Professional Documents
Culture Documents
Situation Analysis
Willamette Furniture's product offerings focus on the executive level
customer who has an appreciation for quality craftsmanship and
materials, and wishes to integrate technology in to their office
environment. Our market segments within the office furniture
context include the corporate executive, small business owner, and
home office. We will target these markets through a variety of media
including the Internet, catalog distribution, and word of mouth
advertising. Because Willamette offers products at a high cost level,
we do not wish to mass market. Rather our strategy is to make our
product information readily available to those seeking quality office
furniture with specific technological needs. Therefore, we will add
internal catalog publishing to our existing catalog marketing
programs (currently through high level channels such as Sharper
Image). In addition, because our product assumes the use of
computer technology, the development of websites will increase our
company profile by promoting our product line in the media most
appropriate to our customers.
Market Needs
Willamette gives the discriminating personal computer user, who
cares about design, quality furniture, and quality of working
environment, a combination of the highest quality furniture and an
integration of the latest technology, at a relatively high price.
Willamette provides this discriminating customer with more than a
piece of furniture. We provide a quality working environment that
includes the integration of technological components that generally
exist as part of the executive setting. The quality of manufacturing,
materials, and ergonomics found in our products serves to enhance
the appearance of an executive's office atmosphere, in turn adding
to their status and effectiveness as a decision maker, innovator, and
leader.
We understand that our target market needs more than just office
furniture. This need grew out of the special requirements of personal
computing, when combined with office furniture -- keyboards at
correct height, monitors at correct height, proper channels for
cables, and other amenities. Our target customer wants to have all
of that, plus fine furniture. There is a need for quality wood and
workmanship throughout. We don't just sell office furniture, we sell
design, workmanship, fine materials, and a total-quality office
environment.
The Market
Our product is positioned very carefully: this is high-quality office
furniture combining workmanship and ergonomics for the customer
who understands quality, is a user of high technology equipment,
and is willing to spend money on the best. Unlike the mainstream
Market Analysis
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Market Analysis
2000
Potential Customers
Corporate
Executives
Small Business
Owners
2002
2003
2004
Growt
CAGR
h
2%
3%
Home Offices
5%
Other
5%
Total
2001
3.99
144,0
146,3
148,6
151,0
153,4
00
04
45
23
39
150,0
153,7
157,5
161,5
165,5
00
50
94
34
72
440,0
462,0
485,1
509,3
534,8
00
00
00
55
23
100,0
105,0
110,2
115,7
121,5
00
00
50
63
51
834,0
867,0
901,5
937,6
975,3
1.60%
2.50%
5.00%
5.00%
3.99%
00
54
89
75
85
Market Demographics
We focus our marketing on three types of target consumers:
1.
2.
3.
4.
Market Demographics
Comput
Market Segments
er
Age
Income
Usage
$200,00
Corporate Executives
Medium
40-65
0 and
Prestige
Staff
Comfort
User
Space
User
up
Small Business Owners
Medium
30-65
$50,000
and up
$100,00
Home Offices
High
25-65
0 and
upo
Other
Market Trends
Our market has finally grown to recognize the disparity between
most of the standard office furniture sold through channels and our
own products.
The development of the high-end office worker, office owners, and
the baby-boomer executive is an important trend for us. We now
have people who are using computers and also appreciate the oldfashioned workmanship of good furniture.
Today's high integration of technology in the work place, especially
in the multi-task oriented, executive environment, sets the stage for
growth in the area of high quality, technologically integrated office
environments. Similarly, home offices and small business owners
Market Growth
According to [source omitted], the market for office furniture is
growing at XX percent per year, and is projected to increase. The
market for PC-related office furniture is growing even faster, at YY
percent per year, and is projected to top $XX billion by the year
2005.
Most important is the growth in home offices with personal
computer equipment. As the cost of the computer goes down,
steadily, the number of home offices goes up. According to [source
omitted], this is about 33 million right now, growing at 15 percent
per year. Households spent $XX billion last year to equip home
offices, and 15 percent of that was spent on furniture.
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Macroenvironment
At a large scale, market research demonstrates that the high-end
market that we are catering to is growing and changing to our
benefit. Generally, there is a trend toward executive turnover in
large companies today. That is, corporate restructuring, increased
small business development, and the growth of the home office
sector is providing for a younger market in the executive, small
business owner, and home office positions.
Research indicates that this new generation of executives
implements technology to a much higher degree than past trends
have indicated. Therefore, with the emergence this new generation
of executives, the appreciation of quality craftsmanship and
materials in office furniture that provides for an effective office
environment, combined with the utilization of emerging
technologies for greater efficiency, dictates that our product line will
increase in popularity.
The Company
Willamette Furniture Mfr. is a privately-owned
specialty manufacturer of high-end office furniture for computer
users who care about elegant office space. Our customers are in all
levels of business that can afford very high quality office furniture,
plus a growing portion of high-end home offices.
Willamette Furniture Mfr. is an Oregon corporation, subchapter S,
owned entirely by Jim and Susan Graham. It was created in 1992. At
that time the product line and industrial property rights (including
trademarks) were purchased from the heirs to the Willamette
Association, which was a 1970s commune in rural Oregon.
Willamette Furniture Mfr. had actually existed since the 1970s as a
"hippy commune," but its present existence began in 1992 when the
furniture line was purchased by Jim and Susan Graham. The
Grahams moved to Oregon from California and purchased the
business as part of the move.
Sales took a big jump in 1997, when we reached more effective
channels of distribution. The key was winning a place in the Premier
Executive office furniture catalog, which led to winning the interest
of the Needham furniture distributors, and display space in several
hundred stores.
Profitability and working capital were problems during our recent
growth, but we believe we now have costs and cash flow under
control.
Mission
Willamette helps create pleasant, productive office environments
with well-designed furniture that incorporates new technology into
the classic office model, in which real people can work happily. We
are sensitive to the look and feel of good wood and fine furniture, as
well as to high-powered personal computing. We always provide the
best possible value to our customers who care about quality office
Product Offering
Willamette offers very high quality office furniture designed to
effectively incorporate computer machinery into the executive office
or home office. The key to the line is an ergonomically effective desk
that still looks like an executive desk and looks very good in a highend office, but is intended to accommodate the personal computer.
Each piece is available in either oak or cherry.
1.
2.
3.
Positioning
Our competitive edge is our dominance of high-technology
ergonomics and traditional high-quality furniture workmanship.
Although there are many computer furniture manufacturers, and
many computer lovers, few have brought the two crafts together as
we have.
We focus on a special kind of customer, the person who wants very
high quality office furniture customized to work beautifully with
modern technology including personal computers, scanners,
Internet connections, and other high-tech items. Our customer
might be in larger corporations, small or medium business, or in a
home office with or without a home-office business. What is
important to the customer is elegance, fine workmanship, ease of
use, ergonomics, and practicality.
The product strategy is also based on quality, in this case the
intersection of technical understanding with very high quality
woodworking and professional materials, and workmanship.
An important competitive edge is our assembly strategy, which is
based on interlocking wood pieces of such high quality that
assembly is not only a pleasure for our customers, it is actually a
feature that enhances the sense of quality.
SWOT Summary
We are on the brink of major opportunity. We have the strength of a
combined expertise in high-tech ergonomics and furniture
manufacturing, and the opportunity of a growing market and new
channels of distribution. We have the weakness of a small company
without a lot of experience, and the threat of new competition
taking aim at our niche.
Strengths
Weaknesses
Opportunities
Threats
1.
2.
3.
Existing competition.
Historical Results
The following historical results table is based on research and some
simplifying assumptions:
1.
2.
4.
Historical Data
Variable
Industry Revenue
Company Market Share
Company Revenue
Industry Variable Costs
Company Variable Costs
Industry Gross
Contribution Margin
1997
1998
$143,820, $146,696,4
000
00
12%
13%
$17,258,4 $19,070,53
00
$84,600,0 $86,400,00
00
$8,413,47
0
0
$9,535,266
$59,220,0 $60,296,40
00
1999
$149,630,328
14%
$20,948,246
$87,900,000
$10,100,047
$61,730,328
Company Gross
$8,844,93
Contribution Margin
Marketing Expenses
$23,600
Company Net
$8,821,33
Contribution Margin
$9,535,266
$10,848,199
$27,600
$43,000
$9,507,666 $10,805,199
Competition
Within our niche we have three significant competitors, Ethan Allen,
Acme Computer Furniture, and ABC Manufacturing. Acme is a bigger
company, operating mainly in our same niche, whose marketing is
better than its product quality. ABC is a subsidiary of Haines
Furniture, a major furniture manufacturer, which has recently
targeted our niche. Ethan Allen is a furniture manufacturer which
produces some office furniture products and markets to the high
level consumer.
In general, however, our competition is not in our niche. We
compete against generalized furniture manufacturers, cheaper
computer-related furniture, and the mainstream merchandise in the
major furniture channels and office supply stores. It is not that
people choose our competitors instead of our product, it is that they
choose lesser quality, mainstream materials instead of the higher
quality furniture we offer.
In the mainstream business, channels are critical to volume. The
manufacturers with impact in the national sales are going to win
display space in the store, and most buyers seem content to pick
their product off the store floor. Price is critical, because the
channels take significant margins. Buyers are willing to settle for
laminated quality and serviceable design.
In direct sales to corporations, price and volume is critical. The
corporate buyer wants trouble-free buying in volume, at a great
price. Reliable delivery is as important as reliable quality.
In the high-end specialty market, particularly in our niche, features
are very important. Our target customer is not making selections
based on price. The ergonomics, design, accommodation of the
computer features within the high-quality feel of good wood, is
much more important than mere price. We are also seeing that
assembly is critical to shipping and packing, but our customer
doesn't accept any assembly problems. We need to make sure that
the piece comes together almost like magic, and as it does, it
presents a greater feel of quality than if it hadn't required assembly
at all.
Direct Competition
Acme Computer Furniture
Acme has been operating since the middle 1980s, and grew up with
computer-related furniture. It was one of the first, certainly the first
we are aware of, to develop personal computer desks and market
through advertising in computer magazines. Today they are about
twice our size. They have a very nicely done catalog and good
relationships with two distributors.
Strengths: good marketing, strong advertising budget, relationships
with distributors, strong direct sales.
Weaknesses: the product is more standardized, and of lesser quality,
with less sense of design and materials and workmanship.
ABC Manufacturing
ABC Manufacturing is a division of Haines Furniture, the second
largest manufacturers of mainstream home furnishings. Haines
bought ABC three years ago and is focusing on our niche. We see
very good quality product, and an excellent sense of design, but
little movement in channels or catalogs.
Strengths: financial backing, product quality.
Weaknesses: ABC has not seemed to understand our niche, where to
find the buyers, how to market as a specialty niche instead of the
more traditional furniture channels.
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Competitor
Price
Growth Rate
Market Share
$800
8%
3%
ABC Manufacturing
$1,500
1%
10%
Ethan Allen
$2,500
3%
15%
Office Depot
$400
12%
32%
Staples
$400
4%
10%
Office Max
$400
15%
30%
$1,000.00
7.17%
16.67%
Average
Total
$6,000.00
43.00%
100.00%
Marketing Strategy
Willamette furniture is moving toward internal marketing control by
establishing programs such as an in-house catalog publishing and
distribution department, detailed customer service vehicles that will
allow us to track the success of our marketing and sales, and further
integration with established quality catalog vendors, such as Shaper
Image.
Our target markets present great opportunities for company growth,
as our niche is not at all saturated at this point. We will dominate
the high-end office furniture market by stressing the quality in
workmanship and materials of our product lines, keeping up with
and integrating technological advances in the personal computing
environment, and by increasing our market research and customer
service in order to constantly satisfy our markets' needs.
The home office, small business owner, and corporate executive will
greatly benefit from our quality products in terms of , comfort, and
appreciation of the office environment. The key to reaching this
market is to make them aware that our products are available. We
do not need to convince them of anything but the assurance of
quality in manufacturing and ergonomic design.
Value Proposition
Willamette Furniture Mfr. gives the discriminating personal computer
user, who cares aboutdesign and quality furniture and quality of
working environment, a combination of highestquality furniture and
latest technology, at a relatively high price.
Critical Issues
The critical issues emerge from the SWOT analysis and review of the
market:
Financial Objectives
1.
To grow our sales more than three times over during a fiveyear period, from $450,000 in 2000 to $1.6 million in 2004.
2.
3.
Marketing Objectives
Our marketing strategy assumes that we need to go into specialty
channels to address our target customer's needs. The tie-in with
high-end quality catalogs like Sharper Image is perfect, because
these catalogs cater to our kind of customers. We position as the
highest quality, offering status and prestige levels of purchase.
Our presence on the World Wide Web will increase the availability of
our products to the specific market segments that we wish to target.
Because Willamette's product offerings concentrate on the
integration of PC technologies, Web presence is a natural objective
in reaching appropriate potential customers.
Finally, our movement into internal catalog publishing will provide
Willamette's marketing managers with additional control over the
content and recipients of our direct marketing. With experience
Strategy Pyramids
Our main strategy at Willamette Furniture is to position ourselves at
the top of the quality scale, featuring our combination of superb
technology and fine old-fashioned woodworking, for the buyer who
wants the best quality regardless of price.
Tactics underneath that strategy include research and development
related to new designs and new technology, choosing the right
channels of distribution, and communicating our quality position to
the market.
Programs are mainly those listed in the milestones table, including
new design programs, new equipment to keep up with design,
channel development, channel marketing programs, our direct
sales, and our continued presence in high-end catalog channels and
new presence in the web.
Marketing Mix
Our marketing mix depends mainly on the product and product marketing, but we
are also leveraging a lot more in our presence in channels than on our direct
national branding. The channels are the key to our recent growth and our
prospects for additional growth.
Product Marketing
Our product marketing has to emphasize the benefits of our unique combination
of technological expertise, ergonomics, and fine furniture craftsmanship. We need
to sell pride of ownership and workmanship, and prestige. That has to come out in
our packaging, finishing, shipping, and collaterals.
Product marketing's most important challenge is the problem of assembly and
packaging. We know we have the best product when we deliver it locally. That
Promotion
Our promotion strategy is based mainly on making the right information available
to the right target customer. We can't afford to sell people on our expensive
products, because most don't have the budget. What we really do is make sure
that those who have the budget and appreciate the product know that it exists,
and know where to find it.
The marketing has to convey the sense of quality in every picture, every
promotion, and every publication. We can't afford to appear in second-rate
catalogs with poor illustrations that make the product look less than it is. We also
need to leverage our presence using high-quality catalogs and specialty
distributors.
Service
The service aspect of Willamette's marketing mix is limited in traditional terms.
That is, due to our high degree of quality in manufacturing and assembly, our
product lines do not require continued maintenance or service. However, we do
consider our customer service to be key to the retention of customers.
Willamette manufactures many accessories in addition to our main, executive
desk lines. As a result, we offer a fully integrated office environment, including
peripherals such as lamps, cabinets, tables, and chairs. Therefore, a Willamette
Furniture customer is not considered to be a one time buyer. The establishment of
a quality office environment can be an on-going process. Willamette will continue
to offer additional pieces to our customers, targeting them based on their
previous purchases.
Sales Plan
Our strategy focuses first on maintaining the identity with the high-end buyer who
appreciates the best available quality, but is also very demanding regarding
computer systems and technology. We've been able to find these customers using
a combination of direct mail catalogs and direct sales to distributors.
For the next year we continue to focus on growing presence in the high-end direct
mail catalog that finds our specialty customer. We will work with Sharper Image
and Broadview more than ever, and we expect to gain position in the major airline
catalogs as well. Specialty retail is a new channel that could become important for
us.
Our work with distributors has been promising. We hope to continue the
relationship with distributors selling directly to larger corporations, even though
this takes working capital to support receivables.
Channels
Our past marketing strategy assumes that we need to go into specialty channels
to address our target customer's needs. The tie-in with the high-end quality
catalogs like Sharper Image is perfect, because these catalogs cater to our kind of
customers. We position our products as the highest quality, highest price offering
in any channel mix.
By including our products in these high-end catalogs, we were able to successfully
target the specific niche that was our marketing milestone. This has provided the
foundation for a move to internal catalog production. With a higher degree of
information control internally, these catalogs will target the same audience, but
will include more extensive information in terms of quality, examples,
testimonials, and information tailored to past sales experiences.
Channels of Distribution
The four main manufacturers are selling direct to the office superstores and
buying discount clubs. This accounts for the main volume of distribution. The
office furniture customer seems to be growing steadily more comfortable with the
retail buy in the chain store.
The major corporate purchases are still made directly with manufacturers.
Although this is a major channel for some of the more traditional manufacturers, it
is essentially closed to new competition. The direct channel is dominated by two
manufacturers and two distributors. The distributors will occasionally take on a
new line -- happily, this has helped Willamette -- but the main growth is in retail.
Published research indicates that 51% of the total sales volume in the market
goes through the retail channel, most of that major national chains. Another 23%
goes through the direct sales channel, although in this case direct sales includes
sales by distributors who are buying from multiple manufacturers. Most of the
remainder, 18%, is sold directly to buyers by catalogs.
this chart
Channel Analysis
Channel Analysis
Channel
Reach
Comarketi Paymen
ng
ts
Cost
Risk
Outside Catalogs
10
Internal Catalogs
Websites
Other
Channel Forecast
Channel Forecast
Channel
Growt
h
2000
2001
2002
2003
2004
CAGR
Outside Catalogs
20%
120
144
173
208
250
20.14%
Internal Catalogs
40%
200
280
392
549
769
40.03%
Websites
40%
100
140
196
274
384
39.99%
0%
0.00%
Other
35.19
%
420
564
761
Implementation Schedule
Willamette Furniture will begin the year 2000 by continuing to strengthen our
alliances with established partners in distribution. We will prepare our catalog
Milestones
Advertising
First Catalog Placement
Second Catalog
Third Catalog
Other
Start
End
Date
Date
1/1/200
1/11/20
00
1/10/20
1/31/20
00
00
1/15/20
2/5/200
00
1/1/200
1/15/20
00
Manage
r
Department
$50,000
Jack
Ads
$40,000
Jack
Ads
$30,000
Jack
Ads
$0
ABC
Department
Manage
Department
$120,00
Budget
0
Start
End
Budget
Date
Date
1/5/200
3/5/200
3/10/20
3/15/20
00
00
7/1/200
8/30/20
00
9/1/200
9/10/20
00
1/1/200
1/15/20
00
Total PR Budget
Direct Marketing
New Distributor
In-House Catalog Plan
In-House Catalog Design
In-House Catalog Mailing
Other
Start
End
Date
Date
3/15/20
3/25/20
00
00
1/5/200
2/19/20
00
2/21/20
3/22/20
00
00
3/25/20
3/30/20
00
00
1/1/200
1/15/20
00
Name me
Name me
Terry
PR
$15,000
Terry
PR
$5,000
Terry
PR
$15,000
Terry
PR
$0
ABC
Department
Budget
Manage
r
Department
$5,000
Cassidy
Tavel
$3,000
Cassidy
Sales
$0
Bertha
Other
$2,000
Bertha
Other
$0
ABC
Department
$10,000
Budget
Websites
$5,000
$40,000
Web Development
Start
End
Date
Date
2/1/200
5/31/20
00
1/1/200
1/15/20
00
1/1/200
1/15/20
Budget
Manage
r
Department
$20,000
Jack
IT
$0
ABC
Department
$0
ABC
Department
Other
00
1/1/200
1/15/20
00
ABC
Department
$20,000
Budget
Other
$0
Start
End
Date
Date
2/1/200
4/1/200
4/1/200
4/16/20
00
1/1/200
1/15/20
00
1/1/200
1/15/20
00
Budget
$5,000
$1,000
Manage
r
Terry
Sampso
n
Department
Other
Other
$0
ABC
Department
$0
ABC
Department
$6,000
$196,000
Financials
The financial picture is quite encouraging. We have been slow to
take on debt, but with our increase in sales we do expect to apply
for a credit line with the bank, to a limit of $150,000. The credit line
is easily supported by assets.
We do expect to be able to take some money out as dividends. The
owners don't take overly generous salaries, so some draw is
appropriate.
Break-even Analysis
Our break-even analysis is based on running costs, the "burn-rate"
costs we incur to keep the business running, not on theoretical fixed
costs that would be relevant only if we were closing. Between
payroll, rent, utilities, and basic marketing costs, we think $30,000 is
a good estimate of fixed costs.
Our assumptions on average unit sales and average per-unit costs
depend on averaging. We don't really need to calculate an exact
average, this is close enough to help us understand what a real
break-even point might be.
The essential insight here is that our sales level seems to be running
comfortably above break-even.
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Break-even Analysis
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Break-even Analysis
26
$40,144
Assumptions:
Average Per-Unit Revenue
$1,518.86
$383.80
$30,000
Sales Forecast
Our sales forecast assumes no change in costs or prices, which is a
reasonable assumption for the last few years.
Sales Forecast
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Sales Forecast
2000
2001
2002
209
350
600
32
35
40
43
50
50
10
10
10
20
297
455
720
2000
2001
2002
$1,600.00
$1,600.00
$1,600.00
$1,750.00
$1,750.00
$1,750.00
$900.00
$900.00
$900.00
$1,000.00
$1,000.00
$1,000.00
$2,500.00
$2,500.00
$2,500.00
$334,400
$560,000
$960,000
$56,000
$61,250
$70,000
$38,700
$45,000
$45,000
$7,000
$10,000
$10,000
$15,000
$25,000
$50,000
$451,100
$701,250
$1,135,000
2000
2001
2002
$400.00
$400.00
$400.00
$525.00
$525.00
$525.00
$180.00
$180.00
$180.00
$300.00
$300.00
$300.00
$625.00
$625.00
$625.00
Unit Sales
Executive Desk Oak
Sales
Executive Desk Oak
$83,600
$140,000
$240,000
$16,800
$18,375
$21,000
$7,740
$9,000
$9,000
$2,100
$3,000
$3,000
$3,750
$6,250
$12,500
$113,990
$176,625
$285,500
Sales by Manager
Willamette's sales in terms of our management structure are
represented in the following table. Jack and Cassidy are our
strongest generators of sales because of their established
relationships with past customers and channels.
We will bring on two new managers due to our progress on the
Internet and through internal catalog publishing. Although the first
year sales projections for Sampson and Bertha are not extremely
high, their positions and customer interactions will increase
exponentially with the completion of our websites and internal
catalogs.
Willamette has decided to bring them on early because Peggy will
be taking a leave of absence during the summer months of 2000.
The overlap will also allow Sampson and Bertha to become quite
familiar with our product offerings before their respective
departments are online.
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2001
2002
Jack
78
126
223
Peggy
30
71
152
Sampson
57
80
109
Cassidy
78
86
103
Bertha
48
92
133
297
455
720
Sales
Other
Total
Average
50
76
120
Sales by Segment
Willamette's sales by program forecasts are a direct result of past
performance stemming from outside catalog marketing and market
research. Our expanding markets are, by default, heavy users of the
World Wide Web. With our technological integration that is key to
Willamette's product offerings, it can be assumed that our target
customers will find our products via the Internet (with a relatively
aggressive Internet marketing scheme).
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2001
2002
109
215
362
Sales
Corporate Executives
94
136
203
Home Offices
90
104
155
297
455
720
Other
Total
Average
74
114
180
Sales by Program
Our sales by segment show how strategically we have targeted our
market segments in the past and project to continue to do so
successfully. With historical experience in targeting these market
segments, Willamette will only increase in its market share due to
expansions in marketing programs tailored to our past success.
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2001
2002
Outside Catalogs
122
134
176
Internal Catalogs
82
152
232
Websites
77
144
207
Customer Service
13
25
105
297
455
720
Sales
Other
Total
Average
59
91
144
Expense Forecast
Our expenses occur as the result of both historically successful
marketing endeavors and projected marketing programs designed
to take advantage of expanding markets and improved product
lines. We will be moving into the realm of Internet marketing and
sales in the year 2000. The initial costs are high relative to the
maintenance costs involved after the websites' creation.
Similarly, the development of an in-house catalog design and
publishing department will incur higher start-up expenses than
maintenance costs after the initial publication. We have chosen
these two new marketing programs as areas where expenses can
initially build up because research indicates that they will cause our
market share to increase exponentially over time.
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2001
2002
Outside Catalogs
$24,000
$50,000
$100,000
Internal Catalogs
$72,000
$104,000
$125,000
Customer Service
$30,000
$40,000
$50,000
Websites
$30,000
$30,000
$40,000
$0
$0
$0
------------
------------
------------
$156,000
$224,000
$315,000
Other
Total Sales and Marketing
Expenses
Percent of Sales
34.58%
31.94%
27.75%
Expense by Manager
Willamette Furniture's expenses in terms of manager are directly
proportionate to the managed program's potential. As our market
share increases and capital is generated, we will support further
marketing programs and the expansion of current programs, thus
increasing our managment budgets for these specific departments
and projects.
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2001
2002
$36,000
$46,000
$61,000
Expenses
Jack
Peggy
$31,200
$41,200
$56,200
Sampson
$31,200
$41,200
$56,200
Cassidy
$24,000
$34,000
$49,000
Bertha
$33,600
$43,600
$58,600
$0
$18,000
$34,000
$156,000
$224,000
$315,000
Other
Total
Average
$26,000
$37,333
$52,500
Expense by Segment
Willamette Furniture's expenses in terms of marketing programs are
directly proportionate to the proposed and historical success of
these programs. As our market share increases and capital is
generated, we will support further marketing programs and the
expansion of current programs.
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2001
2002
Corporate Executives
$84,000
$94,000
$109,000
$48,000
$58,000
$73,000
Home Offices
$24,000
$34,000
$49,000
$0
$38,000
$84,000
$156,000
$224,000
$315,000
Expenses
Other
Total
Average
$39,000
$56,000
$78,750
Expense by Program
Willamette Furniture's expenses in terms of market segment are
directly proportionate to the segment's potential. As our market
share increases and capital is generated, we will support further
marketing programs and the expansion of current programs.
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this chart
2001
2002
Outside Catalogs
$24,000
$34,000
$49,000
Internal Catalogs
$72,000
$82,000
$97,000
Customer Service
$30,000
$40,000
$55,000
Websites
$30,000
$40,000
$55,000
$0
$28,000
$59,000
$156,000
$224,000
$315,000
Expenses
Other
Total
Average
$31,200
$44,800
$63,000
Contribution Margin
Willamette's sales will increase as a result of market growth, market
share increase, and Internet presence. Our gross margin will remain
steady at approximately 75%. The contribution margin will steadily
increase as a result of the initial expenses involved with starting
Contribution Margin
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Contribution Margin
2000
2001
2002
Sales
$451,100
$701,250
$1,135,000
$113,990
$176,625
$285,500
$0
$0
$0
------------
------------
------------
$113,990
$176,625
$285,500
Gross Margin
$337,110
$524,625
$849,500
74.73%
74.81%
74.85%
2000
2001
2002
Outside Catalogs
$24,000
$50,000
$100,000
Internal Catalogs
$72,000
$104,000
$125,000
Customer Service
$30,000
$40,000
$50,000
Websites
$30,000
$30,000
$40,000
$0
$0
$0
------------
------------
------------
$156,000
$224,000
$315,000
34.58%
31.94%
27.75%
$181,110
$300,625
$534,500
Gross Margin %
Marketing Expense Budget
Other
Total Sales and Marketing
Expenses
Percent of Sales
Contribution Margin
Contribution Margin / Sales
40.15%
42.87%
47.09%
Controls
The executive furniture market is steadily increasing at an average
calculated annual growth rate of 7.75 percent. With this in mind, our
marketing programs will expand accordingly. The addition of an
internally created catalog will allow Willamette to market to this
expanding number of potential customers. Sales will increase
accordingly, providing working capital for internal product
development, marketing department growth, and Internet
development. A presence on the Internet will be a key milestone to
expanding sales and marketing potentials through the utilization of
new channels.
Keys to Success
The keys to Willamette's success have historically been effective
market segmentation and implementation strategies. Along these
lines of proven success, Willamette will implement direct marketing
strategies based on our success in distribution through high-end
channels such as the Sharper Image. Our catalog marketing will turn
to in-house production for more specific, extensive product
descriptions.
Successful niche marketing: we need to find the qualityconscious customer in the right channels, and we need to make sure
that customer can find us.
Almost-automatic assembly: we can't afford to ship fullyassembled desks, but assembly must be so easy and automatic that
it makes the customer feel better about the quality, not worse.
Market Research
Due to the market segmentation that Willamette Furniture has
established, we will require constant updates in terms of the
potential sizes, distributions, and purchasing patterns of the quality
conscious, technology utilizing executive markets. We will use our
historical performance to establish a customer database containing
Contingency Planning
Willamette Furniture is unique in its discovery and utilization of the
high quality, executive level computer integrated office furniture
niche. Therefore, it is possible that with our success and superior
design, other, well-established furniture manufacturers may release
a competitive product line. However, Willamette focuses specifically
on the high-end, technologically integrated aspect of office
furniture. With this exclusive concentration, Willamette can continue
to focus its resources on producing the best executive level office
furniture available. Another possible challenge would be the
emergence of a new company in our niche. This however, would not
be quite as threatening, as their initial market share would be
minuscule, allowing for us to strategize further for continued
success. Finally, an established furniture company my choose to
begin marketing to our target market. This would not be overly
threatening because our products are inherently the best available
due to the true craftsmanship involved in their design and
manufacture.
Marketing Organization
Susan Graham, President, is responsible for overall business
management. Our managers of finance, marketing, and sales report
directly to Susan. Susan had a successful career in retail before
becoming half owner of Willamette. She was an area manager of
Ross Stores, a buyer for Macy's, and merchandising assistant for
Sears and Roebuck. She has a degree in Literature from the
University of Notre Dame.
Jim Graham, designer, is responsible for product design and
development, assembly, and manufacturing. Our workshop manager
reports directly to him. Jim designed furniture for Haines
Manufacturing before becoming half owner of Willamette. He was