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Home, Garden Gifts Online Business Plan

Grapevine Country Gifts

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Market Analysis Summary

Our target market is women over age 40, with household income over £60,000. With high disposable income, mature adults (empty nesters) redecorate their homes to reflect their tastes more than was possible when there were young children in the home.

Last year in the U.S., female consumers produced the highest growth rate in online sales, accounting for 52% of online purchases, an increase of 5% over 2002. Nearly 54% of those purchasers are in our target age group. Gifts and flower sales online were up 56% this holiday over last. Home and garden purchases were the top category in the 2003 holiday buying season, experiencing a 27.9% increase over 2002. This female target market is the primary purchaser of household gifts and home décor. The mature audience shopping online is expected to increase by 16%, compounded, per year through 2008. (Network World Fusion, Jan, '04, U.S. 2000 Census; Jupiter Research, Feb,'04)

4.1 Market Segmentation

As stated above, the company's target audience is women over 40 with a household income over £60,000. In terms of sales channels, we believe that about half of our target clientele will be reached through our website, with the other half split between the ones we reach via our participation in road shows and special events. We also forecast that the pool of potential web clients will grow at the fastest rate (at 20% annually), while the client base for road shows and special events will be growing at 15% and 10%, respectively, as summarized in the table below.

Market Analysis
2004 2005 2006 2007 2008
Potential Customers Growth CAGR
Web Sales 20% 76,093 91,311 109,573 131,488 157,786 20.00%
Road Shows 15% 40,500 46,575 53,561 61,595 70,834 15.00%
Special Events 10% 36,000 39,600 43,560 47,916 52,708 10.00%
Total 16.53% 152,593 177,486 206,694 240,999 281,328 16.53%

4.2 Target Market Segment Strategy

We know that the target market segment we have selected is already predisposed to seek out our products. Comfortably well-off women over 40 make up most of those attending home and garden and other shows at which we exhibit our products. Our presence at these shows has increased monthly visits to our website by 413% in the past year.

While online purchases by women over 40 continue to rise, publications by Jupiter Research in February, 2004, project that similar women over 60 will be expanding their Internet experience and expenditures at even higher rates in the near future. By expanding our presence on other shopping sites, we will continue to increase our access to this group.  Linking with other popular sites through a LinkShare program will not only provide additional revenues with "click-through" purchases, but associate Grapevine Country Gifts with other quality merchants on the Internet frequented by our target market.

Market Needs
Home redecoration allows women to reflect their tastes and use their creativity to make their homes truly special to them. Quite often this means that a woman looks for some rare, limited-edition item that will bring comfort to her home and peace in her mind. Although home decor products are carried by many retailers, out-of-stock items are hard to find, since few stores special-order items. While a few hard core collectors find the thrill of searching for rare items appealing, most of our customers who would like to decorate their homes favor convenient ordering and reasonable prices.

4.3 Industry Analysis

Post-2003 retail sales reports indicate that economic concerns and comfort levels for buying on the Internet are improved. Holiday sales, exceeding projections, were up 29.5% over 2002 – reaching £12.5 billion (excluding travel and auctions). (Network World Fusion, Jan. '04)  Although predictions for retail sales growth in 2004 are a little slow in coming, the recovery can be seen in sales bursts on the web and increased sales at Spring shows.

4.3.1 Competition and Buying Patterns

Competition for jewelry and home décor is stringent on the Internet and at consumer shows. Many online and traveling merchants have been in existence for a longer period and have established recognition. Our products are also carried in fine gift shops, such as Hallmark stores, and in major department stores. Many of our competitors have additional advantages because of their greater size, which allows them to more easily absorb losses on unpopular products.

Our targeted consumers are seeking convenience and value in their purchases. They want a wide selection to reflect their own individual styles, and easy purchase processes at good prices. Our switch to an easier payment process has shown how important it is to our customers to have a secure, transparent, and reliable purchase process with good customer service. This one change is responsible for at least half the strong sales growth we have seen in the last year.

Customers who come to shows and festivals where we exhibit are also seeking convenience and value, but our competition at these shows is largely the other vendors. A potential customer arrives with at least a subconscious notion of how much she is willing to spend, and on what, while at the event. Sales made by other vendors are money taken out of our pockets. Competition here is about value, attractiveness of displays, good selection, and friendly, in-person interactions. 

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Market Analysis
2004 2005 2006 2007 2008
Potential Customers Growth CAGR
Web Sales 20% 76,093 91,311 109,573 131,488 157,786 20.00%
Road Shows 15% 40,500 46,575 53,561 61,595 70,834 15.00%
Special Events 10% 36,000 39,600 43,560 47,916 52,708 10.00%
Total 16.53% 152,593 177,486 206,694 240,999 281,328 16.53%