Sunbeam Case Analysis
Situation Analysis Company Sunbeam has offered innovative products to household families for over 100 years and is a publicly traded company. In 1910 Sunbeam introduced their first iron. In 1930 Sunbeam introduced the Mixmaster stand mixer. The mix master stand mixer became the single most popular small kitchen appliance in the country. In 1998, the US Postal Service dedicated a stamp in honor of the famous Mixmaster as one of the country’s greatest innovations. Sunbeam has been known for these and other durable and affordable products.
Household appliance sales and service co. started in 1972 as SASCO branch 80. Sunbeam Appliance Service Co. is a division of Sunbeam Corp in Niles Illinois. Sunbeam’s home office and factory originally began in Chicago, known as the Sunbeam Factory Outlet Center. This factory was the largest Sunbeam servicer in the country. There was well over 100 factory-owned service centers, providing products and repairs. Over time Sunbeam closed all the factory-owned outlet service centers. In the mid-1980’s , Branch 80 was the last to be closed .
We have changed ownership and location, but are still in the suburban Chicago neighborhood where it all began. Our facility has been providing Sunbeam and Oster products and services to our customers for over 38 years, and proudly serving our customers online for 8 years. The Sunbeam convertible iron and steamer features a large water tank, a steam button that releases a shot of steam to help release wrinkles while ironing, and a stainless steel design to allow for easier use and gliding over garments. The steamer can be used vertically to allow the user to steam curtains and garments hanging in a closet.
For the consumers safety, the iron features an automatic shut off so the iron doesn’t over heat, a digital steam indicator to notify the user when the steamer function is activated, and an anti-drip function to help prevent the leaking of water while the user irons and steams his/her garments. Customer The potential market for Sunbeam is every household. Ironing is seen as a necessary evil; everyone needs to iron something in his/her house or closet. According to the U. S. 2010 Census, there are 114,825,428 households in America, meaning 114,825,428 potential customers. We assumed every household in America needs one iron.
We did not take into account people who buy wrinkle free clothing or people who use dry cleaning because we feel even those people would still have an iron. Ironing is cheaper than dry cleaning, and even if a house has wrinkle free clothing, the household would still have couches, drapes, pillows, and table cloths that would still require ironing or steaming. Competitors Sunbeam has four main competitors: SureSource, Euro-Pro Operating LLC. , T-fal, and Panasonic. SureSource makes the Rowenta DA156 iron and uses 360 degree photography, search engine marketing, affiliate marketing, and direct mail as its marketing strategies.
Euro-Pro makes two irons, the Europro Operating G1568 and the Shark G1435. Euro-Pro focuses on easy to use small household appliances and is a family run company. They feature products such as irons, steamers, and steam irons. T-fal makes the T-fal FV4379003 iron. T-fal is based in West Orange, NJ and focuses on non-stick coatings for household appliances. The last competitor, Panasonic, is the maker of the Panasonic NI W750TS iron. The Panasonic NIW750TS iron features the same vertical steaming capability as the Sunbeam iron, the same 360 degree swivel design, and same automatic-off feature. Collaborators Jarden Consumer Solutions o Formally known as Alltrista, it was formed in April 1993. It was a spinoff from Ball Corporation. In December 2001, the company was reincorporated in Delaware. In May 2002, the company changed its name to Jarden. Jarden is a leading provider of global consumer products with a portfolio of over 100 brands. • Sold nationally in Bed Bath & Beyond as of summer 2010 • Also sold in small appliance retailers and other retailers such as Wal-Mart, Amazon, Sam’s Club, K-mart, and Walgreens as of fall 2010 • Sunbeam collaborates with TEAMS design, Altitude, and Beyond Design to create its product designs
Climate The Sunbeam convertible iron + steamer is a full size iron that converts to a dry clean style steamer. Sunbeam plans to capture customers from the professional dry cleaning industry with this comparably lower priced combination product. The dry cleaning industry has approximately 30,000 facilities in the U. S. with combined sales of approximately $20 billion. There are 114 million households in the United Stated according to the U. S. census bureau. Industry estimates that there is one iron in every household in the U.
S. Problem Statement Redesign the iron to improve the product and have 35% positive customer reviews by the end of the fiscal 2012 year. Relevant Criteria • Does the strategy improve the iron? • Does the strategy improve customer satisfaction? • Will the strategy potentially convince people who don’t iron/ use dry cleaning they need this product? Description of Alternatives • Promote product as more convenient/cheaper than dry cleaning • Exit the iron/steamer market • Regulate pricing throughout distribution centers Reduce the price of the iron • Split iron and steamer into two separate products and sell as a package • Keep product as is • Market the steam iron internationally • Cut distribution channels Analysis of Alternatives | |Improve Iron |Improve Customer Satisfaction |Convince | | | | |Customers to | | | |Switch | |Promote as more convenient/cheaper |No |No |Yes | |Exit the iron/steamer market |No |No |No | |Regulate Pricing |No |Maybe |Maybe | |Reduce Pricing |No |Maybe |Maybe | |Make Iron and Steamer two separate products |Yes |Yes |Yes | |Keep product as is and reposition it |No |No |Maybe | |Sell iron internationally |No |No |No | |Cut distribution channels |No |No |No | Suggested Strategy The strategy we recommend is to split up the iron and steamer and to make them two separate products. Once the products are separated, we recommend selling the products in a combination pack.
This strategy allows consumers to still get both the iron and steamer, which was the original appeal of the product, while allowing manufacturing to eliminate the leaking problem of the steamer and allow the iron to get hot enough to iron out wrinkles. We also recommend regulating pricing throughout the distribution centers, promoting the iron and steamer pack as being a less expensive and more convenient alternative to dry cleaning and to cut some of the distribution channels. Details of the Strategy Product We recommend Sunbeam split the iron steamer into two separate entities and sell them together as a combination pack. In order to implement this strategy, Sunbeam needs to hire a new product engineer to redesign the iron and steamer, and to correct the problems perceived by customers.
Customers have complained about the irons weight being too heavy, the small water capacity, automatically turning off once the iron reached its peak temperature, and the steamer was not strong enough to get wrinkles out of clothes. To fix the complaints, the new design would use fewer materials to lighten the weight of the iron, the water tank of the iron would be made larger, and the automatic off function would be changed to only turn off if the temperature of the iron got to a specific temperature for longer than 15 minutes without being used. We would have the engineer design a motion sensor so the iron would “know” when it is being used and would not turn off during that period.
The steamer’s only problem was that it never got hot enough to steam out wrinkles however; a recall was made due to customers being burned by the steam. To fix the problem, the new Sunbeam product engineer would design the steamer with an extended handle to keep the customers hand farther away from the steam and have a nozzle at the end of the steamer to help the customer aim the steam in his or her desired direction and to further help the steam stay away from the customer. We assume the price for hiring a new product engineer would be the same as industry standards so we are assuming the price will be $70,000-$90,000. Price When we looked at the price of the original iron, we noticed there was a vast price range. We found a range of prices from $25-$80.
We recommend Sunbeam to regulate the price of the new iron steamer combination pack across the distribution centers. After some calculations we found the average price of the old iron to be around $52. 60. We believe the new iron and steamer combination pack should be priced slightly below the old price at $50 with an introductory $10 rebate for the first six months after the release date. Placement Currently, Sunbeam products are sold in Wal-Mart, K-Mart, Walgreens, Bed Bath & Beyond, Amazon, department stores, small appliance stores, and other online channels. We recommend Sunbeam should reduce its distribution channels. Promotion ———————– Nov. 15, 2011 Sunbeam Case Analysis Sunbeam Corporation