INTRODUCTION

This paper is conducted to take a look at the market of Sleep Bed 360® – a product made by
Sleep Number® – a company that focus on ỉmproving sleeping quality by using special bed that
are accompanied with advanced technology. This is one of the most significant innovation in the
company’s 30-year history, with the use of the latest biometric sleep tracking technology. When
consumers use this bed, the technology would intuitively sense and automatically adjust comfort
to keep consumers sleep well at night.

Throughout 30-year history, this innovation is indeed one of the most remarkable change in the
technology of Sleep Number®, which helps Sleep Number® to gain multiple success on both
market areas and awards. Self-adjusting, smart and modern, this product is really worth the price
despite having other potential competitors that have lower prices and more comfortable products.

So what determines the success of Sleep Bed 360®? This paper would have a close look at
different factors of their marketing strategy and how these factors affect their success. This paper
would also points out different strengths and weaknesses of this product, points that other
potential competitors could take advantages of, and how the government policy affect the quality
of the product.

The content that this paper would discuss about includes:

1. General Information of the product
2. Macroeconomic Market Environment
3. Target Market Environment
4. Conclusion
 General Information

1. Description: (Golde, K. in Mattress Clarity, April 15, 2021).

- Adjustable air mattresss with a DualAir Adjustability feature, which allows couples to decide
the firmness of their half of the bed.
- All Sleep Bed 360® come with one or two air chambers that will inflate or deflate based on the
consumers’ setting.
- All beds also come with a Sleep Number® number, or Sleep Number® setting, that
corresponds to the individual’s ideal firmness and support. The higher the number, the firmer the
mattress.
- Sleep Bed 360® are organized into three categories: Classic, Performance and Innovation. The
Classic series beds, C2 and C4, offer the most standard options while the Innovation series has
the largest, thickest layers and most added features.
2. Relative advantage:
- The most particular advantage of Sleep Bed 360® compared to other mattress products and
innovations would be the combination of technology into the self-adjusting feature of this bed.
- The SleepIQ Technology would sense how a person sleeps and provides data that lets
consumers make modifications to optimize their night’s sleep. It let someone know what
consumers’ best sleep hours are and help them find the best Sleep Number® setting. This
technology could connect to a number of health and wellness apps including Fitbit, Apple Health
or Nest (Golde, K. in Mattress Clarity, April 15, 2021).
3. Can consumers try this product easily?
The answer is yes: Sleep Number® provide a 100-night trial for any consumers who order their
bed, and ask the consumer to allow themselves a 30-night adjustment to the new mattress. After
that 30-night adjustment, if the consumers are not satisfied, they could return the bed or ask for a
change. (Timmons, J. in Healthline, June 2, 2021)
4. Possible problems and resistance to product acceptance:
- The foot-warming accessory on certain models are concerned with overheating, resulted in a
recall of these products.
- Aside from that, the mattress may not be the most comfortable for those who look for a soft bed
or those that are used to memory foam mattresses.
 The Macroeconomic Market Environment

1. Economic environment:
- Sleep Bed 360® is a luxury brand of sleep beds, and their target is the group of people at the
age of 35-64 years old, therefore most of the price changes that happens in the economic and in
the market may not affect them as much.
- They, however, would have many potential competitors that have more competitive prices and
more comfortable mattresses. To compete with those products, Sleep Number® has improved
and innovated, constantly introduces new technology and new models of this bed.
- Sleep Number® also provide a 100-night trial with a 30-day adjustment and return if
consumers are not satisfied with the products. This is another advantage of the company
compared to other competitors.

2. Social and cultural environment:

- The most significant issue that Sleep Number® must pay attention to is the environment issues
revolves around mattresses and sleeping bed. The 100-day trials of Sleep Bed 360® may create
an impossible waste mountain, and a wild west of rouge recycler.
- Most of the advertisement of this product focus on couples, as Sleep Bed 360® mostly provide
technology to ỉmprove couples’ sleep quality. This may not be the suitable advertisement
strategy for those who live alone, as the number of this group constantly rise throughout the
years.

3. Technological environment:
- Sleep Number® technology and SleepIQ is remarkable innovation of the company, which has
gained them awards at CES® Best of Innovation award for these new features.
- These technologies are one of the latest in the technological environment of mattresses, a huge
advantage for Sleep Number®. But that does not mean the technological environment of this
industry is old-fashioned; in fact, it is the opposite.
- Some noticeable innovations in the mattress industry would include sleep sensor, adjustable
beds or light and heating, things that Sleep Bed 360® also have. In the long-run, if they do not
constantly improve and innovate, they may lose the technological advantage of their product.
 The Target Market Environment
1. Market description:
a) Consumer target: (ChiefMarketer, April 25, 2019)
i) The demographic of this product:
- This product focuses on the consumer in the age of 35 to 64 years old, those that have stressful
work environment and need to improve the quality of their sleep.
- This product is a luxury brand, and focuses on mid-end to high-end consumers, those who are
financially stable and want to make their life more comfortable.
ii) Value and needs drivers: The main purpose of this product is to improve the quality of
consumers’ sleep, which would help to enhance the health of consumers after having better
sleep. The main value that the consumers would consider before purchasing is their own comfort
after using this product.
b) Geographic area: This type of product is usually sold in United State of America, with most
of the stores located in California (67 stores) and Texas (58 stores). Up to 2021, the total stores
of Sleep Number® in USA are 619 stores.
c) Size of the current market: (BedTimes Magazine, March 23, 2020)
- Sleep Number®’s 4th Quarter (in 2020):
+ Net sales: $441 million
+ Net income: $24.1 million.
+ Earnings per share: $0.82
- Sleep Number®’s Full year (in 2020):
+ Net sales: $1.7 billion.
+ Net income: $81.8 million.
+ Earnings per share: $2.70
- Store count (up to 2021): 619 stores in USA. In 2020, Sleep Number® opened 59 stores and
closed 27 stores.
d) Where do consumers usually buy this product?
i) Typical retail outlets: Sleep Number® do not have retailers; they distribute the bed using their
own stores system that spread across USA. For other consumes who want to buy this bed outside
of USA, Sleep Number® would provide an UPS shipping for Canada, Puerto Rico and U.S
Virgin Islands. However, the Premium Delivery and Set Up services are only available in 50
states of USA where the stores are located, and services outside of these area may be charged
additionally.
ii) Typical wholesale distribution: For wholesale, or business sales, Sleep Number® have a
seperate commercial sales team that can assist business with purchasing Sleep Number® beds for
a variety of residential and non-residential environments, such as hotel, fire station or medical
centers.
iii) Online or other ways to distribute the product to consumer: Sleep Number® has a website
that provide shipping service across 50 states in USA and some areas outside of USA.
e) Promotion, or how do consumers learn about this type of product:
i) Advertising: Sleep Number® has TV commercial advertisement in 2020, with multiple videos
of different people and different circumstances and how they change positively after using Sleep
Bed 360®.
ii) Listing in business directories: Sleep Number® and Sleep Bed 360® has appeared in multple
reviews of different online newspaper such as Minneapolis/St. Paul Business Journal, or
Healthline.
iii) Free promotions and trials: Sleep Number® offers a 100-night trial that begins the day the
mattress arrives, and the company would ask the consumer to give themselves a time limit of 30
nights to adjust to the new mattress. If after 30 days have passed but the 100-night trial has not,
the consumer can contact the company for a return or an exchange. Some accessories, however,
can’t be returned. (Timmons, J. in Healthline, June 2, 2021)
iv) Public relations activities, sponsorships: Sleep Number® had won CES® Best of Innovation
award for new features of Smart Bed 360® that proved to provide consumers an addition of
nearly 100 hours of quality sleep each year. (Business Wire, January 6, 2020).
f) Pricing:
i) How responsive is consumer to this type of product?
This product is a luxury brand and mostly targeted to mid-end or high-end consumers, therefore
the price elasticity of this product is not high, or in another term, the demand for this product is
price inelastic.
ii) Payment terms: (Sleep Number support website, retrieved June 14, 2021)
- Sleep Number® has partnered with Synchrony Bank to help consumers with paying the
mattress over time, with a Credit Card that allows them to use at multiple stores of Sleep
Numbers®.
iii) Lease financing offered? (Sleep Number website, retrieved June 14, 2021)
- Yes! Sleep Number® provide a 0% interest for 48 months on all smart beds through 20/6/2021.
- The company also provide a Sleep Number® Credit Card through through Synchrony Bank
with a revolving credit line to use again and again at Sleep Number® locations.
g) Service and warranty issue: (Sleep Number website, retrieved June 14, 2021)
- Sleep Number® provides 1-Year Full Warranty and 15-Year Limited Warranty for Sleep Bed
360®. In 1-Year Full Warranty, any covered repairs or replacement parts and associated labor
for the service would be totally free. After the First Warranty Year to the fifteen one, any repair
or replacement cost would be calculated by multiplying the then-current prices for the product by
the percentage of such cost that the consumers are responsible for paying.
Time from Original Purchase Date Percentage of cost of product/part that the
consumers are responsible for paying
First Warranty Year No Cost
First Anniversary to Eleventh Anniversary 30% + 5% for each completed year
Eleventh Anniversary to Fifteen Anniversary 85%

2. Major competitors in this product category:

i) Potential competitive products, their strengths and weaknesses:
- Potential competitive products: Casper Original Foam.
- Strength: The most significant weakness of Smart Bed 360® is the complain of how the
mattress is too thin or too hard, causing uncomfortable sleep position and sore body next
morning. This could be the strength of Casper Original Foam, as their products provide a more
comfortable feeling.
- Weakness: The most particular weakness of Casper Original Foam is that it is nonadjustable
compared to Smart Bed 360®, and it does not have any technology that are as advanced as Smart
Bed 360®.
ii) Potential competitors’ prices: Compare to other nonadjustable mattress, Smart Bed 360® is
more expensive: $4,299 for a queen size mattress. This would be another weakness compared to
the price of $1095 for a queen size mattress of Casper Original Foam. (U.S News, retrived June
14, 2021).
iii) Potential competitors’ promotion and advertising methods: Casper mostly pay attention to
online mediums such as Facebook or desktop videos. (Gansline, S. in Pathmatics Inc, March 19,
2021).
iv) Potential competitors’ channels of distribution: Consumers could buy Casper Original Foam
from their online stores, or directly at their stores and retailers.
3. Government intervention:
a) Health and safety standard: (International Sleep Products Association, or ISPA, June 4,
2018)
- Any mattresses products for children must limit the use of lead contents and certain chemical
compounds, such as phthalates, in the mattresses.
- Cigarette Ignition Resistance test (Part 1632) and Open Flame Resistance test (Part 1633) is
required. Any products that do not meet requirements must be returned to the factory.
b) Electrical standard:
- Since Smart Bed 360® has included technology in their mattress, for body-warming
specifically, they have to follow standardized electrical requirements of U.S. Consumer Product
Safety Commission (CPSC).
- In 2017, they have voluntarily recalled the foot-warmer in certain Smart Bed® in cooportion
with U.S CPSC due to some reports about the foot warmers located under the mattress cover can
short-circuit and overheat, posing a burn hazard. (Sleep Number®, March 17, 2020).
c) Packaging and/or recycling requirements: (compliancegate.com, January 19, 2021)
- The US Law Label requires that any stuffed products that are used to support or rest should
bear a label specifying the filling materials. These products that are included in this law are
mattresses, pillows, sleeping bags, and other upholstered products.
- Under the law, the label for a mattress shall include the following information:
+ Company name of the importer
+ Composition of the filling materials (Weight %)
+ Uniform Registry Number (URN)
+ A statement indicating that this label should not be removed: “Do Not Remove”.
 Conclusion

- The target demographic group of this product is mid-end to high-end consumers that are
approaching the middle ages or elderly, those who have high expectations when they look for
something to buy, therefore the advertisement projects of Sleep Number® would focus and
emphasize on two remarkable prospect of their Smart Bed 360® product: comfortable and high-
quality.

- This type of consumers also value convenience since their work and personal lives are so
stressful. They would search for a full package of online, or offline buying, delivery and set-up.
Thus the Premium delivery and set-up service, combined with multiple stores located in all 50
states of USA, is a plus for the company. In my opinion, the Placement factor of 4P Marketing
Mix is what determines the success of Smart Bed 360® sales, due to the convenience of the
store’s locations and availability of the products.

- Another factor that determines the success of Smart Bed 360® sales is the warranty policy and
the accessibility of the product. The warranty policy allows the consumers to keep using the
product as long as posssible, increase the brand royalty, while the accessibility of the product
allows the consumers to choose products that are the most suitable to them.

- However, the Price factor of 4P Marketing Mix might be the disadvantage of the Smart Bed
360® sales. Even though Sleep Number® do provide lease financing and a credit card that
would help consumers when they purchase the products, the expensive price of this product is
not as competitive as other potential competitors.
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