Essay Example on Furniture Industry: Growth, Go-Green, Telecommuting

Growth in the hotel industry With the construction of guest rooms, hotels are demanding furniture like beds, chairs, tables, etc+5

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The "Go Green Campaign" The Government is bans deforestation and leading to a decrease in wood supply -2

Rise in TelecommutingWorking from home has gained significant popularity since the financial crisis in 2008-2009 and the European debt crisis in 2011-2012. During the period, consumers realized they could work from home more conveniently (Huws, Spencer, Syrdal and Holts, 2017.). As a result, individuals started building home offices driving demand for furniture such as computer desks, chairs, and filing cabinets.

Small house units

According to Arif, Killian, Goulding, Wood, and Kaushik (2017), the growing population in the region leads to the construction of small houses such as single-and two-person units. As a result, these households continue to demand multi-functional and portable furniture.

Increase in the modern lifestyleThe upcoming wealthy individuals in society have a common interest in the contemporary lifestyle. Affluent consumers are demanding for more comfortable designs with a luxurious taste. As a result, furniture companies are working hard to meet the growing demand.

Increasing hotels in the regionThe hotel is thriving every day and thus increasing competition for the among players in the hospitality sector. As a result, restaurants are striving to improve the quality of their services to sustain their clients (Biesta, 2019). Such include installing guest rooms with most comfortable and luxurious furniture such as beds, chairs, wardrobes, tables, and many more. Thus, they increase the demand for furniture.

The "Go Green Initiative"The UK Government campaigns against deforestation in the region to protect the forests. The government has enacted strict laws against any practices that harm the environment, specifically the forests such as tree cutting (Fish et al., 2016). As a result, wood supply to manufacturing has decreased. Consequently, the quantity of furniture to supply the dealers also decreases.

Competitive Analysis

Market Dominance Structure

The furniture industry in the UK has a couple of players. However, this study will cover the three most competitive players, which include Bed Bath & Beyond Inc., Wayfair Inc., and DFS Furniture PLC. Bed Bath & Beyond Inc. has a market share of 58.4 %, taking the lead in the industry. The company has over 30 stores across the region and thus covers a large customer base (Issah and Antwi, 2017). Also, Bed Bath & Beyond Inc. is a strong selling brand in the UK dealing with a variety of furniture. However, the company has more expenses in-store maintenance, which is a weakness. The company also suffers from theft and pilferage from the staff, a practice hurting its reputation in the market.

Wayfair Inc. is the second largest with a market share of 49.7%. The organization's major strength is the centralization process, where it controls all activities from the headquarter store. Centralization is critical in cutting down administrative costs while increasing efficiency in customer service (Issah and Antwi, 2017). Wayfair Inc. has a wide range of products that gives customers exclusive modern designs with high comfort. However, the company's few numbers of stores in the region are a weakness. Also, The company sells at relatively high prices compared to other players in the industry.

DLS Furniture falls in third place with a market share of 41.5%. DFS Furniture has a strong relationship with its customers in the region, and it turns out to offer the most promotions (Issah and Antwi, 2017). DFS Furniture puts more focus on R&D to gather the necessary information for quality improvement. There is a strong relationship between the company and its loyal customers, who often acquire rewards and gifts. However, the company does not offer a wide range of products compared to Bed Bath & Beyond and Wayfair since it allocates most of its funds in R&D. Also, quite many customers complain about the speed of service by the company where products take a longer time to reach the clients.

Competitor OverviewThe figure below shows a competitor overview with a company's range of products and the revenues trend in the last five years, starting from 2015 to 2019. The revenue figures are calculated in dollars. However, the reader can convert them to any other form of currency.

Company Product Range Revenue $ (2015-2019) In millions

Bed Bath & Beyond Inc. Office furniture, indors, outdoors, Kitchenette, bedroom, Living room furniture

2019: $209,140.18

2018: $193,734.78

2017: $168,596.23

2016: $159,420.48

2015: $132,884.97

Wayfair Inc. Living room, bed room, office, kitchen & dining, accent, entry & mudroom, game room furniture

2019: $ 199,898.75

2018: $ 187,630.26

2017: $ 178,446.92

2016: $ 168,489.27

2015: $ 143,568.46

DFS Furniture Kitchen & dining, living room, office, kids furniture, game room furniture

2019: $192,786.54

2018: $183,447.23

2017: $163,689.90

2016: $133,664.38

2015: $114,773.62

Segmentation Analysis

Companies perform segment analysis intending to find and serve the most rewarding clients. Typically, segments possess common traits and thus make leads to a more effective and specific marketing plan (Dolnicar, Grun and Leisch, 2018). The B2B marketing strategy has four popular needs-based parts, which include the Quality and Brand focused segment, Price-focused segment, Service-focused segment, and Partnership-focused segment.

IKEA is a big company that has survived in the industry for an extended period. As identified in the macro factors, housing is thriving in the region. Therefore, there is an opportunity for IKEA to target partnership-focused segments. Such segments include the building and construction companies in the area. Partnering with construction companies will market furniture to the houses, for example, living room furniture, kitchen and dining, and bedroom.

Also, IKEA can target service-focused segments, mostly in the hospitality industry. The increase in the number of hotels in the area presents the company with an opportunity to not only supply them with modern furniture but also help in the installation of the same. Where a restaurant lacks technical know-how of installing the versatile furniture, IKEA can provide experts for the work. Not only will the experts install but also train hotel staff on how to install the furniture.

Product and Pricing Strategy

Product Strategy

The company will have two categories of products; fixed furniture and multi-functional & mobile furniture. As discussed earlier in the macro analysis, the number of houses and hotels is rising in the region, causing a rise in demand for furniture. Typically a hotel does not require a lot of mobile furniture. A kitchen requires permanent fittings, just like guest rooms do not need to keep on changing furniture. Therefore, the cabinets fitted in the kitchens and beds allocated in the guest rooms should be durable to last for a longer time.

On the other hand, the upcoming houses in the region have small spaces. As a result, the households are demanding for multifunctional furniture to save on space. Also, the majority of these households keep on migrating from one house in search of better units with a more substantial area. As a result, individuals are demanding furniture which is portable to facilitate easy and convenient migration from one location to another. Therefore, the company should consider increasing multi-functional and mobile furniture to meet the growing demand in the market.

Pricing Strategy

IKEA will adopt a value-based pricing strategy- selling good quality at a reasonable price. IKEA produces high-quality products that delight customers. Specifically, the company provides furniture with unmatchable designs and more comfortable as well. Pricing of the product will be subject to customs designs the customers' demands. Thus the price will vary accordingly. The company will consider cost-leadership later on after building a strong client base.

Promotional & Communication strategy

IKEA uses the AIDA framework, which speculates that the buyer undergoes a cognitive, affective, and behavioral stage. The model implies that customers get interested in a product after proposition catches their attention (Genchev and Todorova, 2017). The use of the right promotional materials then triggers the buyer's desire for the product before taking action to purchase.