Introduction
The founder of Above Ground Designs, Craig Hines, wanted to provide a single product dubbed the Aerial Chair to the market with hopes of making it the most sought-after hanging chair. Craig applied his creativity in designing the Aerial Chair before selling it through various approaches including exhibits. However, several aspects of marketing proved ineffective, thereby offering Craig’s rivals a competitive edge. In this respect, this paper analyses the case of the Aerial Chair by focusing on the key issues and strategic approaches. The paper will also identify the alternatives and similar critical matters that require Craig’s consideration before providing the recommendations, which can bolster the success of the product.
Current Situation
The creation of the Above Ground Designs aimed at facilitating the realization of Craig’s dream of offering a successful product to the market. The Aerial Chair saw its establishment from the creativity of Craig who sketched the hanging chair himself. Craig further advanced the product by introducing the Superlite version that targeted the backpackers’ market segment. The initial marketing strategies entailed exhibitions at trade shows, outdoor fairs, and shopping malls. Endorsements from different magazines including Outside and Men’s Health saw the Aerial Chair gain popularity as it received positive reviews.
However, the pricing aspect of Craig’s marketing strategy prompted his leading retailer, Recreational Equipment Incorporated (REI) to ask for a wholesale price of below $100. The pricing issue created a considerable success problem for Above Ground Designs. Poor display of the product also offered Craig’s competitors like Airchair and the SKY Chair, a competitive advantage. The need to invest in a more efficient marketing strategy demanded Craig reinforce his financial resources. Moreover, the essence of venturing into the boating market niche offered Above Ground Designs an opportunity for growth amid the challenges faced.
Key Issues
Several issues affect the success of Above Ground Designs. Thus, they require immediate intervention. The critical issues comprise the different aspects of marketing that lack efficiency. The key problems that influence the prosperity of the Aerial Chair include product design, pricing, distribution volume, product promotion approaches, and finances. The mentioned issues affect the operations of Above Ground Designs, thereby limiting sales and acquisition of a larger market share.
The product design is based on Craig’s preferences. The sketches done by Craig in developing the product depict his point of view regarding what would make an excellent hanging chair. Although creative, the design approach failed to consider the preferences of the target clients. Consequently, Craig was forced to introduce products of several colors to meet the unique preferences of the company’s market base.
The pricing element also undermined the competitiveness of the Aerial Chair in the market. The lack of economies of scale barred Craig from enjoying the small production and operation costs compared to main rivals such as Airchair and the SKY Chair. Notably, the production costs for the original and Superlite hanging chairs were $62.72 and $61.74, respectively. As such, Craig initially priced the Aerial Chair at $199 for wholesale clients and $120 for retail customers. However, the increase in the prices due to significant production costs prompted Craig to raise the retail price to $149. Above Ground Designs’ competitors slightly raised their prices. However, they sold their products at lower costs than the Aerial Chair. The pricing aspect undermined the competitiveness of Above Ground Designs in the market, necessitating the introduction of a new strategy.
Above Ground, Designs could hardly distribute at least 100,000 hanging chairs to suppliers at a go. The company, at its peak inventory, could only produce 300-400 chairs, mostly after receiving orders. The limited availability of the Original and Superlite models that came in four distinct sizes discouraged most large retailers, including QVC from engaging in a big deal with Above Ground Designs. Essentially, increasing the sales of a product in the market is one of the key aspects of enhancing the realization of profits in a given industry. Nonetheless, the low sales volume realized by Aerial Chair owing to the insufficient inventory undermined the expansion of the company in a market with abundant growth opportunities. Therefore, the need to bolster the inventory and distribution aspects is critical for reinforcing the success of Craig’s dream.
Amid the initial success gained by the product through advertisement with various magazines, the Aerial Chair encountered some considerable product promotion challenges. Notably, the poor display of the product in different retail stores undermined its visibility, hence impacting the sales volume. Most retail stores considered placing fast-moving items that occupy smaller floor spaces in strategic areas, thereby not prioritizing products such as the Aerial Chair. The display limitation diluted the growth of brand awareness for the Aerial Chair.
The need to strengthen the financial health of Above Ground Designs is crucial since it plays an integral role in fostering the effectiveness of marketing approaches. Craig injected money into the business from his future inheritance to stabilize the financial health of the company. Nonetheless, the plan was not strategic enough as it was untenable. The founder feared to acquire finances from credit facilities to facilitate the efficiency of Above Ground Designs with regards to inventory and distribution. Thus, the need to reinforce the financial management of the company was essential.
SWOT Analysis
The need to investigate the internal and external influences that affect the performance of the Aerial Chair is necessary. The strengths and weaknesses faced by Above Ground Designs account for the internal factors that influence its performance. On the other hand, the opportunities and threats represent the external factors that have an impact on the success of the Aerial Chair brand.
Strengths
Above Ground, Designs has an innovative founder who pursued a dream of developing a product that suits his interests. The designing of the Aerial Chair emanates from the ideas and interests of the founder (Craig). Thus, the creativity of the leader accounted for its development and survival in the industry amid the challenges.
The promotion of the product through the print media platform, especially magazines is one of the marketing strengths of the Above Ground Designs. The company gained considerable popularity through the advertising done by magazines such as Outside, Men’s Health, Cruising World, Motor, Boating, and Sunset.
Weaknesses
Above Ground, Designs has a weak financial position that undermines its marketing endeavors. The economic instability bars the company from enhancing its inventory. Besides, Craig fears to acquire credit facilities to bolster the efficiency of the company’s operations in the recreation industry.
The pricing of the Aerial Chair also undermines the competitiveness of the company. The rivals of Above Ground Designs offer a variety of products at prices lower than those of the two Aerial Chair models found in the market. The pricing is a major setback to the company’s marketing strategies.
The poor display of the product in stores adversely affects the company’s performance. The lack of creativity in marketing has hindered the ability of the Aerial Chair to secure strategic places in stores. The product promotion weakness makes the company’s brand image inferior to its competitors besides customers finding it less appealing.
Threats
Above Ground, Designs faces stiff competition from rivals, including Airchair and the SKY Chair due to its ineffective distribution network and marketing strategies. The competitors have greater brand images that make their products more preferred by customers in comparison to Craig’s offerings to the market.
Financial instability experienced by Above Ground Designs inhibits the sustainability of its marketing approaches. Notably, Craig lacks a financial plan to guide the marketing strategies of the company. The issue forces the company to depend considerably on print media and displays to boost the popularity of the brand. Craig depends on his inheritance to finance the company, depicting an unsustainable financial management strategy.
Opportunities
The increase in sales of residential houses in the United States has triggered the growth of the outdoor furniture market. The two industries are directly correlated. The trend implies that demand for products offered by Craig’s company would increase. The decreasing oil prices in the pleasure boat market offer Above Ground Design a chance to exploit clients in this sector. Furthermore, the increasing incomes of the United States employees provide a greater purchasing power as they seek to buy recreational items including the hanging chairs.
Alternatives
- Do nothing: The failure to implement an alternative would lead to a deterioration of Above Ground Design’s financial health. Failure to act would also force customers to consider products offered by rivals due to the high prices. Refraining from taking precautionary measures would also result in tarnishing the image of the Aerial Chair brand in the market.
- Seeking financial support: A reinforcement of the financial resources required to foster the sales and grow the market share acquired by Above Ground Designs is essential. The availability of adequate funding is crucial for promoting production and distribution to meet the pricing and inventory requirements in the market.
- Integrating online platforms in product promotion: Besides using the company’s website, the need to engage online platforms such as social media will facilitate increased awareness of the Aerial Chair brand. Social media as a marketing platform has the potential of reaching customers worldwide.
Critical Issues
The identified alternatives affect several aspects of the marketing mix that Above Ground Designs needs to integrate to foster success in the market. Therefore, it is imperative to determine the positive and negative outcomes of the alternatives identified. Essentially, the marketing mix incorporates the 4Ps, which represent the product, place, price, and promotion.
Doing nothing implies that the product would not see any improvement meant to meet the standard offered by rivals. As such, it would be hard for the company to increase sales volume by venturing into new markets. Lack of intervention would also imply that the prices for the Original and Superlite products would still be high compared to those offered by the rivals. Additionally, failure to take action would lead to no improvements in the product promotion endeavors, which are requisite for the attainment of Craig’s dream.
Injection of financial resources would see the Aerial Chair attain a desirable brand image. The alternative also has the potential of stabilizing the prices of the two Aerial Chair models with the objective of realizing competitive prices in the market. The injection of financial resources would enable the company to increase the distribution channels. It would also have sufficient money to procure an integrated marketing strategy. Adopting greater use of the online platform would improve the image of the Above Ground Designs brand, thus enhancing the product and promotion aspects of the marketing mix. Importantly, the alternative has the potential to increase the sales of the company in the recreation sector. The use of online platforms would facilitate the distribution of Aerial Chairs through online retail stores.
Recommendations
For the sake of driving the Aerial Chair towards success, Craig needs to consider some interventions. The recommendations focus on the aspects of finances and product promotion. First, Craig needs to source financial resources from players such as financial institutions to enhance the sustainability of the company’s marketing objectives. The strategy is crucial for supporting the redesigning of the product to fit the market expectations and facilitating the reduction of the offered price.
Second, Craig ought to consider engaging in marketing strategies that seek to capture the global market. The integration of various social media platforms would be beneficial for Aerial Chair since it would reach different market niches that need the product for recreational purposes.
Finally, the hiring of professional marketers is crucial for fostering the planning aspect of marketing. Notably, Craig lacks a marketing plan, which is vital for guiding the actions necessary for promoting products. Besides, a business plan is also required since it gives a company a sense of direction towards the realization of the set goals and objectives.