Market insights lead to the right China distribution strategy, deliver fast growth for high-end furniture brand

Opportunity

1. China’s economic growth and large population make it the biggest furniture market in the world. But due to its enormous size, the market is very fragmented with only a few players in the high-end furniture space. A significant market trend is that there are increasing consumer demands for ergonomically designed, quality and environmental friendly products. The sum of these factors represents an attractive market potential to our customer.

However, to enter the China market was not an easy task: the value chain is complicated due to the large geography, China’s provincial economic development is not homogeneous, and purchasing decision making is complex with many stakeholders involved including real estate developers, project management (PM) companies, turnkey/design companies, and end-users. These challenges proved that to reach Chinese customers and achieve sufficient business scale required careful evaluation and planning. ARC Consulting was contracted to help the customer understand the complexities of the market and make the right decisions for their business.

Approach

The overall project was split into 4 phases as follows:

This summarizes the first part of the project, Business Plan Development, which consists the following steps to answer the questions “Why, How and Where” to expand market presence:

• Step 1: Research Preparation
  • Prepare the research scope and focus together with the Client
  • Liaise with current resources and leverage past in-house experiences
  • Develop a research framework and assign team responsibilities
• Step 2: Data Gathering
  • Qualitative and quantitative research and data gathering within the outlined focus areas
  • Data sources: Competitor analysis/best practices, Government departments and organizations, academics, field research, previous in-house China retail/franchise knowledge database, published reports, ARC Consulting network
• Step 3: Analysis and Reporting
  • Analyze collected data to gain fact-based input and conclusions

1. Market segmentation and stakeholder analysis
2. Value chain analysis
3. Potential analysis (cost/benefit)
4. Brand positioning analysis
5. Lead time analysis- what are the customers’ expectations?
6. Price analysis
7. Mapping of potential obstacles and barriers
8. Evaluation of legal set-up options
9. Resource requirements and internal support
10. SWOT analysis

• • Review analysis output with the client
  • Prepare a market expansion plan for the client

The outcome of the project was a coherent and fact-based business plan tailored according to the client’s internal capabilities and adequate to serve the market under existing characteristics.