Advertising Business of Made-com - Case Study Example

MARKETING REPORT FOR MADE.COM SALIH ERMAN DOGU S00703786 MARCH 8TH, Contents Introduction: The Brand 4 Target Audience 4 Macro Size and Statistics 5 Micro Details 6 Competition 6 SWOT Analysis 6 Strengths 6 Weaknesses 7 Opportunities 7 Threats 7 Segmentation, Targeting, Positioning (STP Analysis) 8 Consumer Segmentation 8 Competitive Advantage 8 O Porter’s Generic Model 8 Cost Leadership 9 Differentiation 9 Focus or Niche Strategy 9 O Marketing Mix 10 Unique Sales Proposition (USP) 10 Conclusion/Recommendation 11 Reference List 13 Introduction: The Brand Contemporary organizations have exhibited robust growth due to the application of management and marketing theories that contribute to success. There are factors that need to be considered by organizations in intensifying brand awareness. In the United Kingdom, for instance, there are separate surveys that are conducted to determine the most famous brands: the Consumer Superbrands and Business Superbrands (Superbrands (UK) Ltd. Company, 2015). The organization that topped both surveys is British Airways and seconded by Rolex under the Consumer Superbrands and by Apple under the Business Superbrands (Superbrands (UK) Ltd. Company, 2015). The criteria for judging an organization as belonging to the consumer or business superbrands are factors such as quality, reliability, and distinction (Consumer Superbrands, 2015). In this regard, the current research aims to present a comprehensive analysis of one of the brands in UK, Made.com. The paper would be structured in terms of evaluating the following areas: target audience, competition, competitive advantage, and unique sales proposition (USP). A concluding portion would provide recommendations on advertising strategies that would improve the brand’s overall image and public’s awareness to enable them to eventually be included among UK’s superbrands in the near future. Target Audience Made.com was reported to have been established in 2010 by three (3) founders: Ning Li (CEO), Julien Callède (COO) and Chloe Macintosh (Head of Collections) (Sheppard, 2013). From an interview with the incorporator, Ning Li, the target audience for Made.com are consumers who are basically price conscious and looking for quality made furniture. As emphasized, when asked to describe Made.com’s target audience and customer base, Ning disclosed that “there are two types of customers on Made.com: Firstly, the smart customers that can afford to pay for a £3,000 for a sofa, but prefer to shop on Made.com because they know they can buy with us for £600 and secondly frustrated customers that could not afford to pay the £3000 for a sofa but would like to have one anyway” (Sheppard, 2013, p. 1). From the response, it could be deduced that the target audience are those who belong to the high income group; yet are highly educated to discern that quality furniture could be custom-made to cater to their personal requirements and preferences. In addition, their clientele are also those who belong to the middle- and low income group who look into functionality and affordability as factors incorporated in their purchase decision making. Macro Size and Statistics In a news written by Noakes (2014), Made was the brand that was included among the Tech5, the top tech businesses in the UK. As reported, “Made, the design-led ecommerce brand, is the second-fastest growing tech company in the UK, according to a competition hosted by The Next Web. The winning five UK businesses, known as Tech5, were judged on actual revenue, traffic and employee data that shows the growth rate between 2011 and 2013. The main entry criteria for the Tech5 was that they must have launched in 2009 or later, have more than €500,000 in revenue (2013), and build its own scalable product or service driven by technology” (Noakes, 2014, p. 1). Additional information disclosed that Made captured the UK furniture market at an unprecedented pace. The organization’s performance reportedly exhibited the following relevant statistics: “Made employs 150 people, has seen 100% year-on-year average growth over the past three years and is set to launch in two new European countries this year following a successful launch in Italy and France in 2013” (Noakes, 2014, p. 1). Likewise, the organization was reported to have expanded in the Netherlands and in Germany (Made.com, 2015). Micro Details The local market of Made is within the Charing Cross Road in London where their showrooms are in London, Soho; London, Notting Hill; Redbrick, West Yorkshire; and London, Old Street (Made.com, 2015). Their official website enables potential clients to view their products online, including prices and specific locations that the products are available. The fact that the company has expanded its operations in international markets affirm their ability to tap increasing demands and the popularity of the brand to attract current and potential clientele globally. Competition SWOT Analysis Strengths The strengths of Made include the application of a business model that does not include the services of middlemen; as such, enabling the organization to capitalize on cost savings. As emphasized by Ning, “because of our business model – we don’t have to pay for warehouses, inventory or high street shops. And we don’t buy from middlemen. All the savings (often up to 70%) are passed to the customers” (Sheppard, 2013, p. 1). In addition, the organization attracted famous designers of high caliber, such as Steuart Padwick and John Stefanidis (Sheppard, 2013). Therefore, Made produces furniture considered as high quality; yet offered in the most affordable prices. Weaknesses Made seem to manifest weaknesses in terms of some advertisements which were reported to be misleading (Farley, 2014). As reported, “The advert listed three products and compared the advertisers price against a "typical high street" price. Two complainants challenged whether the comparisons between the advertisers prices and "typical high street" prices were misleading and could be substantiated, because they understood that the advertiser was the sole vendor for the products listed and they did not believe the products they were being compared to were equivalent in quality” (Farley, 2014, p. 1). The article generated negative impact on the image of Made. Opportunities The aim of Made is to become “Europe’s number one destination for home design” (Farley, 2014, p. 1). The expansion in international markets continue to enable Made to capture opportunities from the UK and Ireland, Italy, France, Netherlands, and Germany. In addition, the optimistic growth prospects in the domestic and international furniture markets would provide greater prospects for professional growth. Threats The threats facing Made include more stringent pressures from competitors, both in the domestic and international markets. Their venture into other markets would be faced with responses from competitors which could include application of pricing and promotional strategies that would prevent them from gaining increased market shares. Segmentation, Targeting, Positioning (STP Analysis) Consumer Segmentation The consumers of Made could be segmented according to the following major demographic variables: age, income level, educational background, gender, race or cultural orientation, and use (for home, business, office, or other purposes). For instance, under age, Made could design furniture for children, adolescents, adults, and for the aged. Under income level, consumers are segmented according to those belonging to the low, middle, or high income group. Under educational background, consumers are segmented according to those who pursued formal education and those who only reached lower academic levels (primary and secondary; as opposed to those who pursued higher education). Of course, gender is important to consider in designing furniture since it would influence and affect the choice of style, color, functionality, and aesthetic qualities. Moreover, race, ethnic or cultural orientation of consumers could also influence the style. Some consumers who come from Asian countries could prefer more traditional styles using indigenous materials. Customers coming from the Western and developed countries could prefer innovative styles and materials that are highly evolving. Finally, consumers could also request designs of furniture according to use: if it would be for the home or for the office, and in which particular area the furniture would be located (bedroom, living room, kitchen, dining room). Competitive Advantage O Porter’s Generic Model As learned, Porter allegedly suggested “3 broad or generic strategies for creating a defendable position in the long-run and outperforming competitors” (Anon., n.d.). These strategies are: cost leadership, differentiation, and focus or niche strategy. Cost Leadership Using the business model of Made, it is evident that the company is applying cost leadership strategy through the elimination of middlemen in offering products to the consumers. As emphasized, “without the middleman we connect you directly with designers, saving you up to 70% off prices at leading retailers – based on closest equivalent products in design and functionality, but which may differ in other respects, such as finishes and materials” (Made.com, 2015, p. 1). Therefore, Made capitalizes on affordability as a competitive advantage in offering the furniture to the clientele. Moreover, Made also tailors the customer’s furniture requirements to their needs through made-to-order specifications. Since these furniture are delivered at once, no additional expenses in warehouse and inventories are passed to the consumers. Differentiation A differentiation strategy is made possible through the made-to-order business model where the specifications in furniture design are left to the preferences of their clients. In addition, through tapping the qualifications and expertise of popular furniture designers, clients are assured that they are provided with high quality products that cater to their specific needs. Focus or Niche Strategy Made initially focused on the needs of domestic clients who were reported to be looking for furniture pieces that are good in quality; yet, are affordable. As such, Made emphasizes focus on unique products (furniture) that could be ordered according to specifications or purchased through viewing the products online and through their showrooms (Made.com, 2015). O Marketing Mix 7Ps Product: Custom made furniture or those offered in showrooms Price: Very affordable due to the elimination of middlemen Promotion: The company advertises their products through television ads (Made.com, 2014), as well as through accessing crucial company information through their official website (Made.com, 2015). Place: Made has four (4) showrooms which were identified above and have strategic locations in international markets. Likewise, they also offer their products through the online medium. Packaging: The furniture/s are delivered and packaged in boxes, in seals, as well as in individualized containers according to customers’ specifications. Positioning: The positioning aspect was discussed in greater depth through the consumer segmentation topic, as above-mentioned. People : Made is careful in selecting personnel according to the requirements of the job to match skills and competencies of the people. Likewise, they make sure that customers are provided with effective customer service through addressing distinct needs, specifications, and unique demands. Unique Sales Proposition (USP) By definition, USP means “the factor or consideration presented by a seller as the reason that one product or service is different from and better than that of the competition” (Entrepreneur Media Inc., 2014). From the information gathered about Made, it could be deduced that the USP of the company is the application of their business model: doing away with middlemen and designing furniture that cater to the demands of the customer in the most affordable manner. A view of the official website of Made would already acknowledge offering their USP through focusing on the following main competitive advantages: ability of consumers to save as much as 70% due to direct production, group orders, low prices, as well as uncompromised quality (Made.com, 2015). In addition, consumers are offered value and peace of mind through timely delivery, access to real time tracking, as well as fuss free returns, if and when, needed (Made.com, 2015). Moreover, testimonies from customers who availed of their products could be viewed to attest to the premium quality and Made’s ability to meet and even surpass the expectations of their clientele through the portal on customer reviews (Made.com, 2015). For example, one client, Josefina Smith, who was reported to have purchased a “Hooper Storage Coffee Table, Natural Ash and a Tubby Rectangular Scatter Cushion 25 x 70cm, Zest Green and a Moroc Rug, 170 x 240cm, Multicolour and a Navy Tripod Floor Lamp, White” (Made.com, 2015, p. 1) on November 10, 2013 quipped that “We recently bought our second home which we intend to let out to holiday makers. Its a 2 bedroom flat and I furnished the lounge and dining area with furniture from Made. Love the Moroc rug, Tubby cushions, Navy lamp, Henley coffee table. My room is MADE! Looking forward to our next purchase” (Made.com, 2015, p. 1). Conclusion/Recommendation Made has evidently exhibited significant success since its inception in 2010. In a matter of about five (5) years, Made has already expanded its operations in the international market. Likewise, the robust growth in sales over the past years has attested to the increasing popularity of the brand and the increasing awareness of the clients to the core competencies and competitive advantage of the company over its competitors. From the comprehensive analysis of the organization, it was evident that Made has applied their expertise through capitalizing on their strengths, as well as in capturing the opportunities in the external environment. From the weakness and threats that were identified, it is hereby proposed that Made should intensify their advertising and promotional campaign to counter the negative image the resulted from the apparent flaw in alleged falsification in advertising made. Thus, aside from the television advertisement that was developed, Made should invest additional funds for greater promotions using the print medium and the online medium. They should advertise in furniture publications and in broadsheets. Likewise, using their showrooms, Made should offer promotional discounts for loyal and repeat purchase customers. In addition, they could even provide additional discount coupons for referrals to new clients. Concurrently, past performance has already affirmed that Made produces one of the best designs in contemporary furniture and using innovative materials and resources. They have attracted famous furniture designers that enabled producing distinct and sophisticated designs that customers love. With the recommendations and continued application of marketing strategies that emphasize their strengths and core competencies, Made is sure to eventually belong to the super brands in UK in the near future. Reference List Anon., n.d.. Michael Porter’s “Generic Strategies”. [Online] Available at: http://faculty.bcitbusiness.ca/kevinw/4800/Bobs_porter_notes.pdf [Accessed 4 March 2015]. Consumer Superbrands, 2015. Selection Process and Judging Criteria. [Online] Available at: http://d3iixjhp5u37hr.cloudfront.net/files/2015/02/CSB-2015-Selection-Process-7W1o4o.pdf. [Accessed 4 March 2015]. Entrepreneur Media Inc., 2014. Unique Selling Proposition. [Online] Available at: http://www.entrepreneur.com/encyclopedia/unique-selling-proposition-usp. [Accessed 4 March 2015]. Farley, P., 2014. ASA finds Made.com advert misleading. [Online] Available at: http://www.furniturenews.net/news/articles/2014/04/273243617-asa-finds-madecom-advert-misleading. [Accessed 4 March 2015]. Made.com, 2014. TV Advert. [Online] Available at: http://www.made.com/advert [Accessed 4 March 2015]. Made.com, 2015. About.us. [Online] Available at: http://www.made.com/about-us [Accessed 4 March 2015]. Made.com, 2015. Our Showrooms. [Online] Available at: http://www.made.com/showroom. [Accessed 4 March 2015]. Made.com, 2015. Real Inspiration. [Online] Available at: http://www.made.com/customer-reviews. [Accessed 4 March 2015]. Noakes, V., 2014. Furniture e-tailer Made in UKs top tech companies. [Online] Available at: http://www.furniturenews.net/news/articles/2014/04/877095751-furniture-e-tailer-made-uks-top-tech-companies. [Accessed 4 March 2015]. Sheppard, S., 2013. Meet the man who’s got it Made.com. [Online] Available at: http://www.thedesignsheppard.com/interviews/meet-the-man-whos-got-it-made-com#sthash.UvBmIits.dpbs. [Accessed 4 March 2015]. Superbrands (UK) Ltd. Company, 2015. An Insight into some of Britains strongest brands. [Online] Available at: http://www.superbrands.uk.com/results. [Accessed 4 March 2015]. Read More