Poppi Designs has learned by experience that it needs to target several market niches to be successful. Poppi has identified three promising areas: Specialty Retail, Designers, and Unfinished Furniture Retailers. The first group accounts for nearly 80% of present sales. Reliance on this group will decrease somewhat as a result of increased efforts in marketing the other two customer groups.
According to U.S. government statistics there are over 17,000 outlets selling furniture nation-wide. Briefly stated, these outlets fall into the following categories:
The last three mentioned market sectors - Unfinished Furniture Outlets, Specialty Retailers, and Designers - are the ones most attractive to Poppi's products. Each of these market segments are expected to grow at a steady rate of 2% per year. The table below summarizes the total market potential for Poppi for the years 1998-2001.
** Deleted for confidentiality.
Due to the limited resources available to Poppi Designs, the company will avoid the middle- and high-end furniture segments that it cannot profitably reach. By specifically focusing its marketing efforts on the underserved segments of Designer and Unfinished Furniture markets, Poppi will diversify its customer base. This will help the company to reduce its current sole reliance on the Specialty Retail segment. Established connections with the Italian manufacturers of high quality furniture will help the company to source rarely available products, which are in strong demand by the sought customer segments.
Customer needs across the three segments described in Target Market Segment Strategy are similar in the sense that each customer segment seeks high quality furniture supply sources that will help add value to the retail consumers. Unfinished furniture outlets require furniture that may be either finished by the 'do-it-yourselfers' or by the store's on-site finishers. In both cases, the furniture will help sell such retailers other high-margin products and services. Designer stores require quality unfinished furniture that can easily be finished by the outsourced finishers or upholsterers. Like with many other products, designer stores can then add hefty premiums to leverage their brand identity through perceived product uniqueness. Finally, the Specialty Retailers that are currently the core customer segment for Poppi, have shown the need for antique-looking furniture that appeals for their clientele. This need can be met by applying special finishes to the Poppi's products.
As mentioned in the Market Segmentation section, the market areas most attractive to Poppi Designs are:
The major players in the furniture business are the large manufacturers headquartered in High Point, North Carolina and elsewhere, primarily in the South. There are also many local manufacturers that are much smaller and usually specialize in a particular wood or a particular style. The more important outlets for Poppi's products do not usually carry the domestic products coming out of the South. This is because these outlets need to have larger margins to survive and thus need to avoid products that are found everywhere. For these specialty outlets, smaller importers are often preferred who can offer a more unique line. Chapman, for example, is a maker of furniture in Italy. Katrina's Heritage is another supplier that targets this same specialty retail segment. Some of these retailers do their own importing and make frequent buying trips to Europe or rely on buyers located there. Poppi's products are solid pieces, heavier than most, with more hand carving work.
For the vast majority of furniture outlets, furniture is not supplied off the showroom floor, but instead must be ordered. The customer will be shown a chart of standard finishes, make his choice, as well as his choice of fabric, make a down-payment and then wait at least eight weeks to receive the ordered furniture. Large institutional buyers such as hotels would negotiate directly with the furniture manufacturer. The larger manufacturers have regional representatives who will call on major outlets and large direct buyers.
Poppi Designs' distribution plan is to sell directly to the design trade , who pay list price, as well as offer two tiers of discounts when selling to small and large retailers. Arranging the sale of full container loads directly to big buyers is also considered.
Brand names are of little, if any, importance. The key to the buying decision on the part of the consumer is the salesman and the chair being in front of the buyer. As has been pointed out in the Competitive Analysis section there are other chairs with similar appearance as those supplied by Poppi which are less expensive. It is essential that the salesman point out the salient features and selling points favoring Poppi's chairs (weight--i.e. stability, strength, etc.). The re-gluing of a chair several years down the road can be a very costly exercise. Unless a salesman mentions the likelihood of this happening in the case of a lighter chair, the consumer is not apt to consider it. Most importantly, Poppi's chairs must be available in the retail outlet. Whatever chairs the outlet carries are going to be sold. Many of the specialty outlets targeted in the Market Strategy section carry chairs from only one supplier.
The most frequently seen competitor selling to Poppi Designs' prime targeted outlets is Chapman. As was pointed out elsewhere in the business plan, Chapman products are produced in Italy, which has a better reputation for delivery reliability. The chairs (unlike Poppi's chairs) come from one factory. These products are imported by a firm in Delaware which enjoys a full-color catalog of excellent quality published by Chapman. More importantly the importer carries every catalog item in stock. The Chapman chairs are, however, inferior in quality to those of Poppi's suppliers in terms of weight, strength of construction, as well as the degree of hand-carving detail.