Managing the Service Value Chain at Forest Timbers - Essay Example

? Forest Timbers Introduction Forest Timbers is a timber merchants, importers and machinists company that operate from Hereford in United Kingdom. The company specializes in the soft and hardwood from North America, Europe and Asia. The marketing team is committed to ensuring that they deliver excellent products. Some of its products and services include shop fitters, furniture makers, joining and kitchen manufacturers. Most of these products are driven by supply and demand. The kitchen industry in the United Kingdom is valued at 1.2 billion pounds. The economic down turn had a negative impact on the consumer expenditure and the resultant manufacturers selling prices. The consumer confidence and house building decreased tremendously. The kitchen furniture market reduced rapidly because of house moving. The market value also declined costing the industry more than 250 million pounds. This marketing essay seeks to discuss PEST analysis, target segments and value chain in the industry. PEST analysis PEST analysis is a crucial tool when it comes to marketing process of any organization. It involved identifying economic, technical, political and social influences on the organizational entities. The external factors include uncertainties and risks. Political factors The political or legal set up of the United Kingdom furnisher industry has an immense influence in the mode of regulation that affects the industry. The legislations that are sponsored by the government have the potential to affect the spending power of the consumers. The fiscal policies in the United Kingdom during the recession had a profound effect on the consumer choices in the furniture market (Bruhn & Georgi 2006). The political environment is composed of pressure groups, laws and state agencies that influence the furniture market. The political developments in the United Kingdom have affected all the stakeholders in the furniture industry. Studies show that the legal environment in a market can limit the operations of individuals or organizations (Lopes & Duguid 2010). Therefore, the stakeholders in the furniture industry must understand the United Kingdom’s political system and processes. This is likely to give the stakeholders an enhanced insight into the most profitable business decisions to take in the furniture industry. Government interventions in the running of timber industry affect both the long-term and short term plans of the organization (Lopes & Duguid 2010). The government of the United Kingdom monitors the timber industry to avoid depletion of the forest cover. The government has enacted special legislations that ensure that nature resources are not destroyed for private gain. The furniture market in the United Kingdom is subject to these legislations. The marketing strategy of the timber industry is affected by the government interventions. The government of the United Kingdom has informal and formal rules that play an important role in the timber industry. Some of these laws are the tax policy, environmental regulations and other trade restrictions. Research shows that political stability and tariffs affect organizational profitability (Jerrard & Hands 2008). The government is keen on the role of the forests in fighting climate change. Some of the causes of deforestation include wood extraction, expansion of infrastructure and getting more agricultural land. The government controls the logging process in order to ensure that technology does not lead to compromise in the forest cover leading to negative effects on the weather patterns. Technology has enabled the sawyers to harvest up to 4000 tons of timber in a day. Economy factors The economic risks or factors relate to regional trends in the conditions that can have profound effects on timber industry in the United Kingdom. The free market economy, the dynamic inflation rate which is under strict fiscal policies because of the recession and the slow economic growth has a negative effect on the timber and furniture company (Lopes & Duguid 2010). The purchasing power of the consumer is immensely weakened by the turbulence in the global financial situation. The levels of unemployment have been rising as some of the adversely affected industries lay off. The United Kingdom has a slight shift from the conservative economic policies (Bruhn & Georgi 2006). This aims at addressing the current crisis with workable and practical results that give immediate results. The fiscal policy in the United Kingdom discourages the possibility of increased revenues. Some of the raw materials are sourced from external markets in China, United States and India. This means that the cost implications have multiple economic factors that are driving them. Social factors The social factors reflect the tastes and preferences of the consumers. The values and belief of the stakeholders are defined by the society. The timber industry in the United Kingdom is driven by social perceptions on certain services and products (Sandhusen 2000). Therefore, social factors have an impact on the marketing operation and the effectiveness of the company. The economic crunch across the globe created a negative perception on the consumer purchasing trends. The education levels and growth rate affect the profitability of the timber industry in the United Kingdom (Jerrard & Hands 2008). The fiscal policies and stagnant economy in the United Kingdom has caused a reduction of the occupational structure. New affordable products are being manufactured by the timber company to meet the consumer needs in the present conditions. Forest Timbers sells some veneers at 1000 pounds per unit. However the social considerations must be made to accommodate the financial situation. Weather conditions can also affect the demand of the products. Weather is known to cause the disruption of the log supplies. The disruption affects the ability of the company to meet the demand of the timber products (Lopes & Duguid 2010). Technological factors Technology has multiple facets. The facets include process information, development of new products and basic operations. Therefore, technology is a source of competitive advantage to the timber industry (Sandhusen 2000). Design of products is central in developing furniture. This calls for training and investing in skilled workforce. Market intelligence in the furniture market is affected by the technological growth (Jerrard & Hands 2008). Access to technology has made it easier to fell trees. Rapid forest clearing has been enabled through the sophisticated machines. Technology has enabled deforestation of huge areas much faster. This makes it possible to fell trees with a diameter of 800 mm. the machines have also made it possible to produce over 3,500 tons daily. Forest Timbers have invested in technology that enables the company to produce any size or shape. As a result, the company has increasingly developed competitive furniture. Technology has enabled better preservation of timber and record keeping (Lopes & Duguid 2010). The company has management software that enables the company to monitor progress from a centralized position. Negative effects of logging Deforestation is said to drive climate change. The forest soils are said to be drying fast leading to increase in desertification. Forests serve as a cover for the water catchment areas. Trees perpetuate water cycle continuously. Therefore, the furniture market is seen an insensitive to the environmental needs and sustainability. Target market Segmentation makes it easy to identify the consumer groups and desires. At the same time, segmentation identifies the purchasing power of the potential consumers and their buying attitudes. The process must factor in the demographic variables. These include demographic variables. The variables include social circumstances, sex, nationality and age. Socio-economic variables include education and income levels (Lopes & Duguid 2010). The variables make it easy to identify the consumer changes and life-cycles at home. Consumers in the same demographic profile can act differently towards the same product. A target segment must be measureable, identifiable, discrete, accessible and sustainable (Bruhn & Georgi 2006). The bargaining power of the consumers in the UK is high. The potential target market is likely to have a high purchasing power. Designed furniture is increasingly becoming the future trend in among the potential target markets. The company is targeting corporate and individual customers in the UK market (Jerrard & Hands 2008). The company is also targeting upcoming middle and upper cadre of the employees. The strategic and marketing team is developing furniture products that meet the needs of the consumers. The company is developing styles that have a strong appeal to potential customers The company is committed to understanding the consumer behavior in the United Kingdom. Research indicates that consumers form an important part in the value chain (Sandhusen 2000). The target market is being reached through intensive communication and advertisements. The strategic and marketing team takes note of the cultural, psychological and personal factors that affect the buying behavior of the target market. The marketing team acknowledges that offers cannot take address the needs of the target markets and segments exhaustively (Jerrard & Hands 2008). Therefore, the factors are taken into consideration when products are being developed. Before venturing into new markets, the company embarks on research to establish the needs of the consumers. The price policies and strategies are designed to accommodate communication and distribution of the products to these segments. Identifying the target market in the furniture industry entails understanding the characteristics, lifestyles and values of the potential consumers. This makes it easy to adopt the distribution and consumer demands in ways that are effective and valuable to the target market. The marketing team of the company understands that consumer satisfaction is the crucial in the marketing of the furniture products to potential markets. The means that the furniture products must meet the demands of the target market if revenues are to be increased (Jerrard & Hands 2008). Market research makes product differentiation easier. Value generation of the furniture production must always focus on the product. Meeting consumer demands is correlated to product differentiation. This calls for effective communication and increased valuation in the product development. Studies show that the main motivation of buying a product is its utility and functional value (Sandhusen 2000). The furniture products must also appeal a social status to the target markets. Consumers use products and brands to develop and enhance their identity. The furniture industry must exploit these aspirations to increase revenues in these target markets (Lopes & Duguid 2010). The distributor of the furniture products must increase the perceived value of the product at the stage of purchase. This increases the level of satisfaction among the potential consumers. Identifying the equivalent needs and can be satisfied by the same product characteristics. Understanding consumer needs is important in this process. GE Matrix Market attractiveness High Medium Low High Excellent furniture Selective investment is needed in these furniture products Poor market research of markets demographics medium Furniture products that needs to be developed (having proper target market) The product needs to be developed and more revenue invested in marketing The products needed a strategic reconsideration. Market research can be a solution low Poor consumer understanding The product has unexploited potential. Consumer understanding needed. Poor furniture investment and research( demographics misconception) Brand position Fig 1 Branding is the core of marketing furniture. Competitive pricing leads to enhancement of brands and profitability. All the process of the furniture company must be aimed at generation value for the customer. Therefore, cooperation in the entire product chain is vital. Value generation should be the aim of the entire furniture company (Jerrard & Hands 2008). The primary activities affect production and sales of furniture directly. Supplementary activities support the value creating process of the primary activities. Strong brands are likely to attract more sales. However, the supplementary activities do not have to contribute directly to the process of manufacturing of the furniture (Williams 2004). Therefore, the market drove approach causes all the processes to adapt to the value creating concept to meet the consumer expectations. This could mean developing products and furniture designs that have a strong appeal and economic advantage to for the consumers (Bruhn & Georgi 2006). Distributors and manufacturers must cooperate in order to increase the furniture product value to the end consumer. This calls to well research price segments that attract different profiles on the target market segments. Manufactures must develop dominant brands through partnerships with credible suppliers and distributors (Sandhusen 2000). The furniture industry in the United Kingdom must understand the need for consumers are looking beyond the usefulness of the product. Creating the product value starts from the time the consumers view the furniture for the first time to the time it gets to his hands. The value provided by the company or the manufacture must be equivalent to the value perceived by the consumer. Consumers in the furniture industry are said to be faithful to their perceived value. Consumer ensures that the basic needs are satisfied first by the furniture they procure. However, satisfaction is about meeting simultaneous needs to the consumer. Demand complexity among timber products demands that manufactures and suppliers address the emotional value of a multiple consumers. Appendix Fig 1- a GE matrix table References Bruhn, M., & Georgi, D. 2006. Services marketing: Managing the service value chain. Harlow: Financial Times Prentice Hall. Jerrard, B., & Hands, D. 2008. Design management: Exploring fieldwork and applications. London: Routledge. Lopes, T. S., & Duguid, P. 2010. Trade Marks, Brands and Competitiveness. Hoboken: Taylor & Francis. Sandhusen, R. 2000. Marketing. Hauppauge, N.Y: Barron's. Williams, S. J., & University of Wales, C. 2004. An investigation into supply chain management in the UK furniture industry. Cardiff: University of Wales. Read More