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.

CarmineD wrote:
Although I won't be buying one at the current pricing, I would consider one if the price dropped to say $50.  The danger to Dyson is that by gouging consumers on the fan, consumers might do the math and conclude that vacuums are overpriced by a similar factor.  Just to be generous, suppose that with it's novelty that the fan is worth $100:  then the fan is overpriced by a factor of 3.5.   A consumer might conclude that the vacuums are also overpriced by a factor of 3.5. 

Severus wrote:

Hi Severus,

Thinking along the lines of novelty as regards appliance buys we could well live without, the price of the Dyson fan should at best, have been a hundred dollars as you've mentioned to make it attractive to the American public.  I think that proves even more true if Dyson distributoors are going to send them to not necessarily high-end shopping venues like BestBuy, Target and Wal-Mart.  People shopping at these places are not going to them to find out how much they can spend.  They're looking to see how much they won't have to spend.

I'd expect to see a desktop fan at the present $300 price at Sharper Image, Hammacher Schlemmer or even Bed, Bath & Beyond.

Breville -- a rather pricey maker of kitchen appliances -- commands higher than usual prices but a very large part of its product is made of cast metal and has some semblance of being "heavy duty."

By the way, does anyone know how you go about cleaning one these fans periodically?  Desktop fans with exposed blades collect dust but can usually be easily dissasembled for cleaning.  I've done it many times.

The perforations allowing the entry of air around the middle of the base of the Dyson fan can be wiped clean externally and without problem but how do you get at the "impeller" to clean it and does the ring come apart for cleaning as well?

As for vacuum pricing in general, it's been way over actual cost for a long time.  Even more annoying in the pondering of it is the fact that most of what's offered is neither being made at home nor are most of the workers producing the product getting near what we'd consider a living wage.

Venson

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.