Dyson [Markets & Strategy]

BUSINESS REPORT:
Markets & Strategy
Sunil Thapa

Sunil Thapa Page | 2
Contents
Part I. Operating Environment
1. Introduction……………………………………………………………….03
2. Market Environment………………………………………………………03
3. Main Competitor & Customers……………………………………………04
4. Market Share……………………………………………………………....04
5. Competitive Analysis……………………………………………………...06
6. Porter’s Five Factors………………………………………………………07
7. Porter Analysis…………………………………………………………….08
Part II. Key Economic Variables
1. Global Economy…………………………………………………………..09
2. Interest Rate……………………………………………………………….10
3. Commodity Prices…………………………………………………………11
4. Unemployment………………………………………………………….....12
5. PESTEL…………………………………………………………………...12
Part III. References
Harvard Referencing………………………………………………………15

Part I. Operating Environment
1. Introduction
Most of the companies establish to achieve hefty profits and keep them as a focal point but very
few companies like Dyson Ltd had emerged themselves in the quest of contemporary design and
stand to cater domestic needs with its innovative products. The company is named after the
founder Sir James Dyson, a man with extraordinary design architecture and innovation spirit.
From the initial stage the company had been involved in heroic struggle from getting the right
manufacturing location to fighting cases of intellectual property.
Product advantage has been a key element for the success of Dyson ever since it launched the
Dyson DC01 vacuum cleaner in 1992 it had clearly distinguished itself in the market, when all
vacuum had the same function sucking dirt into the bag, the DC01 introduce spinning ‘cyclone
chambers’ which did not clog and produce maximum suction. The company set up its own
manufacturing plant in 1993 overcoming the early hardships it faced. After penetrating the
market with its innovative vacuum cleaners the company has been successful by constantly
producing similar high quality products such as bladeless fan and hand dryers called the Dyson
Air multiplier and Air blade and in September 2011 the company launched fan heaters under the
product line of Dyson Hot range. Today the company distributes in 45 countries and exists in a
global competitive market (Dyson, 2013).
2. Market Environment
 Vacuum Cleaners Growth UK: In the UK, vacuum cleaners have recorded a retail volume
growth of 1% in 2012, a marginal decrease compared to 2011. The deceleration in growth was
largely due to an increase in unit price and slower replacement cycles among consumers (Euro
International 2013). According to this source, forecast sales of vacuum cleaners in both volume
and value growth from 2012-2017, two specific models namely the stick vacuum and robotic
vacuum cleaner will remain in the highest percentage of sale.
 Variety: Vacuum cleaners configured with different design and innovation account for
volume of sales in different regions, most common models are handle, upright, cylindrical, and
robotic vacuum cleaners. What is popular in Europe may not be the same in other regions.

 Replacement-driven products: Not only the vacuum cleaner market but even other home
appliances product of the company is based on a replacement life line. This means the consumer
will opt for a new purchasing only if the product breaks down. However beyond consumer
appliances the company has expanded its product category with industry hand driers, but the
future may demand more than this to maximize growth and sustain.
3. Main Competitors & Customers
Although a leader in home market Dyson is not relieved by fellow competitors, for market
invasion and patent infringement the company regularly tackles with Vax Ltd a UK based
company, meanwhile giant companies like Hoover, Electrolux AB and Miele are no exceptions
who manufacture both major and small appliances (Mintel, 2010). Unlike Dyson’s single prime
product they have range of product line and most importantly are confident in sharing almost the
same features and technology of vacuum cleaners as Dyson. These global competitors were not
founded in the UK but in the present date dominate certain regions and market share
internationally.
The main customers for this sector largely covers homes, more precisely as it is a house hold
product consumers at home are the target audience which can range from teenagers to middle
age. However Dyson’s other product line like hand dryers serve commercial purposes from
corporate to industries which can involve people from different profile such as shoppers or an
office employee.
4. Market Share
Dyson Ltd
Dyson led by US and Japan sales had record breaking annual sales of £1.05bn in 2011. It exports
85% of its machines outside the UK, compared with 30% in 2005 (BBC 2012). In terms of
volume the company ranked 15th
in overall consumer appliances in the UK in 2012 with a share
of 2% mainly from vacuum cleaners, in which the company is a leader with 20% volume share
(Euro monitor 2013). On the other hand, in US the company held 5% share in vacuum cleaner,
up slightly from 2011, accounting it the fastest growing manufacturer despite premium price and
economic challenging conditions (Euro monitor International 2013).

Vax Ltd
The principal activities of UK-based floor care company Vax are the development and
distribution of carpet and vacuum cleaners. In the UK it accounts for 10% retail volume share,
following Dyson.
Hoover
Acquired by Candy Group in 1995, this company operating under the Hoover Candy Group
stands third with 8% retail volume share in the UK. (Hoover, 2013)
Electrolux AB
The Swedish domestic appliances manufacturer ranked third in major appliances and 14th
in
small appliances, Electrolux main market is Latin America with 28% of company’s total volume
sales in 2012, similarly hold a major market in North America and Western Europe combining
both regions 44% of global volume sales was accounted (Euromonitor International, 2013).
Miele
A German based company firmly established with more than 42 subsidiaries and the company’s
highest historical turnover of € 2.81bn in 2007-08, Miele is a strong competitor in the industry, it
has a strong European dominance from where it achieves maximum sale. In 2010, 80% of its sale
was generated from Europe, and in India it has recently concentrated to expand from 17 stores to
add 7 more in the end of 2012. (Euromonitor International 2013).
US Market Share
TTI Floor Care North America led vacuum cleaners in the US in 2012. It maintained a 32%
share of volume sales, supported mainly by its Dirt Devil and Hoover brands. Bissell was in
second place, holding a 21% volume share, and The Eureka Co was third with an 11% share
(Euromonitor International 2013).

5. Competition Analysis
Analyzing the global and domestic market it can be assumed that different form of competition
stands at different levels.
The US market is led by Techtronic Industries Co Ltd (TTI Group) contributed by Hoover and
Dirt Devil the company sales maximum number of vacuums, it has a global presence which is a
threat to be considered. Sales of vacuum cleaners in this market is accounted by low price points,
brands like Bissell and Eureka dominate in the second and third place with lower price than
Dyson’s premium products.
To be precise, these companies give paramount importance to product design, technology and
innovation. Each of their products have reached an extra mile in innovation, the new Vax C88-
M8-B Mach 8 base for instance has a bag less cylinder vacuum cleaner featuring a multi cyclonic
technology with extraordinary features (Vax Ltd), other giant market leaders have similar cutting
edge technology. In this race of development patent security is imminent Dyson desk fan has 11
patent separate applications, and it must continue to be concern about such issues.
More broadly, companies are spending massively in marketing and advertising for results, Vax
ltd withstand spending £7.3m in advertising from 2008 to April 2012 being the second-highest
adspend brand in the sector (Mintel 2013). Competition also exists in aligning strategy within the
industry, high street approved retailer and online shops are common point of sales for which
rivalry is fierce among all.

6. Porter’s Five Factors
Competitive Rivalry:
(Summary Below)
Supplier Power:
 In house design and
manufacturing provides
advantage in lead time
and flow in supply
chain.
 High investment in
R&D is a competency.
 Company’s 350
engineers and scientist
used in technology and
innovation.
 More than 120 own
special testing station in
Malaysia.
Threat of Substitutes:
 Uncertain economic
environment.
 Increase in design and
technology of vacuums.
 Cases of M&A which is
expected to continue.
 Tough penetration in new
markets those are already
dominated.
 May be considered less
essential in new markets where
broom is used instead vacuums.
 Absence of James Dyson’s
public figure.
Buyer Power:
 More options with
low end prices may
discourage
consumers.
 Can bargain from
wide range of
products of other
companies providing
similar features.
 Wide range of retail
point of purchase.
Threat of New Entrants:
 Less threat because of difficulty
to form R & D and innovation
for competition.
 Hard to compete with the brand
presence and its product quality.
 M&A can be a way for fresh
companies which are a bold
threat.

7. Porter’s Analysis
After accurate speculation, in order to maintain its position in the UK and grow in other regions
Dyson is in demand of rapid innovation. This can be achieved by its in house manufacturing
capability and fluent supply chain, as ‘Manufacturers are realigning their product ranges to more
specific consumer requirements’ (Mintel 2010), advance products like robotic cleaners can
accelerate Dyson’s growth. However, its premium price has been a key matter in the competition
despite double the price than its competitor’s product sales were often recorded high especially
during the initial stages of the company, but due to wide number of competitors and their low
price products responding to the factors Dyson must have alternative strategies in the plan.
Likewise, technology among competition is also parallel allowing most vacuum having similar
dynamic features and the invention of this is at speed. Earlier unique products like bag-less
cleaners, cyclonic built in and energy efficiency has now become common ground of battle,
models like Vax Air3 upright cleaner and Electrolux’s T8 ZT3520 thus pose serious threat.
Leading in innovation and design and selecting the right retail point of sales can also reduce
customers bargaining power for Dyson.
Economic conditions remain uncertain specially in the developed market ‘the rebound in output
in developed countries has proven feeble, while fiscal austerity is being imposed, especially in
the Eurozone’ (Global Small Appliances 2012).
Competitive Rivalry:
 The main competitors in this industry consist of similar strength and scale
competing for the marginal areas of growth.
 Advance technology and innovation give companies a competitive edge against
each other.
 Merger and Acquisition has been a common trend for market invasion.
 Collaboration like TTI supported by Hoover and Dirt Devil can be counted as
competition and such expectations must be aligned in the strategy.

Merger and Acquisition must be closely examined by Dyson as they are normal for competitors
to penetrate market meanwhile awareness of competitors’ market hold is equally important, for
instance, Elexctrolux which is ranked second in market position for vacuum cleaners have fewer
footholds in China therefore in this market the company is claimed uncompetitive due to low
volume sales. These factors sometimes lead companies to collaborate for market share, on the
other hand Dyson can build strength by monitoring such activities while maintaining its position.
Consumer spending plays a vital role, therefore future markets like India and China where
economic growth, improved electricity supply, purchasing power and huge middle class
population offers significant prospect. Most importantly launching the right model in the right
market is also vital as there is wide range of vacuum cleaners and market demand may vary.
Part II. Key Economic Variables
Economic variables play an extremely important role in the operations of Dyson and integrating
right strategies for the future years can prosper growth.
1. Global Economy
The global economic downturn of 2008-09 had significant impact on sales of this industry
however it has return to growth favorably because of the emerging regions like Asia Pacific and
Latin America (Passport 2013). In 2011 the Retail Volume Growth of small appliances in India
and China was mapped at a rate of 10-15% which stands more than half than any other countries.
Dyson can benefit by fine-tuning its robust marketing and distribution channel in such regions as
already the company has plan to strongly expand its presence in India, China and Latin America.
The UK had been on a plateau since 2008 crisis hit and after losing its AAA credit rating on
early 2013 the country’s forecast is uncertain, though the economy has managed to avoid the so
called triple-dip recession the way ahead is not going to be easy. The Office for National
Statistics said its first estimate for gross domestic product (GDP) showed the economy grew
0.3% during the first quarter of 2013 (BBC Research 2013).

The upcoming economic factors will play significant part for Dyson’s growth in the country
encouraging consumers with purchase power. Distributing its products in more than 45 countries,
global economy roofs the company’s performance however economic recovery and rise in
consumers’ incomes will motivate for new vacuum cleaner purchase, this is predicted to reach
4% volume CAGR (Compound Annual Growth Rate) during the forecast period 2013 (Passport
2013).
The US economy has seen a growth of 2.5% in the first quarter of 2013 and consumer spending
has rose at an annual rate of 3.2%. Though according to the experts figures are not as expected
but somehow such growth on spending is a positive signpost for the companies.
2. Interest Rates
Interest rates are of reflective impact for Dyson and other competitors in this industry. Low
interest rates inspire companies to borrow and invest in R&D while finance expansion.
In the UK interest rates have remained at the record-low level of 0.5% since 5 February 2009,
The Bank's Monetary Policy Committee (MPC) have held rates at its current record low for more

than three years (Economic Tracker 2013). This stimulus also pushes businesses to new horizon
by capital lending opportunity of new inventory and infrastructure takes shape. Similarly in the
US interest rates remained at a record low of 0.25% since December of 2008 after the credit
crunch (Trading Economics 2013). In the Euro zone the ECB is set to hold meeting on 02 May
2013 to lower its benchmark interest rate from the current 0.75% (Bloomberg 2013).
Looking figures in the India, the RBI (Reserve Bank of India) lowered its key rate to 7.5% from
7.75%, unfortunately the economic growth has dipped to 4.5% due to manufacturing slowdown
and delayed business reforms (BBC 2013).
3. Commodity Prices
Evaluating commodity prices are important for any manufacturing company, as even minor
changes in certain factors impact hugely in the operations of the firm. On the supply side Dyson
has a benefit of holding its own in house manufacturing, while factors such as overall
manufacturing cost, energy prices and income levels are strong determines.
In 2012 electricity price in the UK was recorded at US$12.45per kWh, where as the US and
France share similar price of US$ 8.90per kWh, in contrast cost in Italy and Germany was US$
20.23per kWh and US$ 15.15per kWh respectively (Statista 2013), this vary in price help
indicate Dyson for decision of manufacturing expansion and designing energy needs in its
products for consumers. Emerging economies dominate energy production, however new
markets like Asia Pacific and Africa are predicted to have growth in production in the next few
years (BP 2013).
In Malaysia where Dyson’s 120 testing station are run, as compared with January 2012, the PPI
(producer price index) for domestic economy for January 2013 slipped by 3.3 per cent. Despite
that, the indices manufacturing goods, machinery and transport equipment remained unchanged
(Statistics Gov Malaysia, 2013), this is positive and have a neutral affect on the functions of the
company.

4. Unemployment
This macro-economic variable has an effect upon levels of demand for products and services. In
UK the number of people out of work rose by 70,000 to 2.56 million in the three months to
February, this led the unemployment rate of the economically active population to increase
slightly to 7.9% (BBC Economy Tracker 2013). Sadly in the Eurozone unemployment was
surged to a record high at 12.1% on April 2013 (Eurostats 2013). Majority of the consumer in
this category will be unable to purchase Dyson’s premium products, on the other hand creating
jobs is also a social and economical challenge for the company. However in the far east,
developing economy may help boost situation.
5. PESTEL Analysis
Since due to the demand of this report, portions from the factors of the PESTEL are discussed on
both the part above, few more detail analyses are featured below:
POLITICAL ECONOMIC SOCIAL TECHNOLOGY ENVIROMENT LEGAL
International
Policies
Global
Economy
Consumer
Incomes
Advance
Features
WEEE
Regulations
Intellectual
Property
EU
Regulation
New Markets
Employme
nt
Robotic
Vacuums
CSR
Political Factors:
On an average in the UK and US, political factors seem to be accounted favorable for the
company, at home Sir James Dyson’s role as Conservative Party’s technological czar had an
impact as the government announced that it would increase the rate of research and development
tax credit to 225% for small and mid-sized businesses from April 2012 (Euromonitor
International, 2013).
On the other hand previous vested regulations such as in the past, the EU experts had proposed
restriction on power used by vacuum cleaners, the EU had summoned for developing new
technology which reduces power input to save energy. The EC wants power inputs to be cut by
the year 2014 to 500 Watts (0.5kW) for upright cleaners and 750 Watts for canister cleaners and
upright cleaners with integral hose and tools (Telegraph 2010). This had also led in decline of

sales and such bold bureaucratic laws force companies to pace innovation by expanding
competition, therefore Dyson must open doors for similar challenges ahead.
On the road to expansion the company must be careful of bureaucratic regulations in the new
countries as seeds of corruption and delayed reforms from international policy makers prove to
be stumbling blocks.
Economic:
Though the small appliances industry returned to almost the same growth levels as pre-crisis in
2010 and 2011 (6% and 5%, respectively), however vacuum cleaners are predicted to see slow
growth (Euromonitor International, 2013). As highlighted in the global economic section of the
second part of this assignment, capturing retail growth in India and China will focus sales growth
and may ease pressure of western markets for Dyson. Reports indicate, the global growth rate in
India is projected to be up to 6.7 per cent and in China 8-8.5% between 2013 and 2014 (The
Times of India 2013).
In the developed countries where the company is performing well, since people seek comfort
within their homes disposable incomes have has created additional demand for homely gadgets
(Euro monitor International, 2013). But moderate income in emerging markets is a matter of
scrutiny as it may be unfavorable for Dyson’s premium price.
Social Factors:
The company’s contribution in society is well recognized with effective charitable ventures such
as global workshop to find best in engineering and design. In addition the ‘James Dyson Award’
allowing students to participate in engineering solutions and winning £10000 has been a
remarkable contribution. Despite the much heated debate of outsourcing of jobs by opening
testing labs in Malaysia the company is also documented to prosper jobs at Wiltshire laboratory
in the UK. Expansion of such social existence in new markets through Corporate Social
Responsibility (CSR) is a key strength for Dyson.

Technological Factors:
Not only overcoming technical milestones but remaining on top of the game with the right model
in the right market is more crucial. The volume share of robotic cleaners is contributed by
developed countries, the US, South Korea, France, and Japan, accounted for 68% of total robotic
vacuum cleaners' volume sales in 2011 (Euromonitor International, 2013). This market is
constantly challenged by futuristic robotic designs and technology needs are high, where as in
other regions advance upright and cylinder vacuum cleaners might prove to be a star. Challenges
in this area are because of innovative models such as the Bissell Cleanview Compact bagless
cylinder vacuum cleaner which features 3-stage filtration including HEPA and foot pedal
function (Passport 2013).
Environmental Factors:
Global warming has been a common topic for companies, In UK WEEE Waste Electrical and
Electronic Equipment regulations require that businesses participate actively in reducing disposal
and recycling, (WEEE 2013) . In response companies like Vax have reduced 50% polystyrene in
their packaging Vax, 2013). Dyson itself has a competitive edge in this category as it complies
by the rules of WEEE, all of its products are energy efficiency and the company has recyclable
schemes, this environmental factors act positively in any markets.
Legal:
Fight for patent infringement in order to secure design and technology of vacuum cleaners has
been common for companies in this sector. In July 2010, the company lost legal action against
Vax Ltd in the UK, with High Court rejecting its claim that the Vax Mach Zen had infringed
Dyson’s registered designs. (Euromonitor International, 2013). Saving intellectual property had
been crucial for the company, in the past the founder even urged Prime Minister David Cameron
to present talks with Chinese premier for improving Chinese intellectual property regime (The
Telegraph 2012).
Legal matters were also recorded in the High court of England when Dyson claimed that Yong
Pang, an engineer, was paid more than $18,000 by a German competitor to pass on the
technology (Euromonitor International, 2013). It is now immensely significant for the company
to scrutinize legal regulations in emerging markets.

6. References
BBC News (2013) Economy Tracker [online] 25 April 2013. Available from:
http://www.bbc.co.uk/news/10613201. [Accessed 30 April 2013]
Bloomberg (2013) Interest Rate Volatility [online]. 26 April 2013. Available from:
http://www.bloomberg.com/quote/DX24:TH. [Accessed 26 April 2013]
BP (2013) Commodity Prices [online]. 25 April 2013. Available from:
http://www.bp.com/search.do?cf=&gf=&tf=&nf=&bf=&re=false&pe=&de=false&rl=&cl=&nl=&bl=&
ml=&lf=&ls=&lc=&ll=&lb=&cp=1&ra=&fl=n&kw=commodity+prices+2013&categoryId=37&sc=1.
[Accessed 21 April 2013]
EuroStat (2013) Euro Area Unemployment Rate [online]. (Chairperson: Mr. Thomas Wieser).
Luxembourg. Eurostat. Available from: http://epp.eurostat.ec.europa.eu. [Accessed 21 April
2013]
Department of Statistics Malaysia Official Portal (2013) Product Price Index [online].
(Chairperson: Dr. Haji Abdul Rahman Hasan). Malaysia: DSM. Available from:
http://www.statistics.gov.my/portal/index.php?option=com_content&view=category&id=141
%3Aproducer-price-index&Itemid=153&layout=default&lang=en [Accessed 17 April 2013]
Environment Agency (2013) Electric Equipment Regulations [online]. (Chairperson: Lord Chris
Smith). England: WEE. Available from: http://www.environment-agency.gov.uk. [Accessed
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Euromonitor International (2013) World Economic Outlook – April 2013: Commodity Market
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Euromonitor International (2013) Dyson Inc in Consumer Appliances (USA) – February 2013.
London: Passport. Available from: http://www.euromonitor.com/ [Accessed 16 April 2013]
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London: Passport. Available from: http://www.euromonitor.com/ [Accessed 16 April 2013]
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2013. London: Passport. Available from: http://www.euromonitor.com/ [Accessed 16 April
2013]
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Hotspots Post Recession – March 2013. London: Passport. Available from:
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2013. London: Passport. Available from: http://www.euromonitor.com/ [Accessed 20 April
2013]
Euromonitor International (2013) Robotic Vacuum Cleaners Welcomes its Golden Age – 28
June 2012. London: Passport. Available from: http://www.euromonitor.com/ [Accessed 16
April 2013
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Passport. Available from: http://www.euromonitor.com/ [Accessed 18 April 2013]
Euromonitor International (2013) Vacuum Cleaners in the UK – April 2013. London: Passport.
Available from: http://www.euromonitor.com/ [Accessed 18 April 2013]

Dyson (2013) Inside Dyson [online]. Available from:
http://content.dyson.co.uk/insidedyson/default.asp?basketTotal=0.00&basketQty=0&logged=fale
Hoover (2013) About Hoover [online]. Available from: http://hoover.com/. [Accessed 02 April
2013]
Miele (2013) Learn why is Miele different? [online]. Available from:
http://www.miele.co.uk/about/experience_miele_tmd.aspx. [Accessed 02 April 2013]
Mintel (2010) Vacuum Cleaners - Market Share – UK – August 2010 [online]. London: Mintel
Oxygen. Available from: http://academic .mintel.com [Accessed 12 April 2013]
Mintel (2010) Vacuum Cleaners – Companies and Products – UK – August 2010 [online].
London: Mintel Oxygen. Available from: http://academic .mintel.com [Accessed 12 April
2013]
Statista (2013) Commodities [online]. Statista Prices & Access. Available from:
http://de.statista.com/statistik/suche/q/commodity/. [Accessed 26 April 2013]
TTI Group (2013) About TTI [online]. Available at: http://www.ttigroup.com/. [Accessed 08
April 2013]
The Telegraph News (2010) Europe to cut power of vacuum cleaners to save energy. The
Telegrapgh [online]. 12 September 2010. Available from:
http://www.telegraph.co.uk/news/worldnews/europe/eu/7996383/Europe-to-cut-power-of
vacuum-cleaners-to-save-energy.html. [Accessed 12 April 2013]
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http://www.tradingeconomics.com/country-list/interest-rate. . [Accessed 26 April 2013]

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