A presentation of why Carpanelli should be entering furniture market in Kazakhstan. A detailed marketing plan.

1. Name Matricula
1. Syed Ali Rizvi 823621
2. Anuar Baitulakov 822528
3. Milica Barovic 823092
4. Yessymkan Oralbayev 813379

2. Kazakhstan and Italy relations
Source: http://atlas.media.mit.edu/profile/country/kaz/

3. Kazakhstan and Italy relations
• Crude oil and gas together account for the most tradable good between the two
countries
• Kashagan oil field – largest offshore human discovery in the last 30 years*
• Strategic partnership agreement in trade (2009)
• Temporary visa-free regimen for Italian citizens
Since 2001
operator
An exciting discovery of a young
adventurous born-in-Naples Italian
guy, Pasquale Caprino (aka Son
Pascal) in a program on Deejay TV
called Pascalistan

4. Suppliers are
already
established and
will just extend
to Kazakhstan
branch
PORTER’S 5 FORCES ANALYSIS
INTERNAL
RIVALRY:
LOW -
MEDIUM
THREAT OF
NEW
ENTRANCE:
LOW
BARGAINI
NG POWER
OF
BUYERS:
MEDIUM
THREAT
OF
SUBSTITUT
ION: LOW
BARGAINI
NG POWER
OF
SUPPLIER:
LOW
Absence of such
type of furniture
companies
providing similar
types of value for
the customers
Possible competition
from other European
furniture brands, but
also increasing trend
for uniqueness and
exclusivity
Exclusive and
glamour furniture
itself is not a prime
necessity and there
are several
alternatives
Products offered are
exclusive, unique, and
glamour, industry
profitability is relatively
high and market coverage
is limited by major cities

5. Intensity of rivalry.
• The business area where the branch is supposed to be deployed has little-to-nonexistence
rivalry due to Carpanelli’s niche differentiation factors such as the fact that Carpanelli
products “are made with selected materials, precious woods and exotic essence,
enriched by elaborate inlays handmade as many years ago, with mother of pearls
details and precious stones and precious metals.
• All the creations are, in fact, designed for customers with international profile, more and
more selective and refined. Every single piece is recognizable by a registered inlay trade
mark, symbol of authenticity and in the meantime precious decoration.
Competitors.
• There are several market players that manufacture and sell furniture in Kazakhstan. They
are represented by Zhanna Trading House, Sergio Interiors, and Azimut furniture shop.
However, there is none that provide exactly same furniture as Carpanelli does.

6. Industry growth.
• Potentially, Carpanelli Kazakhstan branch can be a extended into more bigger markets of Russia
and Belarussia thanks to Common Eurasian Economic Trade Union which is formed between
Kazakhstan, Russia and Belarussia starting from January 2015.
Product differentiations.
• Carpanelli branch in Kazakhstan is considered to be unique. Relatively low competition in
furniture industry of this kind certainly increases attractiveness.
• Taking into account potential market niche conquer, it is possible to decrease price or add
additional customization services in the future.
Threat of new entrants.
• The extravagant, handmade, glamour furniture industry attractiveness might motivate other
entrepreneurs to establish an identical branch for their company, and thus, the threat of entering
by other players is very high (due to the development of internet technologies it is relatively quick
to spread the news and get noticed by other competitors even over sees). Due to pioneering
market entry, Carpanelli Kazakhstan branch is promised to stand firmly by gradually conquering
market niche and increasing number of customers.
•

7. Threat of substitutes.
• The furniture industry where Carpanelli operates is unique for Kazakhstan furniture
market. Therefore, at the initial stage, there is a great chance of acquiring a business
niche. The quality and exclusivity is very high for a reason of higher attractiveness
from customers. Higher premium price for such quality and exclusivity is charged and
therefore, is aimed at the customers with higher level of social status and
economic/financial position.
Bargaining power of buyers.
• Bargaining power of buyers becomes Medium - Low due to the fact that is not a
prime necessity and there are possible alternatives from other European brands.
• Carpanelli Kazakhstan branch aim is to make every customer satisfied with the
quality and service provided thereby charging premium price. Buyers possess less
control over which products or services to choose from in the given differentiating
furniture industry and therefore, buy.

8. PEST Analysis

9. Political. As a member of the Eurasian Economic Union, the country offers the possibility
to expand any business outside its borders into other Eurasian countries, which is an
advantage in case for future growth. Kazakhstan is considered as a politically stable country
due to the fact that the political fluctuations that can be observed have a small repercussion.
Economical. Kazakhstan is has transition economy and also one of the richest of the
world in terms natural resources such as gas, oil and precious metals. Purchasing power of
the Kazakhstan population is relatively high and this situation should not change in the
short-term future as the inflation rate is low. According to this description, it is possible to
state that Kazakhstan represents a fairly good market for a new foreign business regarding
the access of customers to products and services, especially in the product sector.
Social. Even if the country seems to have a high social development in comparison with
the rest of the Eurasian region, it still shows a high gap of 28.6% between the richest and
poorest sectors according to the Gini index. Nevertheless it still has a high population with a
high purchasing power. As it presents a high educational level, it is possible to state that the
population is eager to analyze their new options in order to differentiate from the crowd for
which Carpanelli Kazakhstan branch should be considered as an option for most of the
people that might need it.
Technological. There is a high Internet penetration (62.2%) in the country. There is also
almost a complete coverage of mobile and Internet services through the country. This
allows Kazakh population to access Carpanelli local website easily and choose make orders
by visualizing the product line from their home and/or mobile devices.
PEST Analysis

10. Competitive advantages.
• It is very important for any kind of business to have relative competitive advantage in
order to be able to create added value for it’s customers and satisfy the demand in a
better and more convenient way. It is strongly believed that our customer’s
expectations are the key benchmark that has to be analyzed and relevant solutions
need to be provided.
• One of the major competitive advantage that Carpanelli products had inherited is the
fact that their products had been developed within the company and inherited family
traditions dating back hundreds years ago. Our team strongly believes that one of the
most important competitive advantages that Carpanelli products and services has, is
the fact that they are actually the first ones who introduce the glamour, hand made,
exclusive furniture products in Kazakhstan.
• It has also been noted that majority of the companies that manufacture and sell
furniture are aimed for general public. On the other hand, the furniture
manufacturing concept that Carpanelli Kazakhstan branch provides is concentrated
especially on the rich layer of society and is available in Russian/Kazakh languages.

11. Resources. To make the business established and prosper, the Following key resources are needed: Marketing
division. Marketing plays a very important role in the introduction of new type of customizable furniture industry
with the world wide known brand, thus, there was a need of good marketing division. Therefore, highly trained
and skillful marketing staff were needed.
Key Partnerships. Any business cannot progress without a decent financial endorsement; for this reason our
team plans to approach Carpanelli headquarters and acquire very strong support and interest in going further
with this idea. Providentially due to the possibility to extend market to Russia, Armenia and Belorussia our team
strongly believes that Carpanelli officials will be willing to cooperate in this direction.
Customers. Following sections of the public are our target group that we are interested in:
Rich E-Shoppers: People who are active online shoppers that have the possibility to buy exclusive products with
high premium price.
• Oil and gas industry management workers: People who work in oil and gas industry that have the possibility to
purchase exclusive products.
• Kazakhstan National company workers: Especially during and before national holidays these employees have been credited with
high bonus payments.
• Residents of Astana, Almaty, Atyrau regions who have very high standard of living.
Core competencies. The core competences are the main drivers, which help to differentiate Carpanelli products
from its different competitors in the market. Inherited Family quality dedication, craftsmanship, techniques for
assuring exceptional hand made product, and strong attention to exclusivity and glamour are those Core
competences that Carpanelli posesses.

12. Porter’s Value chain.
• In order to get the most winning positions or to become a market leader, it is highly
advisable for Carpanelli to undertake Porter’s value chain analysis to unveil its strong
relationship between activities that reflect business performance. Alongside with this kind
of analysis, makes it clear what are the competitive advantages of the branch to be opened.
• Firstly, it is required to outline the main stakeholders and to connect the activities. The
stakeholders list consists of:
• Developing Team. It is a group of people who have a high level of competence and
professionalism, that work on the marketing methodologies and techniques applicable to
Kazakhstan citizens. It is one of the most crucial features to become a market leader.
• Local Business establishment. Another essential part of conducting business in Kazakhstan:
arrangements of Mobile studio shows in National “Korme” exhibition center and other
types of visual representation of furniture possibilities.
• Company Employees. There must be this necessary item of a company life-cycle that adds
value to get higher level of efficiency and effectiveness.
• As soon as the stakeholders are identified and the activities are clarified with regards to
Porter’s value chain, it is vital to examine and divide the business’ strengths into 2 groups:
primary and secondary (supporting) activities. See next slide Figure # 2.

13. Figure 2. Porter’s Value Chain

14. Primary activities.
Inbound Logistics. First and important goal of the inbound logistics is to find and outsource the service of a
distribution to strong distribution networks present in Kazakhstan. Another crucial target is to contract with the
Kazakhstan local business partners such as “Korme” exhibition center officials. It is considered to have
marketing negotiations with the developing team in order to increase the popularity of Carpanelli products.
Operations. Carpanelli target is to increase the popularity of the Carpanelli brand among target clients and
make them get used to a new opportunity for having high quality, hand made exclusive furniture. The
methodologies used are quite simple and easy to understand: initialization of Carpanelli branch in Kazakhstan
with further business expansion to Eurasian Economic Union market. Carpanelli brand will be promoted to
increase the popularity and brand recognition. Surveys will be conducted on satisfaction with the Products.
Further, the marketing strategies will be generated on the basis of acquired statistics.
Outbound Logistics. Updating the Carpanelli local website content and increasing awareness of the brand by
presence in Exhibition centers as well as securing the Astana Expo 2017 boot spot.
Marketing and Sales. Marketing is crucial part of the business running. Due to that promotions during Studio
Mobiles exhibitions, Astan Expo 2017 Exhibition etc, are the key priority of Carpanelli to take advantage off of
this, it is necessary to create/set the pace for the differentiation in the market by a competitive cross promotion
marketing strategy. Active usage of banners are the means of promotion of company’s product – website and its
further mobile app development opportunity, as well as the generic means of printed ads hanging on the ads wall
boards of Huge Corporations with the flyers given by dedicated staff.
Service. Possibility of life time warranty as an after sales service provision keeping in mind several straight
forward limitations and purchasing warranty option.

15. Secondary (support) activities.
Firm infrastructure.
• This part deals with planning and controlling the core business activities.
• Minimized business cost flat organization structure is adapted by Carpanelli in Kazakhstan.
• Centralized management system is used to be able to plan and control.
• Technology development (R&D). Mainly, the service of intelligence team is needed to create
marketing and promoting strategies.
• Human Resource Management. In order to achieve high rates of performance, there must be core
valuable assets in the local branch. Our team is focused on the people search who have already
had a positive experience in active marketing and brand recognition increase initiatives and have
some competences and potentials in this field. Evaluation of employees’ performance will be
based on their individual performance.
• Procurement. This side is out of the company’s focus. However, with the future possibility to use
huge potential of Kazakhstan local forests to be used as a material for the product.

16. analysis
Strengths:
1.The furniture manufacturing differentiation concept stands out
as a unique service to offer the match between demand and
supply of exclusive products;
2.Local website that has Intuitive navigation, personal account
and search;
3.Useful and relevant content;
4.Customer-centric furniture design;
5.Creative team;
6.LT customer relations;
7.Unique differentiation factors;
8.The ability to connect people from specific segments of
“social origins” in order to provide comparative advantage.
Weaknesses:
1.Not ready, outdated local web service content
2.Confusing structure and navigation;
3.Absence of important skills (i.e. website devel
4.Lack of possibility to co customize the furnitu
5.Challenge of establishing reputation using
New to the Kazakh market;
che acquirement;
s at real time in the exact furniture
EEU;
ng tactics;
o better convey communication with the
Astana Expo 2017;
ation with “KORME” exhibition center.
In order to leverage strength, an attacking market strategy is
built:
1.Customer migration to web strategy;
2.Customer contacts via e-mail use, Facebook group,
company flyer ads, exhibition Studio mobile etc.;
3.Market creates a chance to enjoy the maximum benefits
available since there is no entry barrier and no competition;
In order to tackle weaknesses, existing opportu
foundation for building strength for attacking st
1.Refine customer contact strategy;
2.Marketing strategy;
3.More friendly website design and interface;
4.New markets strategy development;
5.Avoid lack of communication channels prov
thus creating better marketing strategy,
mpetitors/players;
s with logistics due to sanctions applied to
effect for Kazakhstan;
eds (economics recovery);
dvertising;
of the team’s values which deteriorates the
ition.
A leverage strength based on minimizing threat the
business idea encounters – building defensive strategy:
1.Partner with complementary elite exhibitions and
partners;
2.Build own customer reviews;
3.More attention web accessibility and personal accounts;
4.Affiliate more with marketing opportunities for better
brand recognition;
5.Emphasis on social networks.
Defensive strategy to counter-strike weaknesses
1.Find reliable web developers who build loc
content;
2.Establish the staff with highly qualified pro
and communication

17. Distribution channels
It is worth mentioning that some distributors in Kazakhstan focus only on
specific types of furniture market.
In this regards, it had been decided to segment the Carpanelli furniture lines
and identify in case there is a correlation between the Carpanelli specific
segment of furniture and the respective segments of furniture that the
distributors specialize in.
It had been therefore decided to present in below text the names of the
distributors and the specific furniture segment that the distributor has been
specializing in (in case the distributor’s policy assume
segmentation/specialization) otherwise it will be mentioned that the
distributor is able to specialize in all segments of furniture products. In
addition to that, after the presentation of general information about the
distributor, it had been decided to provide the potential possibility and
reasoning for cooperation and relevance of Carpanelli product lines with the
below mentioned distributors.

18. Distributors (1)
• Company «Divo Divan» - is one of the largest distributors of
upholstered/soft furniture in Kazakhstan (mainly specializing in distribution
of all kind of sofas). The company had been present in the Kazakhstan
market for over 5 years, and during that time «Divo Divan» Company has
managed to establish itself as a reliable partner for the acquisition of high-
quality and stylish furniture for the home and office. The company has also
been constantly developing and exploring the tastes and needs of the
customers, and a range of network salons «Divo Divan» is a real reflection
of the Company’s strive and respect for the customers. «Divo Divan»
Company’s retail network is presented by the best sofa manufacturers of
Russia, Ukraine and Kazakhstan, such as «Blest», «ADC», Zlata - Mebel,
ARS, Romira, Dalio, Davidos, sit, color sofas (Russia), «NEXTFORM»,
Kazakhstani Quant.
• Since Carpanelli SpA has a diverse lines (more than 17 lines/designs) of
exclusive sofas it could be interesting to contact the «Divo Divan» Company
and try to establish some potential business partnership. Taking into account
that currently «Divo Divan» Company does not have European furniture
manufacturers in their business partner portfolio, it could be a great
opportunity for Carpanelli SpA to get into this cooperation and start doing
business with «Divo Divan» Company in specific sofa segment.

19. Distributors (2)
• “Zhanna” has worked successfully in Kazakhstan since 1992. During this
time, managed to pass all stages of development of commercial activities.
Starting with the sale of clothing, the company gradually shifted to delivery
of furniture from the Baltic states, then from Germany, Holland, Belgium.
Later Furniture Center "Joan" was to give preference to Italian furniture,
because Italy - the undisputed world leader in the production of stylish and
quality furniture. There about 4 thousand companies, creating almost 40%
of the world's furniture.
• The following brands are presented: Nieri, Loft, A.R. arredamenti, Turri,
Angelo Cappellini, Carpanelli, Giorgetti, Valcucine, Lube, Giemme,
Mantellassi, Zanaboni, Della Rovere, ORA Acciaio.
• “Zhanna” - the largest furniture distributor in Kazakhstan and Central Asia
with a network of specialized shops totaling an area of about 10,000m2.
• Upon customer special requests, a customized design is executed according
to the practices of the furniture companies presented. The staff constantly
maintains their skills, help in the selection of furniture based on the
individual customer requirements and conditions of the room.
Source: http://www.zhanna.kz/partner.aspx?CatalogId=30643

20. Distributors (3)
• Company “DomusA” was founded in 2004 and presents exclusive
finished materials and accessories from the best European
manufacturers in Kazakhstan market.
• Company “DomusA” is not only specializing only in furniture but has
diverse products and services among which a unique collection of
lighting, sanitary ware, marble, ceramics, furniture, carpet and leather
coverings, windows, doors, stairs, flooring and terraced floors,
fireplaces and designer accessories that allow the customers to create
the interior of any style - from modern to palatial luxury, to embody
the most exquisite designs. Company works directly with European
furniture brands such as Veneran, Vincent Sheppard, VV, Twils,
Smania, Selva, Stella del mobile, Savio firmino, Montbel, Poles Salotti,
Mobilidea, Randola, Cantori etc. It could be a great opportunity for
Carpanelli SpA to get into this cooperation and start doing business
with “DomusA” Company in all segments of Carpanelli products.

21. Distributors (4)
• “Azimut” Company is a furniture manufacturing company in
Kazakhstan. Company has its own production facilities, high-quality
materials and components are used from leading furniture
manufacturers, advanced equipment and advanced technologies allow
to occupy a leading position in the furniture industry. For production
Company uses: laminate, natural veneer, solid fine wood, heat-
resistant plastics and accessories from leading manufacturers. In
addition to that, Company acts as a distributor for several foreign
furniture manufacturing companies from Belarussia.
• Absence of the European high quality furniture manufacturer in the
portfolio of the Company could be used as an opportunity for the
Carpanelli SpA to get into cooperation and start doing business in
Kazakhstan in cooperation with the company. It is also worth
mentioning that “Azimut” specializes in sales and distribution of all
kinds of furniture types.

22. Distributors (5)
• Sergio Group Company was founded in 1998, which was marked by the
appearance on the market of Kazakhstan completely new commercial brand -
world leader in production the Italian kitchen furniture - Scavolini, recognized
and loved a wide range of connoisseurs of high quality and comfort.
• The next stage of development - the emergence in 2002 of the interior salon
Sergio Interiors, combines in his concept of all the possibilities for creating a
full image of a modern home. In 2008, Sergio Interiors showroom was
presented in the capital of our Republic - the city of Astana.
• Today Sergio Group is a member of more than 30 world famous furniture
brands such as Scavolini, Natuzzi, Minotti, Poliform, Flexform, Flou, Canella,
Toncelli, Santarossa, Bontempi Casa, Angelo Cappellini, Besana, and many
others. In the salons Sergio Interiors presented exclusive accessories and
tableware from famous European manufacturers - Villeroy & Boch, Christofle,
Lalique, Alessi, Guzzini, WMF, CreArt, and many others.
• Expositions of salons Sergio Interiors divided into different stylistic areas -
from modern to classic - with finished interior solutions, allowing customers to
feel and visually represent furniture in its interior.

23. Segmentation and targeting
• In order to solidify Carpanelli’s positions as a #1 furniture for medium to high income
class, segmented age is 35+ in Astana and Almaty cities (both account for 13% of the
total population). Pop (Astana) = 778,200. pop (Almaty) = 1,475,400 as of Jan 1, 2013.
Segment Description and user profile Main benefits sought Main criticalities
emerged
35yo-
45yo
Young and ambitious. Usually owners of
entertainment places (lounge bars,
restaurants, petroleum stations, casinos,
retail shops, supermarkets)
This segment mainly
buys Carpanelli’s
Contemporary and
Glamour lines.
This segment has
little children who
might ruin furniture.
For this reason they
might be buying
expensive furniture
less.
45+ People with a solid established career.
Usually, they work at higher echelons of
government bodies and national
companies
This segment is
meant to buy
Contemporary and
Classic lines.
Adherence to old
soviet heritage
lifestyle by being a
strong patriot of local
furniture
manufacturers.
Source:
http://www.stat.gov.kz/faces/wcnav_externalId/publicationsSocialDevelopment?_afrLoop=213155429347515#%40%3F_afrLoop%3D213155429347515%

24. Segmentation and targeting
• Positive implications
• furnishing of an increasing premium-class number of homes both in
Astana and Almaty will continue (tendency is to continue for the next
3-5 years) due to population wealth accumulation, increase of GDP
per capita, strength of the national currency, local prices stabilization
• residual government entities will continue moving from Almaty to
Astana establishing new offices
• by furnishing top management government body cabinets, Carpanelli
brand awareness will increase
• Italian furniture quality is considered to be one of the best in the
country. Soviet hunger for Western European luxury will be still
evident for the next 5 years

25. Segmentation and targeting
 Three leading furniture distributor players (80% of the furniture market):
Azimut Group (both in Astana and Almaty), Zhanna and Sergio Interiors (in
Almaty) - potential consumers will be targeted through a trustworthy and
positive image of the retail stores (3 market leaders) through mass media
advertising and city billboards. Additional facilitating distributors are revealed
for additional market conquering (Divo Divan, DomusA, Mebel).
 It is assumed to occur no potential conflict of interest – negotiation practices
with distributors: sign “exclusivity” conditions so that the abovementioned
distributors are the only suppliers of the Carpanelli furniture on the Kazakhstan
market
 35+ segment is placed at the following entities:
• Public government bodies (parliament and ministry cabinets)
• Big holdings’ top management (Samruk-Kazyna, Baiterek, Zerde – total 4)
• National companies (KazMunaiGas, KazTransGas, KazakhTelecom, KEGOC – total 35)

26. Positioning
• Based on the targeted market of luxury patrons we
have high value in positioning of the firm. The
values prepositions perceived by the customers are
competitive with the small market and with the
competitors.
• Carpanelli has been looked by the customers as the
benchmark in the High end Furniture market
providing elusive designed furniture.

27. Brand Identity
Points of Parity:
1. Rich Furniture brand

28. 4+1 P Model
Product
Carpanelli line is
divided into 3
main product
lines.
1. Classic
2.Contemporary
3. Glamour
Price
Carpanelli
price range is
quite high with
the least being
1200EUR.
Promotion
Carpanelli
mainly do their
promotion
through
furniture fairs
especially
“Salone Del
Mobile” Milan
Place
Carpanelli is
currently
operating in 7
countries
worldwide,
however their
manufacturing
plant is situated
in Italy (Desio)
Personal
Selling
As the increase
in demand for
customized
products
Carpanelli has
approached to
personalize
furniture for
customers
under
contracting line

29. 4+1 P Model
• Product
• Price
• Promotion
• Place
• Personal Selling (Customization)

30. Market Value perceptions
Carpanelli
Zhanna
Sergio
Azimut
Durability Design Uniques Detailing Material Quality Build Quality
Value Curve
High
Low
*Datasource: http://www.italiankazakh-visit.com/files/presentazioni/Plenary%20DELOITTE%20-
%20General%20Description%20of%20Manufacturing%20and%20Trade%20in%20Kazakhstan.pdf

31. Marketing Strategy
• Target: well-off customers
• Economic rise of Kazakhstan market has changed
the trend in the high end furniture market, many
customers are opting for exported furniture from the
conventional local producers and the other Russian
based producers. This change in trend has enforced
Foreign companies to enter countries niche bazaar.

32. *Source: Deloitte Survey Kazakhstan
Market Growth
•The global crisis has only slightly affected the
Kazakhstan furniture market
•Between 2006 and 2010 the CAGR was 11%
•The Kazakhstan market is valued at US$ 500
million, with roughly 80% of demand met by
imports
•The major suppliers are China, Russia, Belarus,
Ukraine, Poland and Italy
•Imports include not only finished goods but also
parts for further assembly
•Domestic major production areas include Almaty,
Western Kazakhstan and Pavlodar, producing chairs,
office furniture and kitchens.
•The key retail players focus on medium-to-upper
end furniture whose outlets are Zhanna, Akniet,
Azimut, Bravo and Sergio, Scavolini and Eco Mebel
•In 2007 the 70 thousand m2 MEGA, Lumir and
Armada centers opened

33. Marketing Strategies
• Distribution Strategies
• Branding Strategies
• Relationship marketing
• Digital / online marketing (Emails)
• Niche marketing
• Word of Mouth Cultural relevance.

34. Demand Forecast
• Because of lack of data for the entire spectrum of the population, data on spending habits,
consumer preferences, and their monetary assets which are presented in the report were estimated
but the estimation is performed in the most possible accurate way in accordance with the available
secondary data
• Thus, forecast is done taking into consideration following information found:
• Supply does not satisfy current demand in the furniture market of Kazakhstan and more entrants are
expected
• The economy is expected to grow at a high rate
• This will further develop the consumer base and increase willingness to purchase furniture
• Presently mid and high end consumers have preferences towards Italian style
• Analysis of the competitors
• Segmentation of Kazakhstan furniture market into 4 primary segments
• Focus on high class and exclusive furniture for consumer group with income over 4000$ per month
• High-end furniture market absorption ability
• Population of the city where majority of people with income higher than 4000$per month live

35. Four Primary Furniture Market
Segments
• Four primary furniture market segments can be differentiated by production category and
target consumer group. The market shares of each segment can be reflected in triangle
shape with largest share on the bottom:
Exclusive furniture for consumer
group with income over
$10,000 per month.
High class furniture for consumer
group with income
within $4,000- $6,000 per month
Mid-level furniture for consumer
group with
income within $2,000- $4,000 per
month
Moderate (lower-level) furniture, for
consumer group with income below
$2,000 per month
4
3
2
1

36. Analysis of Main Competitors
• Our focus is on the high class and exclusive furniture customers
• High class furniture is currently mainly represented by Zhanna Trade House, and
partially by Azimut furniture shop
• Zhanna Trade House has a net of specialized furniture shops with major retail
capacity in Almaty and Astana, with 50% and 30% accordingly.
• The rest 20% are covered by regional shops
• The main portion of the customers of Zhanna are households with average income
of USD4,000-USD6,000 per month
• Benchmark prices in Zhanna:
• Bed- USD1,500- USD3,500
• Sofa- USD1,000- USD5,000
• Dining table with 12 chairs- USD1,500- USD5,000

37. Analysis of Main Competitors
• The exclusive furniture market in Kazakhstan is for 80% represented by Sergio Interiors
• A significant portion of the consumers is mainly concentrated in Almaty.
• Comparing Almaty and Astana consumers, most of the clients have base homes in Almaty which
they furnish with high profile furniture whereas in Astana they have so called economy class
accommodation with furniture of less exclusive quality
• Wealthy people prefer Almaty for residence and purchases (i.e. cars, furniture, accessories, etc)
• Sergio Interiors sells exclusive furniture to a segment with income exceeding USD10,000 per
month
• Benchmark prices offered by Sergio Interiors:
• Bed- USD6,500
• Sofa- USD8,000- USD16,000
• Dining table with 12 chairs- USD12,000- USD18,000
• Average exclusive furnishing of the homes in Kazakhstan is done for minimum USD70,000

38. High-End Furniture Market
Absorption Ability
• To appraise current high-end furniture market absorption ability, an experience of
“Grange” furniture saloon can be taken as an example
• The Grange saloon entered the high-end furniture market in February 2005 by
introducing a new brand to Kazakhstani market, GRANGE (France), which is well-
known throughout the globe as producer of elite furniture of classic design
• The brand is oriented on a high-end buyer
• For the period of the first 6 months, the saloon sold over 50 pieces of the furniture
• Benchmark prices in Grange furniture saloon:
• 1. Bed- USD6,000
• 2. Sofa- USD4,000
• 3. Dining table with 12 chairs- USD5,000 - USD10,000

39. Quantification of Demand
• The most significant component of the market absorption capacity is the
quantification of demand
• The main difficulty comes from the fact that official income data, and other
determining factors that allows for the segmentation of populations, is not easily
available
• The underlining difficulty is that wealthy populations, particularly those within the
former Soviet Union, are determined never to formally disclose their actual wealth
due to tax reasons
• At the same time they value being publicly associated with wealthy class and spend
considerable funds on posh products which can directly relate them to the
Kazakhstani elite
• Given a data-poor environment, the relevant socio-economic data partially
maintained by secondary information sources have been used to determine and assess
the wealthy and higher middleclass segment of the Kazak population used for
Carpanelli furniture demand forecast

40. Marketing Budget and Demand
Forecast
• According to the latest available data in World Bank database income share of highest 20 % is 38.3%
• GDP of Kazakhstan in 2013 was 231,876,282,134 US$
• Highest 20% owes 231 876 282 134,00*0.383=88 808 616 057,322
• Taking into consideration the fact that the most of wealty people live in Almati which has population of
1,507,737 and all other factors previously mentioned in the paper the estimation on potential customers
can be done
• Our focus is on the high class and exclusive furniture customers, thus on the consumer group with income
over 4000$ which according to our estimation represent 30% of population of Almaty: 1 507
737*0.3=452 321 people
Advertising Expenses
Furniture Exposition in Milan (26$/sqm+vat22%)*100sqm=3172$
Furniture Exposition in Almaty 24$/sqm*100sqm=2400$
Total Marketing Expenses 5 572$

41. Financial Statement Estimation
• Since the Carpanelli furniture prices can be set within the boarders of Grange furniture saloon prices , we consider Grange
saloon as a good base for estimation of number of products sold during the year, thus we take
• 150 (number of products) for the first year
• Trough competitor analysis it is found the most popular high end furniture products in Kazakhstan are bad, sofa and dining
table with 12 chairs and thus prices of the same furniture in Carpanelli are estimated based on its exclusive furniture competitor
prices:
 Bed 7000$
 Sofa 10000$
 Dining table with chairs 15 000$
• Thus, the average value of single purchase is taken to be
7000+10000+15000)/3=10 667 $
• Different scenarios are made based on quantity of furniture sold and costs of goods sold
• Optimistic scenario:
 Quantity sold is taken to be 150 (based on direct competitor’s report from 2005.)
 COGS are taken to be 30% (based on the previous experiences of the owner of Carpanelli )

42. Financial Statement Estimation
• Pessimistic scenario:
 Quantity sold decreased to 84 (taking into account 2 big currency devaluations that happened in period between 2005. and 2015.
which made imports more expensive and thus less attractive)
• After the 25% devaluation of the Tenge on February 4, 2009 the exchange rate was set to 150 tenge per dollar +/- 5 tenge.
• In February 2014, the National Bank of Kazakhstan announced devaluation of the national currency. The new exchange rate of tenge
was 185 tenge to 1 US Dollar. (Previously being 155,5 tenge to 1 US Dollar)-19%devaluation
Devaluation has been carried out in order to increase foreign competitiveness and support commodity producers of Kazakhstan in
world market.
 COGS are taken to be 50% (based on the previous experiences of the owner of Carpanelli )
• Since current supply does not satisfy demand in the furniture market of Kazahkstan,also in the market are represented only few serious
competitors (Zhanna has retail capacity of 80% in Kazahkstan in high end furniture and exclusive furniture market in Kazakhstan is for 80%
represented by Sergio Interiors) we can say the economy is expected to grow at a high rate
• Thus, we can take yearly growing rate to be 12% in optimistic scenario and 10% in pessimistic (based on real data, between 2006 and
2010 the CAGR was 11% )
• We took distributer’s percentage on net sale for rendering their services to be 10%, since it is the most common scenario in most of ex
soviet union countries (based on the experiences of the entrepreneurs from Serbia we interviewed ,as well based on the information we gained
from the employee of one of the biggest furniture distributer in Kazakhstan).
• Negotiation between distributors and Italian companies goes smoothly, and not high percentages on net sales for distributers are needed to
make them cooperate with recognizable companies as Carpanelli is.

43. Estimated Income Statement for the
First 3 Years of Operation
• Optimistic scenario:
• Pessimistic scenario:
2015 2016 2017
Revenues 1 600 050 1 792 056 2 007 103
Cost of goods sold
(30%)
480 015 537 617 602 131
Marketing expenses 5 572 5 572 5 572
EBIT 1 125 607 1 260 011 1 399 400
Distributor’s service
fee 10%
112 560 126 001 139 940
Gross Profit 1 013 047$ 1 134 010$ 1 259 460$

44. Estimated Income Statement for the
First 3 Years of Operation
• Pessimistic scenario:
2015 2016 2017
Revenues 896 028 985 631 1084 194
COGS (50%) 448 014 492 815 542 097
Marketing expenses 5572 5572 5572
EBIT 442 442 487 243 536 525
Distributor’s service
fee 10%
44 244 48 724 53 652
Gross Profit 398 198$ 438 519$ 482 872$

45. Conclusion
• According to the financial analysis done, Kazakhstan furniture market
offers large opportunity for Carpanelli
• Furniture market in Kazakhstan has a considerable potential for European
importers, mainly due to existing gap between ‘exclusive’ and ‘high class
furniture’ suppliers which marks out a potential niche for European high
quality furniture targeting growing higher middleclass households with
income between USD 4,000 to USD10,000
• Another motive for European furniture companies to enter Kazakhstani
market is a qualitative factor of demand which is marked by growing
customers’ preference towards European contemporary furniture styles,
which are rapidly replacing previously trendy ‘soviet-era’ style