International Market Strategy: Targeting Madagascar for iRobot

6-2 Short Paper Amy Richard Southern New Hampshire University INT 640: International Market Strategy Professor Gordana Pesakovic January 19, 2024

Introduction My selected low-income classified target market is Madagascar. Madagascar is considered a low-income country because its GNI per capita does not exceed $1,085. In 2021, Madagascar’s GNI per capita was $490, which was a 6.52% increase from 2020 (Madagascar - Gross national income per capita in current prices, n.d.). In the United States, the Roomba Combo j7+ Robot Vacuum and Mop retails for $999.99. The well-known company, iRobot, designed this product to better support those who have a busy lifestyle. The product mops and vacuums simultaneously, identifies obstacles and avoids hazards such as pet accidents, and can be turned on and off anywhere using the iRobot application that can be downloaded on any smartphone. This product comes with many benefits, not only does it minimize one’s household chores, but they are als o long-lasting, easy to use, and incredibly efficient. Roomba can clean in most hard-to-get spots like under the bed, under the couch, and in tight corners. “Brand positioning is a process of getting your brand out there and establishing it as something worth thinking about” (What Brand Positioning Is And Why It’s Important For Your Business, 2022). iRobot, is a Massachusetts-based company that was first launched in 2002. iRobot took innovation to the next step and designed a product that was new and unheard of, leaving most of the country in awe. iRobot's brand positioning is to offer innovative and convenient solutions for home cleaning, by using humorous and emotional appeals in marketing campaigns (Shultz, 2021).

“Product positioning is a marketing strategy that influences how consumers view a product” (Hitchcock, 2023). Regardless of its price, there is a growing demand for iRobot and their products. In the last decade, there has been an increase in hygiene awareness. This could be a result of COVID-19 and the threat it possesses. The trend for owning high-end technology has also increased within the last decade and is expected to further increase as we approach the years to come. Since its launch in 2002, iRobot, a Massachusetts-based company, has shipped and sold more than ten million Roombas (Ballve, 2014). With this being said, it is evident that many view the Roomba to be a desirable luxury. However, it may be considered a necessity for those who have busy lifestyles. Regardless, iRobot has successfully established itself and has created a positive consumer view of their product(s). Globalization versus Responsiveness “Marketing globalization is a term that refers to the marketing strategies of companies intending to sell their products worldwide, as opposed to specific demographics” (What Is Marketing Globalization? (With Benefits and Strategies), 2022). The Asia-Pacific region is a major market for household robots, especially in countries such as China, Japan, and India where products like Roomba are often in high demand (Household Robots Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029), n.d.). This is a target market factor in favor of globalization for iRobot. Another target market factor in favor of globalization for iRobot is the market expansion by online retailers such as Amazon. Amazon could increase the awareness and adoption of robotic vacuums among new customers and regions since they are already a global company (Johnson, 2024). Lastly, the global robotics market is growing rapidly across various sectors, such as manufacturing, healthcare, defense, logistics, automotive, and food and beverage (Global Robotics Market (2021 to 2025) - Featuring Intuitive Surgical, iRobot and

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KUKA Among Others - ResearchAndMarkets.com, 2021). This is yet another target market factor in favor of globalization for iRobot. Target Market Challenges and Adaptations For iRobot, there are a few product-related problems and challenges faced by consumers in low-income target markets like Madagascar. The primary challenge is the high cost of their products. Those of low-income target markets will view iRobot products as unaffordable luxury and not a necessity. Furthermore, Roomba requires a reliable electricity supply to function. With this being said, Madagascar will be an extremely difficult target market because “Madagascar is one of the least electrified countries in the world, with only about 20% of its population having access to electricity” (Burns, 2023). Lastly, there are many benefits to using robots in the home that often go unnoticed. This lack of awareness and education can lead to low demand for products like Roomba. For Madagascar and other low-income target markets, iRobot can design a product that is not only more affordable, but a product that does not require electricity to function. Unfortunately, any robotic product is going to be a costly purchase. However, iRobot can design a product that is smaller and runs off solar energy. Since many consumers in Madagascar cannot afford large homes, a smaller vacuum will only be needed. Being a smaller size, iRobot will need fewer materials, which will then significantly decrease the cost of their product. As for the solar power aspect, this will be a positive product adaptation to support those consumers who do not have access to electricity. When it comes to the lack of awareness and education of the benefits of household robots, iRobot can adapt their marketing plan to explain these benefits in detail to increase product demand.

Summary of Recommendation to the Company’s CEO “Local responsiveness is the degree to which the company must customize their products and methods to meet conditions in other countries” (Global Business Strategies for Responding to Cultural Differences, n.d.). I believe the benefits of local responsiveness can outweigh its costs. However, in this case, the adaptations and customizations may lead to increased costs for iRobot. Since the technology required to transform an electric product into a solar product is quite advanced, the product intended to be designed for low-income countries that lack electricity may cost more for iRobot to make, regardless of the product’s small size. This does not mean that iRobot should refrain from entering all international target markets. iRobot should only refrain from entering low-income target markets like Madagascar where many do not have access to electricity. There are several trade-offs within the I-R framework that my firm, iRobot, should understand before it considers adapting the Roomba for low-income markets like Madagascar. Some of the advantages include increased market size and brand reputation. Since a large part of the world’s population consists of low - income markets like Madagascar, iRobot’s customer base will further expand. As for brand reputation, that will also be positively affected because iRobot’s desire to improve the lives of those in low -income countries will be viewed as a kind and caring act which will then increase customer loyalty. Some of the costs include pricing and lack of infrastructure. Since products must be adjusted and priced affordably for low-income countries, iRobot’s profit margins could be heavily affected. Furthermore, iRobot’s costs could increase further with the lack of infrastructure in low-income countries to support the distribution process and product sales.

Marketing, product developing, and manufacturing can collaborate to maximize integration benefits while remaining responsive to low-income target markets like Madagascar by focusing on feedback, sharing insights like comments on social media and blog posts, and creating a cross-developmental mission that motivates everyone in the team to work hard and work their best (Thiefels, 2019). Responsiveness will increase iRobot’s product launch time, take -off, penetration, and diffusion in a positive way that almost makes the possible decrease in profit margin well-worth it. However, I believe that iRobot should sill refrain from entering Madag ascar’s target market regardless of the positive impact there will be on these product areas. The adaptation to transform an electrically powered vacuum into a solar powered vacuum will simply be too costly.

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References Ballve, M. (2014, August 4). The Rise Of The Roomba Vacuum Shows There Is Huge Business Potential In The Home Robot Industry. Business Insider. https://www.businessinsider.com/the-roomba-and-the-surprisingly-big-home-robot-industry- 2014- 8#:~:text=iRobot%2C%20a%20Massachusetts%20company%2C%20has%20shipped%20more %20than,in%20the%20last%20four%20years%20and%20a%20half . Burns, L. (2023, December 8). Does Madagascar Have Electricity. Madagascarcharm.com. https://www.madagascarcharm.com/does-madagascar-have-electricity/ Global Business Strategies for Responding to Cultural Differences. (n.d.). Lumen Learning. https://courses.lumenlearning.com/wm-principlesofmanagement/chapter/responding- to-cultural-differences/ Global Robotics Market (2021 to 2025) - Featuring Intuitive Surgical, iRobot and KUKA Among Others - ResearchAndMarkets.com. (2021, July 16). Business Wire. https://www.businesswire.com/news/home/20210716005102/en/Global-Robotics-Market-2021- to-2025---Featuring-Intuitive-Surgical-iRobot-and-KUKA-Among-Others--- ResearchAndMarkets.com Hitchcock, J. (2023, October 26). What Is Product Positioning? Definition and Template. Shopify. https://www.shopify.com/blog/what-is-product-positioning

Household Robots Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029). (n.d.). Mordor Intelligence. https://www.mordorintelligence.com/industry- reports/household-robots-market Johnson, J. (2024, January 11). iRobot rumble: Can Roomba hold its ground?. Entrepeneur. https://www.entrepreneur.com/finance/irobot-rumble-can-roomba-hold-its- ground/468224 Madagascar - Gross national income per capita in current prices. (n.d.). Knoema. https://knoema.com/atlas/Madagascar/topics/Economy/National-Accounts-Gross-National- Income/GNI-per- capita#:~:text=Gross%20national%20income%20per%20capita%20in%20current%20prices&te xt=In%202021%2C%20GNI%20per%20capita%20for%20Madagascar%20was%20489%20US %20dollars. Shultz, E.J. (2021, November 5). HOW ROOMBA IS MARKETING ITS SMARTEST ROBOT VACUUM EVER. Ad Age. https://adage.com/article/podcast-marketers-brief/how- roomba-marketing-roomba-j7/2378111 Thiefels, J. (2019, October 28). How Marketing and Product Teams Can Improve Collaboration. Openview. https://openviewpartners.com/blog/how-marketing-and-product- teams-can-improve-collaboration/ What Brand Positioning Is And Why It’s Important For Your Business. (2022, January 24). Forbes. https://www.forbes.com/sites/theyec/2022/01/14/what-brand-positioning-is-and- why-its-important-for-your-business/?sh=4886fe295a63

What Is Marketing Globalization? (With Benefits and Strategies). (2022, September 30). Indeed. https://www.indeed.com/career-advice/career-development/what-is-marketing- globalization

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