.asp. (accessed 6 Jan 2009). Key, H. And Xie, Y. 2009. Corporate reputation and customer behavioral intentions: The roles of trust, identification and commitment. Industrial Marketing Management, 38(7), p.732. Mathis, R. and Jackson, J. 2005. Human Resource Management, 9th ed. Sydney: Thomson-South Western. Mintel International Group. 2009. Vacuum market statistics. http://www.giichinese.com.tw/report/mt104817-vacuum-cleaners.html. (accessed 6 Jan 2009). O’Leary, N. 2007. The New Superpower: China’s Emerging Middle Class. Adweek, 48(1), p.12. Rudnik, M. 2007. Canisters on the comeback: New technology and an upscale consumer push are lifting the category. http://hfnmag.com/fileadmin/template/main/images/resources/rpt070716_floor_care.pdf (accessed 7 Jan 2009). Slideshare.net. 2009. Consumer trends TNS perspective 2009. http://www.slideshare.net/joewheller/china-consumer-trends-tns-perspective-2009-oct. (accessed 7 Jan 2009). Sunshine, B. 2008. On show: who, what, when, where and why this week. Financial Times, London. 29 Mar, p.2. Read More
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