Euro-Pro’s Shark products have real suction in the vacuum appliances marketgreg Featured

5:20pm EDT December 19, 2013
Mark Burris, president, Euro Pro/Shark Mark Burris, president, Euro Pro/Shark

Few companies today consider the vacuum cleaner market as an area to grow and expand business. That market four or five years ago, however, was very interesting and caught the attention of executives at Euro-Pro Operating LLC, a Newton, Mass.-based pioneer in innovative cleaning solutions and small household appliances.

The company looked at the market at the time and noticed it was divided into two segments. There were well-entrenched brands like Hoover, Bissell and Eureka selling at low price points, under $100. Then Dyson came into the market and become the No. 1 brand selling vacuum cleaners at more than $400.

“It presented a very unique opportunity,” says Mark Barrocas, president of Euro-Pro. “As we looked at the market, we had a compelling strategy within the vacuum cleaner market where we felt consumers wanted lightweight, more-maneuverable vacuum cleaners than what were present in the market at that time, and they wanted it at affordable prices.”

Euro-Pro entered the market with its Shark cleaning appliances in the $150 price-point range, a challenging arena that the marketplace called no-man’s land.

Here’s how Barrocas and Euro-Pro turned no-man’s land into a billion-dollar business.

Find new markets

Five years ago when Euro-Pro was looking at entering the vacuum cleaner market to grow its business, the company considered three keys to being successful.

“We looked at Euro-Pro’s capabilities, competitor weaknesses and marketplace opportunity,” Barrocas says. “We looked at how those three things converge with each other and the center point of how those converge on each other was where the product innovation or the opportunity was for us.”

Euro-Pro had the technology to make vacuum cleaners that were lighter-weight, more versatile and were able to deep-clean carpets better than the competition.

“When we looked at the competitor weaknesses, we looked at the fact that competitors were making heavy vacuums,” he says. “And the marketplace opportunity was a huge spread from $100 vacuums to $400 vacuums. As those three things converged, it presented an interesting white space for us.”

The company took its findings in the vacuum cleaner market and began to transform its own product.

“You can’t innovate based on looking at what everyone else does and trying to incrementalize,” he says. “You have to find your own white space where you’re going to be able to differentiate and create a unique proposition for the consumer.”

Euro-Pro heard from consumers that no matter how much they vacuumed their home, there were still issues with their vacuums getting their homes clean.

“These were issues where we looked at consumer problems and we created technology solutions to those problems,” he says. “Then through our media strategy, where we spend more than $100 million on TV advertising a year, we were able to educate the consumer on why this technology would be of strong benefit to them in their home.”

Create new innovation

Not only did Barrocas and his team want to educate consumers about their new vacuum product, they wanted consumers to educate the company itself for innovation purposes.

“Innovation for us comes from a lot of different places,” Barrocas says. “It’s being able to take a lot of different insight and data points and synthesize it down into a hypothesis. A tremendous amount of work goes into building that hypothesis. That insight comes from our capabilities, the competitor’s weaknesses, the consumer insight and the market opportunity. That all synthesizes down into a product innovation hypothesis.”

The company then takes that hypothesis and starts to move it forward into prototypes. Those prototypes are then given to consumers to test.

“We go out and talk to consumers and observe consumers using, interacting and commenting on those prototypes,” he says. “Based on that, we continue to refine our hypothesis and concept until it goes down a product innovation funnel that ultimately leads us to a product we feel good about moving forward with in the market.”

If there is a key to what Euro-Pro tries to do, it’s that the company doesn’t marry its product hypothesis.

“Our hypothesis is not a religion; it’s just a hypothesis,” he says. “If it proves out and there are enough data points that force us to think differently about it or change it, we are very quickly able to do that without feeling constrained.”

If you look inside Euro-Pro, some of its biggest successes have come from projects that have failed or been scratched.

“We try not to throw the baby out with the bath water and try to find the nuggets of things that were good or positive about what we developed and then build on them in some other way,” he says.

Consumer focus

In addition to the company’s attention to the innovation process, it also spends quality time educating consumers and listening to their needs.

“All too often there are amazing products in the market, but one of the challenges to consumer products companies is to educate the consumer about what is unique about their products,” Barrocas says. “When you walk through a Target or a Wal-Mart, there are tens of thousands of products on the shelf. Challenge No. 1 is how do you get to the retail shelf. Challenge No. 2 is getting off the retailer shelf and into consumer homes.”

That’s where Euro-Pro takes a unique approach to things. Many companies in its industry focus on the buyer or retailer. Euro-Pro focuses on the consumer.

“What does the consumer need?” he says. “What does the consumer want? What is going to excite the consumer? Then, how do we use TV advertising and the Web to educate them on what we’ve done?”

The company has an interesting go-to-market business model where it advertises significantly on television. In fact, Euro-Pro is the largest appliance advertiser on television.

“We create consumer demand through TV advertising,” Barrocas says. “A portion of that demand is fulfilled directly to us, and we ship products to consumers. However, 90 percent of the demand is fulfilled through retail stores such as Macy’s, Bed, Bath & Beyond and Wal-Mart.

“Our business model is really based on three core principals — one of which is product innovation, second is product quality and the third is creating consumer demand. Our view of the world is how do we bring those three things together to ultimately create a solution for the consumer?”

If you’re going to shop today for a vacuum cleaner, the odds are that a majority of Americans are going to go online and look at consumer reviews.

“As we started our vacuum cleaner business five years ago, we were focused on making sure we were driving exceptional consumer satisfaction,” he says. “We want to see five-star ratings online about our products. Over the course of the last five years, we’ve driven very high satisfaction levels to the point where over the last two years our Shark vacuum brand is rated the most recommended vacuum in America.”

The growth of Euro-Pro and the Shark brand has really been driven by a strong focus on redefining markets that are in place. The company has gone from 1 percent share in the vacuum cleaner market five years ago to 23 percent market share today. At the price point between $130 and $250, the company holds a 70 percent market share, and at an even deeper level, it has 90 percent share of the steam-cleaning category.

In five years, Euro-Pro has developed into a 600-employee, more than $1.2 billion company.

“We’ve been able to take share in some very well entrenched markets,” Barrocas says. “I think our business model and product innovation approach has demonstrated to be scalable, and there are a number of additional categories for us to be able to scale that across.” ●

How to reach: Euro-Pro Operating LLC, (800) 798-7398 or www.sharkclean.com

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