Running head: ASHLEY FURNITURE AND BASSETT FURNITURE1

The Furniture Industry Promotional and Advertising Strategies:

Ashley Furniture and Bassett Furniture
Erica MosleyFerebee
Strayer University

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The Furniture Industry Promotional and Advertising Strategies:
Ashley Furniture and Bassett Furniture
The furniture industry is classified in two ways, by the North American Industry
Classification System. The furniture and home furnishings stores subsector of retail
trade and the furniture (United States Department of Labor, 2014a) and related product
manufacturing of the manufacturing sector (United States Department of Labor, 2014b).
The furniture industry generates over 2 billion dollars of profit a year (Coughlin, 2013).
The industry has revealed that it is economically elastic. The culprit that has the
biggest effect is the housing industry. When the housing market crisis occurred it
affected the furniture industry drastically (Freeroamin, 2014). During the first decade of
the 21st century the industry saw a lot of manufacturers and retails declare bankruptcy.
(Anderson Bauman Tourtellot Vos (ABTV), 2013).
Business intelligent analyses have accused the industry of becoming
complacent. Organizations that have been able to deal with changing consumer taste,
new technology, and a hyper competitive market have been able to whether the tough
economic conditions (Anderson Bauman Tourtellot Vos (ABTV), 2013). They have
prevailed in developing marketing concepts (Boone & Kurtz, 2013) and strategies that
are evolved around the consumer (Anderson Bauman Tourtellot Vos (ABTV), 2013).
In, Houston, TX there is a private owned furniture retailer, Gallery Furniture,
which post profits of approximately 100 million dollars, has no account receivables,
does not pay employee commissions based on sales, utilize process improvement
strategies, provides same day guaranteed delivery, free furniture setup and disposal as
a form of service differentiation (Casinger, 2008). This company has made it a priority

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to establish and maintain a strong relationship with their customers. Boone & Kurtz
(2013) describe this as relationship marketing, by going beyond the norm to maintain a
relationship with all individuals in the process.
According to Boone & Kurtz (2013) competition among firms centers on the effort
to satisfy customers. A few issues with this industry is: the supply chain, disposal
income available to consumers, heavy competition, strong unmet consumer needs, and
lack of decent marketing/branding.
Promotional Strategies of Ashley Furniture and Bassett Furniture
Ashley Furniture and Bassett Furniture are two companies that reign supreme in
the industry. These two companies, have begun to establish their own network of retail
stores. The two companies have combined financing, manufacturing and retailing. All
promotional strategies that are uniquely combined as promotional strategies.
Ashley Furniture utilizes their stores to provide a more direct link to the
customers. Removing the middle man assist them in being able to control pricing,
quality, and supply logistics. The supply chain in the furniture industry has become
unreliable over the past few decades (Yu, Shen, & Lewark, 2011). Many companies
that moved the manufacturing of their product to the Asian realm of the world have
begun to see their returns diminish (Baodong, 2012).
Emerging problems with manufacturing in China and other Far East countries
include but are not limited to:

drastic increases in shipping rates (Eksioglu, Eksioglu , Jilie, & Jin, 2010),

rising cost of labor (Baodong, 2012),

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and Asian currency has appreciated and has cut into profits (Anderson Bauman
Tourtellot Vos (ABTV), 2013).

The Chinese government has begun to past legislation to increase the standard of living
for its middle class. In, May of 2103 one of the first steps towards this was that the
Chinese government increased the minimum wage by 19% (Russell, 2013a). In
Malaysia a new law will force the wages to increase by 65%. This resulting in
companies raising prices (Russell, 2013b). The Boston Consulting Group recently
reported that U.S. firms that are outsourcing overseas will soon see a tipping point in
offshore manufacturing by around 2015. Manufacturing for North American consumers
in places like Mexico would be more beneficial financially for merchants (Anderson
Bauman Tourtellot Vos (ABTV), 2013). The logistics challenges are better illustrated
with an analysis of the various supply chains that are utilized by furniture manufacturers.
In general, there are four supply chain models the furniture industry uses: the direct
sales model, agent outsourcing model, direct investment model, and the manufacturer
outsourcing model (Eksioglu, Eksioglu , Jilie, & Jin, 2010).
The direct sales model, establishes a relationship with a manufacturer that limits
the manufacturers ability to service other clients. The direct investment model is a
factory that is owned by the furniture company and set up in the host country. The
manufacturer outsourcing model utilizes more experienced agents that combine
shipments and deal directly with the manufactures (Eksioglu, Eksioglu , Jilie, & Jin,
2010). The agent outsourcing model, is utilized by smaller organizations that cannot
afford a direct contact with a manufacturer.

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The agent outsourcing modal is not the most desirable because the savings of
lower cost furniture is lost in the shipping. This method a lot of smaller business orders
are put together and this normally requires the order to be placed at a minimum 4 to 6
months in advance (Baodong, 2012). The issues that have arisen are: unreliable
delivery times, the container loading and unloading requires special equipment and
unloading can add additional cost, and finally attempting to predicting demand so far in
advance can cause merchandise to be out-of-date (Eksioglu, Eksioglu , Jilie, & Jin,
2010).
Customization although necessary to keep up with consumer demands, this
could further delay the ability to provide the product to the end user in a timely fashion
(Barnes Report, 2014). Ashely Furniture and Bassett Furniture have begun to promote
semi-customized products that are made in the United States. They are utilizing a
social promotion strategy (Barnes Report, 2014) due to the major unemployment and
the Asian manufacturer issues that currently are hurting the consumers in the United
States. Due to the major availability issues has been delivery and all of the logistical
issues previously mention.
Grossman and Helpman (2002) developed a model to exhibit the trade-off
between in-house production and outsourcing. It was surmised that in-house
production represents a more standard form of production with higher input costs for
components, but outsourced production must overcome search frictions and contractual
imperfections (Grossman & Helpman, 2002). Quality has become a major issue within
this industry. The industry news leader, Furniture Today, highlighted how a government
customer bases their decisions on buying furniture by observing damage reports of the

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end user (Koenig, 2003). The quality issues have grown to the point that several high
end furniture companies have decided to keep manufacturing in the United States
(Anderson Bauman Tourtellot Vos (ABTV), 2013).
In house financing and offers such as having a set cost lower than individual
pieces is another way that these two companies have been able to maintain their
standing in the industry. The main marketing channels that they continue to employ are
catalogs sales, direct mail and TV ads. Tradeshows, such as the High Point Furniture
Market, also continue to be important in creating a presence with buyers. Analysis
stress that these are ineffective tools for marketing and brand building (Anderson
Bauman Tourtellot Vos (ABTV), 2013).
Two Ways A Company in the Furniture Industry Can Gain Advantage
Through differentiating marketing strategies and branding is one suggestion for the two
companies to gain advantage. In a 2002 survey conducted by my office at the
University of North Carolina at Greensboro, only 5% of furniture retailers considered the
manufacturers name to be more important than the retailers name (Brod, 2004). For
the most part in furniture, the retailer is the brand (Anderson Bauman Tourtellot Vos
(ABTV), 2013). Building manufacture brands has not been a priority in the furniture
industry, however a few companies such as Lazy Boy (Bassett Furniture) and Ashley
Furniture have been successful in doing so. Logistical expertise, the use of information
technology and efforts to become more ecofriendly are becoming the new keys to
differentiation (Anderson Bauman Tourtellot Vos (ABTV), 2013).
Product awareness, in more unconventional places would be better for these
companies. Social media is a large marketing tool. Building games (such as

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PlayStation home and Zanga), Facebook conversations/promotions, made in America
campaigns, having the label or a label available on commercial furniture, sponsoring
makeovers (such as the ones that G.E. sponsors), providing free furniture to shelters,
and partnering with home builders (Labuschagne, van Zyl , van der Merwe, & Kruger,
2012). Another differentiate idea would be to begin to invest in incorporating an ecofriendly furniture line, plating trees and recycle programs to their social portfolio
(Wulandari, 2012).
There is also a retailer that Furniture Today highlighted, in the Houston, TX
region (One retailer's success story, 2003). They are called Gallery Furniture and they
are a small business that makes about $100 million, he credits his success in providing
a service that no one else can give and that is same day delivery (Casinger, 2008). Setup times and delivery are one of the major complaints of consumers. A study was
conducted about the furniture industry by Tomasz Gawronski (2012) which concluded
that a better scheduling policy would allow setup time in the made-to-order furniture
industry to be reduced, which would indirectly improve customer satisfaction.
It is recommended by business reports that furniture executives should study the
fashion industry. The need for companies to create a perception in the consumers
mind of what the label stands for, is missing from the industry. They would learn that
branding is why women will pay $500 for a simple black dress when they can get a
similar garment for $100 or less (Anderson Bauman Tourtellot Vos (ABTV), 2013).
Bassett Furniture heavily incorporate the ability to customize furniture however Ashley
does not.
Two Consumer-Oriented Promotions for the Short and Long Run

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Building a brand in the short and long run would not be an expensive task in the
furniture industry. The furniture industry is capital and labor intensive, so any change
could result in excessive expenses. Investing in accessory lines and utilizing
automation is not a tool that is used by the industry as much; however analyst seem to
think that it is something that could really set a company apart (Anderson Bauman
Tourtellot Vos (ABTV), 2013). Automation would offer opportunities for manufacturers to
increase efficiency with things such as just-in-time inventory (logistics), maintaining
information concerning clients and quality issues, customized shopping experience and
possibly providing better credit opportunities for their clients.
According to Mechiko Penny, a merchandise manager at Walter E. Smithe
Furniture Company, a room without accessories and a rug is, after all, just a room full
of furniture. The accessories are the jewelry that enhance and personalizes the room.
Over the past few years, several top 100 furniture stores have experienced double digit
growth with making accessories for purchase available to the consumer (Dickenson,
2013).
The sale of accessories, include pillows, lamps, vases, towels, table top
accessories, rugs, kitchenware, bed sheets/spread sets, paintings, florals, trees,
lighting, wall dcor, hangers and chandeliers. Stores like Ikea have become successful
and eaten into the market share of the United States furniture industry by adding these
elements to their stores (Soshkin, 2013). The best part about Ikea is that they also
have a caf and you can purchase the ingredients if you like.
Automation, customer rewards, adding a variety of accessories are all long term
structures that could lead to success. A short term fix that could boost sales, would be

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to provide in house financing, create bundle packages (that includes accessories), user
friendly websites and begin to invest in social media/advertising (Coughlin, 2013). In
house financing can case a lot of issues however a lot of consumers are not keen to the
high interest rates that are sometimes demanded by credit companies.
Providing terms such as 12 months no interest and financing such as this would
increase sales. Currently these companies use outsourced credit companies however,
the 12 or 24 months no interest rates is not something that has developed (Coughlin,
2013). Stores like Rooms-To-Go, which is a local chain is one successful store that
advertising heavily and also provides no interest over two to three year periods (French,
2013).

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References
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Baodong, C. Y. (2012). Analysis on the Dynamic Relationship between the Research and
Development Capacity, Net Exports, and Profits of China's Furniture Industry. Forest
Products Journal, 62(7), 590-596.
Barnes Report. (2014). Worldwide Household & Institutional Furniture Mfg (NAICS 33712).
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Casinger, L. (2008, October 1). Thinking big in Houston: Gallery Furniture. Furinture Today.
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Today, 28(12), pp. 36-41.
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Impact of Outsourcing on Furniture Supply Chain Performance. Forest Products Journal,
60(3), 258-265.

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Freeroamin. (2014). Effective Marketing Strategies for a Furniture Business. Retrieved from
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United States Department of Labor. (2014a, March 11). Furniture and Home Furnishings Stores:
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