iRobot 2005 Annual Report Download - page 15

Customer Service and Support
We also invest in our ongoing customer service and support. Consumer customer service representatives,
some of whom are in-house and some of whom are outsourced, are extensively trained on the technical
intricacies of our consumer products. Government and industrial customer representatives are usually former
military personnel who are experienced in logistical and technical support requirements for military operations.
Marketing and Brand
iRobot markets its home robots in the United States to end-user customers directly through our sales and
product management team of eleven employees. We also market our consumer products in the United States
through our retail network of 19 national retailers and internationally through in-country distributors. We
market our government and industrial products directly through our team of six government sales specialists to
end users and indirectly through prime contractors. We also market our product offerings through the iRobot
website. Our marketing strategy is to increase our brand awareness and associate the iRobot brand with
innovation, reliability, safety and value. Our sales and marketing expenses represented 15.3% and 14.8% of our
total revenue in 2005 and 2004, respectively.
We believe that we have built a trusted, recognized brand by providing high-quality robots. We believe
that customer word-of-mouth has been a significant driver of our brand's success to date, which can work very
well for products that inspire a high level of user loyalty because users are likely to share their positive
experiences. Our grass-roots marketing efforts focus on feeding this word-of-mouth momentum and we use
public relations and advertising to promote our products.
Our innovative robots and public relations campaign have generated extensive press coverage. In addition,
iRobot and our consumer robots have won several awards and our inclusion as one of 15 prime contractors on
the FCS program has greatly enhanced our brand and awareness among government and industrial customers.
Through these efforts, we have been able to build our brand, and we expect that our reputation for innovative
products and word-of-mouth support will continue to play a significant role in our growth and success.
We expect to accelerate our investment in national advertising, consumer and industry trade shows, direct
marketing and public relations to further build brand awareness. We believe that our significant in-house
experience designing direct campaigns and promotional materials, combined with our media-targeting
expertise, gives us a significant competitive advantage.
Our website is also playing an increasing role in supporting brand awareness, addressing customer
questions and serving as a showcase for our products. Our consumer robots and accessories are sold through
our online store.
Manufacturing
Our core competencies are the design, development and marketing of robots. Our manufacturing strategy
is to outsource non-core activities, such as the production of our robots, to third-party entities skilled in
manufacturing. By relying on the outsourced manufacture of both our consumer and military robots, we can
focus our engineering expertise on the design of robots.
Using our engineering team of over 100 roboticists, we believe that we can rapidly prototype design
concepts and products to achieve optimal value, produce products at lower cost points and optimize our
designs for manufacturing requirements, size and functionality.
Manufacturing a new product requires a close relationship between our product designers and the
manufacturing organizations. Using multiple engineering techniques, our products are introduced to the
selected production facility at an early-development stage and the feedback provided by manufacturing is
incorporated into the design before tooling is finalized and mass production begins. As a result, we believe that
we can significantly reduce the time required to move a product from its design phase to mass production
deliveries, with improved quality and yields.
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