iRobot 2009 Annual Report Download - page 46

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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 13.7%, 15.2% and 18.0% of our total revenue in
2009, 2008 and 2007, 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 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 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 invest 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 domestically and
internationally through our on-line store. In 2009, the on-line 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 several manufacturing locations and has been manufacturing products since
1977. Jetta Company Limited brings substantial experience to our production requirements. 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.
Our PackBot family of government and industrial products is manufactured by Gem City Engineering and
Manufacturing Corporation, or GEM, at one plant in Dayton, Ohio. GEM’s location is particularly important as
military products supplied to the U.S. government must have the majority of their content manufactured in the
United States. GEM has multiple facilities and relies on subcontractors for certain component manufacturing
capabilities. GEM has been in the business of manufacturing primarily machined metal products since 1936, and
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