Custom World Fitted Bedroom, Case Study Example

Executive Summary

Marketing strategy and strategic positioning plays an important role in company’s growth chart. Big chain of markets are getting tough competition from small scale stores who offers special discounts from time to time catering to a particular section of market. Contrary to this, the buying habits of consumers have changed in recent times which makes it difficult for the small size store to offer competitive price. Consumers have started experimenting shopping online along with visit to department stores, superstores, and furniture warehouses. Focusing on the modern changes in the current market, the report intends to propose a strategic plan for UK’s local retail company ‘Custom World fitted bedroom’ manufacturers. The give report’s main aim is to analyze the current market status of UK furniture manufacturing industry and enhance the sales growth of ‘Custom World fitted bedroom’ manufacturers by proposing a strategic marketing plan.

Table of contents

1. Introduction. 5
2. Market and company position analysis. 5

2.1 Market opportunities. 5

2.2. Competitor Advantage. 6

2.3. Macro and Micro Market Analysis. 7

3. Strategy design. 12

3.1. Mission and Vision Statement. 12

3.2. Market segmentation. 12

3.3. Three-year Marketing Objectives. 14

3.4. Three-year Marketing Strategy. 16

3.5. Assumptions. 17

4. Branding Issues and Strategic Positioning. 18

4.1. Branding Issues. 18

4.2. Strategic Positioning. 20

5. Internal marketing strategy. 20

5.1. Recommendations. 20

5.2. Implementation Activities. 23

6. Conclusion. 23
7. References. 25

Table of figures

Figure 1: UK Domestic Furniture Industry.. 13

Figure 2: Branding Attributes. 16

Figure 3: Strategic Positioning. 17

1. Introduction

Custom World fitted bedroom was found in 1982 by two partners having manufacturing experience located in South Coast of England. This company initially used to sell household furniture made as per the order placed but currently it has developed an exceptional line of brand known as dining room and living room furniture that are sold via regional and local retail stores. The main objective of this report is to analyze the current market status of UK furniture manufacturing industry and enhance the sales growth of ‘Custom World fitted bedroom’ manufacturers by proposing a strategic marketing plan.

2. Market and company position analysis

2.1 Market opportunities

As per the current research study done by the retail analyst ‘Verdict’ showed that the bedroom furniture and bed market will see rapid growth in this year by £79.4m whereas the entire floor covering and furniture market is expected to contract by £518.2m.Matt Walton, Verdict retail analyst stated that beds have always been on the high even in present economic conditions because it has a string connection with the sense of wellbeing and quality of sleep.

The demand for different household furniture is based on disposable income, employment levels, and interest rates whereas income growth and housing starts trigger long and midterm demand. ‘Custom World fitted bedroom’ is expected to grow because of the rising demand in the South coast England. This plant will create 600 new employment opportunities in this area also generating housing starts much above the national and provincial averages(Lowson). It has been predicted by the local region Economic Development Office that such trends will be seen for another 5 years, which will stabilize thereafter. This ensures strong demand for bedroom furniture in the area. Presently, there are not adequate furniture manufacturers and retailers in this area to fulfill the demand and thus ‘Custom World fitted bedroom’ has a unique opportunity to make the most of this golden chance

2.2. Competitor Advantage

It has been reported by the Chamber of Commerce that the South Coast area has 30 retail stores selling furniture. These outlets comprise of 80% small-scale independent retailers, 15% furniture chain outlets and 5% discount stores(Hitchen).

South coast has two major competitive furniture producers that manufacture bedroom furniture similar to this company. They are Canadian Heritage furniture and Conklin Furniture. The following is the detail analysis of these two companies.

Summary of major competitors in the area

• Canadian Heritage Furniture

-Company size: small

-Location: Vancouver Island

-Distribution channel: small and independent retail outlets (small scale)

Advantage of product line:

-Exceptional quality

-Reasonably design price

-Flexible (consumers can select from a wide range of finishes to fulfill their design and style preferences)

• Conklin Furniture

-Company size: 25 employees Location: Lower Mainland

-Target market: living room, patio furniture, dining room and bedroom.

-Product line: superior quality and do not use particleboard, veneers and fiberboard.

-Rapid growing

2.3. Macro and Micro Market Analysis

PEST method is adopted to analysis the overall UK market. SWOT method is adopted to analyse the key factors which will affect manufacture and retailing of fitted furniture over the next three years and current position of Customer World

PEST Analysis

Base on PEST analysis, the following is the overall situation of the UK furniture market.

The approximately worth of the UK Bedroom Furniture market was estimated to be £575m (MSP) in 2011, representing around 12% of the overall Domestic Furniture market. After substantial growth in the early 2000’s, the market became more difficult and as the decade progressed experienced significant declines in 2008 (4%) and 2009 (6%). The share of the overall furniture market has declined since 2002.

Due to the housing crisis in the end of 2007, influence of the global credit crunch and the world economic recession, consumers lost their confidence. And the rapid penetration of low cost imports of furniture from the Far East and Eastern Europe lowers down the overall market price of the UK furniture market.

Not only the domestic competition is fierce but also the international competition. The imports of the furniture in the UK increased dramatically in the last decade and takes up for about 69% of the bedroom furniture market. However, majority of fitted furniture is manufactured in the UK. Those countries that export to the UK are Germany, Italy, Denmark and China. From them, China exports the most furniture to the UK which is 34.3% of the overall UK imports of furniture.

Solid wood furniture remains in high demand in the medium to upper sector of the market as well as modular furniture. Nevertheless, the market demand of the variety and range of contemporary styles in alternative woods is also increasing.

The future growth in the bedroom furniture may be from the lower end of the market. And in a short period, companies would gain from the expense of the medium to higher priced end by expanding cheap imports and innovative products. Nowadays, Internet and catalogue increase their sales and proportion of products.

Overall, in the next 5 years, the UK furniture market is likely to prove relatively grim with little volume growth. However, the bedroom furniture market shows slow but sustainably increases in the next few years and reaches a value of £650m in 2016.

 SWOT Analysis

Influence of SWOT factors on the company

Strengths:

• Skilled human resource maintain and increase company’s profit, for instance, salesmen gives detail explanation of product and reduce potential customers doubts
• Innovation of product attracts market and expand new market share.
• Efficiency control of installation process ensures satisfying product quality to customers which assists company to operate sustainably.
• Bonus could inspire salesmen to devote 100% of their energy to contribute to the company.
• High rate of sales visit to sales saves human resource and raise
• Appropriate risk control ensures the company’s cash flow.
• Outsourcing saves labour costs and fixed assets costs

Weaknesses:

• Slow updated showroom cannot provide a straight image of innovative product.
• Low working efficiency of salesmen causes low rate of input-output ratio.
• Restrict market region leads to limit market share and limit profit.
• No fixed selling price causes doubt of new customers.
• Low employees decision involvement results low working enthusiasm
• Lacking CSR could lead to product-harm crisis.

Opportunities:

• Online shopping attracts potential customers and reduces cost of human resource.
• Designed and modern furniture acquire increasingly market share nowadays.
• The positive trend in UK furniture market appeals foreign investment and reduce company’s pressure of cash flow.

Threats:

• Increasing number of foreign furniture competitors with low price could lead to losing customers
• Unpredictable sales quantity of new product leads to stock problems.
• Importing raw material outside of the UK causes increasing of cost of product.

3. Strategy design

3.1 Mission and Vision Statement

Custom World fitted bedroom is an innovative manufacturer of bedroom furniture. It aims at supplying its consumers with furniture of superior quality and unique designs at reasonable prices via reputed retail stores. They will continue to extend their product lines and innovate new designs depending on the needs of their customers.

3.2. Market segmentation

Overall market segmentation

There are three key sectors of the furniture industry named office furniture, household furniture

and various other furniture like institutional, restaurant and hotel furniture.

Chart 1 Key sectors of furniture industry

Chart 2 Wooden furniture contributions in 3 furniture sectors

3.3. Three-year Marketing Objectives

BCG Matrix tool is used for the company to search marketing objectives

The followings are marketing objectives.

• Decrease the amount spent on marketing relative to the sales generated
• Minimize costs and enhance productivity by the purchase of its new Point-to-Point drilling machine
• Increase sales by enhancing the retail distribution of new product lines.
• Expand product lines to fulfill the consumer demands.
• Expand the distribution of products within South coast of England.

Target Market Segmentation

Target market of Custom World’s could be divided into four segments based on variety family types. Those segment consumers would possibly interchange their category.

Chart 3 Target audience segmentation

• Household of singles (Age<35, Age 35-64, Age>64)

Customers focus more on simple and comfortable furniture style and rely on personal preference when making decisions.

• Couple without children and without other people

Customers make decisions together, however, in most conditions, females have control over the final decision. And customers prefer modern style furniture since they are normally young.

• Couple or single parent with child<6 years with or without other persons

Customers consider the safety and quality when buying furniture at first for children’s safety. For example, couples would consider the material, the height of furniture not only the style of the furniture.

• Couple or single parent with child>6 years or without other persons

Customers also focus on the safety and quality with furniture but less hard compared with those customers who have children<6 years. Customers prefer practical and quality furniture.

Target market of Custom World’s could also be segmented into another two parts.

• The main target market

-Small and independent retailers located in the South Coast and associated communities.

• The secondary target markets

-Independent retailers located in other provinces.

With the growth in sales, larger department stores and furniture chains will be approached.

3.4. Three-year Marketing Strategy

Marketing Mix Strategy

Pricing Strategy

The pricing strategy aims at pricing the goods at competitive prices. This strategy considers consumer’s price sensitivity, competitive pricing strategies, and production costs. The market of household furniture is quite competitive and today’s aware consumers are looking for good value. The company aims at offering superior quality furniture at reasonable prices.

Place Strategy

The place strategy is to offer multiple distribution channels. Online distribution channel needs to be developed. Though Customers do not usually order furniture online, through online purchase channel, customer may order replacement pieces instead of going to the store to buy one piece. Online purchasing could also benefit residents who live far away from Dorset and Hampshire. Live chat software needs to be added on the website in order to answer questions from online customers. Besides online distribution channel, Custom World’s could also corporate with local retailers. Samples of typical products of the company can be placed in retail stores to attract attention from customers and increase sales.

Picture 4 Distribution channel

Promotion Strategy

With the growth of the company, they will be hiring a manufacturing agent for promoting its product lines to the retail stores within the province. A 5% or 7% commission is charged by the agents on the basic wholesale price at which the product was sold. The retailers then add more margins to the price and determine its retail price. The direct sales cost will be 59% of the gross sales including the production wages of 33% and the materials and goods average to 25%. The net income is predicted to rise from ?38, 645 to ?75, 779 in the next three years.

Besides, company can give to all the targeted retailers printed catalogue, which features all their product lines along with the samples of wood finishes. Potential consumers can study these catalogues to get an idea about the products, which are not displayed in the showroom. A brochure will also been designed on individual products, which are given to the interested consumers via the retailers. Custom World’s could make online advertisements. It is essential to create awareness by providing knowledge to the potential consumers regarding the benefits and features of having modular furniture.

Product Strategy

The products in the next three years are set to be high quality household furniture and office furniture which combine with superior workmanship and ergonomic design for the customers who understand quality and are willing to use high technology equipment. Most importantly, the target customers would like to pay more for comfort and high quality. The company does not sell laminates or cheap furniture.

3.5. Assumptions

• High advertisement cost for new product

-Profit on new products may not cover the promotion costs

• The company does not partner on R&D projects

-Negative consequence: R&D risks are not reduced and level R&D funding is not explored.

-Lack of customer attention grabbing skills in sales personnel

• Competitors will launch new product at the same time as the Custom world’s does.

-Distract attention of consumers

• The green environment affects the furniture industry by raising material costs.

-Increase cost of production and decrease of competitiveness

• Change of consumers’ purchase channel

-Company needs to develop or change current distribution channel

• Outshining competitors with new advertising strategy
• 4. Branding Issues and Strategic Positioning

4.1. Branding Issues

This is the era of modern and innovative furniture. In order to remain in the market, each company faces a tremendous competition to stay ahead. They have to face new challenges every day. Those who can deliver furniture that are unique and innovative in nature can sustain in this market. The talent and creativity of employees is considered to be the greatest asset nowadays. Companies willing to sustain in this global market are utilizing the talent of designers in most strategically planned manner. The market laws that were used since ages are no more relevant and have been substituted by new trends of eco-green issues, environmental safety, economic growth and such other factors. To face the competition in a healthy manner, company shall focus more on cultural and economic objectives with wider economic strategy (Luff).

Figure 2: Branding Attributes (Lowson)

In the market of furniture manufacturing industry bringing new services without compromising the design quality is the de-facto. Company also needs to be able to carry the nation’s image along with social responsibility that the company bears. Currently branding strategies in are lacking in ‘Custom World fitted bedroom’ manufacturers.

Today, consumers are brand addicted. They are very conscious in choosing a product. The overall impact of the product shall be so appealing that a consumer shall be compelled to buy the product. One of the best examples is the household furniture where the makers must convince the consumers to buy their product over other competitive makers. The simple design created a wave among the global audience. Companies shall emphasize and invest more in hiring sales professionals from best design and architectural schools, who are capable of thinking out of the box (Wille).

The latest trend in furniture manufacturing is being adopted to get the best of the product. Improved quality of raw material, regular monitoring of manufacturing process, attractive packaging material and all such factors are the areas where new upcoming designers are putting their focus. The company needs such multi-level approach to get that extra boost to move ahead with impact.

Figure 3: Strategic Positioning (Pepke)

4.2. Strategic Positioning

Strategic positioning plays an important role in companies growth chart. Big chain of markets are getting tough competition from small scale stores who offers special discounts from time to time catering to a particular section of market. Contrary to this, the buying habit of consumers have changed in recent times which makes it difficult for the small size store to offer competitive price. People have started experimenting shopping online along with visit to department stores, superstores, and furniture warehouses (Chew).

In the field of furniture manufacturing industry the company must know that Internet plays a major role in the change of this habit. However, consumers have been noticed to use this medium more for research and comparing prices with other stores. The touch-and-feel factor still drives them to actual warehouse. Furniture market saw very less participation from consumers in recent years. Sustaining has been difficult for various stores and had either to close down or lessen their number of stores (Lowson). In such scenarios, it is important that household furniture manufacturing companies like ‘Custom World fitted bedroom’ manufacturers implement effective strategies.

It is advised that company enforces highly effective’s sales practices as its strategic positioning practices which can reach the consumers effectively. Implementing online marketing strategies is one of the most recommended initiatives as at present social media and online advertising are reaching customers quicker than any other means. So, publishing online advertisements on the household furniture uniqueness of ‘Custom World fitted bedroom’ manufacturers and the discount prices offered.

5. Internal marketing strategy

5.1. Recommendations

It is very important that ‘‘Custom World fitted bedroom’ implements highly efficient profit-maximizing ventures seek regular sales. However, furniture is not a commodity that generates similar returns daily. This is because consumers make one-time investments in furniture, as they are not replaced for over a few years. Effective advertising is essential, as these items cannot bring in steady income. Some of the effective ways of selling furnishings for ‘Custom World fitted bedroom’ are as follows:

Posting Advertisements in Newspapers:

One’s locality is the most suitable venture for advertising the movables, as consumers prefer buying them from a place in their vicinity. It is natural for people of the city or town to read the weekly or daily regularly and thus such publicity is good enough for them to notice.

Building Strong Bonds: The relationship with the existing clients must be based on trust. Such a marketing strategy helps a business to grow via referrals.

Offering Discounts/ Referral Fees: Loyalty rewards are well appreciated by the people that have patronized one’s products for long. This makes them feel important and valued resulting in the enterprise’s success (Furniture and motor vehicle seats.).

Nurturing the Ties:

Company must never make the consumers feel that they are only a MasterCard or Visa for the company. Real interest must be showed in them by sending them simple cards on some special occasions.

Creating Online Awareness: Whether small or large, corporate ventures must spread online awareness top stay competitive. Any company desiring a larger consumer base must make online advertisements. It is essential to create awareness by providing knowledge to the potential consumers regarding the benefits and features of having modular furniture. There are several ways of doing this by uploading videos of staff and customers creating different looks with a piece of furniture and by hosting events inside the store which gives the consumers an opportunity to experience the store products. One can design and distribute some informational brochures which give answers to the questions asked frequently regarding modular furniture. Such awareness approaches must assist consumers to reach a conclusion that pieces of modular furniture are best suitable for homes, universities, colleges and businesses because they are flexible, affordable and durable.

Offering Multiple Distribution Channels: Most of the customers desire to see a piece of furniture before making the purchase and thus they must be provided with the opportunity to visit the store and then place orders. Online purchase option must also be made available to the customers ordering replacement pieces. One must also involve in live chat so that the customers can browse and buy online and enquire about the products. In addition to this, schools and businesses might need sales consultants who visit them with brochures which feature different styles of modular furniture’s.

Connecting with Business Owners:

Modular furniture is enjoyed by corporate executives and small businesses as business grows as business grows helping them in creating collective work spaces and offering them flexibility needed for their offices. Since modular furniture is quite popular with business professionals this strategy must be mandated in one’s business. One can also join networking groups and local business to establish relationships with the potential clients. Events like happy hours within the store give business professionals an opportunity to see the furniture. Such events attract the attention of the media and also help in increasing ones business presence enhancing ones business reputation.

Making the Campaign Cause-Oriented: One must align their efforts with a number of causes. While helping an NGO or charity, one attracts the attention of the target market particularly of those who are socially aware desiring to patronize firms sharing similar principles.

5.2. Implementation Activities

The company can plan to undertake some steps in the coming months, which have been discussed above. The company can process a loan for implementing the new marketing strategies. After it is installed, certain full-time employees and management can be given training for operating the machine. A graphic painter and artist will be employed for designing the brochures and catalogues for the product lines. The samples for the stains and wood finishes can be given with the catalogues and brochures. An agent can be hired in the coming month for representing the product lines.

Management and Staffing

The operators/owners should take charge of the company and they share all the product development, layout, design, marketing, administrative and managerial functions. The number of full time and part time employees working in the shop should be increased. Since the furniture industry is known to be cyclical, there are fluctuations in the staffing levels between two to five employees as per the production needs. The part-time workers are promoted as full-time workers based on the increase in sales.

Management Team

On account of new promotional plan it is suggested that ‘Custom World fitted bedroom’ hires the professional having the sufficient experience within the industry of household furniture. The Custom World fitted bedroom had employed 25 workers at the shop floor. All the employees boast of having wood working and carpentry experience. It is suggested that in order to expand the management team with skillful employees especially the professionals with excellent sales experience and marketing skills could help the company to progress

The South Coast area has enough of skilled and semi-skilled labor. There may be problems in recruiting and retaining employees as the new plant opens because it will be offering benefit packages and union wages. This may result in rising labor costs that will affect the smaller manufacturers of the area.

6. Conclusion

As the competition in the furniture manufacturing industry is growing severe it is important that company designs budget friendly, flexible and well-designed furniture pieces as per the changing demands of customers. The marketing strategy plays a very vital role in determining the success of the company. The marketing techniques should be highly efficient and impressive. This strategic marketing plan and above suggested marketing strategies are likely to help ‘Custom World fitted bedroom’ furniture manufacturers to create a new milestone in the market.

 6. References

Chew, Celine. Strategic Positioning in Voluntary and Charitable Organizations. New York: Routledge, 2009.

Furniture and motor vehicle seats. London: DIANE Publishing, 2011.

Hitchen, David. Small and Medium Sized Companies in Europe: Environmental Performance, Competitiveness and Management: International EU Case Studies. lONDON: Springer, 2003.

Lowson, Robert H. Strategic Operations Management: The New Competitive Advantage. London: Routledge, 2002.

Luff, Peter. Future of UK manufacturing: oral and written evidence. London: SAGE, 2007.

McLaughlin, Thomas A. Nonprofit Strategic Positioning: Decide Where to Be, Plan What to Do. London: John Wiley & Sons, 2006.

Oliver, John Leonard. The development and structure of the furniture industry. London: Pergamon Press, 2000.

Pepke, Ed. Forest Products Annual Market Review 2009-2010. lONDON: SAGE, 2010.

Steven, Paul. Strategic Positioning in the Oil Industry: Trends and Options. london: I.B.Tauris, 2002.

Wille, Stefan. Review Of The Uk Domestic Furniture Industry. London: SAGE, 2005.