Vacuum Cleaners Discussions

Dyson has this week released details of their end of year 2009 performance and generally paints a positive picture. Highlights include:-

• Despite the recession, global sales for the company increased 23% to 770m GBP
• Operating profits more than doubled from 90m to 190m GBP
• The Dyson Air Multiplier is a top seller in Australia; within 6 weeks, representing 64% of the market for desk fans, by value.
• In the UK and US markets, the updated 'ball' range represents more than half of the Dyson cleaners sold.
• In the UK, the company has a total market share for vacuum cleaners, by value, of 40%.
• Dyson is the market leader for vacuum cleaner sales (by value) in the UK, US, Canada, Australia, France, Belgium, Spain, Switzerland, Ireland and New Zealand.

Looking ahead, the company talks about new product launches scheduled towards the end of 2010 - a fair number of which (my speculation) are likely to continue the trend of offering a completive advantage by using digital motor technology. Ironically, a technology originally developed for use in their full-size vacuums, while all current models continue to use traditional motors.

http://www.independent.co.uk/news/business/news/dyson-profits-double-thanks-to-rd-investment-1983841.html

http://www.themanufacturer.com/uk/content/10603/Dyson_cleans_up

http://www.managementtoday.co.uk/channel/Entrepreneurship/news/1006022/sales-vacuum-dyson-gadgets-cost-worth-paying/

http://www.eurekamagazine.co.uk/article/25296/Dyson-doubles-operating-profits.aspx - note: this has the statement 'The company has also confirmed plans to launch a robotic version of its bagless vacuum cleaner' - dunno if that's significant, but I haven't seen it reported elsewhere.

As for Dyson a HUGE amount of the cost is for Advertising. It's not in dealer margin that's for sure.

Lucky1 wrote:

I would agree with this several years ago.  More recent years, I have not seen any dyson/Sir James advertising anywhere.  Not on TV, at least not here in the US, no US magazines, notta.  Maybe Sir James is concentrating on the UK home front or stock piling the funds he raided from Retained Earnings several years ago.  Perhaps dyson is sinking in R&D with all the new planned/pipelined products.  Haven't seen anything new yet in vacuums, the white edition of the ball model doesn't count.  Still same old same old DC25.  Last new vacuum is the DC28 in upright and DC23 in cann now going on a year and two young. 

Carmine D.

I agree Carmine. Even in the UK, Dyson products aren't normally being advertised in the press, only on TV during programmes and often late on rather than evening time when the family sit down to dinner. Dyson doesn't need advertising anymore anyway - they've already established their name and what they do. At least Dyson are doing advertising in the UK though; the last time I saw a UK Hoover advert it must have been in the 1980s for the Turbomaster and then 1990s for their Turbopower 2/3 Permabag:

Turbomaster: http://www.youtube.com/watch?v=Xp8KqoSVHME

Turbopower 1000: http://www.youtube.com/watch?v=RzcR6qzBJ_4

The U.S has at least a lot more advertising in the Hoover product ranges.

We still get a bit of Dyson Advertising in the NYC Metro area, probably because of demographics I would guess. Shark and their crap has by far the biggest visibility. Bissell, while not advertising often, does tend to buy some premium spots at big event TV programs. I see some electrolux (mostly appliance) and minimal Hoover or DD.

CarmineD wrote:

Hi Carmine .....unique it is. will no doubt sell at high end venues.

The display at target i noticed had no other fan on[running] or near it.But a $15 fan down a bit from it puts out the same airflow ...so its more a piece of working art that can be used but not one thats practical for the avg. person in a home where they need and use a fan/s as a suppliment to the a/c....as in our case for example...in an office it would look nice..a nice office that is, so that they would complement eachother.

As with the radiance i was gifted.....beautiful it is, but so not worth the money in my personal use view. Elegent and powerful and oh so heavy. An 8925 or pansc585...cleans and grooms just as well for a third to half the cost.....not as pretty to look at...but nice deep cleaners.

turtle

Lucky1 wrote:

Same here..guess its an east coast thing....but have been seeing alot of the swivel sweeper over the past couple weeks..guess cause its summer and all the kiddies are home....i figured id see more across the board from all the vac names.

turtle

The Air Multiplier fan offers dyson/Sir James an excellent opportunity to flaunt the inventor and company's latest in its household wizardry.  Coupled with the summer season [in the USA].  Notta yet.  Perhaps soon?  Lest the risk that SEVERUS and Venson cogently illustrate.  Consumers, especially during a prolonged period of unemployment nationwide of 10 percent, may view a 10 inch fan for $300 as exorbitantly priced.  Giving suspicion to the fact that perhaps the company's vacuums are too. 

Historically here in Las Vegas, the last dyson/Sir James TV ads here in the silver state were the ball dysons.  Several years young now and counting.  Nothing since.  The TV clips were concurrent with the beginnings of the perception that the USA and globally the economies were headed into an uncertain and unchartered difficult course.

HOOVER, since vacmanuk mentions, last advertised with a flurry and frenzy for the Platinum collection.  Both TV and magazines. HOOVER walked the red carpet with the Oscar stars for the Paltinum collection. 

ORECK, a favorite of a particular poster here, is still going strong with advertising on TV, newspapers etc.  No let up.  Trebor and Procare correctly point out that ORECK has increased market share in 2009 and poised to do likewise 2010.  Ask myself/yourself why the difference?  Why does ORECK stay the course with advertising while others fade?  Especially if we are to believe the ORECK detractors here who claim it offers the same 40 year old products and market strategies while others boast the industry's latest and greatest. 

Carmine D.

CarmineD wrote:
I try to keep an open mind about pricing. I have to price up products for my own business - adding value and working out how much the market will take.

For the Dyson Fan At 300 USD, there's certainly a big margin between the combined component, assembly and shipping costs and the selling price. Clearly, Dyson's research and general overheads need to be factored in but, could we say that the product would still have a reasonable sales margin for all involved, if it retailed at 100 USD? In which case, Dyson would need to ask - "could we shift at least 4x as many units at this lower price point?"

However, it's not even as straight-forward as that. In selling 4x or more units they'd need have invested in a much larger manufacturing capacity and have well stocked local warehouses - with all the financial risk which that involves. They need to protect against underestimating the public demand, selling out on the first day, making eager buyers wait 3 months for stocks to be replenished, while missing out on 2/3rds of the revenue and all the publicity generated by the launch. Particularly with a highly seasonal line like this, you wouldn't get another good bite of the cherry until the following year.

If the product was say priced at 200 USD and still performing well above average, typically selling out in less than a week and making levels at the central warehouses go critically low, what options do you have to stabilse stock holding and capitalise on the unexpected popularly? Put the price up to 300 USD? You have a unique, patented product - technically, you have no direct competition and yes, you can do this. However, it would be a very unpopular move, with both retailers and the public alike.

The preferred option is to price as high as you think the market will take and keep a close eye on the initial sales figures. If demand is in check with supply, stay as you are. Once manufacturing / stock levels have stabilised and demand has started to fall, you can then stimulate sales with steady prices cuts and look to reach the next level of buyer.

Retailers can promote with offers like '33% off - was 300 USD, now 200' and in the buyer's mind they're getting 300 USD worth of product, with an extra 100 USD in their pocket. The price might go down to 100 USD eventually, by which time you've introduced a new, improved product and can sell both side by side - the latest high-tech product at an 'entry-level' and 'premium' price whilst continuing to get combined margins that eclipse the competition.

M00seUK wrote:

Hi M00seUK,

I don't see that need of a desktop fan requires all the  over-build here or the hked up price.  Yet, I also believe that if you want to sell one and then sell more in worthwhile amounts, consider what it actually is and price it accordingly. There is nothing about this fan that in the least way convinces me that it costs more than ten or twelve American dollars each to mass produce and box up for shipping.

There are venues that we refer to as schlock-shops here in the U.S.  They sell usable goods but none of great speciality or great price. We usually head for "better" stores for the fancy stuff and are more susceptible to influence by way of the type of store to pay more for what we might readily buy for less elswhere.  If, per your feeling, high volume sales may not be of issue and the possibility of this machine's speciality is intentionally being posed to justify price then I think the purposes of all involved are better served by placing the fan in high-end stores like Neiman-Marcus, Bloomingdalse or even Macy's where people with the wherewithal to drop a few hundred bucks on small items are far more likely to be found.

Where is the logic in placing a $300 fan in venues where entire air conditioners are selling at two-thirds the price and far more powerful fans sitting right besided it can be had for one-tenth the price?  Selling speciality items has not only to do with the product itself being sold but where you place it for sale. Presentation means a lot.

Target and Wal-Mart could carry the very same stuff as Tiffany and Company but to what end?  The quality of jewelry sold at Costco is not the same as at a high-end vendor and most people who happen to make a purhcase there do not have the same expectations or make the same execeptions in regard to price as they would if, as an example, they walk into Harry Winston's.

If I walk into an everyday venue, as needed and with no particular urgency of purchase involved, I'm already programmed to think forty bucks or so for a desk fan or blender, maybe $300- 350 for a vacuum cleaner, maybe four to six hundred bucks it there's a good sale on TVs.  That is not written in stone as like everyone else I'm willing to go higher if I see product that appears to genuinely merit its price.  Nonetheless, I don't think that reflects my thinking alone and I don't think it aids Dyson much.

If Dyson's belief is that people everywhere are going to love the fan so much that they'll drop $300 wherever they happen to see it I think they need to think again.

Best,

Venson

Hello M00seUK:

I would agree partially and possibly with some of your arguments IF dyson fans were a year round seller like vacuums with peaks and troughs for consumer demands. 

Certainly this is not the case with fans.  Fans are a seasonal seller.  The sales market is at most 30-60 days during the summer season. For example, in Las Vegas, May & June would be the peak months for fan sales with falling off demand in July and August [clearance for clearing shelves for back to school items which tends to be the peak sales season second to Thanksgiving-Christmas-New Year's]. 

All the arguments about stocking shelves with accurate product quantities, shipping trends and costs to tweak warehouse inventories/supplies are moot points for fans.  3 months is the sales season every year barring unforeseen and prolonged Indian Summers.  Tops is 4 months even in the hottest of climates in the USA like Las Vegas.  After that time, it's a done sales deal and the item disappears until the next year's summer season.  Which to my way of thinking makes advertising the Air Multiplier more critical and relevant now rather than later in the USA.  Although it's been for sale since March, and as you say, and if we believe you, is a unique product without competition, it means $300 10 inch fans are more likely a candidate for an advertising media blitz.  Yet, so far at least, nothing done to put the latest and greatest in front of the US buying market.  Who, if we are to taken in by your points, would be running to the stores in unprecedented numbers at this very moment to buy up all the inventory $100-$200 dyson 10 inch fans.   Not in the throes of the worse Recession since the Great Depression of the 1930's in the USA.  With 5 percent of the homes in the US in foreclosure, 11 percent in arrears, and 10 nationwide unemployment.  I know its even worse on your side of the pond. 

Carmine D.