Manchester Products: a Brand Transition Challenge

1. How would you characterize the household furniture industry?

The household furniture industry is growing market that still has a lot of potential for Manchester. In 2004, this industry grew 4% from the past year and was a $36.64 billion business. Much like office furniture, household furniture sales are closely dependent on the condition of the economy. The burst of the dot.com bubble in 200 and the recession of 2001 caused both industries to decline. However, household furniture took much less time to recover. In just one year it rose from -3.7% growth in 2001 to 7.1% growth in 2002. After the early 2000s housing boom, “furniture manufactures relied on innovated and stylish product introductions to fuel growth (Quelch, p. 4). The household furniture industry was also very competitive amongst the established manufacturers. Imports from low cost labor areas where forcing down prices, and in combination with domestic powerhouse brands, Manchester Products was in for a test. The market is also segmented by both price and quality. In customer surveys the most important aspect of household furniture was style, design, quality and comfort, not necessarily the brand. This is good news for Manchester because if they are able to produce comfortable, stylish, and quality furniture they will be able to survive despite not being a huge player.

2. What are the benefits and risks associated with the acquisition of PLFD?

There are several benefits associated with the acquisition of PLFD. To start, PLFD already has strong brand equity and is a major player in household furniture. Based on Exhibit 3, 80% of consumers are aware of the brand and 45% own a product. PLFD “was a premiere name in high-end, fashionable consumer goods, and was considered a true lifestyle brand” (Quelch, p.1). As a new arrival to the household furniture, this is exactly what Manchester Products needs to help increase their brand awareness.

On the other hand, there are also risks associated...