Marketing Analysis of GOD Essay
Marketing Analysis of GOD
GOD is now a fast-growing furniture and furnishings company brand in Hong Kong. They describe them as “More Than Just a Furniture Store”. GOD is the phonetic sound of the Cantonese slang “to live better” which a basic human desire all around the world. The founder of GOD – Douglas Young and Benjamin Lau opened the first GOD store at Ap Lei Chau in 1996. Within 2 years, two more shops opened in Central and Tsim Sha Tsui respectively. In 2001, GOD has opened a 20,000 sq.ft. flagship store in Causeway Bay.
The mission of GOD has always been “to define a new Hong Kong identity” – by exploring age-old oriental traditions and updating them with modern consumers in mind, their demonstrations of the techniques and wisdom of past generations in the east still has a place in the future world.
Most of the furniture of GOD is made in China to their stringent standards of quality and workmanship. Their products range from furniture, bathware, kitchenware to even lighting and carpets. Among these various products, furniture occupies the highest proportion of sales revenues.
What makes GOD different from other convectional furniture and furnishing company is that all of their furniture is designed by local designers. The company is strongly against today’s mass produced and soulless products. The main theme of their furniture is creative, comfortable, and multifunctional. In order to surprise their customers, GOD constantly turns out new items on a weekly basis. Because the marketing strategy in GOD is so clear that make the company become one of the few furniture companies that can still make a profit, and even expand their business, in the time of economy downturn in HK these years.
Situation Analysis: 1. SWOT Analysis:
Internally, GOD has a management team with designing knowledge which could perfectly apply to the daily management in the company. Small size of management team also benefits the company with the efficient division of labor. Despite the fact of having numerous competitors with lower price, G.O.D. is still taking the leading role in the industry with its unique offerings of the oriental tradition Asian design in products, as well as the extraordinary decoration in each branch . G.OD is expanding its market share by connecting to other different industries, so as to attract more customers from different aspects. The diversification of production and also the “custom made” strategy contribute to the company as it prevent excess inventory. Moreover, its own R&D team takes a big responsibility in fulfilling the demand of the customers in having a better quality.
Other than all those favorable circumstances, G.OD is still encountering certain weaknesses. Due to the short history of establishment, G.O.D. is lack of experience and specialization. Its relatively high price and narrow choice of products has also prevented the visit and purchase of customers. Also, due to the limited capital inflow in the company, GOD is still not able to develop a large R&D team; it also regards advertisement as a big burden for the company. Regardless of the success of the manufacturing approach, it, on the other hand, has lead to the high cost of production as it could not achieve the economy of scale.
Favorable external factors include the increasing upscale market which people are more concerned about quality of life, there are only few and not well-established local competitors, and as the economic is recovering, there are more opportunities. Ergonomics is one of the most popular topics in furniture industry because the customer’s perceived value can be raised by introducing it.
Unfavorable external factors include the taste of customers which people like international culture more, like Japan. In addition, the favorable investment condition attracts competitor from foreign countries.
2. Industry analysis:
The furniture and furnishing industry has a long history in Hong Kong. It includes the production of household, office and furniture, as well as bedding and parts of furniture. There are 249 furniture manufacturers in Hong Kong, employing more than 704 people as at Sep 2002. Around 90% of them are small companies engaging less than 10 people .
Although it is not the major industry in the local market, the competition is very keen. In terms of market segmentation, the current furniture industry in Hong Kong is generally divided into three main categories: high-end, middle-end and lower-end market.
However, in the past, the craft-based, labor-intensive furniture industry was one of the oldest industries in Hong Kong. It was developed to meet local demands. At that time, the furniture industry was dominated by a large number of small firms and could be divided into three major sectors, namely, wooden furniture, rattan furniture and metal furniture .
After the economic crisis in 1998, many small companies went bankrupt and customers’ incentive on buying furniture was lower. To maintain their competitive power, many large companies strive to reduce their costs and increase their efficiency. Some relocate their manufacturing operations to other areas with lower operation costs like Mainland China. Foreign manufacturers are taking steps to strengthen their domestic production through production specialization. Hong Kong’s furniture makers also start to establish their own brands and some concept stores in order to develop their unique product lines to differentiate their firms from the others. Companies like GOD and Franc Franc are the most apparent examples which produce products with Hong Kong local characteristics and Japanese culture respectively.
Recently, due to the economic recovery and the change of customer trend, people are going to be responsive to the new trends and design of furniture. Thus, the industry is going to produce products to cater the needs of Hong Kong people. Also, many furniture manufacturers become more careful about the choice of raw materials to meet international standards, such as compliance with legal or other environmental requirements in their target markets.
Because of the limited living space in Hong Kong, the industry produces the furniture which is highly practical and multi- functional. Moreover, most of them embrace innovative designs and combinations of furnishings which allow them to save home spaces and provide a sense of style and modernism.
To cater the growing trend and design of furniture which correspond to their taste and lifestyle, the industry produces DIY furniture which can let consumers to make their ‘unique’ furniture with their own styles. Moreover, most of them are made of the environmental friendly materials for production.
3. Competitor Analysis:
Competitors in relevant market:
There are three main competitors of GOD in Hong Kong, accordingly Franc Franc, IKEA and PRICERITE. Their target market segments do not necessarily the same but do have some overlapping as they both target on the market segments of middle-income level families. Further, the mission of their competitors also stress on developing a new concept of life style to Hong Kong people.
Franc Franc’s company would invest over 30 million dollars in Hong Kong and expect there will be 36 million HK dollars gross profit in the first year. There will also be 2 or 3 new branches opened in the next few years. They will be mainly located in some big shopping malls.
IKEA have 4 branches in Hong Kong mainly located near big housing town. IKEA is the most well known furniture company in Hong Kong due to the massive advertising programs. The concepts of their design are simple, multi-functional and sustainable. They also have a successful and well-developed customer service system which helps them to develop the loyalty of their customers.
PRICERITE’s target group mainly focuses on lower income families. They provide a relatively low price to their customers, thus helping them to develop a low cost, comfortable and multifunctional living environment. They have over 45 branches in Hong Kong so as consumers can easily find a PRICERITE nearby.
1. GOD—Uniqueness of local culture
In these years, many industries especially those expose frequently to young people like filmdom and musical industry, advocate local original design and innovation. This atmosphere makes young people create a good feeling to Hong Kong local products. Today, GOD is the unique furniture store with strong “Hong Kong” concept. What Hong Kong concept here means is Hong Kong’s own culture and social atmosphere. GOD is a local brand and all of their exclusive designers are local. GOD claims their products have “soul” because their products can turn out local people’s opinion and attitude to lives. It can attract a group of Hong Kong new generation who like to show off their characters and tastes by their home furniture .
2. Franc Franc—Adhere to Japanese-styled goods
The trend in Japan always is a benchmark for the young people in Hong Kong. It is because the young people in Hong Kong think Japanese always stand on the tips of the trend. Thus, most of them are adherent to Japanese-styled goods. Many Japanese brands like Fancl and Sanrio have successfully developed their business in Hong Kong. Their successes are also based on this reason. Franc Franc is the sole furniture concept store with Japanese style in Hong Kong. This make it exclusively enjoys the adherent from Hong Kong young people in this market .
3. IKEA—Cost Leadership
To provide goods with high quality at relatively low prices, IKEA drives tough bargains with its suppliers in order to employ lowest cost suppliers of raw and semi-finished goods from all over the world. IKEA Also, their products developers seek out manufacturers who can produce in the most cost-effective way and designers always work with solutions that result in a low price. This cost-focused supply chain model results in getting the goods with cheapest price and good quality.