iRobot 2007 Annual Report Download - page 47

Marketing and Brand
We market our home robots in the United States to end-user customers directly through our sales and product
management team of 14 employees. We also market our consumer products in the United States through our retail
network of more than 30 national retailers and internationally through in-country distributors and our international
sales team of 3 employees. We market our government and industrial products directly through our team of
12 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 18.0% of
our total revenue in both 2007 and 2006.
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 as the only small business among the
first-tier partners 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 customer 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 marketing 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 home robots and accessories are also sold through our online store.
In 2007, the online store was the single largest outlet of our home robots division products.
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, 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 manufac-
turing 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.
We outsource the manufacturing of our consumer products to two contract manufacturers, Jetta Company
Limited and Kin Yat Industrial Co. Ltd., each of which manufactures our consumer products at a single plant in
China. Jetta Company Limited has been manufacturing products since 1977 and brings substantial experience to our
production requirements. Jetta Company Limited has several manufacturing locations and recently expanded one of
its facilities to increase capacity for the production of our Roomba 400 series and Scooba robots. Kin Yat Industrial
Co. Ltd. has been in business since 1981, has several manufacturing locations in China, and began manufacturing
our Roomba 500 series in 2007. Combined with our own engineering operations in India and Hong Kong, this
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Form 10-K