Artistry Meets Affordability with Blu Dot Furniture
The phrase "not cheap, but affordable," summarizes the pricing strategy of Blu Dot, a Minneapolis-based furniture maker. Blu Dot prides itself on selling artistically modern, high-quality furniture at prices that it feels are more affordable for consumers. Blu Dot's pricing decisions stem from the personal experiences of co-founders John Christakos, Maurice Blanks, and Charles Lazor. When furnishing their first apartments, the three men quickly realized that the furniture they wanted was beyond their price range. They saw a market need for quality furniture that was affordable. With a background in architecture and art, the men felt they could use innovation, simple manufacturing processes, and off-the- shelf materials to fill this need. In 1997, Blu Dot was started using $50,000 of the founders' savings.
Today, Blu Dot's products can be found in boutiques and independent retailers nationwide, with products available to order online as well. The founders of Blu Dot have designed their furniture using inspiration from the modernism art movement, which includes artists like Marcel Duchamp and Donald Judd. For consumer products, Blu Dot can be considered more of a shopping product than a specialty product. Blu Dot differentiates its products as quality and affordable furniture with more of a modern design appeal. In terms of its target market, Blu Dot sees consumers' desires for furniture as operating on a scale. On the one end of the scale are consumers who are looking for very basic, inexpensive furniture. On the other end are consumers who are looking for custom designed furniture and will spend great amounts to obtain it. Blu Dot targets those who are more in the middle: customers who do not want to spend large amounts on furniture but would like to have well-designed, artistic products.
Blu Dot also offers trade discounts to store buyers, interior designers, architects, exporters, and corporate gift buyers. This market represents the business products that are usually purchased due to the functional aspects of the product more than fashion or psychological involvement. Business products are considered accessory equipment that does not become a part of the final product and assists with office activities. By having different product lines, Blu Dot is able to market a closely related group of product items because of marketing, end-use considerations. The company sells several product lines-tables, storage, accessories, desks, beds, seating, and shelving. Blu Dot has been highly successful, with sales doubling in recent years and a sustained growth rate of 40 to 60 percent since 1996. By having both consumer products and business products, Blu Dot has managed to serve two distinct markets.
However, the challenges Blu Dot encounters have not diminished with its success. Blu Dot still struggles with keeping affordability at the lower end of the spectrum and craftsmanship at the high end. When pricing products, the designers add up their fixed and variable costs plus the markup needed to allow the business to function. Creative pricing strategies are often employed to make the appropriate margins. For example, when selling a set of coffee tables, one table may have a higher markup while another one has a slightly lower markup in order to appeal to the price-conscious consumer and create profit.
Blu Dot recognizes that it has to think of the total product offering as having a combination of three interdependent elements: the core product itself, its supplemental features, and its symbolic or experiential value. While some customers focus on the artistic aspects of the product, other consumers are more concerned with value. Therefore, Blu Dot must synchronize its marketing mix to make product and price consistent.
The designers have also found ways to keep costs lower through innovative and efficient uses of materials, processes, and distribution methods. For instance, Blu Dot contracts with suppliers that make industrial products due to the more efficient technologies and processes used. Blu Dot furniture is designed to be able to ship easily, cutting down on distribution costs. Additionally, the designers use simple manufacturing processes and straightforward materials to create what they term "a by-product of the process." Blu Dot also ensures that its products can ship efficiently and are easy for its customers to put together. Add aesthetics into the equation, and the designers have significant challenges indeed.
Despite these difficulties, the designers thrive on their ability to blend manufacturing and art to create high-end furniture at more affordable prices than their competitors. For those with a flair for modern, affordable furnishings, Blu Dot offers a range of products to suit your artistic palate.
Do you think that the product life cycle would be an important marketing concept in developing and managing Blu Dot products?