1. Dyson and the bagless vacuum cleaner

2. Against all Odds
"I wanted to give up almost every day. But one of the things I did when I was young was long distance running, from a mile up to ten miles. They wouldn't let me run more than ten miles at school - in those days they thought you'd drop down dead or something. And I was quite good at it, not because I was physically good, but because I had more determination. I learned determination from it." "A lot of people give up when the world seems to be against them, but that's the point when you should push a little harder. I use the analogy of running a race. It seems as though you can’t carry on, but if you just get through the pain barrier, you'll see the end and be okay. Often, just around the corner is where the solution will happen."

3. Summary Patent issues with previous employer
Bagless vacuum cleaner – idea conception 1978
In search of a manufacturer
Break-through in Japan

4. Summary Entering the UK market In search for retailers
Competition response
Hoover’s ‘counter-strike’
Penetrating the US market

5. Relevant theories Patents and licensing Pearson’s uncertainty map WACC
Marketing strategy

6. Patent:
a set of exclusive rights granted by a state (national government) to an inventor or their assignee for a limited period of time in exchange for a public disclosure of an invention.
Monopoly for 20 years
Annual Fees
To be legally protected by a patent

7. Licensing :
Licensing is the act of granting another business permission to use your intellectual property
Licensing involves technology owner receiving a license fee in return for access to technology (patented invention)
Arise when competitor wants to be free of any patent infringement
Other reasons for licensing

8. Pearson’s uncertainty map
High 3
Application
engineering 1
Exploratory
research
Uncertainty about output 4
Combining market
opportunities with
technical capabilities 2
Development
engineering
Low
High
Low
Uncertainty about process

9. WACC
Broadly speaking, a company’s assets are financed by either debt or equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.
A firm's WACC is the overall required return on the firm as a whole and, as such, it is often used internally by company directors to determine the economic feasibility of expansionary opportunities and mergers. It is the appropriate discount rate to use for cash flows with risk that is similar to that of the overall firm

10. How to develop a product market strategy and Plan for Marketing Product Introductions
Mission Statement
Customers
Market Segmentation
Competitors
Product Position
If Possible, Do Market Testing
Make Strategy Decisions
Write an Action Plan
Implement Your Plan

11. New Product Development: The cornerstone of successful strategic marketing
The Secrets to Success:
Keeping the original product development objective in mind.
Admitting to and welcoming unexpected results.
Applying unexpected results to the original development objective.
The Unexpected
The Proper Attitude
Create a Working Plan
Show your plan to others
Research existing work.
Carefully describe the problem to be solved by your product
What is the Objective?

12. Questions for Discussion
What was Dyson’s most serious problem he had to overcome?
Manufacturing the product has turned out to be hugely profitable, yet this was not the original plan; why not?
Explain the rationale behind Electrolux and Hoover’s decision not to purchase the license from Dyson. Given Hoover’s recent development of the Triple Vortex how do you assess this decision? What level of royalty would have been reasonable for both parties, that is, Dyson and Hoover?
Why is negotiating a licence for a new product so difficult?

13. Questions for Discussion
What was Dyson’s most serious problem he had to overcome?
- not enough capital for production
- people did not believe in the invention’s worth
- licensing the invention

14. Questions for Discussion
What was Dyson’s most serious problem he had to overcome?
Manufacturing the product has turned out to be hugely profitable, yet this was not the original plan; why not?
Explain the rationale behind Electrolux and Hoover’s decision not to purchase the license from Dyson. Given Hoover’s recent development of the Triple Vortex how do you assess this decision? What level of royalty would have been reasonable for both parties, that is, Dyson and Hoover?
Why is negotiating a licence for a new product so difficult?

15. Questions for Discussion
Manufacturing the product has turned out to be hugely profitable, yet this was not the original plan; why not?
- again – capital issues
- the “small level of income also provided the encouragement he needed to start planning the establishment of manufacturing facilities in the UK”
- trust issues

16. Questions for Discussion
What was Dyson’s most serious problem he had to overcome?
Manufacturing the product has turned out to be hugely profitable, yet this was not the original plan; why not?
Explain the rationale behind Electrolux and Hoover’s decision not to purchase the license from Dyson. Given Hoover’s recent development of the Triple Vortex how do you assess this decision? What level of royalty would have been reasonable for both parties, that is, Dyson and Hoover?
Why is negotiating a licence for a new product so difficult?

17. Questions for Discussion
Explain the rationale behind Electrolux and Hoover’s decision not to purchase the license from Dyson. Given Hoover’s recent development of the Triple Vortex how do you assess this decision? What level of royalty would have been reasonable for both parties, that is, Dyson and Hoover?
- already have a considerable market share
- one of the products they actually rely on wouldn’t matter anymore, if they choose to sell a „bagless‟ vacuum cleaner
- people might not want to pay such a high price for something that is unknown
- royalties - % of the product’s sales revenue

18. Questions for Discussion
What was Dyson’s most serious problem he had to overcome?
Manufacturing the product has turned out to be hugely profitable, yet this was not the original plan; why not?
Explain the rationale behind Electrolux and Hoover’s decision not to purchase the license from Dyson. Given Hoover’s recent development of the Triple Vortex how do you assess this decision? What level of royalty would have been reasonable for both parties, that is, Dyson and Hoover?
Why is negotiating a license for a new product so difficult?

19. Questions for Discussion
Why is negotiating a license for a new product so difficult?
- Buying license for something is basically franchising. A franchisee receives the right to use a given brand name, to produce, promote and sell the products under that brand name, pretty much gain all the advantages of the given brand name. But this has to be paid, of course. It is easy to convince people to pay for a well established brand, which is known and secure on the market; but when it comes to a new product, which people know nothing about, then it is risky and even frightening to pay for it’s license. One never knows if the investment is going to pay back.

20. 5. How can businesses try to ensure that their senior managers (both buyers and new business development managers) do not dismiss exciting technology and with it potentially profitable business?
Innovation = Theoretical conception + Technical invention + Exploration (Commercial exploitation )

21. Innovation Management as Managerial Process

22. 7. Not all firms invest in R&D
7. Not all firms invest in R&D. What should be the level of expenditure on R&D for a firm?
Businesses should use risk-adjusted cash flows in conjunction with their WACC as a discount rate to determine the net present value (NPV) of each of their R&D projects
Statistic
“Nearly 17% of revenues regularly goes to supporting the company's R&D efforts, a figure some 10 times greater than the average in the UK”

23. Market research Product Life Cyscle Ratio analysis : ROI
6. What is the role of patents? To what extent is it an effective system for protecting intellectual property?
Market research
Product Life Cyscle
Ratio analysis : ROI
Dyson`s experience with the patent system- the relative cost of taking patent in five countries is between £ and £ (surce: Tortt, 2008)

24. 8. Explain the very dif`ferent market entry strategy used for the US?
$30 million ad campaign
Technology- intensive product