Dyson’s Competitive Advantage

2816 words (11 pages) Essay in Management

05/06/17 Management Reference this

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1. Introduction

“Demand for organizational innovation and technological advantage are increasingly crucial components of competitive strategy for many firms” (Buffa, 1984; Butler, 1988; Miller 1989). Dyson encompasses these components within its business, using innovative strategies and technology to gain a better technological advantage. This report will seek to determine Dyson’s competitive advantage and how this helps them maintain their position as the market leader in innovative products.

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2. Brief History of Dyson

Dyson, an electrical manufacturer, is solely owned by Sir James Dyson, and its headquarters are based in Malmsbury, Wiltshire. Dyson was the first company to introduce a bagless solution to conventional vacuum cleaners. After securing a significant market share in the vacuum cleaner industry, the company decided to diversify in to new products and countries. Dyson’s vision is to make products more environmentally friendly and easy to use; his ongoing mission is to promote design and innovation through the production of his products. Today Dyson has a presence in 45 countries and still maintain a 46 % and 32% share in the UK and US Vacuum cleaner market, respectively (Telegraph, 2008).

3. Competitive advantage using innovation

Simply put, innovation is the process of transforming opportunities in to new ideas and of putting these ideas into common practice (Tidd et al, 2001). Dyson shows how innovation and different ways of creating and adding value through design can distinctly change an industry. “Innovation enabled Dyson, a newcomer in the domestic appliances industry to become a market leader and force a reaction from established manufacturers in that market” (Thompson and Martin, 2005).

According to Kotler et al. (2009) competitive advantage is gained by offering consumers greater value, either through lower prices or by providing more benefits. Competitive advantages and differences they create in firm performance are strongly related to the resources firms hold, and how these are managed (Ireland et al, 2009).

Dyson is one of the most important resources in his company, his innovative spirit and ability to defend market share demonstrates how he has gained a position as the market leader in innovative products and thrives to maintain it. “Firms need to innovate, not just once, but repeatedly, to keep their competitive edge” (Bruce and Jenvaker, 1998).

In order for Dyson to sustain its competitive advantage it must also develop a competitive strategy which is more innovative from its competitors, this involves Dyson increasing the strength of its brand.

4. The Dyson brand

Dyson has strong brand recognition, as the qualities projected by James Dyson become associated with the product itself (Boyle, 2004). The product is instantly identifiable by the brand name, because of the innovative design portrayed. Even though Dyson is a leading vacuum cleaner brand, it is still losing out to cheaper machines that have developed their own bagless technology (Hollensen, 2008). Hollensen argues that Dyson would need to drop its prices or strengthen the power and quality its brand. The innovative strategy Dyson employs is word of mouth and the company today claims 70 percent of its vacuum cleaners are sold on customer recommendation (Hollensen, 2008).

Dyson believes the marketing must be just as innovative as the product, so he likes to have his face associated with the product. The intelligent innovator communicates with opinion leaders for their opinions on the products, and publicizing them to the public. Another innovative strategy implemented by Dyson is related to the product brochures, as these tell a story of a heroic battle in becoming the market leader (Boyle, 2004). “Each brochure gives emphasis on education and information of the product rather than brand building” (Hollensen, 2008). These strategies enabled Dyson to offer products that surpass existing market expectations and offer superior design and performance (Jones, 2002).

5. Technological innovations

For the purpose of this report a selected number of innovations produced will be discussed to determine how the company maintained its reign as the market leader.

Dyson Bagless vacuum cleaner

Dyson’s first bagless vacuum cleaner was launched in 1993. The DC01 (figure 1) overcame the problems with conventional vacuum cleaners (e.g. losing suction and bag replacement), through the use of Dual Cyclone technology (figure 2). The inspiration came from analysing a local sawmill and how it spun sawdust out of the air and collected it in a chamber. This gave James his initial vision of using this technology on a much smaller scale.

In 2001 Dyson improved the Dual Cyclone with the Root cyclone (Figure 3; it used a number of small-diameter cyclones to provide better suction (Lütolf-Carroll, 2009). The Root Cyclone is 45% more powerful than its predecessor providing better dust and dirt pickup as well as constant suction (Dyson Press, 2005). The success of Dyson’s breakthrough in to the vacuum cleaner market is shown in figure 4, showing the cleaner becoming the best- selling Dyson product.

Dyson Air Multiplier

Dyson launched the Air Multiplier in 2009 (Figure 5). Time Magazine (2009) voted the fan third in the “Top 10 everything of 2009”. The Dyson Air Multiplier is a bladeless fan which is 15 times more efficient than a conventional fan (Dyson Press, 2009).

Figure 6 displays the air being pushed out over an airfoil-shaped ramp, which is similar in shape to the wing of an aeroplane). In doing so, “surrounding air is drawn into the air flow, so by the time the cool air hits your face, it is the equivalent of 15 units” (Telegraph, 2009).

6. Product Life Cycle (PLC)

The PLC consists of four stages Introduction, Growth, Maturity and Decline. “Making R&D the top priority is the best blueprint for the renaissance of invention and engineering in Britain” (Dyson, 2005). This PLC was modified by adding a Research and Development (R&D) stage, (Figure 7). The Air Multiplier was placed in the Introduction stage because the product has only recently been introduced. In order to establish a position in the market Dyson needs to build awareness of the product through strategies mentioned previously.

The Dual/Root Cyclone vacuum cleaners are placed in the Maturity stage, as this is where the majority of Dyson’s market share is. In order for Dyson to remain the market leader it must extend its time in the Maturity stage by continuously innovating. “Point 1” illustrates what happens when Dyson improves the existing product (version 1). Production of version 1 is reduced and is replaced with version 2 which remains in the maturity stage due to the technology being changed not the product.

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In conjunction with the PLC the Boston Consulting Group Matrix (Figure 8) was also used to provide a framework for evaluating the relative performance of the business. This would enable Dyson to decide where best to allocate its resources.

7. Competition

Dyson has struggled to get where it is today by competing with established electrical manufacturers. In 1998 the company sold nearly 1.4 million vacuum cleaner units (Figure 9), compared to other competitors who clearly failed to compete against Dyson’s dominance in the market.

Hoover, Dyson’s main competitor, had infringed Dyson’s patent for its bagless technology. Hoover was ordered to pay Dyson £6 million in damages and £2 million in costs (Colston and Middleton, 2005). Upon observing Figure 10 Dyson’s radical growth can clearly be realised. In the space of 18 months Dyson became the US market leader with a product that was double the price of Hoover, who had conquered the US market for 98 years Lincoln and Thomassen, 2007).

Hoovers fall in market share could be due to the fact that their bagless vacuum sales were stopped, enabling Dyson to increase their market share from 2002 with Hoover visualising a decrease. This increase could also be influenced by their innovative strategy.

When comparing the Dyson bagless vacuum to conventional vacuums, figures 11 and 12 show Dyson’s market share compared to Miele and Hoover. Dyson had found a gap in the market for a new and innovative product that maintained its air flow and never lost suction (Figure 13).

8. Learning from failure

Dyson displays his firm belief in failure enabling progress, as supported by Hlavacek et al. (2009), ‘An engineer’s life is 99 percent failure… Failure is actually like a drug that keeps you living on the edge and trying to come up with a solution.’

James Dyson came across many failures while innovating and these have sometimes proven to create new product ideas, he also believes that failure is the starting point for success because it’s important to understand why the failure occurred only then will the solution for overcoming that failure arise. “It took Dyson four years, several patents and over 5000 prototypes to produce the world’s first bagless vacuum cleaner “(Jones, 2002).

An example of a failure in innovation is Dyson’s Contrarotator (figure 14), it replaces a conventional single drum with two drums (figure 15) that rotate in opposite directions to imitate a “hand washing” action (Piercy, 2002). Dyson was competing against established brands such as Bosch, Electrolux and Hoover. The Contrarotator (figure 14) was discontinued in 2005, due to high production costs. The company lost £90 Million on the washing machine (Davidson, 2010).

Dyson is working on a new washing machine in R&D (figure 7) to improve on the previous one in terms of efficiency in costs and performance (Marsh, 2006). On further analysis of the Contrarotator, Dyson may not have carried out enough market research; it is clearly evident the company took a big risk.

9. Conclusion

The technological innovations Dyson has created enabled them to gain a competitive edge over their competitors. To maintain competitive advantage, firms, especially newly started firms, have to “continuously improve processes and products, build innovation capabilities, and dynamically align operations with strategic objectives” (Smeds and Boer, 2004).

Continuous innovation is important to maintain the life of the Dyson’s products, and the strength of the brand. The company implements a simple but effective way of achieving brand recognition and enabling promotion in a new and unique way. However Dyson’s strategy is risky as they have always been first in exploiting untried solutions, the success of its products is unknown until it has entered the marketplace. The idea of technology transfer is unique to James Dyson as he has shown his ability to use these in different ways.

In conclusion to the above stated it is also important to consider challenges to Dyson and how this could affect their position as the market leader e.g. protection of intellectual property. In order for Dyson to maintain its position as a market leader in innovative products it needs to look to the future and see how technologies developed can be used to enter other markets. Continuous innovation is the key to the company achieving this in today’s competitive industry; failure can also be used to achieve this vision.

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