This paper examines HNI Furniture's marketing approach for its ergonomic office furniture line, focusing on two key areas: target market segmentation and pricing strategy. The analysis identifies the corporate purchasing market and the work-at-home retail consumer as the primary customer segments, distinguishing each by psychographic and demographic characteristics. It then evaluates HNI's decision to pursue a price skimming strategy — setting prices at the upper end of the mass market rather than the absolute premium tier — as a means of building market share while preserving margins in a growing, relatively price-inelastic segment estimated between $11 and $13 billion.
When ergonomic furniture was first launched, it was considered a niche market. There is now, however, a growing link between ergonomic factors and workplace injuries that is driving the ergonomic industry into the mainstream (Johansson, 2000). The main customer base for ergonomic office furniture is corporations making mass purchases for their companies. This market is typically served through wholesalers — major competitor Steelcase is one example. Smaller companies may purchase through retail outlets. The overall market is estimated to be between $11 and $13 billion (ZPryme, 2010). Individual customers also tend to shop through retail outlets such as Staples, Office Depot, and Costco.
The market can best be segmented into corporate and retail categories. The corporate market is driven by purchasing departments and office managers. Because ergonomic furniture is a differentiated product, the psychographic profile of corporate buyers reflects a desire to provide the best possible work experience for employees and to minimize workplace stress and injury. Not all companies fit this psychographic profile. Those that do tend to operate in higher-value industries where office employees are critical to daily operations.
Market segmentation in this industry therefore depends not only on company size but on organizational values and the degree to which employee well-being is prioritized in purchasing decisions.
In the retail segment, the key demographic is concentrated in the work-at-home market. These customers tend to have higher-than-average incomes, hold white-collar occupations, and are likely to have a college education. This market is also older — roughly 35 to 65 years of age — as that demographic is more likely to work from home and more likely to invest in products that support their physical health, particularly back health.
HNI's objective is to build market share in the ergonomic furniture segment. The company needs to establish its product line and work to build volume within the industry. Ergonomic furniture generally commands a premium price over conventional furniture. Within the ergonomic segment itself, price is correlated with quality. At the lower end, chairs are primarily valued for their ergonomic design and typically run around $300. At the higher end, products feature better fabrics and higher-grade materials overall. Prices for a premium ergonomic chair can reach up to $700 (Ergonomic-Chairs.net, 2010). For HNI, the objective is to capture as much market share as possible in ergonomic chairs, and the pricing strategy must reflect that goal by targeting the lower end of the ergonomic premium segment.
HNI has selected a price skimming strategy, which involves setting relatively high prices based on perceived value. The company aims to build market share on the basis of quality (Meissner, 2010). Ergonomic chairs represent a growth market, and this strategy allows HNI to enter the market without sacrificing margins. The goal is not to become the largest player in the market but to build a solid market share based on a high-quality product. Strong margins are a priority, and a skimming strategy supports this while establishing a clear market position. Ergonomic chairs are relatively price inelastic, which makes skimming more appropriate than a penetration strategy in this context (EconomicExpert.com, n.d.).
HNI does not intend to set prices at the absolute highest level within the ergonomic segment. Instead, the focus is on pricing at the upper end of the mass market — for example, just under $500 for a chair. Product quality will be differentiated on the basis of ergonomic design rather than the use of high-end fabrics or luxury materials. This positions HNI competitively within the growth segment while remaining accessible to a broader corporate and retail customer base.
Johansson, C. (2000). Top 10 emerging practice areas to watch in the new millennium. American Occupational Therapy Association. Retrieved April 24, 2010, from
No author. (2010). Industry overview: Retail office furniture in the United States. ZPryme.com. Retrieved April 24, 2010, from http://zpryme.com
No author. (2010). Best ergonomic office chair. Ergonomic-Chairs.net. Retrieved April 24, 2010, from
"Justification for sub-premium skimming price point"
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