Question 1: Lowest Risk Strategy for Growth
Growth models depend on a mix of risk strategies that align with an entrepreneur's vision. The number of strategies in a model depends on resources, maturity and desired pace of growth. Some strategies include market penetration, audience expansion, and product line expansion. Market penetration entails building a product or service and entering a market with established competitors; growing the business and gaining market shares entails differentiating from competitors (Kok). Audience expansion requires offering services or products in a new geographical area; it involves appealing to a new market once previous ones get saturated. Product line expansion, on the other hand, implies adding variations to core products to reach a broader audience.
Question 2: Market expansion
Market expansion refers to business strategies where a business focuses on different consumer segments to expand their market size. Companies usually take it up for future growth whenever previous markets get saturated. Market expansion potential depends on new market sizes that a business attempts to enter (Ayal).
Question 3: Is Market Expansion a Medium Risk Activity?
True, Market expansion is a medium risk activity in business. Unlike when an entrepreneur starts-when they put in much sweat and spend resources-to develop a fledgling business and achieve success in the market, market expansion comes when the company has made some success and begins to thrive, meaning that entrepreneurs are responsible for their clients at that moment.
Question 4: Diversification
Diversification means selling new products into established markets. Diversification helps corporations to avoid cyclical variations by producing products and services with varying demand sequences. It also reduces a business' reliance on one or few income sources and to obtain an advanced growth rate. It can also respond to a competitor by annexing their core markets or industries (Xing).
Question 5: Prioritizing Critical Success Factors
Prioritization of critical success factors can vary from business to business. However, most successful enterprises prioritize their success factors based on customer requirements and the competitive advantage. A successful appeal to customers using a competitive advantage can improve profits and increase growth potential (Xing).
Activity 9: Business Plan
D-Light Home Decor is a home furnishing company that offers home improvement services to its clients. The business seeks to provide services to primary residences, vacation homes, and business premises. It intends to achieve an average of $50,000 in sales every business month for the initial financial year and generate an average of 60% of revenues from product sales in the first financial year. The business intends to capture customer interest by organizing its services by theme and offer lifestyle marketing. The marketing plan for the business will exploit style profiling to reach out to potential consumers. The store will venture in products such as beds, sofas, dining sets, office desks, and kitchen furniture. Home furnishing has grown competitive, with more companies venturing into the industry. Our strengths include generating consistent traffic of products through high advertising and having a strong marketing team to appeal to customer desires. The business not only intends to sell furniture products to consumers but to also offer home improvement services to them. Our marketing strategy involves offering quality products at affordable prices to appeal to both executive and regular clients. In exploiting market opportunities and optimizing profitability, the business will utilize automation of chargeback processes, reaction to changing market conditions, improving supplier relationships and integrating planning. Some of the ways that the business will use to meet its objectives will include setting employee goals, providing useful feedback and offering training to employees. D-Lights Home Decor will require staff in the following positions: business manager, sales manager, operations manager, merchandise office manager, customer service supervisor, visual display manager, human resource manager, warehouse manager, lead driver, and an additional driver. Regarding finance sources, the business will primarily utilize personal investments, grants, business incubators, and venture capitals.
D-Light Home Decor is a home furnishing company for discerning clients who are conscious of quality. The business intends to offer assistance to customers in their design choices. The business seeks to provide services to vacation houses, primary residences, and businesses. This incident offers personal devotion via design processes and also provide design products and resources to its clients.
- To achieve an average of $50,000 of sales every business month for the initial financial year.
- To generate an average of 60% of revenues from product sales in the first fiscal year.
- To establish a client base for its commercial revenue that can account for more than 10% of its total revenues.
The following is the marketing plan of D-Light Home Decor. This is a business that offers home furnishing and design products and services. Since 2015, home furnishing has grown into a lucrative business industry. Big-box retailers once dominated the industry but now is beginning to give way to independent interior designers. Now with tools like Pinterest and design blogs, home furnishing shoppers have numerous inspiration and access to a variety of design to experiment with. Historically, professional interior design involved only expensive luxury. Now, coherent, polished yet personalized aesthetic does not require experts anymore. Growing number of consumers elevated the home decor industry to over $79 billion by 2016 according to IBIS world. The industry, therefore, offers a conducive environment to invest. This business will provide interior design and home furnishing services primarily to New York customers. By organizing our services by theme, D-Light Home Decor intends to capture consumer interests through lifestyle marketing. We will also exploit style profiling to reach out to potential consumers by offering numerous products for our clients.
D-Light Home Decor Ltd intends to offer services primarily to consumers in the private sector, including private homes, personal business premises, and vacation homes. This business will give full attention to furnishing small business offices and private homes as a starting strategy, allowing the firm to focus 100% on consumers in that sector. We will be targeting consumers by product line or services. We intend to venture into various furnishing products, from living room furniture, bedroom, kitchen, and office furnishing. From the start, we intend to open our services to consumers in and around New York. Our first store's location will be based in New York though we intend to open new avenues in other cities with time. Our services will be available online, with delivery available depending on the distance from our stores. D-Light Home Decor will venture in a variety of home furniture, from beds, closets, sofas, dining sets, office desks and office chairs among other furniture.
Competition. Currently, there are quite some furnishing companies getting established, with the industry growing in the past few years. One such company includes Interior Define, located in New York but also operating in Chicago, San Francisco, Los Angeles, Boston, and Austin. Interior Define has been operational in the design industry since 2014. Over the four years of operation, it has managed to raise a total of $27.2 million from investors such as Fifth Wall, Breakout Capital, and Pritzker Group. It has ventured in all sorts of furniture from sofas, beds, dining sets and kitchenware. Interior Define uses a price strategy of selling its products based on customer needs and profits. By aligning their services with customer needs, Interior Define manages to satisfy their customers' needs.
Home furnishing industry has grown into a competitive industry over the years. Currently, it stands at a highly competitive position with more companies getting involved and consumer demands rising significantly. Unlike our competition, D-Light Home Decor intends to prioritize our critical success factors based on customer needs and the competitive edge. Our strengths include generating consistent traffic of products through intense advertising, having a wide selection of products available on the marketplace, having a strong marketing team to appeal to customer desires and having a research team to research on new product designs that hit the market. One of the weaknesses, however, includes fluctuations in sales performance due to lack of established consumer base.
D-Light Home Decor indulges in home furnishing products such as furniture, home design, and home improvement services. Our furniture products range from living room sofas, dining sets, beds, closets, office cabinets, office desks, and chairs. Our home design services include home decorations and home improvement.
Our products and services stand out because we don't simply supply home furnishing products but also offer professional furnishing services on home decoration. By offering furnishing services, our clients are guaranteed lifestyle benefits for their satisfaction. D-Light Home Decor is involved in selling more than the products alone. The only disadvantage, however, may be expense involved in getting all services. Most competitors only offer furniture delivery, making their services cheaper. However, with additional styling services from us, the prices are relatively higher. Though quality, the prices might drive away clients who compare our services to our competitors regarding expenditure alone.
D-Light Home Decor intends to get supplies from manufacturers directly. There are numerous furniture manufacturers across the country such as Ashley Furniture Industries, IKEA, Williams-Sonoma, and Steelcase. We will vary our furniture supplies from the top manufacturers to obtain a variety of products. With product variety, we can then satisfy all categories of clients that we currently have.
Our business intends to build a brand, which offers quality services at affordable prices. We intend to give the best quality in the market but also appeal to both executive and regular clients. The first feature to emphasize is quality of service. By attempting to reach out to regular clients, our prices will be competitive compared to the market prices. The third feature involves being accessible to all kinds of clients, both executive and regular. Concerning pricing, D-Light Home Decor intends to use markup on cost pricing strategy. The business intends to use a 25% markup on cost for our products. However, considering our services coming as both products and home improvements services, the prices will be negotiable. The business will offer sales terms for our clients negotiate prices depending on client satisfaction, which will vary home improvement pricing but not the product prices. With the inclusion of negotiation clauses, we will be able to maintain our image and offer quality services at affordable prices.
Regarding advertising, D-Light Home Decor intends to use the following: television, internet, radio, newspapers, trade associations, magazines, and billboards. We chose the media above due to their high accessibility among our potential clients.
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