Advance Diploma in Business Management (Part Time)

Title of Project Proposal

How to increase the company profitability and survival by using multiple niches in furniture industries.
PREPAIRD BY COURSE CODE INDEX NO GROUP SUBMITION DATE CONTACT NO : (Mr.) E.M.Samaratunga : ADBM : ADBM-E-011-135 : 2011/2012 - Sunday - Part Time : 26/08/2012 : 0773 292900

A project Proposal submitted for the partial fulfilment of the requirements of the Advance Diploma in Business Management (Part time) Programme

Colombo Sri Lanka

Signature Page
Advance Diploma in Business Management (Part Time)
Certification by Student I wish to express that I conducted this project. I do here by declare and certify that all work contains to this document were carried out independently by myself and with all my effort. Name; Signature Date: Mr.E.M.Samaratunga

Certificate by Supervisor I do here by give my signature that the above student was supervised by me Name: Signature: Date: Ms. Chulani Senarathna

Dedication

I would like to dedicate to this project to my family. Because there is no doubt in my mind that without their continued and caring support, I could not have completed this process.

Acknowledgement
I have taken many efforts in this project. However, it would not have been possible without the kind support and help of many individuals. I would like to extend my sincere thanks to all of them.

This is to express deep appreceation and special thank to Mr. Koloitha Ranawaka for the support and the given presser for us to motivate trough out the period of this course. This project would not have been possible without the support of many people; I wish to express my sincere gratitude to the project supervisor ( Mrs. Chulani Senarathna) for the guidance and the encouragement in carriyng out this project work. As well as for all whom have provided generous support for my reserch, which was carried out sucsessfully. I owe a great deal to my teachers for their support and for providing useful suggestios during the intial phase of this project. Apart from the efforts of myself, there are many people deserve to be gratitude for their contribtion and the willingness to help me with their abilities for the development of this porject, so I am grateful to all of them. i

Excutive summery
The purpose of my reserch was to find out the current situation of the Sri Lankan furniture industries trends, threats, and opportunities in a challenging environment for the home furniture and how could a niche tends to take on new challengers in order to survive and be more profitable in this local and global market. My primary objective was to evaluate how to use company current capacity, strength and weakness to make more profit through servicing markert niching in funiture industries The reseach was carried out with a representational sample of coustomers from the society in different age groups, different professional levels, different liviing enviroment, & backgrounds and various income levels in both genders. Then through the marketing service, it was try to identify the information about the types of consumers, competition, available brands, and buying behaviors by using the questionnaire, and personal interviews. To discover a consumer insight and understand, I was try to make the best possible tactical decision of the short run strategic decision as well as the long run and involving those attempt to increase the companys profitability, building a brand name for servicing the market niches areas.

Table of Contents
Table of Contents
Cover Page Acknowledgement & Dedication.i Table of Contents.ii List of Figures..................iii List of Tables....iv Abstract / Exexcutive Summary...v

Chapter-01: Introduction.5 1.1 Introducton to the organization/Situation 1.2 Introduction to the project 1.3 Research Problem 1.4 Research Objectives 1.5 Scope of the Reseach 1.6 Methodology 1.7 Limitations Chapter-02: Literature Riview /Theoretical Background 6,7 Chapter-03: Findings10 Chapter-04: Discussion and Analysis Chapter-05: Recommendations and Conclusion Appendices List of References

ii

List of Tables
Table 01 - The way of achieving the household furniture Table 02 - How effective the brand image is on home furniture Table 03 - Customers evaluation on key factors among the competitors Table 04 - The awareness of the place Table 05 - The most considerable facts of when buying furniture Table 06 - The main concerned features of a furniture store Table 07 - The way of visiting for furniture Table 08 - The preference on E-Marketing Table 09 - Mostly how they achieve the furniture needs Table 10 - The preferable areas in a showroom

iv

List of Figures
Figure 1 - The layout of achieving the house hold furniture Figure 2 - The layout of the effectiveness of the brand image Figure 3 - Customers rating on the key factors among the competitors Figure 4 - The awareness of the place Figure 5 - The most considerable facts of when buying furniture Figure 6 - The main concerned features of a furniture store Figure 7 - The way of visiting for furniture Figure 8 - The preference on E-Marketing Figure 9 - Mostly how they achieve the furniture needs Figure 10 - The preferable areas in a showroom

Chapter 01.
Introduction of organization

Design Asia Group (Pvt) Ltd. is a company, which was established in 2007 as an interior service provider. Its legacy began with 5 years unparalleled experience in Aluminum fabrication. We gradually diversified into furniture manufacturing and interior designing as well. We possess a high skilled design team and work force for designing and for constructing the commercial officess such as Expo Lanka PLC, Mas holding, Hemas Pharmaceuticals, Dialog, Airtel and Hidramani group, etc... Our fully experienced staffs are geared by their skills and talents to handle any project from designing to finishing. We could feel that we are a fast growing interior oriented company for last five years having a capability of handling any types of total interior projects from A-Z such as painting, wallpaper, partitioning, work stations, etc In addition, we are specialized in cinema acoustics, which would be total in large, medium or small scaled and we have completed over 1500 projects up to date. Design Asia Group (Pvt) Ltd is poised for this challenge of in this new millennium, as an established organization with permanent staff of 20 numbers and field staff of 75 numbers at present. We have our own workshop located at Kollonawa. Our aim is to give the customers more attractive products and plans for an affordable price Amongst one of our main objective is to grow with our customers, we try to build a long lasting and mutually beneficial relationship with our customers and partners, hence we could understand what does customer need? His expectations and problems he faces and his satisfaction, when the successful customer relationship involves with our management formulas it is easy to understand the customers feelings, and it drives us towards the success as well. Leveraging of this knowledge with innovative products and space managing designs help to fulfill our common goals. Being the marketing director of the company the scope of this project is to expand, survival our market without being depend on one niching. As an example Office Interior funiture plays a big role in our market, its about 95% of our whole market, in case if the that

industry falls it would be harmful for our company. Thats why Im looking for a new era by discovering new nichings. With a good approch of entering this new world of tomorrow with a strong growth momentum and a high level of confidence in our ability to deliver better interior solutions and services with added value.

Research problem and research

1. How does a company expand its current profitability, market share, and surveillance through multiple niche market segments by using different brands rather than severing very narrow single niches market?

Objectives of the project

Main objective: To bring stability to the business at times of when a niche market fails and in economic uncertainties. To increase the market share & sales volumes and profitability of the company, there by uplifting the livelihood of the stakeholders. Increasing the mark share and creating long-term growth connecting with customers, building strong brands, shaping the market offerings.

Sub objectives: To study about the Interior market must get knowledge of the Sri Lankan Suggest innovative ideas and market capturing systems to best utilize the Introducing different brands for creating different segments of the mass market. Study about the current trends, customer needs, styles to better customer interior market at first. existing Markets.

satisfaction with retention.

Scope of the research

The expectation of this research is to present our findings regarding the marketing niches, which have success on the field of interior designing industry in Sri Lanka. The interior designing could be defined broadly, such as designing, styling, constructing, keep on touching on trends, furnituring, lighting, flooring, decorating, both in residential feild and commercial field.Within my research I have been limitted only in commercial field which I have been so familier with.

Chapter-02
2 Literature Review /Theoretical Background
The starting point of discussing the segmentation is mass marketing. In mass marketing, the seller engages in the mass production, mass distribution, and mass promotion of one product for all buyers. A niche is a narrowly defined customer group seeking a distinctive mix of benefits. Marketers usually identify niches by dividing a segment into a sub segments. The customers have a distinct set of needs. They will pay a premium to the firm for the one that best satisfies them. The niche is small but has size, profit, and growth potential and is unlikely to attract many other competitors. 2.1 Market- Nicher Strategies An alternative to being a follower in large market is to be a leader in a small market, or niche, Small firms normally avoid competing with larger firms by targeting small market of little or no interest to the larger firms .But even large , profitability firms may choose to use niching strategies for some of their business units or companies Firms with low share of the total market can become highly profitable through smart niching. Such companies tend to offer high value, charge a premium price, achieve lower manufacturing cost, and shape a strong corporate culture and vision Why is niching so profitable? The main reason is that the market nicher ends up knowing the targert customer so well, it meets their needs better than other firms selling to this niche casually. As a result, the nicher can be charged a substantial piece over costs .The nicher achieves high margin, whereas the mass marketer achives high volume. Niches have three tasks: creating niches, expanding niches, and protecting niches. Niching carries a major risk in that the market, niche might dry up or be attacked the company is then stuck with highly specialized resources that may not have high-value alternative uses. Because niches can weakean, the firm must continually create new ones. That is why multiple niching is preferable to single niching. By developing the strength in two or more nichers, the company increases its chance of survival.

Those that truly specialized in a particular area (i.e. Kitchen and office designers) and firms that uses a niche as a market strategy. Let us focus on the latter, because if you are trying to create a message that appeals to anyone that may be interested in any form of Interior Designing, you are spinning your wheels and wasting your resources. The best way to gain awareness is by marketing through the strategy of developing your niche. The biggest objection most have to this idea is that they do not want to box themselves into a narrow offering. However, this is not the case when you use a niche to create awareness.

Let's first look at 5 different strategies to develop a niche: 1) By Industry There are dozens of industries that we can focus on to develop a market for our company. Here are only a few: government offices, medical offices, health care, hotels, restaurants, day care centers, Educational institute and much more.

2) By Product Office Furniture, Kitchen Cabinets, Window Treatments, Color painting, Antiques, Artwork, and Residential Furniture are just a few that fall under marketing with a product focus. 3) By Style We can sell by style, you sell based on your own unique talent. Examples of style include Modern, Traditional, Classic, Youthful, Tailored, and Elegant. 4) By Demographic we can target a certain group of the market such as, Retiring Baby Boomers, Newly married, young earners and those relocating for their work.

5) By Solution A clever way of finding your niche is through offering great solutions to common and difficult problems. We can specialize in Lighting systems, Solar Control, Motorization, Home Staging and offering Solutions to the Disabled.

2.2 Methodology
This emphasis on how are we going to meet with achieving the project objectives. I will try to start the investigation by examining internal and external secondary data and primary data. There it could be found three primary data collection methods, which are, survey, behavioural data, and forces group research; the survey method was chosen to provide the research with the necessary, accurate and reliable information required. In order to complete this reserch the gathering ideas of different costomers plays an imporent role ,in order to get a general picture on coustomer view about the product, price,place , promotion are related activities in a designed questionere. Primary Data -:
o o

Interviewing few Interior designers from the current practitioners Customer Survey/ Questionnaire collecting

o Secondary Data -:
o o

Magazines which were published by the Architect associations Information through Sri Lankan customs

o Other Sri Lankan Business Review Magazines. o Gathering information through the internet. o Company exisisting data sourse

2.3 Expected limitation

Expected financial benefits for the parties, which are concerned, might not be generated. Being a newly booming industry in Sri Lanka, very limited secondry data sourses in available. Very limited publications of interior designing field in Sri Lanka. Very limited professional interior designers in Sri Lanka. Future competition will reduce profitability. All the primary collection had been limitted only for Colombo suburbs.

Chapter-03
3.1 Findings

The primary data were obtained through questionnaires. The questionnaire (open ended and close ended) had been used to gather information regarding the awareness of the marketing strategies and the satisfaction level of their desires. The each questionnaire was covered with 13 questions, as simple as it is to feel easy for the respondents to fill up the enquired information. The questionnaire was distributed amoung 50 population based on simple random sample basis; varied income levels, various demogapics, architecters and different professional levels with different earning levels. The questions were focused on the customer awareness level on the marketing strategies and their overall satisfaction regarding on the markerts condition, service, expectation, durability etc the primary research which was conducted through questionnaires was not as easy as finding information through secondary sources . With amidst the barriers of gathering the primary data and thorough analysing of those questionnaires, this research was accomplished. In the questionnaire, the First five questions were based on 4Ps (Product. price. place & promotion) information. Then the questions of regarding on effectiveness of the marketing strategies and the satisfaction level of coustomers in Sri Lanka. In the first question, customers were asked to mention about the way of achiving their household funiture.

Table -01 Brand Image 1 2 3 4 5 6 Arpico Home Cncept DAMRO Singer Homes Don carolis Unisonic Saniro 8 29 5 7 1 0 50 16% 58% 10% 14% 2% 0%

Graph-01: Brand populerity Through the analysis of the questionnaires, it was identified that, 58% of the markert share has gained by DAMRO.16% markert share chaptured by Arpico Home concept. Don Carolis and singer homes respectivly 14% and 10%.Here it is visible that small companies like Uisonic & Sanro, have gained very limited markert share. Here Damro has been seen as a champion who has moved cautiously forward by acheving 58% in the furniture market in Sri Lanka.

In the 2nd question it was directly asked that, how much does the brand populerity effect on, when they are selectiong a product.

Table -02: How does the brand image effect on the product selling. 1 2 3 4 Extremley Important Very Important Some time it is Important Not very Important 7 12 25 6 50 14% 24% 50% 12%

By this we can get an idea of that nowadays most of the people do not get the brand image as very important substance. The competitiveness in the market share has changed the attitude of cherish the brand image as an important substance. As well as by this image, it indicates that a company cannot hold their market share by only on their brand popularity, but with more added elements. Because the customers expect more elements rather than the brand image. Table 3; Costomers Rating among the compertitiors on Key success factors

Costomer Aweareness Damro Arpico Singer E E E

Product Quality G F G

Product Avialability P F F

After Sales service E P P

Selling Staff F G F

Best Price G H H

Note : E=Excellent G=.Good F=Fair P=Poor H-High

Table 04: The way they aware of the branded place. 1 2 3 4 5 Advertising (T.V. Commercials) Word of mouth Trade Promotions Public relation & Publicity Trade events & Experrience 29 6 4 2 9 50 58% 12% 8% 4% 18%

In the 4th question, the coustomers were asked that how did them aware of that branded place. The main objective of this question is to get an idea and to identify how far the marketing strategies have been directed towards these groups of customers. Here it has shown that the T.V. Commercials are extremley strong to be orientated on a particular place which can remember easily for people, as wellas with the ability of capturing any type of age group.

Product features are discribed in the questions of 5th & 6th questions, the main idea behind this is to get the desired, considerable factors to identifiy on which they are select Table 05: The most considerable facts when buying furniture

1 2 3 4

Quality of the product Stylish & modern Design of the product Affordable price After sales service

17 19 10 4 50

34% 38% 20% 8%

Usually people are vary of choosing the furniture as it is a one sourse, which indicates their courtesy, pride & it should be rewarding for a long period of time.So here it could be seen that most of them had chosen respectively the stylish, modern design of the product and the quality of the product as the durability depends mainly on those factors. As well as even in the question of 06th it had been asked to give a preparation from the given factots in according to their orientation.Even here the majority tends on modern

design & stylish and the Quality of the product.The below given illustration will descibe the status of that. Table 06: Main concerned features of a furniture store. 1 2 3 4 5 6 Parking Modern Design & Stylish Price Rating Quality of the Product Brand Popularity After Sales Service 3 24 11 28 3 7

Through this diagram, it is clear that the people are very greatly concern about modern design and the Quality of the product mainly.

In the question No.08th, it was asked about the way they go shopping for furniture of their household items. Table 07: The way of visit to buy furniture items.

1. 2 3 4

Regulary Occasionally Seasonalwise Rearely

0 15 8 27 50

0% 30% 16% 54%

In this diagram, it indicates that with this economy the people do not spend for furniture very often, some other circumstance would have been hidden in this status why do they prefer to visit rearely for furniture.

As the 9th question follows, the coustomers were asked to list down their expectation, point of view on a furniture showroom or departmental stores as how it should be. we got more then 20 different ideas from each of them on what do they expect form a show room.Those given ideas were combined and catagariced respectivly as follows to make it convince to understand.
1. Affordable price with good rating.

2. Quality products with modern designs. 3. Many varieties of products in one roof. 4. Customer cared service with providing good sales demonstration by sales staff. 5. Spacious-Separate segments & areas to each category, where the customer could find out the need in a short time. 6. Easy payment systems & optinal payment methods ( Credit Card)

The 10th question seeks information on what do they aspire, their comments & point of view and response towards the E-markertig strergies. Table 08: The prefernce on E-marketing 1 2 Who Likes on E-marketing Who dislikes on E- arketing 29 21 50 58% 42%

ThePreferenceon E m eting ark

0% 0% 42% 58% Like Dislike

As the Final three questions of 11th, 12th , and 13th are based on Place, my attempt was to collect the data on their expections, desires, estimations, and attention on a furniture product where they could acquired their furniture needs by the most convenient best way of providing. Table 09: Mostly how do you achive your hosue hold funiture needs 1 2 3 4 By visiting large furniture stores(eg: Damro/Singer) By visiting indipendent funiture stores Directly get it dony by carpenter Go for recondidtion one 24 13 11 2 48% 26% 22% 4%

H do theyg products ow et
4% 22% 48% Visiting large furniture stores Visiting small furniture stores Directlyget done by my carpenter 26% Go for recondition one

In this position a point which I was recognised is though the majority goes for large furniture Stores and then for small, independent furniture stores, a group of 10 architects who represented the respondents were all prefered to have their furniture get it done by a carpenter. Sometimes being architects, they might be known well skilled carpenters where they could get it done their desires by them or weather their expected designs are not in available. As the 13th question goes, it is about the preferable areas that a customer expects from a showroo or a departmental store.Thir preference would be like as below. Table 10: The preferable areas of a showrom 1 Living room 2 Bed mettress 3 Kitchen Cabinet section 4 Dinning 5 kids 6 Office Furniture 7 Clothe Storage 8 Outdoor Furniture 9 10 11 12 13 14 T.V. Media, Eloctronic Lighting Chairs Home Decoration Home tools & Fittings Textiles & Rugs 18 13 12 13 9 11 5 12 5 2 8 12 4 2

Chapter 4

Discussion & Analysis

4.1 SWOT Analysis The overall evaluvation of a companys strenths, weekness oppetunitues and treats is called SWOT analysis .Its a way of monitering the extrenal and internal markerting environment. Design Asias SWOT analysis Strengths 2.Customer satisfaction is our Major strenth 3.Our product quality and service quality 4.Tailer made desing /innorvation/fashion is natureal strenth 5.We have overlimits of manufacturing capacity 6 Company developing highend ,qulity stylish fuiture systerms for officess. 7.Company able to deliver the produts faster comparing to the other comppertitors 8.Leading in a Interior design field 9.We have a art of design and manufacturing facility to office funiture Oppertunitues Threats Weekness 1.Avilability of mass investmet capital is low 2.One of our major weekness is poor distrbuion systerm in island wide 3.Geogrpical coverage poor showroom systerm 4.Week brand 5.Our company has no markert share or reputation within the homefuniture markert

1.Industrys is growing producing gretest ROI 1.Commpertities have supperior acsses to premium new distrubution showroom channlls 2.Our business sector is expanding with meny 2.Globlaice new tecnological advance markert niching oppurtuniyreds 3.A company can customerize a product or 3.Chain,Malasia base low cost import service that was other company offred ony in a products standed form 6.Normaly Costomer orded funiture item probely he must wait one or two weeks 2.Company developing highend ,qulity ,stylish fuiture systerms 4.Precnt government want to encorage local business where posiible 5.Unfullfill coustomer needs Good marketing is the art of finding, developing and profiting from those opportunities. A marketing opportunity is an area of buyer need and interest that a company has probability of profitability satisfying

According to central bank report 2006/2007 and 2009/2011, there is good growth of long durable houshold funiture goods, in the other hand in Sri lanka there are more than 85% of the population in reral areas and due to the open encomic changer during the last three years there is huge a substantial increase in buying power even with rural areas. In accordence with the question, number one huge markert share had gained by main commpititors as Damro, Arpico& Singer. 84% just because of the brand image of them and there infarstuctur (large distribution chanel / spacious wherehouse/ islanwide showrooms) When we compare with Design Asia with those competitors, one of our main weak points is that we do not have that brand image, something that could be recognized by the name as soon as they hear. In fact, we do not have that brand power which flows among the population even though we are generating many more services as their desire. This quiddity could be seen even in the question No. seven where only 12% of the population is considered, as the brand image is not very important at all; the remaining 88% are in the position.where they consider about tha brand even in some extent. At the same time, the table No. three shows that the way of their awareness of the brand 58% has captured by the T.V. commercials. This type of advertising media could be done by a company who is strengthen with a mass investment capital, because they could disburse a considerable amount for advertising as in return they can earn double as much as they spent. In relevant with the above fact television vewing has been turned as a dominant leisure activity even in the rural areas as now they too facilitated due to the development projects on there.So the advertiser could capture the audience in every age group where he could refer to the inclusion of the brands or products through T.V. commercials. When the audience responses to the product placement or the brand that placements have differential effects on consumers memory and brand attitudes. Positively this too would be an influence on the consumers attitude towards the brand choice. For our company the popularity goes through the word of mouth by seeing the quality of product. Apart from the placement, and if we consider about the product mainley modern designed & stylish, Quality product, Affordable price, Availability, After sales service are the most concerned features that expect from the consumers.in here it could be seen that Design Asia has been strenthen with those components. One of the main reasons is mainley we are dealing with the architects, who would be always in touch with modern- stylish designs.So as a strengthen point, we have that art of designing and manufacturing faciltyof office furniture with those new coming designs.

The customer satisfaction is the prominance strength of our company.Therefore always we attempt to produce agod quality product to remain the customer satisfaction forever. As the Table No. 10 shows there is a tend on preference in E-marketing evetually in Sri lanka as well.Because nowadys most of the people are growing with the internet communication facility and they tend to visit those relevant web sites as anything.lk and place their orders through the web sites. According to question No.9 it could been seen that the customer looks on not only the price, product, quality but with the more value added services such as oder in easy, delivery, insllation, customer consulting, maintain and repairing.

Chapter 5
5.1 Recommendation and conclusions

1. Through out this whole research it was identified that there is an opportunity for mulitple niches to serve the customer needs, but with the economical, other Infastrctures, financal factors too be carefulley analysed. 2. One of the main conclutions what I have identyfied was the moving from traditional, valuable timber furniture to modern knock down furniture styles. 3 The prouct gap among with main competitors, like Damro, Arpico and with Design Asia, when it comes to fill that nich market requirement by us the acceptence of the customer should be followed by a future researched. 4. It has been shown that there is a trend of prefering in E-marketing system, on this matter as an example a person could design his living area on his own by only giving the dimentions of the area with just a click and drag on the objectives in the relevant places and placing the orders through online with easy dilivery rather than visiting a showroom with spending more time in a hazsel. Therefore it be should be needed a further research to get an idea of this overoll system. 5. There it has risen only about two or three main companies, and small-scaled furniture stores, but a mid scale copanies are very reare. The reason for this gap should be analysed, weather it isbecause of short of investment capital? Or the brand image or any more reason.

List of reference

1. Markerting Management (A south Asian Perspective) (Philip Kotler/Kevin Lane Keller/Abraham Koshy) 2. WWW.pearsoned.co.in/markertmanagement 3.WWW.IKEA.COM