STEP 2: Market Review: External Analysis

Session 5

STEP 2: Market Review: External AnalysisRecap: What is Step 2? 2.1: Considering Trade Structure: Distribution Channels and Segmentation2.2: Researching and Analysing your current customer profile2.3: Reviewing ‘Styles’ of different markets/countries and their suitability for your products2.4: Researching and Identifying relevant Design Trends in the existing and potential Market to inform your product development/identify where opportunities exist2.5: Assessing Promotional Opportunities for your business2.6: Researching the current Business environment and growth opportunities in different EU countries to identify appropriate target markets/countries 2.7: Researching Market Access Requirements (Legislative/Non- legislative) in target markets to ensure that these can be met2.8: Assessing your competition to ensure that you have a competitive advantage, or at least a fair chance2.9: Identifying Your Opportunities and Threats from your External AnalysisThe ‘OT’ of SWOT

Identifying your opportunities and threats as part of the SWOT process

 At this point, you have completed the Internal Analysis (the SW) of the SWOT process, and so, in order to complete the SWOT analysis, the external analysis of the target market is required in order to identify the Opportunities and Threats that exist. This will enable you to make choices about which products you want to develop and sell, and to which markets (PMC’S –PRODUCT/MARKET Combinations) This can be done by becoming more informed about your existing and potential market(s)

EU Market and Industry Trends for HD & HT

Market structureUnderstanding Europe and the EUTrade watch facts & figuresCurrent economic situationInfluencer on consumptionDistributionSegmentationPrice pointsRegional differencesInfo Sources

EU Market and Industry Trends for HD & HT

UNDERSTANDING EUROPE AND THE EU

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The official MOTTO of the European Union

United in diversity 

The motto means that, via the EU, Europeans are united in working together for peace and prosperity, and that the many different cultures, traditions and languages in Europe are a positive asset for the continent.

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How many countries are united in the European Union?

9

28Let’s name them…

Which of the following countries joint the EU in 2013?

a) Croatia

b) Switzerland

c) Turkey

d) Iceland

:

Croatia

Croatia became the EU's 28th

Member State on 1 July 2013.

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Switzerland

How many official languages are there in the EU?

a) 2

b) 23

c) 15

Answer:

• The EU has 23 official languages.

• Moreover, the EU has more than 60 indigenous regional minority language communities.

(b)

How many countries currently use the Euro as their currency?

The correct answer is 17 countries

Which countries are the main importers of Home Decoration and Home Textiles in the EU ?

17

Germany

France

UK

The Netherlands

Belgium

Spain

EU Market and Industry Trends for HD & HT

TRADEWATCHFACTS & FIGURESCurrent economic situationConclusion for actionHDHT consumption – import

http://www.cbi.eu/system/files/marketintel_platforms/CBI%20Tradewatch%20Home%20Decoration.pdf

The EU is the world’s biggest single trading block

Total EU imports valued € 1,550 billion and represented 20% of

total world merchandise trade.

EU is also leading exporter. 45% of world merchandise exports

TRADEWATCHEU trade facts & figures

The EU as trade partner for developing countries

2014 Current Economic Situation

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In times of economic adversity, the EU market for HD comes under pressure. Consumers are more cautious about spending money on products for the home and this has an effect on trade, with both consumption and imports of HD showing signs of decline

As soon as economic conditions improve, consumption is expected to pick up again. Economic indicators are currently forecasting modest improvements after 2013. Caution is advised as consumer confidence is still low and fragile and there are variations between countries

which products ?home decoration & home textiles

variety of products(from cupboard to sun bed from statue to teapot to lamp)variety of uses (utilitarian/decorative, home/fashion/gift)variety of materials (wood, bamboo, natural fibres, textiles, metal, ceramics, paper, lacquer, leather, etc.)

Home Decoration and Home Textiles variety of products

accessories art bags & purses bath & beauty crochet

books candles ceramics & pottery sund bed furniture

Glass outdoor housewares bamboo sofa

Instruments needlework paper goods toys woodcarving

variety of uses & materials

fashion useful

decoration

home

gift

Product tree

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Product Groups

The product groups in the Gifts and Decorative Articles Sector are categorized as follows: (CBI The Netherlands): plastic, wicker, candle, ceramics, glass, wood, paper, metal and artificial flowers

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Sub –sector Product groups Product examples

1) Ceramics & Porcelain

a. Statuettes Statuettes, ornaments, animal figurines

b. Pots and Vases Flower pots, bowls, pottery

c. Tableware and kitchenware

Plates, cups etc

2) Wickerwork a. Wickerwork Baskets

3) Candles a. Candles Candles, tapers, perfumed candles

4) Wood ware a. Wooden Decorations Frames for paintings, photographs, mirrors statuettes, ornaments, jewellery boxes

Market size Home Decoration and Home Textiles

The EU is one of the most lucrative markets of gifts and decorative articles in the world. In fact, the EU ranks among the top consumers of this product category in the global market.

However, with the labour cost is increasing, more EU countries have to rely on imports, opening the opportunities for Asian countries

market of home décor products is declining

Germans account for 16% of the spending on average UK 24%

total EU-27 consumption of home decorations and accessories amounted to € 13 billion

Consumption of HD in the EU/EFTA

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Consumption in the EU

29

consumption of home

decorations and accessories per household in €?

€ 65,00

The economic crises caused a dip in HD imports in 2012, but is expected to recover in line with market developments.

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IMPORTS

EU/EFTA Imports of HD

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EU/EFTA Imports of HD

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Population

499 Million EU

160 million households

house construction 1.7 million/year

immigration is an important sourcefor population growth

291 Million US127 Japan

EU Market and Industry Trends for HD & HT

Distribution Various intermediaries Niche markets Segments Positioning Price levels

The EU market for HD is fairly stable in its distribution structure, with wholesale importers and, increasingly, self-importing retailers as the main channels between exporters and the market.

Real change can be seen in the increasing segmentation, especially in the upper middle and higher markets, as well as in the market for sustainable products and in the emergence of on-line retail.Find out how these developments offer opportunities for you as a DC exporter.

DISTRIBUTION

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Trade Structure for HDHT

Retailers

Variety retailers• the variety stores are one of the most important formats for the sales of gifts and decorative articles and make up around 45 percent of the turnover.• variety stores need to redefine themselves.

The different types of intermediaries

Furniture & Home Interior retailers

This group includes a large variety of formats (all selling interior decoration products) like specialists, large furniture outlets, etc., each aiming at a specific area or consumer group.

The large furniture outlets are generally large stores, with different types of products under one roof. A notable development in the European furniture landscape Ikea.

Garden centres

Department stores

Mail-order houses

Grocery multiples Supermarkets and hypermarkets

Wholesaler

On-line stores

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Fair Trade

: e.g. www.etsy.com,

On-Line Selling:B2C

On-Line Selling:B2C

On line PlatformsExamples:

www.achica.com

www.notonthehighstreet.com

www.boticca.com

www.5rooms.co.za

www.superbalist.co.za

Plus ..plus…

On-Line Selling:B2B

Street markets

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NICHE MARKETS – CONCEPT STORES.......

2.3 Review of Styles

 Reviewing ‘Styles’ of different markets/countries and their suitability for your products

Your internal analysis looked at reviewing and defining your own product style. As mentioned Styles can generally be defined by considering distinctive common aspects that appear in all your products.

In very general terms, different European countries have different ‘styles.’ This is a ‘generalisation’ as obviously within each country, many different individuals or groups of people relate and choose many different styles (of products).

However it is true to say, that the kinds of styles which are most prevalent in a country can be broadly identified. Understanding these styles, even in very broad terms can help you select which countries (markets) might connect well with your products, and therefore provide an option as a target market.

Styles and Tastes in Different Markets

GermanyGermany

Contemporary/simple/Controlled/measured

Contemporary/simple/Controlled/measured

http://www.butlers.de/Konzept/Konzept,default,pg.html http://www.butlers.de/Konzept/Konzept,default,pg.html

GermanyGermany

‘Country’‘Country’

SwitzerlandSwitzerland

Clean, uncomplicated, simple,Considered, controlled

Clean, uncomplicated, simple,Considered, controlled

deVOL, UK – beautiful , simple wooden, kitchen accessories

East of India – ‘do-it-yourself’ packaging with a very natural look

The UKThe UK

NATURAL, Retro, RUSTIC

NATURAL, Retro, RUSTIC

Pinch of Salt Home UK – exclusive prints & designs with a vintage feel for fashion & home textiles in silk & cotton

The UKThe UK

FEMININEFEMININE

FranceFrance

Sophisticated, vintage, nostalgic & contemporary, eclectic

Sophisticated, vintage, nostalgic & contemporary, eclectic

Market Segmentation

Segmentation (subsets with similar needs)Targeting (which segment to aim for)Positioning (the product in the mind of the buyer)

Market segmentation is the technique used to enable a business to better

target it products at the right customersidentifying the specific needs and wants of customer groups then using those insights into providing products and services which meet customer needs.

Segments are usually measured in terms of sales value or volume. Often defined as low – middle -high

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Market Aggregation

61

The market

Segmentation

62

S-1

S-2 S-3

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64

Retailer/design-boutiques

Retailer/design-boutiques

WHICH segment ?

High, middle and Low

Luxury Market$$$$

Mainstream Market$$$

Mass Market$

Segmentation on price/value; design

Positioning and Market mapping

Once an entrepreneur has identified an appropriate segment of the market to target, the challenge is to position the product so that it meets the needs and wants of the target customers.

One way to do this is to use a “market map”

The market map illustrates the range of “positions” that a product can take in a market based on two dimensions that are important to customers.

Examples of those dimensions might be:•High price v low price•Basic quality v High quality•Low volume v high volume•Necessity v luxury•Light v heavy•Simple v complex•Lo-tech v high-tech•Young v Old

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Plot the following organization onto a positioning map..

• Ikea • Harrods• Habitat• Carrefour• Gallery Lafayette

• OBI• OTTO• Armani Casa•ZARA Home

Mapping

OBIOBI

ArmaniArmani

ZARAZARA

IkeaIkea

VOLUME BUSINESS – LOW PRICE

STANDARD PROUDCT – WITHOUT FASHION FOCUS

HIGH PRICE LUXURY SEGMENT

FASHIONABLE CHANGES EVERY SEASON

Source: Euromonitor and other specific sources

motherhousemotherhouse

2.2: Researching and Analysing your current customer profileAs part of the review process, it is important to understand who your existing customers are, where they fit within the trade structure, in which segment of the market they are positioned, their purchasing cycles and preferred methods of sourcing, their product and marketing plans and potential areas of growth, their values, the profile of their end consumers etc. This will enable you to build a profile of your existing market and to build on your existing successes by continuing to satisfy this market. It will also inform you on how to expand this market by finding ‘like-minded’/similar customers.

Customer profile

Who are the target customers?

Why will they want to buy?

What will the target

customers want to buy?

How will customers

want to buy?

When will they want

to buy?

Where will they want

to buy?

Where do they live? How old are they? Are they men, women,

children? What is their occupation? Income? Status? Level of education?

Religion? Special interests?

What benefits these customers

will get by buying my product?

What products with what features will meet their expectations?

How will they want it packaged? What quantities will they want?

Will customers buy this product when they buy other related products? How

important is the place of purchase? Will they go to buy it alone or with someone

else? Is delivery important?

How frequently will they purchase? Is this a regular or special purchase? Are there certain times or days of the week or the

year when products will be more demand (e.g. special foods may be in greater

demand during New Years)

What stores, locations, or outlets will make it easiest for customers to find and buy your products? Where

would they expect to find them?

Knowledge about target customers is the basis for providing them the products that will satisfy them, make them loyal, repeat buyers, and provide profits to the business.

Courtesy Reinhardt Werner

Analyse your customersThe right information will let you build up a useful profile of your customers. This typically includes.

• Who they are

• What they think and believe, what interests them and their opinion of you and your product

• Their purchasing behaviour – which products they buy, where they buy them, when, and how they pay

Which other questions ?????

AddressCountryTrade channel - BusinessProductsBest sellersSegmentend-consumer• age, gender, income, style, motives, occupation.....purchase behaviourWhere they buyHow they sourceBuying cycleLead timeSamplingTerms of paymentPackaging, labelling.........

D & M Depot nv./saIndustrieweg 23IZ. West Z62630 AartselaarBelgiumMr. Steve VercammenManaging Director0032-3-.....Email:http://www.dmdepot.be/

Started in 1992 as a ceramic and glass wholesale business. Export went full speed and the number of clients grew steadily. The success is the result of a unique collection, pure and linear, which radiates their own creative vision regarding trends and decoration. The showroom is now 600sqm, the warehouse 4000sqm and the office 400sqm. Contribution to the creation of contemporary collections.

- Importer, wholesaler, distributor – exhibiting at M&O, Deco Brussels, Ambiente and Macef appr. 600 retail clients mainly furniture stores, department stores, flower boutiques, design stores

- ceramics, glassware, vases, bots, planters- Segment: high- Style: contemporary- product development: own design department- endconsumer: urban, high income, 30-50y, f/m, design led, trendy,cool- purchase: directly from manufacturer, mainly Asia and East Europe- sourcing: visits several fairs in Asia and Europe, Internet, visits suppliers- buying criteria: design conciousness, CSR, eco friendly, knowledge of EU regulations- Buying cycle: 2x per year for shipment/inhouse: March and Sept., sampling 12 months in advance. Lead

time 60 days. Production and pre-production samples.- Labelling: own brand- Exlcusivity: on products in Europe- Turn-over: 20 mio €, payment: L/C 30 days,

                

   

                              

La Compagnie du commerce equitable, 102 rue Amelot, 75011 ParisFranceweb:email:phone:

A company very much involved in fair trade. They develop their own stylish products of decorative articles, ceramics, jeweller and textiles in close cooperation with smaller producers all over the world - project wise. They are distributor and exhibitors on international shows.

- Importer, wholesaler, distributor – exhibiting at M&O, - 600 retail clients mainly fair trade shops, charity organisation, boutiques, furniture stores- home textiles, home accessories, ceramics, kids stuff, fashion accessories, recycled products, stone,

decorative items- Segment: middle-high- Style: modern, design- product development: own design department and sourced- endconsumer: slighty influenced by ternd, ethically conscious, fair income, 25-50y, f/m, - purchase: directly from manufacturer, mainly Asia, Africa, South America- sourcing: visits several fairs in Asia and Europe, visits suppliers- buying criteria: fair trade, CSR, eco friendly, close relation to suppliers (projects)- Buying cycle: 2x per year for shipment/inhouse: March and Sept., sampling 6 months in advance. Lead time

60 days. Production samples.- Labelling: own - Exlcusivity: on products in France- Turn-over: ?, payment: 50% down payment, balance before shipment

                

   

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Assignment: As part of the Market Review process using the workshop material, and your own knowledge and research, summarise and try to profile your existing customers. It may also help to visualize your customers/their shops/websites etc. You could create a visual summary/moodboard of each of your existing customers. Try to also contact your customers with a simple questionnaire to confirm their buying cycle (when they usually sample products, and when they usually place orders), their potential product growth areas and their end user customer profile • What type of organisations are your customers? (Importers-wholesalers/importers-retailers/retail chains etc) • What market segment are your current customers? (low, mid, high-mid, high) • What type of market do your customers sell to? What is the profile of their end consumers?

•Which countries most suit your own product style?

INFO SOURCES

79

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CBI database•Selection for target group

37 sectors•Analysis of information

CBI expertise included•English & Spanish language

accessible information•Free of charge

for target group•Helpdesk service

marketaccess@cbi.eu

A wealth if information, up-to-date information on more than 37 sectors in European Union

market access requirements,

market size, consumer trends, trade structure, packaging, pricing, terms of trade and export guidelines

WWW.CBI.EU

CBI Database content it contains more than 3.000 documents

market studies,export manuals,design guides,fashion forecasts and5.000 selected hyperlinks to additional information sources.

What did we learn