iRobot 2011 Annual Report Download - page 55

Government and Industrial
We sell our government and industrial products directly to end users and indirectly through prime
contractors and distributors. While the majority of government and industrial products have been sold to date to
various operations within the U.S. federal government, we also sell to state and local as well as to international
government organizations and research labs and universities. Our military products are sold overseas in
compliance with the International Traffic in Arms Regulations, or ITAR. We have sold our products to the
governments of various countries in the past several years, including the United Kingdom, France, Germany,
Sweden, Norway, Italy, Israel, Australia, Republic of Korea, Singapore, Bosnia, Lithuania, Qatar, Taiwan, South
Africa and Canada.
Our government products are sold by a team of sales specialists with significant experience in selling to
government and defense agencies. All of these individuals have years of experience selling military products to
government procurement offices, both in the United States and internationally. We maintain a direct sales and
support presence in Europe.
Customer Service and Support
We also provide ongoing customer service and support. Consumer customer service representatives, the
majority of whom are employees of outsourced service organizations or our distribution partners, 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
We market our home robots to end-user customers through our sales and marketing teams as well as through
our extensive network of retailers and in-country distributors. We market our government and industrial products
directly through our team of government sales specialists to end users and indirectly through prime contractors.
Our website is also playing an increasing role in supporting brand awareness, addressing customer questions and
serving as a showcase for our products.
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 12.6%, 12.6% and 13.7% of our total
revenue in 2011, 2010 and 2009, respectively. We expect to continue to invest in national advertising, consumer
and industry trade shows, direct marketing and public relations to further build brand awareness.
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 as
well as advertising to promote our products.
Our innovative robots and public relations campaigns have generated extensive press coverage. In addition,
iRobot and our consumer robots have won several awards and our inclusion among the first-tier partners on the
U.S. Army’s Brigade Combat Team Modernization 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 customer support will continue to play a significant
role in our growth and success.
Manufacturing
Our core competencies are the design, development and marketing of robots. Our manufacturing strategy is
to outsource non-core competencies, 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.
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