Inspired by her beagle, Jax, Tina Nguyen created Jax & Bones in 2006 to make pet products. Though she was entering a crowded market--an estimated $59 billion in 2014 sales--the former restaurant manager saw an unmet need: high-end pet beds that appeal to affluent homeowners and help them express their style. By designing specifically for this market, Jax & Bones landed its $200 pet beds and top-line pet toys in stores such as Bloomingdale's, Pottery Barn, and Barneys New York, catapulting sales to an expected $3 million in 2014, up from $2.7 million the previous year. Nguyen shares her strategy for growing a luxury-product company in a commodity marketplace.

1. Create a luxury identity

Nguyen takes her cues not just from the pet industry, but from the fashion and interior design worlds as well, creating products that reflect the latest colors, fabrics, textures, and styles. (She also considers human bed trends. For instance, when memory foam beds for people gained popularity, she added memory foam to her dog beds.) Last year, steel gray, silver, and blue were big in home design, so Jax & Bones added those colors to its line. The result? A 30 percent boost in sales for an existing dog-bed design, making it a top seller for the company. "If you have nice furniture," says Nguyen, "you don't want an ugly dog bed."

2. Get close to the retailers

Jax & Bones designs its products specifically for an upscale retailer's market--be it the contemporary style of Barneys New York or the "shabby chic" look of Pottery Barn. Nguyen's team researches stores and discusses the goals of retail partners to generate inspiration. "We pay attention to their brand and match our designs to their aesthetics," Nguyen says. She brings her ideas to retailers and then incorporates their feedback into the designs. She also shares credit by including language on a product's tag that says it was made by Jax & Bones exclusively for that retailer, which helps enhance her brand's identity.

3. Stay nimble

Nguyen gets a competitive edge by manufacturing most of her products in small batches at a 35-person factory in the same building as her Baldwin Park, California, headquarters. Proximity makes quality control easier and eliminates wait times associated with offshore production. This lets Nguyen respond quickly to fashion and design trends and get to market at least nine months faster. Plus, she can test products with limited risk. If something bombs, the company won't have thousands of unsold items in a warehouse. She can keep minimum orders low, which encourages stores to try new products and allows Nguyen to use retailer feedback to tweak her designs.