Haverwood Furniture, Inc. operates in the furniture industry, selling upholstered, wood, and ready-to-assemble furniture at medium to higher prices. In 2007, the company had $75 million in sales. For 2008, the company proposed a $225,000 advertising budget. However, the document recommends declining this budget proposal, keeping advertising spending the same as the previous year, and instead focusing on adding personnel, developing an online presence, and expanding distribution channels to furniture chain and discount stores to boost sales and further assist customers.

1. Haverwood Furniture, Inc.
I. Summary of Facts
A. Market - Furniture Industry
1. Types of customers
a. Buying public
b. Baby boomers
c. Retailers
2. Factors of furniture buying
a. Incidence in new housing starts
b. Consumer confidence
c. Disposable personal income
3. Behaviors/trends of furniture buying
a. Customers lack confidence
b. Commitment towards a style
c. Price concerns
4. Economic market
a. Monopolistic Competition
b. Many sellers with a range of prices, styles, and services
B. Product
1. Haverwood Furniture
a. Upholstered
b. Wood (Tables, dressers, and dining room suites)
c. Ready-to-assemble products
d. Casual furniture
2. Benefits
a. Core - Home furnishing/styling products
b. High quality/long-lasting products
c. Medium/high priced products
3. PLC
a. Growth stage
b. The company has peaking profits, many competitors, and intensive
distribution to high quality stores and customers.
C. Price
1. Medium to higher priced products
2. Record $75 million in sales for 2007
3. Proposal of $225,000 for advertising in 2008
4. Sales expenses and administration costs were rising to $65,000-$70,000 in 2008
5. In 2007, allocated costs were $3,675,000 for total promotional expenditures
6. Total industry sales were $31 billion for 2007
7. Elasticity
a. Relatively elastic
b. Customers purchase lowest price and favorable style
D. Promotion
1. Consumer advertising (Appear in shelter magazines)
2. Trade advertising (Appear in brochures, point-of-sale, technical booklets, and
have 2 trade shows per year)

2. 3. Cooperative advertising (Appear in newspapers, some television and radio spots)
4. Expansibility
a. Highly expandable
b. Sales are affected by the industry, the economy and consumer demand
E. Place
1. Furniture and home furnishing stores
2. Department stores
3. Mass-merchandise stores in United States
4. Channel: Haverwood Furniture Inc-Agents-Retailers-Consumers/Users
F. Other
1. Competition
a. 1,000 manufacturers in the United States
b. Ten manufacturers represent 1/3 of furniture industry sales
c. Top 25 manufacturers account for half of U.S. furniture sales
2. Wood quality
a. Improving quality controls
b. Stressing price points and styling features
c. Improving shipping schedules
3. Imports
a. Many companies have outsourced their manufacturers
b. Imports have driven down prices, 30% in some categories
c. U.S. manufactures have been closing in past several years
II. Problem/Opportunity
A. Primary – Budget proposal
B. Secondary
1. Addition of personnel
2. Advertising budget changes
3. Knowledge of customers
4. Internet website
5. Distribution to stores
III. Recommended Action
A. Primary – Decline the budget proposal
B. Secondary
1. Add one extra personnel to the company
2. Keep the advertising budget the same as previous year
3. More emphasis to train employees to further assist customers confidence
4. Develop a website to further assist with product distribution
5. Sell furniture to furniture chain stores and discount stores