DIRECT LOUNGE FURNITURE (DLF) DLF is owned by two entrepreneurs each of whom built up a...

 

 

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DIRECT LOUNGE FURNITURE (DLF) DLF is owned by two entrepreneurs each of whom built up a separate direct marketing business, one in the South and one in the West over a period of some 15 years, before merging three years ago. The main advantages of the merger were joint advertising, wider product ranges, more flexible production and less reliance upon one person. The two owners are good friends and work well together, meeting at least once a week. Both the two constituent businesses comprise showrooms mainly featuring upholstered three-piece suites finished in Dralon cloth, in a wide variety of styles and colours. This furniture is manufactured in two small factories, each of which has an adjoining showroom Sales are achieved by advertising in free newspapers delivered to the south households. These advertisements illustrate the furniture on offer, strongly emphasize the lower prices available to the public by buying direct from the manufacturers and of course invite readers to visit the showrooms without obligation. Upon visiting the showroom the public can look around the products on offer, discuss their individual requirements with a salesperson and be shown round the factory to emphasize the quality of the workmanship, wooden frames etc. This marketing formula works very well and sales/profits are booming. Customers feel they are involved in the design of their own furniture and that they are getting good value. DLF enjoy high proportions of recommendations and repeat sales. Buying behavior patterns are however changing. People are tending to buy individual items rather than the standard three-piece suite and to seek co-ordination with curtains, carpets etc. In partial response to this the West showroom offers made-to-measure curtains in Dralon to complement or Buying behavior patterns are however changing. People are tending to buy individual items rather than the standard three-piece suite and to seek co-ordination with curtains, carpets etc. In partial response to this the West showroom offers made-to-measure curtains in Dralon to complement or match the upholstery. Another change in the industry is in the foam used for upholstering which was formerly highly flammable and when on fire gave out dense black smoke causing many deaths. Legislation has now been passed enforcing the use of safer foam. The media exposure of the fire hazard has caused the public to be more careful when choosing furniture and increasing affluence has also resulted in a move up-market by more households. DLF are well aware that their formula appeals mainly to the more price-conscious households, who have been tolerant of the somewhat less than sophisticated showroom and factory conditions associated with direct marketing of this nature. Required You have been called in by DLF as a consultant to advice on expansion options. Conduct a SWOT analysis and evaluate the options for a). Product development b). Market Development c). A combination of both product and market development Submit your report giving the advantages and disadvantages of each of these three options in more detail, stating what control techniques you would recommend in each case. DIRECT LOUNGE FURNITURE (DLF) DLF is owned by two entrepreneurs each of whom built up a separate direct marketing business, one in the South and one in the West over a period of some 15 years, before merging three years ago. The main advantages of the merger were joint advertising, wider product ranges, more flexible production and less reliance upon one person. The two owners are good friends and work well together, meeting at least once a week. Both the two constituent businesses comprise showrooms mainly featuring upholstered three-piece suites finished in Dralon cloth, in a wide variety of styles and colours. This furniture is manufactured in two small factories, each of which has an adjoining showroom Sales are achieved by advertising in free newspapers delivered to the south households. These advertisements illustrate the furniture on offer, strongly emphasize the lower prices available to the public by buying direct from the manufacturers and of course invite readers to visit the showrooms without obligation. Upon visiting the showroom the public can look around the products on offer, discuss their individual requirements with a salesperson and be shown round the factory to emphasize the quality of the workmanship, wooden frames etc. This marketing formula works very well and sales/profits are booming. Customers feel they are involved in the design of their own furniture and that they are getting good value. DLF enjoy high proportions of recommendations and repeat sales. Buying behavior patterns are however changing. People are tending to buy individual items rather than the standard three-piece suite and to seek co-ordination with curtains, carpets etc. In partial response to this the West showroom offers made-to-measure curtains in Dralon to complement or Buying behavior patterns are however changing. People are tending to buy individual items rather than the standard three-piece suite and to seek co-ordination with curtains, carpets etc. In partial response to this the West showroom offers made-to-measure curtains in Dralon to complement or match the upholstery. Another change in the industry is in the foam used for upholstering which was formerly highly flammable and when on fire gave out dense black smoke causing many deaths. Legislation has now been passed enforcing the use of safer foam. The media exposure of the fire hazard has caused the public to be more careful when choosing furniture and increasing affluence has also resulted in a move up-market by more households. DLF are well aware that their formula appeals mainly to the more price-conscious households, who have been tolerant of the somewhat less than sophisticated showroom and factory conditions associated with direct marketing of this nature. Required You have been called in by DLF as a consultant to advice on expansion options. Conduct a SWOT analysis and evaluate the options for a). Product development b). Market Development c). A combination of both product and market development Submit your report giving the advantages and disadvantages of each of these three options in more detail, stating what control techniques you would recommend in each case.