Drapery Fabricator Business Plan

According to the U.S. Department of Commerce, the entire window treatment category reached $7.8 billion in 1996. The Paint and Decorating Retailers Association states that 30%, or $2.34 billion, was made up of soft window treatments. The population of the 17 communities in close proximity to Cutting Edge Drapery is estimated at 277,253. Roughly, this would mean that this area comprises a total soft window treatment market in excess of $2.7 million annually. All of these treatments must be produced in decorator workrooms. There are various levels of workrooms which are discussed in more detail in this chapter. The company’s share of this nearby market is approximately 7.5%.

Cutting Edge Drapery has not, in the past, invested in advertising or promotion. The client base and volume has grown steadily to nearly $200,000 annually. The market, as explained more fully in Section 4.1, is segmented. Work generated via the higher echelons of interior designers requires a higher level of quality and expanded skills to achieve it. This work is also less price-sensitive. The capability of the company to produce high-quality textile treatments is on par with workrooms who have established high images, and who often have a clientele located far afield from Boston. By increasing Cutting Edge Drapery’s image through advertising and networking within ASID membership and elsewhere, the potential market will expand from its present localized boundaries. This strategy should also result in improved margins as more and more higher-tiered, less price-sensitive, designers bring their work to Cutting Edge Drapery.

4.1 Market Segmentation

The market for soft window treatments reflects the buyer’s income bracket and standard of living in much the same way that the furniture market is segmented. Below are listed market segments based on size of pocketbook and quality of production:

1. Material Outlets. At the bottom of the pyramid are outlets such where drapery material could be chosen and purchased. The person would have to buy rodding at the hardware store and install it all himself. Quality is the lowest.
2. Drapery Specialists. Here you would be waited on and shown fabric samples. A salesperson with some feel for color and decor will assist you and perhaps suggest a few alternatives. They would come and measure at your home and would install it once the curtains were ready. The product itself would probably be done by their own in-house workshop or sent to a low-bidding outside workroom. Some drapery specialists, knowing the price-sensitivity of their clients, have arrangements with large production workrooms in other states to which this customer’s drapes as well as several others will be shipped in one consignment.
3. Hobby Decorators. These will advertise in local newspapers in the “services” section of the classified. They do the same thing as a drapery specialist, but give a bit more special attention to the client and make the client feel that they are dealing with a professional. The results are often better, sometimes worse, but the price tag is higher. These decorators have customers who still have a close eye on their pocketbooks.
4. Interior Decorators. In this category would be decorators of average quality–some quite good and others who are unimaginative. The common factor is that they have not yet “arrived” in their profession. They do not attract the clients with deep pockets. These decorators still expect quality from their workrooms, but are willing to compromise a bit on quality. Neither of these workrooms work exclusively for the decorator/designer trade. These workrooms are for the most part “mom and pop” operations where the wife produces the drapery and the husband installs it. These decorators have more ordinary, straight-forward work than Category Five (below), and are more cost-conscious. These would include most of the present clients of Cutting Edge Drapery with the exception of perhaps three or four.
5. Interior Designers. This is the category of decorator who has “arrived.” He or she is likely to have “ASID” after their name, which means they have successfully passed testing by the American Society of Interior Designers. They sign contracts with clients on a regular basis amounting to tens of thousands of dollars. Several thousand dollars for one window treatment is not unusual. These individuals covet their reputation, and they would not consider using a “mom and pop” workshop or dealing with a workroom that also deals directly with clients. These individuals are demanding in their insistence on quality, and usually have jobs that involve creative solutions. Prices charged by the workrooms these designers work with are several times higher. When surveying these designers as to the features important to them in choosing a workroom, price is the last feature mentioned.

4.2 Target Market Segment Strategy

Currently, Cutting Edge Drapery serves the interior decorator market segment. However, the company has recognized that its skills and quality capability, together with its small size, allow it to be perfectly positioned to compete in the higher end interior designer segment. A shift to this target market will improve profitability levels since the designer segment is much less price sensitive and provides greater margins. Furthermore, since the segment is relatively small and well connected, establishing a reputation among such clients will strengthen the existing word of mouth marketing strategy that the company has pursued in the past.

An analysis of marketing survey data provided indicates that the designers needs of quality, reliable delivery, and high customer service are not always being met by the competition due to the sub-standard, job shop industry environment. In such an environment, it is difficult to provide consistent service. This creates a significant opportunity for Cutting Edge Drapery. The company has already sought to build the infrastructure to create such service through its database of previous work, scheduling, and communication procedures.

4.2.1 Market Needs

The interior designer market segment needs can be broken down into three categories:

1. High quality.
2. Reliable forecasting of product delivery.
3. High customer service.

The need for high quality has been discussed above. The designer’s clients include the high income homeowners that demand unique products, therefore, a workroom that cannot provide such quality cannot compete in this segment. Additionally the end customers expect their tastes and wishes to be pampered by the designers. This requires a high contact service environment where client/workroom communication and customer service is a must. Finally, since interior alterations to a home are often very disruptive, meeting deadlines is crucial to maintaining the reputation of the client designers.

4.3 Service Business Analysis

In setting a foundation on which to build a suitable market strategy for Cutting Edge Drapery, players were contacted by phone. These players are located in the greater Boston area. A summary of this investigation follows:

* * All names have been omitted for confidentiality purposes.

4.3.1 Competition and Buying Patterns

Cutting Edge Drapery exists in a purely competitive market in which there is potentially unlimited competition and easy entry/exit in the market. This situation is mitigated by the fact that almost all competitors are small companies that have very restricted geographic reach. One of the factors influencing choice of workrooms is the professional credentials and reputation of the company’s proprietor. Interior designers and decorators seek to establish long-term relationships with their suppliers to ensure that their client’s strict demands are met. Therefore, the process of choosing a workroom requires a lengthy evaluation period and the establishment of close ties among principals, both of which may not be possible with larger workrooms. Oftentimes word of mouth marketing provides more business than advertising, although advertising in certain areas (such as trade journals) creates awareness of the company’s existence and skill level.

The industry is geographically oriented with most of the clients working on a local basis. Very few designers and decorators carry on business beyond a local or state level.

Price is often not a major issue when dealing in the interior designer segment since the quality and uniqueness of the product is the overall driver of business for the clients. There exists three major competitors in the area that compete in the interior designer segment. The market research described in the following section seems to indicate that there may be a deficit in supply and customer service in this segment.

4.3.2 Main Competitors

The top designers in the Boston area rely heavily on Finelines in Peabody, Paul Brown in Boston, and Inside Outlook in New Hampshire. All three advertise heavily in Design Times and all three have full page ads in the ASID Directory.

The long-term marketing strategy of Cutting Edge Drapery is formulated to bring it up in image to the ranks of the competitors mentioned above.

Other contenders who compete more in Category Four (see Market Segmentation listing) and who compete more directly with the present client base include:

* * All names have been omitted for confidentiality purposes.