DYSON CASE

DOING A DYSON CASE

Taken from European Case Clearing House (ECCH), The Management School,
Imperial College

James Dyson, Martin McCourt, newly appointed Managing Director of Floorcare, and
the Dyson team, had the task of growing the company – doing a Dyson in a way that
could never have been imagined in 1978 when James Dyson first had his idea to make
the proverbial “better mousetrap”

If had taken the inventor more than 20 years to do his Dyson; a five year development
period beginning in 1978, going through over 5000 prototypes before what he felt was
the “absolutely right” model was ready to be launched. Then another 10 years just to get
it to market. Finally, after initial resistance and only grudging retail acceptance, his
product – the Dyson Dual Cyclone*TM – did take off market leader not only in the UK
(capturing more than 52% of the home market by value), but internationally as well,
including even Japan.

Since Hoover’s invention, a flock of international appliance giants such as Eletrolux,

Miele, and Panasonic all put their brands to the product. Differentiation was difficult if at
all possible as the market rapidly matured. Yet, notwithstanding these conditions, the
Dyson version was not only gaining market share, but doing so as premium priced
competitor. Set up to survive by making 10,000 units a year, Dyson’s factory was in
1999 making 9,000 units a day and had more than half the vacuum cleaner market by
value, and one third by volume.

How to keep ahead increasing the momentum as the new millennium approached was
the real challenge facing Dyson.

Players were now aiming at Dyson – either by attacking his slogan, “no bag, no loss of
suction” or by launching models that looked like his copying his color scheme, or which
they claimed were as good as his. In the UK, the challenge was two-fold; despite the
commercial success of the Dyson, of the 23 million British households, just over 17
million still used traditional vacuum cleaners. How could Dyson get to these new
customers, as well as keep existing customers next time around? In addition, how could
the company grow expanding further a field?
The Dual Cycle: Genesis of an Idea
The gist of Dyson’s new approach to vacuuming was to do away with the bag. The bag,
which acted as a filter for the air drawn into the machine by a vacuum pump, was
responsible, in Dyson’s view, for the rapid loss of suction in vacuum cleaners. Although
the bag was designed to trap the dirt, allowing only clean air to pass through the pores
of the bag and out into the room, the fine layer of dust which soon accumulated inside
the bag clogged its pores and so diminished the through flow of air, even after just one
use. In short, the bag was the cause of the two banes of vacuuming loss of suction, and
loss of filtration.

Instead of the bag, Dyson envisaged a cyclone-like machine which, like the cyclone of a
tornado, relentlessly sucked up everything in its path. Commercially this concept had
long been applied by pain spray-shops and sawmills, who constructed 30-foot
structures called cyclone towers which used centrifugal force to separate harmful
particles from the air. This was the underlying concept which Dyson decided to apply in
his alternative to the bag-based vacuum cleaner.

The design of the final product, perfectly functioning and easy to use, as Dyson insisted
I should be, would not be ready tor another five years, and close to 5,000 prototypes.

Turing the Idea into Reality

Now that he had an idea which he and his team were certain could be turned into a
viable working model, Dyson began approaching the leading vacuum cleaner
manufactures worldwide – including, amongst
 “Seeing is believing” became the theme. This meant getting store staff to actually
use it themselves, so that they could in turn demonstrate the efficacy of the
model to the potential customers.
 Accordingly these retailers were given models which they could take home and
use for home trials over 30 days, during which time the machine was typically
swapped around in lost of different people’s homes.
 Store staffs were given special prices if they wanted to buy Dual Cyclones for
themselves.
Creating a Serious Presence in Advertising
Most appliance manufactures relied on women’s journals to promote their wares.
James Dyson, from the very outset in 1993, guaranteed to put 20% of what retailers
spend into advertising on television to promote DC01. Dyson needed to do that to get
them buy so as to generate the cash to pay for advertising, as well as to secure end of
gondola displays in shops. Rather than use traditional ad agencies, Dyson produced its
advertising campaign in-house.

The first advertisement, in 1993 was shown on regional and national television in the
UK. There was a steady growth in advertising expenditures, especially television spots,
throughout the 90’s. Technical aspects of the product dominated the ad messages.

In 1996 Dyson decided to divert 2 million pounds, its entire television advertising budget
for that year, to sponsor Sir Ranulph Fiennes’ artic expedition, whose aim was to raise
money for breast cancer research. All the retailers who would normally fight for every
penny joined it and gave money for this cause.

By 1999 , with a Dyson model in about 15% of UK homes, the company strongly
believed that they had to continue to promote the functionality of the product if the
company was to continue to grow in the future.

Servicing the Market

Each Dyson range had a prominently displayed label with the Dyson Helpline number
on it. The helpline was open seven days a week, from 8am to 8pm, including most bank
holidays.

By 1999, the company had 100 trained customer service staff manning these helplines.
By this time also, Dyson planned to install, together with its software partner, a
Computer Telephony Integration (CTI) system which recognized the telephone number
of an incoming call and brought the customer’s details on-screen automatically. Call
monitoring was frequent so that trainers could listen into calls and assess that standards
were being met. Satisfaction Surveys are performed by Dyson, in which customers were
asked how well calls being handled.

Dyson also developed an overnight repair service provided by Parcel Force and
branded to customers as Dyson Overnight Courier Services. If a customer phoned by
11am, and it was determined by the helpline that the machine had to be seen, Dyson
would send the courier service to pick up the unit and send it to Dyson’s factory to be
repaired and back to the customer the following day. This repair service is free of
charge others, Philips, Electrolux, Bosch, Siemens, and Miele – to ask them to work
within him on developing, manufacturing and launching the model. Most did not
respond. Of those who did, one agreed to meet Dyson – but only if he signed over the
rights to anything he revealed to them in conversation, which he refused. Another, a
Scandinavian manufacturer replied that they were not interested in bagless vacuum
cleaner because they were making so much money out of selling replacement bags to
their current customers – “bags are big business.”

In North America in 1986, Dyson did find a Canadian distributor interested in licensing
the invention in the US – a market of 260 million with 11 million vacuum cleaners sold
annually. However, things did not run smoothly because a large US company also
produced a vacuum cleaner which Dyson thought infringed his patent. He sued the
company in a lawsuit which lasted several years and was only settled in 1991.

Building a Product
By 1993, Dyson at last began succeeding in selling foreign manufacturing licenses for
his Dual Cyclone vacuum cleaners, but had still not made any real progress in the UK.
The small amount of market researched seemed discouraging people said they didn’t
like the idea of the dust being visible in the canister in case their neighbors saw how
much dirt had been picked up in their homes. Dyson, however, insisted that the
transparency of the plastic canister was critical, not only to let people know when it was
full and so had to be cleaned, but also to graphically demonstrate the efficiency and
power of the machine. For him, market research could only tell what has happened, not
what is going to happen.

Finally, he decided he could only do one thing: in 1993, with the help of a bank loan, he
set up his own company – Dyson Appliances Ltd. In March of that year, armed with over
100 patents to protect the technology, the world’s first bagless vacuum cleaner
manufactured under the Dyson name, DC01, and upright – was launched in the UK.

The look of the machine – a silver-grey plastic body which resembled machined
aluminum and seemed a bit like a piece of aircraft technology, with yellow bits used to
highlight the important parts of the machine as well as give it a sense of fun – was
indeed very different to the run-of-the-mill, dull-looking vacuum cleaners with which
most people were familiar. As Dyson remembered, “We wanted it to look like a piece of
NASA technology. Its superior performance has to be visible. It has to look the
business” Dyson insisted that design and style only came at the end: all important, in his
view, was function. While acknowledging the striking look of the machine, he was
adamant that the design was in fact only the by-product of a great technology.

Despite its underlying technology, and its great looks, it was a product designed for the
masses. In his view, everyone would want to take advantage of what he saw as a
quantum leap in functional performance. Not only that, but they would be willing to pay
for it. Vastly superior patents were expensive and had to be paid for. People don’t mind
paying more for a product they know works better, they were convinced. Accordingly,
the Dyson models would be priced at about 200 pounds more than, or just about twice
the price, of the average vacuum cleaner. There was, however, no recommended retail
selling price.

23 months later. DC01 became the overall best-selling vacuum cleaner in Britain.

Getting Retailers on Board

The first retailers approached by Dyson had been skeptical about stoking a strange
looking product with an unknown brand from an unheard company and costing a
premium.

Dyson was convinced at the beginning that getting his innovation accepted meant that
retailers had not just to understand its potential value added but use the machines, both
as individuals in their homes and to clean their shops with. With this in mind, Dyson’s
sales-force used several techniques to overcome the initial trade reluctance.
ANALYSIS REPORT

Problem
 The retailers and manufacturers showed no interest on the product
that Dyson made because it was priced at more than the double that
of existing products.

 How to keep ahead increasing the momentum as the new millennium

approached.

Objective
 To make the product known through wide advertising and promotion
this will drag the potential buyers’ and possibly the retailers’ attention.
And to seek people attention, the product must be sold at a cheap
price. Therefore, several people will be interested about the product
easily.

 To create increasingly sophisticated machines.

Areas of Consideration
 James Dyson is a British inventor, industrial designer and founder
and chief executive of Dyson Ltd. He wanted to invent something
more efficient, by creating a machine that wouldn’t lose suction.

 The manufacturers are against Dyson’s product. They ignored

Dyson’s work because they prefer the old-style vacuum cleaner
instead of the bagless vacuum cleaner.
Courses of Action
 Improving product is good and it has a possibility that your profit will
be increase. He can still invent some product. Maybe he just needs to
lower the price and embellish his product so retailers and
manufacturers can notice his work.

 Instead of the bag, Dyson envisaged a cyclone like a machine which

like cyclone of a tornado.

Advantage
 He can still develop and enhance some product and he and the
manufacturers will gain at the same time.

 The power of customers is high because Dyson is a premium brand.

Disadvantage
 Dyson are at a higher risk of substitutes as it is a premium brand.
Products prices are quite expensive. Therefore, customers would
only go for Dyson products when they want something much better. It
is one of the reasons why manufacturers ignored Dyson, it is because
the product is pricey.

Recommendation
 Dyson can also come to a conclusion where he can low the cost of
his product. Maybe he can reduce its cost whether be marketing,
promotion and research.
Plan of Action
 Have a pleasant communication with the manufacturers and retailers
and discuss the product to them. Offer the product with a lesser price
or affordable price so that manufacturers will take notice of your
product and they can offer it to another manufacturers or retailers, so
that, you will be able to gain more profits and create another product.

Potential Problem
 The manufacturers or retailers might not agree with the idea because
at first, they don’t notice and give attention to the product. They will
lose a big amount of money when they buy Dyson’s product and
there is no guarantee if anyone will buy that product.