Market Entry and Pricing Strategies of the Irobot Roomba



Market Entry and Pricing Strategies of the iRobot Roomba

Abstact

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Introduction

Our company, iRobot was founded in 1990 when two Massachusetts Institute of Technology (MIT) robotics researchers partnered with Dr. Rodney Brooks to create the company. Their initial idea was to make robots a reality to the public, military and industry. They started off as a small private company but went public in November 2005.

We provide home products to perform such tasks as vacuuming (Roomba), sweeping (Dirt Dog) and washing floors (Scooba), pool (Verro) and gutter cleaning (Looj). In addition, we provide military and industrial robots that perform dangerous missions for search, reconnaissance and bomb disposal (PackBot), surveillance (Negotiator) and payload carrying (Warrior) for groups such as the U.S Army Future Combat Systems program. A summary of our companies timeline can be seen below in figures 1 as well as two of our products in figure 2.

Figure 1. Timeline of iRobots significant business achievements.

a) PackBot b) Roomba

Figure 2. iRobot products. a) PackBot, b) Roomba

The focus of this paper will be on the iRobot Roomba, which the company introduced for sale in September 2002 to the public as the first practical and affordable vacuuming robot. To date, we have sold over 2 million units. More specifically, this paper will focus on the demand and market for the Roomba, pricing strategies associated with the product and competitors and finally, the barrier to market entry.

"If you're not different, then you're just a commodity." – Magnus Yngen, Head of the floor-care unit for Electrolux1

Demand of the Roomba

Our target market for the Roomba will be the household vacuum cleaner market. We will be competing alongside existing companies in this market, such as Hoover, Eureka, Dyson, and Electrolux. The household vacuum cleaner market is a mature one with demand derived...