How big is Taiwan’s market? When speaking demographically, Taiwan is one sixtieth the size of mainland China’s population. Based on per capita income, it is only one third the size of Denmark’s. But for the high-end British brand Dyson vacuum cleaner, Taiwan is the largest overseas market out of the 29 countries where the products are sold, according to Business Weekly.
According to marketing firm GIK, Dyson’s products took the top five spots of the ten most popular vacuum cleaners in Taiwan from January to July this year. Last year, the firm grabbed a market share of NT$600 million (US$20 million) out of Taiwan’s total NT$1.5 billion (US$50 million) market. This made Taiwan the largest distributor of Dyson products in the world, beating large markets like China and India, and overtaking affluent countries like Denmark and Israel (excluding Britain and US where Dyson has direct ownership of the businesses.)
In 2006, when Dyson products were first introduced to Taiwan, Dyson’s British headquarters believed that Taiwan would be a small market. Chen Cheng-hong, chairman of Heng Leong Hang (HLH) told Business Weekly that few Taiwanese use carpet and vacuum cleaners, nor was it considered a daily necessity. Besides, Dyson vacuums cost nearly US$1,000 each, six times the price of popular Taiwanese models.
The fundamental hurdle from the beginning was that Dyson’s products were not competitively priced, added Chen. However, HLH decided from the outset not to compete on price. Instead, Chen set up an independent business unit exclusively for Dyson products, hiring extra personnel, and spending 20 percent more than other Dyson distributors.
Chen also extended the warranty for the vacuum cleaners to five years, the longest among local sellers. This meant HLH itself was responsible for the extra costs of after-sales services.
Of course, these upgrades increased operating cost by 50 percent, so Chen also charged 20 to 30 percent more than Dyson charges in the UK in order to make a 10 percent profit, reported Business Weekly.
Like other high-end home appliances, Dyson adopted a similar marketing strategy toward its ethnic Chinese consumers, targeting women and top-end sales. HLH immediately found out this strategy did not work in Taiwan.
Initially, over 70 percent of Dyson products in Taiwan were purchased by men, mostly engineers at the Hsin-chu Science Park (Taiwan’s Silicon Valley), according to Business Weekly. Hsieh Ming-hui, professor of international marketing at National Taiwan University (NTU), noted that there are a large number of engineers with an electronics and mechanical engineering background in Taiwan. They are the people who are willing to pay for technology. Plus, inventor and spokesman of the firm, Sir James Dyson, offered the same appeal as a movie star to his male audience.
C. Y. Huang, professor of management at NTU, also points out that HLH was fully aware that engineers tended to collect information from online forums and are good at explaining high-tech principles in simple terms. So by capitalizing on these initial loyal fans to share their thoughts on websites, HLH simplified the mechanical principles of Dyson products, thus enlarging its consumer base.
Through word of mouth from these engineers, sales of Dyson products doubled each year from 2007 to 2011. The ratio of male customers to females changed from 7:3 to about half and half. Today, Dyson has successfully entered the female market, moving from being a niche product to the mainstream, noted Business Weekly.