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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.
Willamette Furniture occupies a specific niche within the office furniture market. Therefore, our competition does not provide comparable products, as they lack the combination of technological integration and quality in materials and craftsmanship. Our nearest competition includes Ethan Allen, Acme Computer Furniture, and ABC Manufacturing. These companies distribute their products through channels such as chain office supply stores or their own retail locations. In contrast, Willamette targets its potential customers based on their search for our type of product.
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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.
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 products, we do not use laminates or cheap manufacturing technology.
Our marketing 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.
Our target market is a person who wants to have very fine furniture with the latest in technology, combined with an old fashioned sense of fine woods and fine woodworking. This person can be in the corporate towers, small or medium business, or in a home office. The common bond is the appreciation of quality, and the lack of price constraints.
|Small Business Owners||3%||150,000||153,750||157,594||161,534||165,572||2.50%|
We focus our marketing on three types of target consumers:
|Market Segments||Computer Usage||Age||Income||Issues||Decision Maker|
|Corporate Executives||Medium||40-65||$200,000 and up||Prestige||Staff|
|Small Business Owners||Medium||30-65||$50,000 and up||Comfort||User|
|Home Offices||High||25-65||$100,000 and upo||Space||User|
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 old-fashioned 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 continue to demand more advanced technologies and their integration into the office atmosphere. A sense of craftsmanship and quality of materials, such as oak and cherry, is timeless. The synergy of this desire for the classic cabinet-maker look, and use of technology is inherent in Willamette's offerings.
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.
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.
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.
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 environments, and we want every dollar spent with us to be well spent.
We also create and nurture a healthy, creative, respectful, and fun office and workshop environment, in which our employees are fairly compensated and encouraged to respect the customer and the quality of the product we produce. We seek fair and responsible profit, enough to keep the company financially healthy for the long term and to fairly compensate owners and investors for their money and risk.
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 high-end office, but is intended to accommodate the personal computer. Each piece is available in either oak or cherry.
Further supporting our 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.
In 2001 we will introduce the new custom option to our executive desk line based on the laptop computer, with a docking station to connect to a network. The new furniture has a different configuration to assume easy access to the docking station, and better use of the space that doesn't have to be dedicated the the CPU case.
We are also going to accommodate larger monitors, the 17," 19," and 21" sizes that are becoming much more common, particularly in our high-end market. We will also be watching for technological developments, allowing us to be the first to provide custom furniture for wall-mounted flat screens, liquid crystal displays, and similar technologies.
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.
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.
The following historical results table is based on research and some simplifying assumptions:
Looking at the table, we can see that we may soon begin to have measurable market share, as our new channels allow us to contemplate future growth. Our present market share is a function of dividing our numbers, since we don't show up in any industry surveys -- yet.
|Company Market Share||12%||13%||14%|
|Industry Variable Costs||$84,600,000||$86,400,000||$87,900,000|
|Company Variable Costs||$8,413,470||$9,535,266||$10,100,047|
|Industry Gross Contribution Margin||$59,220,000||$60,296,400||$61,730,328|
|Company Gross Contribution Margin||$8,844,930||$9,535,266||$10,848,199|
|Company Net Contribution Margin||$8,821,330||$9,507,666||$10,805,199|
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.
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 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.
|Growth and Share|
|Competitor||Price||Growth Rate||Market Share|
|Acme Computer Furniture||$800||8%||3%|
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