Market Analysis Summary
Currently, the market for permanent floral products is rapidly expanding. According to 1993 statistics, the value of permanent floral products for the 1992 fiscal year was over $2.2 billion, and it still continues to grow.
The gift industry is also growing, as households headed by 45- to 54-year-olds are the biggest gift purchasers.
4.1 Market Segmentation
Since Fantastic Florals, Inc. only deals with a few, select products, segmentation is minimal. Two segments currently exist:
- Gift purchasers: mostly women over 30 with a relatively large amount of discretionary income.
- Floral collectors: same target as above, but with higher standards of quality.
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4.2 Industry Analysis
There are two industries for Fantastic Florals, Inc.: the gift market industry and the silk flower and accessories industry.
In 1991, the average American household gave 5.8 percent of its total spending to gifts, a 0.3 percent increase from 1988. Households headed by 45- to 54-year-olds are the biggest gift-givers. These consumers spend an average of $1,450 on gifts, which is 62 percent more than the average household. In addition, married couples without children are the most generous gift-givers. These households spend 48 percent more than average on gifts. Households with incomes of over $65,000 spent 135 percent more than average on gifts, while they also account for 58 percent of the glassware gift market and 62 percent of the plant and flower gift market. By the year 2000, it is estimated that households headed by 35- to 54-year-olds will account for 63 percent of the gift market.
In the silk flowers and accessories industry, flowers alone accumulated sales over $1.95 billion in 1992. This category still continues to grow.
Considering the information and analysis of both industries, FFI believes that its products have the opportunity to be successful in the market. The growing gift industry and silk flower and accessories industry imply that there is a growing demand for these products. Because there is no similar product currently available in the U.S. market, FFI has a huge opportunity in the silk accessory industry.
4.2.1 Competition and Buying Patterns
According to the information from Silk ’94, the wholesale buyers of silk flowers and accessories are:
- 53 percent – Floral Wholesalers.
- 19 percent – Craft Chain Stores, Floral Chain Stores, Gift Chain Stores, Variety Chain Stores, Fabric Centers.
- 19 percent – Manufacturers/Assemblers.
- 9 percent – Home Centers, Membership Clubs, Nursery and Garden Centers, Catalog/Mail Order, etc.
4.2.2 Main Competitors
Fantastic Florals, Inc. current competitors in the surrounding area are:
- Flower markets.
- Floral wholesalers.
- Craft stores.
- Gift shops.
4.2.3 Industry Participants
There are currently no direct competitors in the silk hair accessories market, and the silk flowers industry is very unconcentrated. Few wholesalers distribute directly to the consuming public, and the majority of retail stores only offer a minimal selection with varying quality.
Both industries, however, are predicted to develop further, while the gift industry also continues to grow. As the markets evolve, the key issue will be relations with suppliers. As there are few suppliers of silk flowers and accessories, competition is likely to increase substantially.
4.2.4 Distribution Patterns
Distribution channels are currently relatively simple. There is one artist in Indonesia who provides all products for FFI. The products are shipped directly to FFI facilities, which are then sold to consumers. There are no significant obstacles to importing these products, and there are no import quotas.