To: Joan Smithfield, CEO, Smithfield Custom Furniture
From: Gregory Brownell, Senior Strategy Analyst
Date: 01 April 2022
Subject: Analysis of New Product Line
e e e Smithfield Custom furniture is looking to extend its product line. e
There are some concern of what path to take with this new product line. e
This memo addresses some of the concerns related to this decision and
offers a recommendation of the best route to take.
A. Porter’s Competitive Advantage Model describes how a company can
use competitive strategy to be successful. According to Porter, there
are five ways to ensure success. The model shows overall
differentiation, overall low cost, focused differentiation, and focused
low cost as four different competitive strategies. Finally there is an
integrated approach that combines the previous four. Smithfield
Furniture has the option to start a new product line that fall within
two of the five strategies of Porter’s Model. The first option of
upscale furniture marketed to the top 7.5% income-earners is
considered a focused differentiation strategy. e This strategy depends
on maintaining a loyal customer base that are convinced on the
quality or exclusivity of the product. (Bruton, 2022 para 11) On the
other hand, if the company were to mass produce and mass market
some furniture at a low price point, it would be considered an overall
low cost strategy. An example of this type of strategy would be that
of Costco and Walmart. (Bruton, 2022 para 9)
B. The best strategy for Smithfield is to pursue is the focused
differentiation strategy. e Since this strategy relies on a particular
customer base, the success of Smithfield can help launch this new
product line. Smithfield already has the equipment and furniture
building experience, they just need the raw materials and vision to
start making this product line. The low cost option has too many
disadvantages and can tarnish the name of Smithfield.
C. The first step to ensure Smithfield should do to ensure the company
moves in the right direction is to conduct an Industry Analysis.
Smithfield should start by conducting and industry overview,
reviewing industry news and innovation, review consumer market
data, conduct research on competitors, determine the economic
conditions and influences, and research government regulations.
(Purdue, 2013) These steps will show the company if entering this
market is feasible and profitable.
Bruton, J. (2022). Porter's Competitive Strategies. In Lumen Learning (Ed.),
Principles of Management
(Module 4). Lumen Learning. Retrieved from
https://courses.lumenlearning.com/wmopen-
principlesofmanagement/chapter/stages-and-types-of-strategy/
Purdue Libraries. (2013).
Introduction to Industry Analysis
.
YouTube
.
Retrieved 2022, from https://www.youtube.com/watch?v=5DFd-ZNbNX4.
