Chandran Periasamy is the Managing Director of Smaart Home Furniture. It is one of the furniture manufacturers in southern India with a profitable business and facing competition from local players, branded players, and online retail stores. Due to a growing strong competition, it is looking into expanding its line of business. It is looking into providing sofa services.
Vidya Suresh and M. Selvalakshmi
Harvard Business Review (W19484-PDF-ENG)
September 06, 2019
Case questions answered:
- Analyze the current Indian furniture market, and comment on the suitability of the new venture in this market.
- Does the future of manufacturing lie in offering product-related services? How does the marketing of furniture differ from the marketing of furniture services?
- Develop the service concept and the positioning of the sofa services?
- What is the future outlook for extending Smaart Home Furniture and its offering to include sofa services?
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Case answers for Smaart Home Furniture: Adding Value by Adding Services
CASE BACKGROUND – Smaart Home Furniture: Adding Value by Adding Services
Chandran Periasamy is the Managing Director of Smaart Home Furniture. It is one of the furniture manufacturers in southern India with a profitable business and facing competition from local players, branded players, and online retail stores.
Based on the advertising on sofa servicing, looking at the positive response from consumers and the present facilities available, two questions arise:
- Should he start offering services?
- If so, should sofa servicing be launched as a separate entity or part of the existing manufacturing unit’s offerings?
INDIAN FURNITURE MARKET
As of 2015, the Indian furniture market is worth $17922 million, predominantly from an unorganized market (85% of sales). From 2009-2013, it has a steady annual growth rate of 12%. The market is currently expected to expand at a CAGR of 12.91%, which is forecasted till 2023.
CURRENT INDIAN MARKET
The Indian furniture industry, to which Smaart Home Furniture belongs, is one of the fastest-growing markets in the world. Several reasons contribute to the industry’s growth, which include:
- Growing economy increasing the spending capacity of people.
- Growing phase of infrastructure and real estate
- It is highly fragmented, with most of the revenue generated from the local players, i.e., the unorganized sector.
- Organized players are Godrej Interio, Home Centre, Damro, zuari, etc.
- E-tailing furniture has increased options for consumers.
- Increasing demand
- Ease of availability of raw material
- Continuous focus on product development
- Availability of alternatives
- Gaining trust
- Rising growth potential
- Use of e-tailing
- Use of e-commerce for marketing
- Modernization of infrastructure
- Entry of foreign brands
- Fluctuating raw material prices
- Advances in alternative design
DOES THE FUTURE OF MANUFACTURING LIE IN OFFERING PRODUCT-RELATED SERVICES?
Yes, the future of manufacturing lies in making product-related services. In this case, it is clearly mentioned that furniture manufacturing is a core business for Smaart Home Furniture. After all, it’s a 1.3 billion industry.
Most local players are still dependent on word of mouth traditional type marketing, but the situation has been more challenging these days. As a small enterprise, some opportunities are missed daily. To start with, some amount can be invested in building their website. Many local vendors are working on that.
As our government has implemented new policies like make in India, our country has manufacturing ecosystem is slowly evolving. Business mindset is getting changed, and slowly and steadily, customers will seek local products rather than purchasing imported products.
Psychological advantage: If we came to know about Indians tend to purchase products only after getting look and touch. We clearly see an added advantage for local manufacturers here.
IS MARKETING OF FURNITURE DIFFER FROM THE MARKETING OF FURNITURE SERVICES?
Marketing of furniture is directly marketing of the products like sofa, chairs, beds, etc. Here, our revenue is dependent on the product. On the other hand, servicing of the products like softa is altogether different. In that case, we are not directly dependent on the sale of our product but to serve them.
Generally, people buy furniture once in five years or ten years depending on the need and income of a family, but all the furniture requires maintenance service yearly, or once in two years.
Here Smaart Home Furniture has an…