Because National Furniture will be 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 will, to some extent, compete with Modern Furnishings for display space at local wholesalers.  Therefore, National Furniture will keep apprised of Modern Furnishings' wholesale network.

On a retail level, the company’s two factory-direct stores will compete primarily 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 includes 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 these stores will also carry National Furniture products in their selection, so in reality, National Furniture will only compete against the brand name furniture contained in the store.

Three different stores owned by National Furniture Chain, Inc. carry only national brands and specialize 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 tends to be of very similar design.  While the chain is a strong competitor in other regions of the nation, these local 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 upper level customers actually travel a few hundred miles from the tri-state area to purchase furniture in the nearest large cities where several furniture wholesalers are located.

The interior design division that National Furniture will create will be 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 dents in the market.  These consultants do little advertising, finding their clients through friends and referrals, and they limit themselves to small homes and offices.  

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

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

National Furniture has decided to include it’s own interior design consulting division in response to these national consultants.  Obviously, these national consultants are not familiar with National Furniture and will recommend that their clients purchase name-brand furniture.  The increasing predominance of consultants in this area will be one of the major obstacles to National Furniture growth.

National Furniture intends to launch an aggressive advertising and sales campaign to keep both the furniture and the consulting business at home.  The synergistic effect from dual efforts on both fronts will assist National Furniture 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 company’s advertisements since they will want to sell National Furniture products also.  The national furniture stores do not have the money to respond, and their parent company will not be interested in allocating advertising 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 have minimal advertising in their own home market and will not be prepared to respond.

The following table (Competitive Analysis) represents National Furniture various competitors: