UK Furniture Manufacturer Business Plan

Our target market is a person who wants to have very fine furniture with the latest in technology, combined with an old fashioned sense of fine woods and fine woodworking. This person can be in the corporate towers, small or medium business, or in a home office. The common bond is the appreciation of quality, and the lack of price constraints.

4.1 Market Segmentation

• Corporate executives: our market research indicates about 250,000 potential customers who are managers in companies of more than 100 employees. The target customer is going to be at a high executive level, in most cases, because the purchase price is relatively steep compared to standard office furniture.
• Small business owners: our customer surveys indicate a strong market among the owners of businesses with fewer than 100 employees. There are 3 million such businesses in this country, most of them with concentrated ownership that makes the owners potential customers.
• Home offices: the home office business has proliferated during the 1990s, and we also have home offices for people employed outside the home. This is a big market, some 3 million home offices, growing faster than other markets. A home office does not necessarily imply a home business–just that a homeowner has designated a room in their home as an office.

4.2 Target Market Segment Strategy

Our segment definition is of itself strategic. We are not intending to satisfy all users of office furniture intended for use with personal computers, but, rather, only those who are most demanding. We are definitely out to address the needs of the high-end buyer, who is willing to pay more for quality.

In our particular market, we also seek the buyer who appreciates two attributes: the quality of furniture workmanship and the excellence of design, with an understanding of technology and ergonomics built in.

4.2.1 Market Needs

We understand that our target market needs more than just office furniture. The need grew out of the special needs of personal computing, when combined with office furniture–keyboards at correct height, monitors at correct height, proper channels for cables, and other amenities. Our target customer wants to have all of that plus fine furniture. There is a need for quality, reassurance of wood and good workmanship. We don’t just sell office furniture, we sell office environment and design, plus workmanship.

4.2.2 Market Trends

Our market has finally grown to recognise the disparity between most of the standard office furniture sold through channels, and our own products.

The development of the high-end office worker, office owners, and baby-boomer executive is an important trend for us. We now have people who are using computers who also appreciate the old-fashioned workmanship of good furniture.

4.2.3 Market Growth

According to [source omitted], the market for office furniture is growing at XX percent per year, and is projected to increase. The market for PC-related office furniture is growing even faster, at YY percent per year, and is projected to top £XX billion by the year 2008.

Most important is the growth in home offices with personal computer equipment. As the cost of the computer goes down, steadily, the number of home offices goes up. According to [omitted], this is about 36 million right now, growing at 15 percent per year. Households spent £XX hundred million last year to equip home offices, and 15 percent of that was spent on furniture.

4.3 Industry Analysis

The office furniture industry has undergone a great deal of change in this decade. The growth of the office superstores made a few large brands dominant. They produce relatively inexpensive furniture that makes compromises in order to stay at the low price level.

Makers of higher quality furniture are in general shuffling for niches to hide in. Although Fulham Furniture Mfr. was essentially developed around a niche, many of the more traditional furniture makers are looking for niches, trying to deal with declining sales as the main volume goes elsewhere.

4.3.1 Competition and Buying Patterns

In the mainstream business, channels are critical to volume. The manufacturers with impact in the national sales are going to win display space in the store, and most buyers seem content to pick their product off the store floor. Price is critical, because the channels take significant margins. Buyers are willing to settle for laminated quality and serviceable design.

In direct sales to companies, price and volume is critical. The corporate buyer wants trouble-free buying in volume, at a great price. Reliable delivery is as important as reliable quality.

In the high-end specialty market, particularly in our niche, features are very important. Our target customer is not making selections based on price. The ergonomics, design, accommodation of the computer features within the high-quality feel of good wood, is much more important than mere price. We are also seeing that assembly is critical to shipping and packing, but our customer doesn’t accept any assembly problems. We need to make sure that the piece comes together almost like magic, and as it does, it presents a greater feel of quality than if it hadn’t required assembly at all.

4.3.2 Main Competitors

Devonbrooke Computer Furniture
Devonbrooke has been operating since the middle 1980s, and grew up with computer-related furniture. It was one of the first, certainly the first we are aware of, to develop personal computer desks and market through advertising in computer magazines. Today they are about twice our size. They have a very nicely done catalogue and good relationships with two distributors.

Strengths: good marketing, strong advertising budget, relationships with distributors, strong direct sales.
Weaknesses: the product is more standardised, and of lesser quality, with less sense of design and materials and workmanship.

ZedNadir Manufacturing
ZedNadir Manufacturing is a division of Haines Furniture, the second largest manufacturer of mainstream home furnishings. Haines bought ZedNadir three years ago and is focusing on our niche. We see very good quality product, and an excellent sense of design, but little movement in channels or catalogues.

Strengths: financial backing, product quality.
Weaknesses: ZedNadir has not seemed to understand our niche, where to find the buyers, how to market as a specialty niche instead of the more traditional furniture channels.

4.3.3 Industry Participants

The main volume in the industry is now concentrated in four main brands, all of which compete for retail sales through major retail chain stores: Staples, PC World, Dixons, and others. These same four are also concentrating efforts as well in the other discount furniture catalogues.

The growth of the office superstores made a few large brands dominant. Designs are similar and quite competitive, costs and cost control is critical, and channel management and channel marketing are the keys to these business’ continued success.

In mainstream office furniture, the rise of the office store channel has siphoned a lot of volume from the older and more traditional manufacturers. The channels that sold the more traditional lines are also suffering. What are left are smaller brands, smaller companies, and divisions of more traditional furniture companies.

There are also some traditional manufacturers still making desks as part of furniture lines focused mainly on home furnishings. Some of these have looked at times at our niche, and are competing for the same sales.

4.3.4 Distribution Patterns

The four main manufacturers are selling direct to the office superstores and buying discount clubs. This accounts for the main volume of distribution. The office furniture customer seems to be growing steadily more comfortable with the retail buy in the chain store.

The major corporate purchases are still made directly with manufacturers. Although this is still a major channel for some of the more traditional manufacturers, it is essentially closed to new competition. The direct channel is dominated by two manufacturers and two distributors. The distributors will occasionally take on a new line–happily, this has helped Fulham Furniture Mfr.–but the main growth is in retail.

Published research indicates that 51% of the total sales volume in the market goes through the retail channel, most of that major national chains. Another 23% goes through the direct sales channel, although in this case direct sales includes sales by distributors who are buying from multiple manufacturers. Most of the remainder, 18%, is sold directly to buyers by catalogues.