DC01 Dual Cyclone became the number one in the UK due to its superior unique technology and a design which communicated this clearly to the clients. Its innovative technology was liked by consumers and resulted in making it a tough competition for industry leaders like Hoover, Electrolux, and Goblin. As of today, Dyson enjoys the market leader position in vacuum cleaner industry and sustained the competition.
What model of innovation Dyson represents?
Dyson had different strategies at different point of time; it can be explained with various models of innovation
Linear Models: There are two basic variations of this model for product innovation. First, is the technology driven model where the scientists make unexpected discoveries, technologists apply them to develop product ideas and then the product is made and it is left to the marketing and sales to promote the product to the potential customers. The second linear model is the market pull model of innovation where the products are made from close interactions from the customers.
(Source: adapted from MBA class lecture notes)
Dyson represents the first linear model of technology push as there was no market research done prior to the launch of DC01.It was inspired by the saw mill suction technology and was made on the basis of R&D done on this concept. The successful R&D lead to the development and manufacturing of DC01, which was later marketed to the customers or users. Hence, Dyson represents technology push aspect.
Simultaneous Coupling Model: The simultaneous coupling model suggests that the simultaneous coupling or combination of the knowledge within three functions, R&D, manufacturing and marketing, leads to innovation. In this model the point of commencement for this type of innovation is not known.
(Source: adapted from MBA class lecture notes)
Interactive Model: The interactive model sums up the technology-push, the marketing-pull and the coupling models. At the center of the model are the organizational functions of R&D, engineering, manufacturing, marketing and sales. The upper part consists of the technology push model and the lower portion talks about the marketing push.
(Source: adapted from MBA class notes)
Dyson’s first innovation, DC01 was based on technology push but after the success of the DC01 and DC02, Dyson’s approach of innovation changed and fitted with the interaction model of innovation as now the R&D started including market research before developing new products, like analyzing present and future needs of customer and taking their views, Dyson also started considering marketing factor with a different and more commercial angle. For e.g. after the launch of DC01, decisions like reducing the weight of their upcoming DC vacuum models or the development of a cleaner capable of working on hard floor etc. all these considerations were based on the needs in society/market and the market potential involved with them. There was also a constant interaction between both of these processes at various stages. Interactive model of innovation truly represents DC03 and onward models as it involves a constant interaction between market needs, technology and various functions of the organization like R&D, and commercialization.
Although Dyson has changed its new product development strategy but the company still believes in the view that the development of new product can not be solely based on the customer’s view as most of the times a normal customer would have a narrow vision and knowledge about the product as compared to the business.
NPD: a strategy for growth
NPD provides an opportunity for growing the business. One of the important ways of identifying growth options available to a business is Ansoff (1968) directional policy Matrix, which combines two key variables which enable a business to grow:
an increase in market opportunity.
(Source:www.tutor2u.net/business/strategy/ansoff_matrix.htm)
The output from the Ansoff product/market matrix is a series of suggested growth strategies that set the direction for the business strategy and that depends on the positioning of the business in the matrix.
Dyson followed the product development as a growth strategy to enter the market by introducing an innovative product DC01 in the existing market of vacuum cleaners.
Dyson adopted this technique to enter the market by developing modified or improved products which can appeal to existing markets. The approach was based on the Product Performance by using technology & Innovation to exploit the big opportunity existing in the market. Suction power was one of the most important factors to consumers considering the purchase of a vacuum cleaner.DC01 was conceived to have the highest level of suction power with the help of the innovative cyclonic technology giving the best performance and it was focused for a niche market which developed with time as projected by Dyson.Technology strategy provides a link between innovation strategy and business strategy of Dyson. It achieved implementation of an innovation strategy mainly through the management of technology and design to make it’s product user favourite.
(Source:
New Product Development stages
Often, the difference between the success and failure of a product development process lies in the company's effective use of design control and project management to control the process. Many companies use a decision process similar to the development decision cycle. Although there exist many variations as needed to address a company's particular needs, most such product development cycles include some version of the following nine phases.
(Fig 2:Linear model of product development)
The development decision cycle in the case of DC01 doesn’t exactly follow the linear model of product development. Dyson started with an idea without enough inputs from the relevant sources like market research or customer preference statistics, also there was no research done on knowing the size and structure of the product’s target market. The concept lacked strategy for positioning and selling the product, goals for market share and short-term and long-term profits. Dyson’s success dismisses the above linear model as for him it was more of a mixture of iterative and concurrent product development processes with cross-functional interactions. Dyson made more than 5000 prototypes and took five years time to develop the final model.
(Source:w.devicelink.com/mx/archive/01/03/0103mx054.html)
Adoption process
Innovation takes time to spread through the social system. Rogers defines the innovation diffusion process as “the spread of new idea from its source of invention or creation to its ultimate users or adopters”. The consumer adoption-process focuses on the mental process through which an individual passes from first hearing about an innovation to final adoption.
Awareness: the consumer becomes aware of the innovation but lacks information about it.
the consumer is stimulated to seek information about the innovation.
the consumer considers whether to try the innovation.
the consumer tries the innovation to improve his or her estimate of its value.
the consumer decides to make full and regular use of the innovation
Adoption Curve: The phases through which consumers or a market proceed in deciding to adopt a new product or technology. At the individual level, each consumer must move from a cognitive state (becoming aware of and knowledgeable about), to an emotional state (liking and then preferring the product) and into a conative, or behavioral state (deciding and then purchasing the product). Dyson had a slow growth in the market at the time of introduction but as the customers got aware of the uniqueness of DC01 it was adopted by a vast majority of people and the proportion changed from the traditional Roger’s curve which assumes 13.5% people in the early adopters’ category. Dyson captured almost 30% market share within a short time of 3 years from the launch of DC01. Dyson first launch of DC01 model was done by Apex in Japan and it was an instant success in the innovation follower, early adopter Japanese market. Dyson utilized its experience from Japanese customer trend and focused DC01 for the upward premium segment.
(Source: http://www.valuebasedmanagement.net/methods_rogers_innovation_adoption_curve.html)
(Source: )
DC01s characteristics responsible for the faster rate of adoption:
Relative advantage: DC01 had the technological edge over the other vacuum cleaners as it had a higher suction power and no need of changing bags
Complexity: better designing and user friendly features increased its manoeuvrability of DC01 and it was easier to handle and use.
Compatibility: the vacuum cleaner market had not come up with any new innovation for ages and customers were facing problems with the current offerings in the industry. DC01 matched the expectations of customers by fulfilling their requirements
Divisibility: Dyson had distributed free samples to retailers and distributors to test and see the results.
Communicability: Newspapers and journal articles helped Dyson in communicating the product awareness and competitive advantage. Sources like journals etc. are trusted by consumers and they helped in the faster adoption of DC01.
Marketing of Product innovation
Decisions about product strategy require information and marketing research assists in accumulating and analyzing that information. The first Dyson product the DC01 was not a result of the market research done by James Dyson. It was the basic Technology push that gave birth to DC01. Market research was not the guide for James Dyson’s innovation. According to him, the people would not have been able to give an idea for the innovation of a bag less vacuum cleaner. Dyson had made which is today the most popular domestic appliance in the vacuum cleaner industry.
According to Porter’s Generic strategy” a highly differentiated product can be priced high as it has a competitive strength over existing ones”. DC01 was focused on a niche market of premium segment customers and was priced almost double the price of the existing brands due to the differentiation factor. The price factor and newness to the market made distribution huge problem for DC01.
(Source:http://www-mmd.eng.cam.ac.uk/people/ahr/dstools/paradigm/genstrat.htm)
In case of Dyson market research was not the main driver behind the product development. James Dyson has good reason to be suspicious of the role of market research in new product development. Not only did he struggle for many years to get anyone in the UK to believe it was worth manufacturing his bagless vacuum cleaner, he faced the same skepticism when he launched in the USA (Thrift, 1997). It was only the PR and newspaper articles and word of mouth which created interest of market in DC01. Dyson used promotional schemes like gifting free DC01 to salesmen and stores Dyson didn’t follow the traditional marketing techniques and relied on editorial coverage and word of mouth which in turn influenced the buyer decision. All this helped DC01 getting place in catalogues and newspaper articles and very soon it changed the consumer/market perception and proved competitors product as obsolete. Within four years of launch Dyson captured over 33% of total domestic vacuum cleaner market in the UK and 51% market for upright cleaners.
Source: http://www.marketingiq.com/index.cfm?seite=book/chapter1/index
Dyson’s approach to continous innovation
A consumer will be encouraged to buy and keep buying a company’s products if they know from experience that they work well and do exactly what they are intended to do.
The idea that consumers will favor products that offer the most quality, performance, and features and that the organization should therefore devote its energy to making continuous product improvements. . In the vacuum cleaner industry many decisions regarding the choice of innovation strategy depend on the technology position of the firm with respect to its competitors. Dyson is a technology asset based company; it started with the technological innovation in the vacuum cleaner industry and has been continuing its approach to have product competitive advantage in terms of technology
Dyson firmly believes that a company’s profits should be invested back into research and development and better technology and ploughs 10% of its turnover back into research and development rather than continuing to sell an ordinary product only on the strength of the way it is advertised or marketed.
After the success of the DCO1 upright and DCO2 cylinder cleaner Dyson has been coming up new models regularly with better features and technology. Dyson has tried to utilize its core competencies in technology in the other products In 2000, he launched the Contrarotator washing machine, which uses two drums spinning in opposite directions and is said to wash faster and better than traditional machines.
The Ansoff matrix below shows that a company should keep developing both its target market and its products. Existing products can be introduced to new markets, overseas for example, or a new product in a new market.
Dyson tried to diversify along with product development, keeping the core competencies intact. Dyson’s experience with the diversification in the field of washing machine didn’t go well. The diversification growth strategy is considered the most risky growth strategy for an organization as it requires both product and market development, Dyson did suffer in this area of innovation
(Source Copyright 2003 The Financial Times Limited Financial Times (London, England) By PETER MARSH)
NPD as an industry innovation cycle
Many studies have suggested that product innovations are soon followed by process innovations in what they describe as an industry innovation cycle. It is common to associate which type of change with physical change, but many changes introduced inside the organisation involve very little physical change. Rather, it is the activities that are performed by the individuals that change.
Abernathy and Utterback (1978) suggested that product innovations are soon followed by process innovations in what they describe as an industry innovation cycle. Product innovations are launched by large companies with substantial resources, especially technical or marketing resources. Other large firms react swiftly to the launch of such a product by developing their own versions. For e.g. Matsushita comes up with a copy of most of Sony’s innovative product within six months of their launching.
Dyson fell pray to this process and started an industry innovation cycle with many companies trying to imitate its style of vacuum cleaner. The innovation cycle intensified the competition in the market and Dyson has been challenged by the low cost competition. The result is Dyson’s effort to reduce the costs in order to substantiate the profit margins by shifting the manufacturing plant from the UK to Malaysia to keep the profit margins intact.
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Conclusion
Further innovation and NPD in the coming years are vital for driving sales and consequently market growth in the vacuum cleaner industry. The development of 'robotic' cleaners that operate independently of human intervention will serve to satisfy the need for convenience pervasive in many aspects of life. Dyson is working on this future opportunity and can utilize its earlier experience in innovation and can use its technological capability as a strategy to increase market share in this value based premier positioned product.
