Marketing DFS Sofas in the Indian Market

Introduction

International marketing refers to the expansion of business and activities to other countries. This paper is a study of marketing DFS sofas in the Indian market. DFS is a leading designer and producer of sofas in the United Kingdom and Europe. The company has more than forty years experience in the sofa industry which provides an advanced solution in sofa designing and manufacturing. DFS has factories in different parts of the United Kingdom and Europe. And also it has more than 70 stores in Europe. The company provides its customers a facility to make purchase without even going to the store. The customer only needs to give the contact number, and the company will contact the customer and will do all the help. The company has a very good customer support system, which retains the existing customers and creates new customers. (Faq’s: You May Have a Few Questions. 2009).

Macro environmental factors of Indian Market

Demographic Conditions: The population growth of the country is fast which is favourable for the marketing companies to expand their business and ensuring long term growth opportunity. High level income groups possess western tastes with local flavour. There exists great potential for luxury products. Among the middle class families the spending on consumer goods is increasing. Brand awareness is very strong among the middle income groups. Hence the demand for branded products is increasing. Branded goods with consumerism are a significant aspect on the middle class society. Thus there exists potential opportunity for international retail expansion by DFS. (Top 10 Consumer Trends in India: Euro Monitor International. 2007).

Sociological conditions: Consumer behaviour in the market is highly influenced by the income level of the consumers. Shift towards smaller and single households is another feature of the Indian society. This makes changes in the family size. These have direct impact on the consumer behaviour in the market. The sale of household goods and durables will be positively affected from this change. This provides benefits to the sofa market also and thus DFS has opportunity for profitable market expansion.

Political conditions: India is a member of WTO and thus trade barriers are highly reduced. Instead, import tariffs are still high in the country. For attracting the foreign investors, in 2007, the government spent US$280 million in the infrastructure development operations and urban development projects which include modernizing the local airports, and modification of road transportation system to absorb an expected surge in road traffic. (Future Scenarios, India’s fast- growing property market: Euromonitor International. 2007). This will facilitate DSF entering in the market without much restriction.

Economic conditions: In the second tier cities, the consumer products companies have potential opportunity through incentives and support policies from government. Thus in the second tier cities there involves opportunity for DSF to start business units. The real GDP growth rate of the country for the year 2006 was 9.45 and it was the highest in the last 18 yeas. About six million of the country’s households are spending more than US$ 28 billion per year. India is the world’s 12th largest consumer market. (India: Income and Expenditure: Euromonitor International. 2008).

“Home furnishing sales in India grew a healthy 23% in 2006, to cross Rs.80 billion. Furniture sales saw the fastest growth up 26% in 2006, buoyed by the increasing retail presence of imported products.” (Headlines, Home Furnishings In India: Euromonitor International. Country sector Briefing. 2007). This should benefit DSF to acquire customer base and profitable growth in the home furnishing industry. Infrastructure facilities: The infrastructure facilities of the country need higher rate of investment. FDI and government are investing in infrastructure development in order to promote the employment opportunities and distribution promotion. (India: Income and Expenditure: Euromonitor International. 2008).

In the Indian home furniture market, about 85% of the total demands are met through the local carpenters. Furniture is the prominent sub-sector in the home furnishing industry. Better quality imported furniture products have higher acceptability among the Indian urban markets. The growth of imported products is supported by government through reduction in import duties on the products. India is the top furniture importer country. Domestic supply of furniture products are not standardised and thus there is always higher demand for standardised imported products. In the imported furniture market in India, there exist competitions. It is expected that furniture products market in the country would have greater potential for market expansion and growth. (India: Income and Expenditure: Euromonitor International. 2008).

Indian consumers are showing higher level brand awareness. Second tier cities are highly attractive to the foreign market firms due to the low labour costs and higher demand for consumer goods. It is estimated that consumer markets have huge potential due to the economic expansion and the emergence of the middle class urban consumers. Communication and transportation facilities are highly improved in the country and this will facilitate smooth functioning of the business. (The Rise of Second- Tier Cities in India: Euromonitor International. 2007).

The rapid growth of property market resulted from economic expansion leads to economic inflation in the field. As a result of the inflation, ordinary families are required to adopt loan system for the payment of their home purchases. This will negatively affect the consumer market. The disposable income available to the consumers will be reduced as a result of the increased interest rate on the borrowed fund. The home ownership rate is higher in India but a major percentage is located in rural area. (India: Country Profile. 2009).

Conclusion

The discussion on the macro-environment of the Indian sofa market reveals that there exists potential opportunity for DSF to profitably enter and ensure business growth. The demographic conditions in the environment characterised by increasing number of households are better supporting profitable growth of home furnishing industry. Consumer trends towards high quality and standardised home furnishing products and government support towards foreign investors provide advantages to the DSF to start its business operations in the country. DSF can target its operations in the second tier market of the county as there involves grater potential for home furnishing market. The growing population in the middle class society located in second tier market would help DSF to get profitable market entry and expansion.

Bibliography

Faq’s: You May Have a Few Questions. (2009). [online]. DFS. Web.

Future Scenarios, India’s Fast- Growing Property Market: Euromonitor International. (2007). (Provided by customer).

Headlines, Home Furnishings In India: Euromonitor International. Country sector Briefing. (2007). (Provided by the customer).

India: Country Profile. (2009). (Provided by customer).

India: Income and Expenditure: Euromonitor International. (2008). (Provided by customer).

The Rise of Second- Tier Cities in India: Euromonitor International. (2007). (Provided by customer).

Top 10 Consumer Trends in India: Euro Monitor International. (2007). (Provided by customer).