Because National Furniture is vertically integrated, it has competitors at several different levels.

On the manufacturing and wholesale level, there is no significant competition to National Furniture in the tri-state area.  One company, Modern Furnishings, Inc. produces low-end furniture such as futons, student desks and bookshelves, and single and double bed-frames.  Modern Furnishings’ market however, is much more limited -- they cater to students and young working singles.  Nevertheless, National Furniture does, to some extent, compete with Modern Furnishings for display space at local wholesalers.  To that extent, National Furniture keeps apprised of Modern Furnishings' wholesale network.

On a retail level, the company has two factory-direct stores primarily compete with two regional department store chains, SMITH's and JONES'.  These two stores are well known for their service and selection, primarily comprised of furniture made in other states, and a few imported items.  Their service and selection make them mandatory stops for most furniture consumers, and their advertising power sustains an image of reliability and convenience.  However, both of these stores also carry National Furniture products in their selection, so the company only really competes against the brand name furniture contained in the store.

National Furniture Chain, Inc., with three area locations, carries only national brands and specializes in furniture.  These stores have been in business for three years in the tri-state area, and have had difficulties persuading the public that they are convenient places to shop.  it’s salespeople are not as knowledgeable and courteous as the department store personnel, and, while they have a wide selection of furniture, it all tends to be very similar in design.  While the chain is a strong competitor in other regions of the nation, these stores have had trouble maintaining the standards of quality for which the other locations are noted.

Because of the minimal choice in shopping locations and the lack of a wide selection of products, a few high-end customers actually make long trips from the tri-state area to purchase furniture in the nearest large cities a few hundred miles away, where several furniture manufacturers are located.

The interior design division created by National Furniture has been competing with several local interior design consultants, out-of-area firms, and one boutique, Imma's Interiors.

None of the local design consultants have really made substantial impressions in the market.  These consultants do little advertising, obtaining their clients through friends and referrals and limiting themselves to small homes and offices.  

Imma s Interiors is a boutique with 3 consultants, all of whom have substantial background in interior decoration and design.  Imma's Interiors has captured a sizable percent of the market share.

Finally, many upper level homeowners and lots of larger businesses bring in design consultants from outside the area.  It is estimated that these consultants currently account for about half of all the area's gross sales in the design market.

National Furniture launched it’s interior design consulting division in response to these national consultants.  Usually, these consultants are unfamiliar with National Furniture products, and recommend that their clients purchase name-brand furniture.  The increasing predominance of consultants in this area has been one of the factors having a detrimental impact on the sales of National Furniture.

The company intends to launch an aggressive advertising and sales campaign to keep both the furniture and consulting business at home.  The synergistic effect from dual efforts on both fronts will assist in it’s tactics for responding to the competition.

The competitive response to National Furniture is likely to be weak.  The furniture chain stores will not want to respond to the ads, since they want to sell the company’s products also.  The national furniture stores do not have the money to respond, and their parent company will not be interested in allocating ad dollars for a response to a company where it’s stores are not competitive anyway.  Similarly, out-of-area design consulting firms will not want to allocate their advertising budgets to the tri-state area.  These firms typically minimize advertising in their own home market, and will not be prepared to respond.

The following table (Competitive Analysis) represents various competitors: