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iRobot_Case_analysis.pptx.pdf
1. BUSN 495
Case Analysis By:
Marc Hebane, Anja Jankovic,
Madison Felts, Mialy Jacky,
Jorden Jackson, & Brooke Hamlett
2. Overview
● iRobot is the leading global consumer robot company founded in 1990
● The companies focus was to design and manufacture robots that
empowered people to do more both inside and outside the home
● In 2018 they had a 24% increase in revenue from the year before
● Company stocks increased 118% over one year (2018-2019)
● In 2005 iRobot became the first robot manufacturer to have a successful
public stock offering (the company sold 4.3 million shares of stock at $24
and raised $103 million)
3. Products:
iRobot Roomba 600 series -$249.99
iRobot Roomba e5-$349.99 iRobot Roomba 900 series -$449.99 iRobot Roomba 800 series -$757.99
iRobot Roomba i7-$599.99
iRobot Terra Lawn Mowing
Robot
- not launched yet
iRobot Mirra Pool Cleaning
Robot
-$999.99
Braava Automatic Floor
Mopping Robot
-$399.99
Common Features:
app accessible, can connect to Wifi, can be used on multiple floor surfaces
4. Situational Analysis
Social/Demographic Factors
● Almost everything has gone digital/automated.
● Consumers look for an easier, more efficient way to do things.
● Trend for smart homes and products to make a home smart.
Technological Factors
● Automation of household items is rapidly growing.
Economic Factors
● Economy grew 2.9%
● Average income growth US and World wide..
● Decline in unemployment rate from 4.36% to 3.90%
Environment/Geographic Factors
Political/Legal/Governmental Factors
● Trade wars
● Privacy or data protection laws
Conclusion: The Macro environment is favorable for IRobot.
5. Five Forces Model
Threat of New Entrants
● Major barriers to entry: Differentiation & access to distribution networks
● Competitive force: Low
● Explanation: With only a few retailers selling this product, it’s easy for new
entrants to get the product on the shelf
Rivalry
● Who are major competitors: Eufoy RoboVac, Dyson, Neato Robotics, LG,
Shark, Samsung, Ecovacs
● Competitive force: High
● Explanation: The products are similar and there are multiple firms
6. Five Forces Model
Power of Buyers Bargaining
● Who are buyers: People looking for an easy way to clean the house and are willing to pay a little extra
● Bargaining power: low
● Explanation: The quality and differentiation of the product are important to buyers.
Power of Supplier Bargaining
● Who are suppliers: Stores like Walmart and Best Buy
● Bargaining power: moderate to high
● Explanation: The manufacturer is dependent on the supplier
Threat of Substitutes
● Who are substitutes: Vacuum, Swiffer, Broom
● Bargaining power: high
● Explanation: There is little differentiation in the items that are being sold so it leads to easier ways to
have substitutes
7. Characteristics of the Industry
Main Characteristics:
● Large market, with low penetration
● High competition amongst rivals
● Concentration on research and development of unconventional products
Driving Forces:
● Technological changes
● Increasing market share
10. Critical Success Factors
iRobot’s critical success factors are attributed to:
- Aggressive competitive pricing to fend off competitors
- Driving higher top-line growth and maintaining dominant market share
- Aggressive spending on advertising and marketing
- Increasing investment in research and development to extend iRobot’s technology and product leadership
- Relatively Low price for the value of the product
- Protected IP and iRobot’s valuing the protection and privacy of their customers
- Roomba dominates the robotic vacuum cleaner market domestically and internationally.
“iRobot believes its ongoing success is dependent on its proprietary technology, the intellectual skills of its employees and the ability of these
employees to continue to innovate. iRobot’s future performance will be determined by the quality of its current and future intellectual
property, its ability to protect it, and its ability to excel in product development and customer support.” (Faculty.Washington.edu)
11. Financial Analysis
In February of 2019, iRobot’s chairman and CEO announced the companies “phenomenal finish to 2018“. The
company exceeded both fourth-quarter and full-year expectations for revenue growth. Revenue for the full year of
2018 was 1.1 million compared to 883.9 million for the full year of 2017. However recent reports for the fourth
quarter of 2021 show that revenue declined 16% due to chip constraints and shipping delays that impacted their
ability to fulfill their $35 million in orders. However, iRobots have surpassed the 40 million robots sold milestone
during 2021 and received many awards and positive reviews.
12. SWOT Analysis
Strengths
● Product Innovation
● Strong Brand Portfolio
● High Level of Customer Satisfaction
Weaknesses
● Investment in Research and Development are low compared to
competitors
● Positioning and unique selling proposition is not clearly defined
13. SWOT Analysis
Opportunities
● Strengthen marketing efforts
● Monitor consumer behavior for changes with consumers to then diversify
the products
Threats
● Competitors
● Cheaper alternatives
● Rising costs
14. Value Chain
Primary Activities
● Operations: Producing well-made automated cleaning devices.
● Distribution: Selling these devices online & through other retailers.
● Marketing & Sales: Focus on the “humanness” of the product.
● Service: Customers are highly satisfied with products.
● Profit Margin: 27.58%
Supporting Activities
● Technology Development: Developing up-to-date systems
15. Competitive Advantage
● First movers Advantage: brand image and position in the industry.
● Global scope of operations
● Cash reserves for R&D.
16. Defining the Problem
What is the core problem?
● How to keep or increase market dominance in the robotic cleaning
industry
17. Identifying the Alternatives
1. Lower prices
○ want to be closer in price with our competitors
2. Implement more marketing strategies in your lower selling regions
○ want to increase popularity, showcase why our product is better than our competitors,
highlight why our benefits outweigh our price
3. Alleviate customer privacy concerns
○ Informs customers of our different privacy options, create more customizable privacy
modes
4. Continuously improve products
○ Improve technology capabilities, products functions
19. Evaluation of Alternatives
Evaluation
Criteria
Lower prices More marketing strategies Alleviate privacy
concerns
Improve products
Quality Will decrease quality in
the mind of consumer.
Will let customers know
that the brand has
reputable quality.
Will not affect the quality
of the product.
Will encourage customers’
return.
Brand
Image
Will slightly increase
because customers will
think the prices are
more appropriate.
Will reach a broader
audience and create brand
awareness.
Will help customers feel
more comfortable
knowing that their
privacy is being valued.
Will increase if the brand
is known for having good
quality products.
Profit Will increase as
customers will agree
with the price more.
Will increase as strategies
will generate more sales.
Will not affect profit Will increase as
customers will be more
and more confident of
their purchase.
Technology
Leadership
Will not affect
technology leadership.
Will not affect technology
leadership.
Will boost technology
leadership.
Technology leadership will
have to improve alongside
products.
21. Recommendations
We primarily recommend that they improve their products (technology and
product functions)
- Customers do not think the benefits outway the cost
They should also consider making changes in these areas:
● Reduce customers privacy concern
- Provide more proof that they are not selling the data they collect from peoples homes
- iRobot came out with a statement saying they would not sell the data to anyone to ensure customers privacy
● Provide customers with subscription services
- Offering a monthly subscription allow a support team if needed for fixing and offering accessories for the iRobot (bumpers)
● Offer updates
- Offering updates to fix security issues and the devices overall performance
