Charlton Bate’s great-grandfather formed the Haverwood Furniture Industry in the early 1900’s. The Company are a medium to high-priced and high-quality producer and sell over 1000 high-quality products in stores nationwide. They are very discerning in selecting merchandising outlets to reflect their products, so they are more of a niche corporation, and do not trade with the usual chain stores or markdown outlets rather they are sellers to High-quality specialty stores and self-governing furniture department stores (Oliveira, 2009). Their quality furnitures include dressers, tables, bedroom and living room suites, with bedroom and dining room furniture being the majority of sales.

1. 1
Case analysis for "Haverwood Furniture A"

2. 2
Table of Contents
Introduction...............................................................................................................................................3
Identification of the strategic issues and problems...........................................................................3
Analysis and evaluation...........................................................................................................................4
Conclusion ..................................................................................................................................................7
References..................................................................................................................................................9

3. 3
Introduction
Charlton Bate’s great-grandfather formed the Haverwood Furniture Industry in the early 1900’s.
The Company are a medium to high-priced and high-quality producer and sell over 1000 high-
quality products in stores nationwide. They are very discerning in selecting merchandising
outlets to reflect their products, so they are more of a niche corporation, and do not trade with the
usual chain stores or markdown outlets rather they are sellers to High-quality specialty stores and
self-governing furniture department stores (Oliveira, 2009). Their quality furnitures include
dressers, tables, bedroom and living room suites, with bedroom and dining room furniture being
the majority of sales.
Identification of the strategic issues and problems
Haverwood Furniture Inc. surfaces a couple of challenges. The chief challenge is how to assign
an advertising expenditure proliferation. Their advertisement agency Hervey and Bernham
propose increasing advertising expenses by $225,000, to be disbursed on consumer marketing
program for shelter magazines by several customer magazines advertisements. Buyers spending
for wood furniture is very recurrent and is unswervingly linked with the regularity of new
housing starts, customer confidence, and not reusable income. Michael Harvey believes that
increasing customer spending by $225,000 will considerably effect consumer confidence in the
business’s favor, motivating sales. Even though business study opines that consumers regard the
furniture shopping experience to be enjoyable, consumers know the fact that they often lack the
required abilities and sureness to assess furniture construction, provide decisions about quality,
and to quantitatively evaluate the price of furniture (Silva, 2009).

4. 4
Another challenge that Haverwood faces is deciding whether or not to combine sales efforts after
a current merger with a furniture company named Lea Meadows Inc. This is a great prospect to
seal in a gap within its merchandise mix. Furthermore, Haverwood already hires a team of ten
full time sales representatives who gets a yearly salary plus a slight commission. Lea Meadows
employs fifteen sales agents to represent its merchandises, who were waged five percent
commission of remaining company sales. Their sales agents also represented noncompeting
furniture companies. The challenge existing is determining whether or not to combine sales
efforts or to offer one sales team the upholstery line (PDC, 2009).
This trade has many different divisions that form as a whole. A few of these sections are sellers,
manufacturers, and raw material producers. A pronounced deal of the raw materials are brought
in from diverse nations in order to keep persistent on quality and cost. Some of the furniture
companies have decided to subcontract different process in order to be cost effective. The
furniture industry depends on diverse financial circumstances which may directly influence a
consumer’s buying power (Rodrigues, 2008)
Analysis and evaluation
The household wood furniture industry is a significant business segment of the general furniture
industry, which is distributed into three main categories: 1) upholstered, 2) wood, and 3) other
(read-to-assemble and casual furniture). Of these three upholstered makes 50 percent of sales,
wood contributes 40 percent of sales, and only ten percent of sales are credited to other. 30% of
business sales have subsequently been accounted for by foreign manufacturing, while ten
manufacturers in the U.S. characterize on-third of the marketplace. Haverwoods have baby
boomers, 47% of all U.S. households and the forty to fifty year old upmarket proprietors with a

5. 5
yearly income of at least $100,000 as their target market. These shoppers according to study
(77.5%) favor a well-informed salesperson when factoring a furniture buying, which is one of the
establishment’s strengths. In the year 2007, end net sales were $75 million earning $3.7 million
excluding excises (Hawks, 1995). The overall sales of the Wood furniture industry for 2007 were
$15.5 billion and the estimated sales for fiscal 2008 revealed as $16.1 billion.
As per the reports there are over a thousand producers in the U.S but only ten companies
characterize one-third of whole furniture manufacturing dollar sales and the top twenty-five
manufacturers account for above half of U.S. furniture trades. Moreover, bedroom furniture from
Asia characterizes 30% of business deals. The prime reason is the importation that has
considerably dropped furniture prices by 30% in some kinds. Many U.S. corporations have
begun outsourcing their furniture trade (Braga, 2009).
The magazines such as Better Homes and Gardens, House Beautiful, and Southern Living offer
95% of refurbishing ideas for customers according to a survey done by Better Homes and
Gardens, they do not offer adequate reason to drive the consumers to buy furniture. However, a
survey done by Better Homes and Garden magazine questioned contestants to rank dynamics
which effect a purchase by order of prominence. Merely 16.3% demanded that magazines were
the most significant while 62.8% said that family/spouses had the major influence on the choice
(Gilder, 2008).
Recommendation
The recommended solution is to discard Mike Hervey's budget suggestion. Professor Bates
indicates that the $225,000 upsurge in promotion will take the budget up to the five percentage
of sales policy bounds. Haverwood’s 5% promotion strategy already overspend the

6. 6
manufacturing standard of 3.5%. A projected 4% upsurge in trades for 2008 will already upturn
the budget to $3.9 million. However, by illustrating supplementary funds from cooperative and
trade marketing allowances, such growth can be accommodated without violating the five
percentage of sales policy parameter. The advertising dollars will be adjusted. Trade publicity’s
advantage is that doing this effectively will influence trader sales to the end-user. They also
comprise brochures for consumers and point of consumption supplies for merchants. Sales
expenditure and supervision include office assistance, remunerations for sales laborers and sales
supervisors. This factor is very important in order to endure and endorse customer service. It is
suggested that these two are improved respectively (Bott, 2008). A substitute to this is to
introduce a promotional website with simulated gallery, maintain its online presence and a
universal presence with a budget of $500,000. With the reduced creation cost it would prove to
be a competitive advantage (Martins, 2008). The market is massive and online trades can be as
much as $5 billion per year says one confidential source. With the better presence of galleries
and exploration of full line will lead to inordinate opportunity and appeal to consumers. Study
shows approx. 58% upmarket customers get ideas for furniture purchases at arcades or design
center retail showrooms.
Reconstruction of communication program should also be introduced. The emphasis should be
placed on Baby Boomers, who embodies 47% of all U.S. households .These shoppers were born
between the years 1946 to 1964. Their typical household earnings is $54,170. They want
products that fit their personality and so it’s even more imperative to be able to focus on the
different individual classes and designs Haverwood has to offer. This tributes the advertising
costs increase in trade campaigns as well as sales expenditure (Gilder, 2008).

7. 7
Again, sales force and sales mediators should be kept detached .This is particularly true for Lea
Meadows who have proficiency in upholstered furniture, unlike Haverwood’s wood furniture. To
strive in this concentrated market place it is essential that the business encourages a focus
strategy and concurrently a differentiation plan. It is argued that additional employees should be
added to help with the fifty new accounts. Sales representatives can train, counsel, and stimulate
retail sales teams. It is graphed that 99% of subscribers like when salespeople deliver existing
options. However, adding a supplementary sales representative to sell the furniture at a cost of
$70,000 is not worth the 0.25 rise in time spent trading. Increasing the call occurrence by seven
added calls per account per year is unmanageable as there are only 2,000 hours in a work year
(Daft, 2008). There will be no reorganization of sales areas or possible downsizings, however it
strongly recommended that new business policies be considered. One should be created to avoid
the same purchaser and dealer to be communicated for the same information. As said before,
buyer spending for wood furniture is very recurrent and directly associated with the frequency of
new housing starts, consumer assurance, and disposable earnings. It can also be argued that
increasing consumer spending may have little influence on increasing customer confidence
(Rodriguez & Echanis, 2008). Distribution should be made more to trade campaigns and other
expenses and decreasing the drift from magazine subscriptions.
Conclusion
A lot of buyers find it actually difficult to choose among the many styles offered by the furniture
companies, scared that they may not like their selection several years after the acquisition. They
purchase furniture from a wide selection of variety, whether they instinct buy or see an
impression in a magazine. Most of the customers believe that a higher price is equal to a higher
quality. Since Haverwood Furniture have a well admired and specialized sales force in the

8. 8
industry, they are bound to attract consumers. Optimistically, the elucidations cited in the report
will help the customers see the remunerations of purchasing from Haverwood, while also
creating the establishment stand out with high quality products and service.

9. 9
References
Da Silva, J. R. M., Martins, M., Oliveira, G. M. V., & Braga, P. D. C. (2009). Parameters of
quality of the woodworkability for determination of different usage of Eucalyptus wood. Cerne,
15(1), 75-83.
Yglesias, C. (2014). Making Materials Matter in Landscape Architecture Education. Research
Record, 11.
Grbac, I. (2008). Wood in the trends for the modern living. In Wood is good: properties,
technology, valorisation, application. Proceedings of the 19th international scientific conference,
Zagreb, Croatia, 17th October, 2008. (pp. 19-29). Faculty of Forestry, University of Zagreb.
Hawks, L. K. (1995). Wood Finishing & Refinishing: Sanding.
Gilder, R. (2008). The Century Illustrated Monthly Magazine, 229-230