1. ) Present an analysis of how consumers buy furniture given the data in the case that is relevant for Crestfield management. (30 points) Crestfield Industries uses a unique approach to selling their furniture and I feel it is important to understand their go to market selling strategy prior to determining how consumers buy from Crestfield. For starters, Crestfield employees 10 full time regional sales managers in the field that are factory trained to assist the distributors on the “Best Practices” of selling the features and benefits of the Crestfield furniture product offering.
Additionally, Crestfild has two Regional Sales Managers who are tasked with training the sales staff and developing new markets and distributors. A direct sales force in the furniture industry is an anomaly and the original owner of Crestfield Industries; Charlton Bates was credited for being “before his time by having factory direct sales staff in the field”. I feel it is relevant to point out the direct sales team at Crestfield is commission based and they are tasked with motivating the retail sales people they work with to “push” the product line.
Additionally, by having a committed sales person as a resource, retail sales staff can gain assistance on how to set up and market the furniture at their individual stores. This article claims that 50% of all Crestfield sales can be traced to the direct efforts of a factory sales representative. Now that I have reviewed the Crestfield factory approach to selling Furniture I can look at how consumers purchase furniture to determine how effective the Crestfield approach to selling really is.
Distribution, furniture is sold through 100,000 specialty furniture and home furnishing stores, department stores, and mass-merchandising stores in the United States. Specialty furniture (Crestfield Industries) and home furnishing stores account for 68% of retail sales.
This is an important percentage for Crestfield to pay attention to. Furniture retailers can be broken down into 6 sub-sets of retail including Gallery Stores, Design Center showrooms, Furniture stores, Department stores, Antique stores and finally lifestyle stores. With all these options to sell through, Crestfield Industries has chosen to market their product using 1,000 high quality department stores.
Their approach is simple, align the company with the best department stores in the industry and push sales by up selling the product with your factory direct sales staff. Department stores and mass-merchandising stores account for 15 and 12% of retail sales respectively.
Consumers purchase furniture by making a number of decisions prior to entering a furniture store. Consumers learn about furniture by reading advertisements in Better Homes and Gardens magazines along with County living and possibly internet searches. Additionally, research has shown that consumers are poorly educated to the features and benefits of furniture products. Crestfields approach to selling furniture with direct sales staff answers this need.
Statistics from a Better Homes and Gardens survey show that 99% of all furniture buyers “ When shopping for furniture and home furnishings, I like the salesperson to show me what alternatives are available, answer my questions, and let me alone so I can think about it and maybe browse around”. Based on this feedback I feel it is imperative that Crestfield continue to offer factory direct sales staff to train the retailers on the features and benefits of the Crestfield furniture product offering.
Statistics also show that consumers lack the knowledge of furniture features and benefits and Crestfield will need to develop a marketing strategy that teaches consumers why their furniture is better than the competitions. As a consumer, I like the show room (Gallery) approach to purchasing furniture because I can look at the individual pieces of furniture assembled into a room that replicates my home setting. Like all consumers making big monetary purchases, I want to see what my purchase is going to look like prior to purchase and also what it feels like when I sit down or lay down on it.
Furniture is a very personal purchase and touching and feeling are all part of the decision making process, so presentation is critical to the purchase. 2. ) What should be the prioritized communication objectives for 2004 and why? (20 points) Crestfield is planning on launching a new line of furniture in 2004 and consumers need to be educated on the features and benefits of the furniture. Statistics show that consumers do not understand how furniture is made and what separates good quality from bad.
I would advocate that Crestfield commit to advertising in trade magazines (Shelter) and cooperative advertising to get the word out that they are launching a new product line. Additionally, Crestfield needs to develop their web-site to be an educational vehicle where potential consumers can learn about their manufacturing techniques and also warranties of their furniture. Web-site, is one of the most effective selling tools the company can have and I feel the buying public uses search engines to ferret out their purchase choices so Crestfields need to be the best in the industry.
I would start by purchasing placement on all the top search engines like Google to ensure when a potential customer searches for furniture Crestfields name is placed in the top three listings. I would also have the web-site show cross sections of all the furniture offerings where consumers can see the different construction techniques that Crestfield uses to manufacture their products. Additionally, I would advocate that all covering materials (Fabrics) and leather materials be explained on the site so consumers can choose the best fabric or leather for their own taste.
I find the cover material decision is just as important to me as the construction of the furniture. As for wood selection, I feel Crestfield needs to explain why wood varieties are selected and which ones make the best furniture. I feel consumers need to be educated on wood selections so when they are ready to purchase they will be asking the important questions like wood type, materials of construction, fabrics used and leather quality!
Additionally, Crestfield may want to consider offering customers a manufacturers discount on the website by simply asking the customer to print out a coupon and bring it in for a percentage off their next purchase. This coupon will allow Crestfield to track their websites usefulness and effectiveness. Printed Literature, all advertisements and product literature developed for the new product should have a common theme and look to tie all printed media together. I feel many companies forget to incorporate a theme into their product offerings.
I would suggest that the marketing department design their theme around the personality of the company and the market the furniture is designed for. If Crestfield offers a high quality refined product that is intended to a specific demographic customer than all media should target the same atypical customer. Direct sales force, should be educated to train the trainer on quality and benefits of the Crestfield product offering. Direct sales staff for Crestield all need to be “communicating” the same message to the distribution network and ultimately the customer.
Training the distribution network to mirror the communication directive of the company is imperative to get a common mantra to the end user of Crestfield furniture! Trade shows, Cresfield needs to get the word out on their new furniture product offering and I am suggesting they participate in industry related trade shows across their target markets. Trade shows are a great way to feature your product in front of future customers, distributors, company owners. By showing the product prior to its launch into the market you educate the distribution network on what is coming from Crestfield Industries.
Additionally, potential distributors can be solicited and these shows to grow the selling organization at Crestfield. By developing a multiple pronged approach to communicating the full product offering Crestfield offers along with the selling features and benefits of the individual products I feel Crestfield will have a well thought out and effective communication strategy. 3. ) Assess the competing needs to be considered in the budget for 2004 (20 points) See attached excel spreadsheet detailing the 2004 Promotion dollar worksheet I have developed for Crestfield Industries.
I feel Crestfield should use the recommended 6% percent sales growth number recommended by the AFMA to calculate their 2004 annual sales “forecast” but only fund the necessary expenditures. If sales are forecasted to be $75,000,000 million in fiscal year 2004 and the company policy is to calculate 5% of sales for promotion expenditures then I feel the $3,750,000 budget is reasonable. Additionally, I feel the budget should reflect the hiring of an additional company sales representative to handle the 50 additional sales representatives need to get
the word out on the new furniture line. The monies appropriated for the new hire will be money well spent when statistics show that 50% of all sales are directly traceable by internal sales efforts. With the introduction of the new product line of furniture it is imperative that Crestfield support the selling efforts with additional factory trained sales staff. I would also recommend the company aggressively fund the cooperative advertising budget to inform the buying public that Crestfield has launched a new line of furniture.
Additionally, Crestfield needs to increase spending on both Trade advertising and consumer advertising. I would like to see an advertising plan that ties all trade advertisements into a common look and theme that work synergistically with the new company web-site. I would recommend that all advertisements have the new web-site address clearly printed on them to raise customer awareness. I would also implement a distributor network of independent commissioned sales staff to work in the field selling the product line to the smaller independent furniture dealers.
I feel a distribution network of commissioned sales staff will be an effective way of penetrating the smaller and discreet markets that the larger stores don’t service and our direct sales force can’t spend time with. Our independent representatives will be factory trained and capable of up-selling the entire product offering. The last change I am recommending is the implementation of a factory direct Gallery style store. I feel the company can greatly benefit from a factory store in many ways, training of all internal and independent sales representatives in a store setting.
The gallery setting will give the company the ability to work different product offering into sets and duplicate the success in the field. Sales staff can take the learned knowledge into the field and duplicate the success learned at the factory store. I feel the factory store concept is a real winner with little risk. I am proposing we use a leased space for the first year to keep expenses down and when the concept takes off the company can fund the growth through profits gained by additional sales.
My excel spreadsheet reflects my sales forecast proposal. 4. ) What is your recommended total integrated marketing communication budget for 2004 and how should it be allocated? (30 points) My integrated marketing communication budget will be calculated on 5% of annual forecasted sales for a total of $3,750,000 dollars. My budget monies will be spent using a six pronged approach adopting some of the traditional Crestfield approaches with additional spending being appropriated for the following.
Note: See attached Excel spreadsheet for my Crestfield communication budget. •Additional hire of (1) new factory direct sales person bringing total to (13). •Develop new web-site specifically for educating customer on the features and benefits of the Crestfield furniture product offering. •Trade Advertising, tie the ads look into a common theme for all printed media and web-site. Participate in industry recognized “Trade Shows”. •Cooperative advertising – stretch sales dollars by working collectively with the stores to target market sell.
•Consumer Advertising – this is imperative to get the word out to potential customers that Crestfield had launched a new product line extension. •Development of Independent Sales Representative network – I want to develop and independent selling team that is commissioned based to reach the small town independent furniture store. •Factory Gallery Store – Launch a Factory direct “Gallery” style furniture store. oTrain the trainer program to be implemented in factory store. oDevelop new product groupings oInterview customers on the likes and don’t like’s.
oPrice point marketing to see where target pricing needs to be. oDevelop company / factory sales training program. oUse Gallery store to train all independent sales representatives. My approach to sales for Crestfield Industries will be using a multiple faceted approach to generating additional furniture sales. By incorporating a new web-site to educate the buying public, purchasing placement on the largest search engines to ensure the Crestfield product offering gets reviewed and hiring additional sales staff I believe my communication plan is a winner.
The Gallery store will require a large “capital” outlay that is outside the normal communication budget but I feel the investment will allow Crestfield the opportunity to explode their sales and gain invaluable marketing information. Having a factory owned store will allow Crstfield to communicate directly with the end uses and test market future furniture products before actually mass producing them. The knowledge gained will be invaluable. In conclusion, Crestfield Industries will be a better company by adopting my communication budget and plan to grow their sales and long term financial future!