Executive Summary

Willamette Furniture has been riding a growth spurt, having discovered the high-end direct mail channel that gave us a push to new potential volumes through channels. Bolstered by appearances in specialty catalogs, we were able to develop another additional channel through distributors of office equipment that sell directly to corporations. We believe that by targeting the high-end market, we can successfully occupy an emerging niche that other channels of distribution have not been able to target. With the implementation of the new marketing focus outlined in this plan, we will position our product line as the high-quality, elegant alternative to mainstream office furniture found in office supply stores. Our ability to integrate emerging technologies in our design, provide complimentary pieces for a complete set, and custom design ergonomic executive-level office furniture will provide strengths and establish a reputation of unmatched quality.

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. 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.

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 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.

Market Analysis 2000 Potential Customers Corporate Executives Small Business Owners Home Offices Other Total Growth 2% 144,000 146,304 148,645 151,023 153,439 3% 150,000 153,750 157,594 161,534 165,572 5% 440,000 462,000 485,100 509,355 534,823 5% 100,000 105,000 110,250 115,763 121,551 3.99% 834,000 867,054 901,589 937,675 975,385 2001 2002 2003 2004 CAGR 1.60% 2.50% 5.00% 5.00% 3.99%

Market Demographics
We focus our marketing on three types of target consumers:

1. Corporate Executives: The Bureau of Labor Statistics (http://stats.bls.gov) reports there are 14.4 million
executive, administrative, and managerial employees in the United States, and that number is growing at 1.6% per year. We estimate the top 1% of that number, 144,000, as our market, and we're suggesting the number is growing at the same 1.6% annually. 2. Small Business Owners and Executives: According to the most recent data available from the Small Business Administration (SBA), there are between 13 and 16 million small businesses (500 employees or fewer) in the United States. That includes about 5.5 million employers and 11 million self-employed people. We take the top 1% of 15 million, to make our potential market of 150,000. We estimate growth at 2.5%, a composite of different sources. 3. Home Offices: According to a story in Home Office Computing magazine, there are 36 million home offices in the United States. That means a home office in 27% of the households in the country. The U.S. census reports that in 1997 there were 16 million households in this country with incomes of more than $100,000 per year. The 27% of those that have home offices are our potential market. That's 4.4 million households (of 132 million total). Our market is the top 10% of those, 440,000, which we estimate is growing at 5% per year. 4. Other: We will also sell to some buyers outside the United States and outside of these targeted market segments. We estimate 100,000 other potential customers, a number that we estimate will be growing at 5% per year.

Market Demographics

Market Segments

Computer Usage




Decision Maker

Corporate Executives



$200,000 and up $50,000 and up $100,000 and upo -



Small Business Owners





Home Offices










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 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.

Market Growth According to [source omitted]. the market for office furniture is growing at XX percent per year. Generally. market research demonstrates that the high-end market that we are catering to is growing and changing to our benefit. and the growth of the home office sector is providing for a younger market in the executive. and is projected to increase. and is projected to top $XX billion by the year 2005. small business owner. growing at 15 percent per year. As the cost of the computer goes down. increased small business development. Macroenvironment At a large scale. at YY percent per year. steadily. Most important is the growth in home offices with personal computer equipment. this is about 33 million right now. and 15 percent of that was spent on furniture. According to [source omitted]. The market for PC-related office furniture is growing even faster. and home office positions. . That is. corporate restructuring. Households spent $XX billion last year to equip home offices. there is a trend toward executive turnover in large companies today. the number of home offices goes up.

and monitor height and angle -are completely adjustable. Each piece is available in either oak or cherry. be ideal for real use of the computer. plus a growing portion of high-end home offices. the appreciation of quality craftsmanship and materials in office furniture that provides for an effective office environment." but its present existence began in 1992 when the furniture line was purchased by Jim and Susan Graham. Our main line is the Willamette computer desk in several versions. which was a 1970s commune in rural Oregon. combined with the utilization of emerging technologies for greater efficiency. and fun office and workshop environment. 1. This is an elegant piece of office furniture designed to look good in executive office or home office. Our customers are in all levels of business that can afford very high quality office furniture. The key was winning a place in the Premier Executive office furniture catalog. but we believe we now have costs and cash flow under control.Research indicates that this new generation of executives implements technology to a much higher degree than past trends have indicated. without sacrificing elegance. 2. Willamette Furniture Mfr. including file cabinets. Willamette Furniture Mfr. productive office environments with well-designed furniture that incorporates new technology into the classic office model. The Grahams moved to Oregon from California and purchased the business as part of the move. had actually existed since the 1970s as a "hippy commune. owned entirely by Jim and Susan Graham. respectful. Cable runs and shelving add to the utility of the executive desk. .keyboard height and angle. 3. We seek fair and responsible profit. is an Oregon corporation. we make custom designs to fit exact measurements. Therefore. The two critical elements of ergonomics -. Mission Willamette helps create pleasant. which led to winning the interest of the Needham furniture distributors. when we reached more effective channels of distribution. and bookcases. Sales took a big jump in 1997. is a privately-owned specialty manufacturer of high-end office furniture for computer users who care about elegant office space. In addition. enough to keep the company financially healthy for the long term and to fairly compensate owners and investors for their money and risk. in which our employees are fairly compensated and encouraged to respect the customer and the quality of the product we produce. Product Offering Willamette offers very high quality office furniture designed to effectively incorporate computer machinery into the executive office or home office. We also create and nurture a healthy. Profitability and working capital were problems during our recent growth. in which real people can work happily. subchapter S. printer stands. We are sensitive to the look and feel of good wood and fine furniture. At that time the product line and industrial property rights (including trademarks) were purchased from the heirs to the Willamette Association. and at the same time. and display space in several hundred stores. but is intended to accommodate the personal computer. creative. We always provide the best possible value to our customers who care about quality office environments. dictates that our product line will increase in popularity. The Company Willamette Furniture Mfr. and we want every dollar spent with us to be well spent. 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. It was created in 1992. We also make complementary pieces to fill out the office suite. as well as to high-powered personal computing. with the emergence this new generation of executives.

Increased capital from successful historical growths in sales. ease of use. Our customer might be in larger corporations. which is based on interlocking wood pieces of such high quality that assembly is not only a pleasure for our customers. Addition of in-house catalog design and publishing will add an aspect to Willamette's functions that has not been previously experienced. liquid crystal displays. Strengths • • • • Strategic market segmentation and implementation strategies. Diversified market segments: Corporate executives. Direct marketing through the development of the above catalog creates the need for further research. the person who wants very high quality office furniture customized to work beautifully with modern technology including personal computers. We are also going to accommodate larger monitors. Internet connections. and better use of the space that doesn't have to be dedicated the the CPU case. in this case the intersection of technical understanding with very high quality woodworking and professional materials. We will also be watching for technological developments. We have the strength of a combined expertise in high-tech ergonomics and furniture manufacturing. The product strategy is also based on quality. small or medium business. small business owners. and the opportunity of a growing market and new channels of distribution. The new furniture has a different configuration to assume easy access to the docking station. Jim is strong on product know-how and technology. the 17. Weaknesses • • • • High-end. SWOT Summary We are on the brink of major opportunity. few have brought the two crafts together as we have. and the threat of new competition taking aim at our niche. or in a home office with or without a home-office business. . Jim and Susan jointly develop business strategy and longterm plans. allowing us to be the first to provide custom furniture for wall-mounted flat screens. Although there are many computer furniture manufacturers. and analysis. We focus on a special kind of customer. We have the weakness of a small company without a lot of experience. Establishment on the Internet will produce technological challenges. data gathering. with a docking station to connect to a network. it is actually a feature that enhances the sense of quality. ergonomics. scanners. it is actually a feature that enhances the sense of quality. Combination of skills in ownership." and 21" sizes that are becoming much more common. home offices. As co-owners. and practicality. which is based on interlocking wood pieces of such high quality that assembly is not only a pleasure for our customers. An important competitive edge is our assembly strategy. Positioning Our competitive edge is our dominance of high-technology ergonomics and traditional high-quality furniture workmanship. and similar technologies. In 2001 we will introduce the new custom option to our executive desk line based on the laptop computer. and many computer lovers. high priced product line limits sales volume. fine workmanship. and other high-tech items. and workmanship. particularly in our high-end market. What is important to the customer is elegance." 19.Further supporting our competitive edge is our assembly strategy. and Susan is strong on management and business know-how.

New start up companies generated by healthy economic growth nation-wide. The total market in the U.000 $146. ergonomics.EXE). This competition could emerge from a variety of given sources including: 1.S. Established mass-market companies' development of new lines. as our new channels allow us to contemplate future growth. and technology (and integration therein). 4. Looking at the table. We estimated growth at 2. we can see that we may soon begin to have measurable market share. was estimated at $140 million in 1996.com to find an estimate for wood office desks.820.5% per year.532 $86.400 $84.S. Our present market share is a function of dividing our numbers.258.948. We simplified our own financial history somewhat.246 $87. so that our numbers are an accurate reflection. We rounded some numbers and consolidated. Employee turnover and corporate restructuring is causing an increased employee turnover at the highest levels.gov/cgi-win/asm/ASMDATA.630. because this makes the analysis more useful for decision making.imarketinc.600.yet. • Historical Results The following historical results table is based on research and some simplifying assumptions: 1. such as office environment quality and integration.900.census.Opportunities • • • • New channels of distribution.400. New marketing strategies for established products and companies.328 14% $20. and home offices has a far greater appreciation of technology and the needs driven by its implementation. Internet marketing and sales. 3. We estimated an average of $500 per desk to calculate unit numbers from market numbers. since we don't show up in any industry surveys -. Historical Data Variable Industry Revenue Company Market Share Company Revenue Industry Variable Costs 1997 1998 1999 $149. Existing competition. 2.000 . small business owners. We used the Imarket Inc. website at www. The new generation of corporate executives. Specific niche: High-end appreciation for quality materials (cherry and oak).696.070. 3. using the average growth of the entire office furniture industry as reported by the U.000 $143. Threats • Growth in the high-end office furniture market invites competition. Census in Cendata (http://tier2. 2.000 13% $19.400 12% $17.

266 $10. Buyers are willing to settle for laminated quality and serviceable design.535. Direct Competition Acme Computer Furniture Acme has been operating since the middle 1980s. price and volume is critical. which has recently targeted our niche. particularly in our niche. a major furniture manufacturer.199 $23. and as it does. We compete against generalized furniture manufacturers. at a great price.220. relationships with distributors. channels are critical to volume. Ethan Allen is a furniture manufacturer which produces some office furniture products and markets to the high level consumer. it is that they choose lesser quality. strong advertising budget. strong direct sales. our competition is not in our niche. Acme Computer Furniture.805. Strengths: good marketing. They have a very nicely done catalog and good relationships with two distributors. The corporate buyer wants trouble-free buying in volume. In general.535. but our customer doesn't accept any assembly problems. Acme is a bigger company.666 $10.821. It is not that people choose our competitors instead of our product.000 $60.930 $9.Company Variable Costs Industry Gross Contribution Margin Company Gross Contribution Margin Marketing Expenses Company Net Contribution Margin $8. design.266 $10. and ABC Manufacturing. We are also seeing that assembly is critical to shipping and packing.047 $59. whose marketing is better than its product quality.328 $8.507. The manufacturers with impact in the national sales are going to win display space in the store.844. ABC is a subsidiary of Haines Furniture.199 Competition Within our niche we have three significant competitors.848. accommodation of the computer features within the highquality feel of good wood.100.330 $9.413. it presents a greater feel of quality than if it hadn't required assembly at all. It was one of the first. because the channels take significant margins. and the mainstream merchandise in the major furniture channels and office supply stores.730. In the mainstream business. operating mainly in our same niche. and most buyers seem content to pick their product off the store floor. Price is critical. The ergonomics. In the high-end specialty market. Reliable delivery is as important as reliable quality.400 $61. Today they are about twice our size. with less sense of design and materials and workmanship. features are very important. Ethan Allen. mainstream materials instead of the higher quality furniture we offer. certainly the first we are aware of.296.000 $8.470 $9. and of lesser quality. is much more important than mere price. however. Our target customer is not making selections based on price. cheaper computer-related furniture. In direct sales to corporations. and grew up with computer-related furniture. We need to make sure that the piece comes together almost like magic. Weaknesses: the product is more standardized.600 $43.600 $27. to develop personal computer desks and market through advertising in computer magazines. .

but little movement in channels or catalogs. and an excellent sense of design. how to market as a specialty niche instead of the more traditional furniture channels.500 $2. Haines bought ABC three years ago and is focusing on our niche. We see very good quality product. Growth and Share Competitor Acme Computer Furniture ABC Manufacturing Ethan Allen Office Depot Staples Office Max Price $800 $1. Weaknesses: ABC has not seemed to understand our niche. the second largest manufacturers of mainstream home furnishings.500 $400 $400 $400 Growth Rate 8% 1% 3% 12% 4% 15% Market Share 3% 10% 15% 32% 10% 30% . product quality. Strengths: financial backing.ABC Manufacturing ABC Manufacturing is a division of Haines Furniture. where to find the buyers.

2. small business owner. and by increasing our market research and customer service in order to constantly satisfy our markets' needs. gives the discriminating personal computer user. The home office. from $450. We do not need to convince them of anything but the assurance of quality in manufacturing and ergonomic design. . detailed customer service vehicles that will allow us to track the success of our marketing and sales. The tie-in with high-end quality catalogs like Sharper Image is perfect.5% this year to 26% by 2004.67% 100.17% 43. as our niche is not at all saturated at this point.00 7. To significantly decrease our sales and marketing expenses as a percent of sales: from 34.00% Marketing Strategy Willamette furniture is moving toward internal marketing control by establishing programs such as an in-house catalog publishing and distribution department.Average Total $1. and corporate executive will greatly benefit from our quality products in terms of . and appreciation of the office environment. offering status and prestige levels of purchase. Value Proposition Willamette Furniture Mfr. comfort. To grow our sales more than three times over during a five-year period. Marketing Objectives Our marketing strategy assumes that we need to go into specialty channels to address our target customer's needs. We will dominate the high-end office furniture market by stressing the quality in workmanship and materials of our product lines.00 $6.000. Our presence on the World Wide Web will increase the availability of our products to the specific market segments that we wish to target. Critical Issues The critical issues emerge from the SWOT analysis and review of the market: • • The underlying paradox: How can we sell our high-end customers a packaged kit that requires assembly? Or do we need to find channels to offer delivery of assembled product? Channels vs. Our target markets present great opportunities for company growth. The key to reaching this market is to make them aware that our products are available. To increase contribution margin from 40% to 48% over five years. a combination of highestquality furniture and latest technology. Because Willamette's product offerings concentrate on the integration of PC technologies. because these catalogs cater to our kind of customers. at a relatively high price. and further integration with established quality catalog vendors. such as Shaper Image.000 in 2000 to $1. 3. who cares aboutdesign and quality furniture and quality of working environment. We position as the highest quality. Web presence is a natural objective in reaching appropriate potential customers.00% 16. keeping up with and integrating technological advances in the personal computing environment. Internet: Can we do both? Is there a channel conflict? Are we going to be able to manage our channels well enough to make money with them? Financial Objectives 1.6 million in 2004.000.

channel development. our direct sales. ergonomics. our movement into internal catalog publishing will provide Willamette's marketing managers with additional control over the content and recipients of our direct marketing. . Small business owners: our customer surveys indicate a strong market among the owners of businesses with fewer than 100 employees. and communicating our quality position to the market. Product marketing's most important challenge is the problem of assembly and packaging. That has to come out in our packaging. but we are also leveraging a lot more in our presence in channels than on our direct national branding. This is a big market. and prestige. and fine furniture craftsmanship. Target Market Strategy Our segment definition is of itself strategic. with an understanding of technology and ergonomics built in. growing faster than other markets. because the purchase price is relatively steep compared to standard office furniture. and we also have home offices for people employed outside the home. Strategy Pyramids Our main strategy at Willamette Furniture is to position ourselves at the top of the quality scale. only those who are most demanding. featuring our combination of superb technology and fine old-fashioned woodworking. including new design programs. our internal catalogs will undoubtedly prove to generate great sales increases for Willamette Furniture. Programs are mainly those listed in the milestones table. rather. some 36 million home offices. Tactics underneath that strategy include research and development related to new designs and new technology. and our continued presence in high-end catalog channels and new presence in the web. We need to sell pride of ownership and workmanship. The channels are the key to our recent growth and our prospects for additional growth. We know we have the best product when we deliver it locally. shipping. Marketing Mix Our marketing mix depends mainly on the product and product marketing. There are 11 million such businesses in this country. finishing. With experience gained through our inclusion in other high-end catalog merchants. in most cases. That isn't necessarily so when we send it in boxes to be assembled. new equipment to keep up with design. we also seek the buyer who appreciates two attributes: the quality of furniture workmanship and the excellence of design. channel marketing programs. and our managers' publishing experience. choosing the right channels of distribution. In our particular market. who is willing to pay more for quality. but. and collaterals. for the buyer who wants the best quality regardless of price.5 million potential customers who are managers in corporations of more than 100 employees.Finally. We are not intending to satisfy all users of office furniture intended for use with personal computers. The target customer is going to be at a high executive level. We are definitely out to address the needs of the high-end buyer. • • • Corporate executives: our market research indicates about 2. We have to make sure that the assembly is truly easy. most of them with concentrated ownership that makes the owners potential customers. Product Marketing Our product marketing has to emphasize the benefits of our unique combination of technological expertise. Home offices: the home office business has proliferated during the 1990s.

The major corporate purchases are still made directly with manufacturers. and information tailored to past sales experiences. our product lines do not require continued maintenance or service. The establishment of a quality office environment can be an on-going process. We've been able to find these customers using a combination of direct mail catalogs and direct sales to distributors. we were able to successfully target the specific niche that was our marketing milestone. and we expect to gain position in the major airline catalogs as well. With a higher degree of information control internally. because these catalogs cater to our kind of customers. We position our products as the highest quality. and every publication. That is. every promotion. By including our products in these high-end catalogs. The direct channel is dominated by . As a result. Willamette will continue to offer additional pieces to our customers. We also need to leverage our presence using high-quality catalogs and specialty distributors. Therefore. we offer a fully integrated office environment. including peripherals such as lamps. it is essentially closed to new competition. due to our high degree of quality in manufacturing and assembly. We can't afford to appear in second-rate catalogs with poor illustrations that make the product look less than it is. even though this takes working capital to support receivables.Promotion Our promotion strategy is based mainly on making the right information available to the right target customer. We hope to continue the relationship with distributors selling directly to larger corporations. Although this is a major channel for some of the more traditional manufacturers. and know where to find it. Channels of Distribution The four main manufacturers are selling direct to the office superstores and buying discount clubs. We will work with Sharper Image and Broadview more than ever. This has provided the foundation for a move to internal catalog production. cabinets. What we really do is make sure that those who have the budget and appreciate the product know that it exists. For the next year we continue to focus on growing presence in the high-end direct mail catalog that finds our specialty customer. highest price offering in any channel mix. because most don't have the budget. we do consider our customer service to be key to the retention of customers. targeting them based on their previous purchases. tables. Willamette manufactures many accessories in addition to our main. This accounts for the main volume of distribution. However. We can't afford to sell people on our expensive products. Channels Our past marketing strategy assumes that we need to go into specialty channels to address our target customer's needs. Specialty retail is a new channel that could become important for us. a Willamette Furniture customer is not considered to be a one time buyer. The marketing has to convey the sense of quality in every picture. but will include more extensive information in terms of quality. The tie-in with the high-end quality catalogs like Sharper Image is perfect. executive desk lines. Service The service aspect of Willamette's marketing mix is limited in traditional terms. The office furniture customer seems to be growing steadily more comfortable with the retail buy in the chain store. Our work with distributors has been promising. these catalogs will target the same audience. but is also very demanding regarding computer systems and technology. Sales Plan Our strategy focuses first on maintaining the identity with the high-end buyer who appreciates the best available quality. examples. and chairs. testimonials.

Price is critical. although in this case direct sales includes sales by distributors who are buying from multiple manufacturers.happily. features are very important. Our target customer is not making selections based on price. accommodation of the computer features within the highquality feel of good wood. price and volume is critical. channels are critical to volume. and as it does. In direct sales to corporations. most of that major national chains.but the main growth is in retail. Another 23% goes through the direct sales channel. and most buyers seem content to pick their product off the store floor. design. is sold directly to buyers by catalogs. is much more important than mere price. because the channels take significant margins. Reliable delivery is as important as reliable quality. this has helped Willamette -. but our customer doesn't accept any assembly problems. In the high-end specialty market. In the mainstream business. Published research indicates that 51% of the total sales volume in the market goes through the retail channel. The corporate buyer wants trouble-free buying in volume. it presents a greater feel of quality than if it hadn't required assembly at all. We need to make sure that the piece comes together almost like magic. Buyers are willing to settle for laminated quality and serviceable design. The manufacturers with impact in the national sales are going to win display space in the store. The ergonomics. Channel Analysis Channel Outside Catalogs Internal Catalogs Reach Comarketing Payments 10 2 8 1 1 8 Cost 5 2 Risk 7 2 . The distributors will occasionally take on a new line -.two manufacturers and two distributors. Most of the remainder. at a great price. 18%. particularly in our niche. We are also seeing that assembly is critical to shipping and packing.

19% 420 564 761 1. Spring and Fall Trade Shows will occur at their normal times.Websites Other 4 0 7 0 9 0 2 0 9 0 Channel Forecast Channel Outside Catalogs Internal Catalogs Websites Other Growth 20% 40% 40% 0% 2000 120 200 100 0 2001 144 280 140 0 2002 173 392 196 0 2003 208 549 274 0 2004 250 769 384 0 CAGR 20. design stages will occur from February 2000 through to the middle of March 2000. We will prepare our catalog placements internally. These distributors will increase our customer base nationwide.00% --------.99% 0. These shows will provide test cases for our internal catalog design. . This time frame is accurate because we have experience in the design stage.14% 40. As in past years. With the completion of this plan.031 1. Milestones .19% Implementation Schedule Willamette Furniture will begin the year 2000 by continuing to strengthen our alliances with established partners in distribution. who have brought their industry knowledge to the marketing department of Willamette Furniture. Simultaneously.--------.--------.403 35.03% 39. the internal catalog plan will be polished and submitted by the end of January 2000. as we have historically submitted our own designs to outside catalog vendors. our last milestone category to be implemented will be the expansion of our product distribution through the addition of three new distributors to our current line-up.--------.--------Total 35. This will be possible with the expertise of Rebecca King and James Black. submitting them by the middle of January 2000.--------.

000 Terry PR 7/1/2000 8/30/2000 $5.000 Terry PR 9/1/2000 9/10/2000 1/1/2000 1/15/2000 $15.000 $0 $2.000 Start Date End Date 2/1/2000 5/31/2000 Budget $20.000 $40.000 Terry PR 3/10/2000 3/15/2000 $15.000 $0 $40.000 Terry ABC PR Department Start Date End Date 3/15/2000 3/25/2000 1/5/2000 2/19/2000 2/21/2000 3/22/2000 3/25/2000 3/30/2000 1/1/2000 1/15/2000 Budget $5.000 $0 Manager Cassidy Cassidy Bertha Bertha ABC Department Tavel Sales Other Other Department $10.000 $0 $120.Advertising First Catalog Placement Second Catalog Third Catalog Other Total Advertising Budget PR Spring Trade Show preparation Spring Trade Show Fall Trade Show preparation Fall Trade Show Other Total PR Budget Direct Marketing New Distributor In-House Catalog Plan In-House Catalog Design In-House Catalog Mailing Other Total Direct Marketing Budget Web Development Websites Start Date End Date 1/1/2000 1/11/2000 1/10/2000 1/31/2000 1/15/2000 2/5/2000 Budget $50.000 $3.000 $30.000 Manager Jack Jack Jack ABC Department Ads Ads Ads Department 1/1/2000 1/15/2000 Start Date End Date Budget Manager Department 1/5/2000 3/5/2000 $5.000 Manager Jack Department IT .

. The owners don't take overly generous salaries. rent.000 Sampson $0 $0 $6. Our assumptions on average unit sales and average per-unit costs depend on averaging. The credit line is easily supported by assets. and basic marketing costs. this is close enough to help us understand what a real break-even point might be.Name me Name me Other Total Web Development Budget Other Laptop Product Test Laptop Product Release Name me Other Total Other Budget Totals 1/1/2000 1/15/2000 1/1/2000 1/15/2000 1/1/2000 1/15/2000 $0 $0 $0 ABC ABC ABC Department Department Department $20. We don't really need to calculate an exact average. but with our increase in sales we do expect to apply for a credit line with the bank.000 is a good estimate of fixed costs. Break-even Analysis Our break-even analysis is based on running costs. We have been slow to take on debt. Between payroll.000 $196. We do expect to be able to take some money out as dividends.000 Manager Terry Department Other Other Department Department 4/1/2000 4/16/2000 1/1/2000 1/15/2000 1/1/2000 1/15/2000 $1. we think $30. The essential insight here is that our sales level seems to be running comfortably above break-even.000. not on theoretical fixed costs that would be relevant only if we were closing. utilities.000 ABC ABC Financials The financial picture is quite encouraging.000 Start Date End Date 2/1/2000 4/1/2000 Budget $5. the "burn-rate" costs we incur to keep the business running. so some draw is appropriate. to a limit of $150.

to a projected total of more than $1 million in 2002. we have been able to buy at better prices. lamps. We are expecting to increase sales grow from $350 thousand last year to $450 thousand this year. The focus will be an executive level office catalog. In 2001 and 2002 we expect growth closer to 60% per year. and is relatively high for our industry because we are developing new channels.518.80 $30. We can buy higher quality oak and cherry than either of our competitors (one in California. and other accessories.86 $383.144 Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost $1. The growth forecast is in line with our last year. one in New York). because of higher volumes. Since our sales increased over the last two years. with furniture.000 Sales Forecast Our sales forecast assumes no change in costs or prices. Our Oregon location is a distinct advantage for local wood. For 2000 we plan to internally develop a company catalog. which will include some other products for the same target customers. . which is a reasonable assumption for the last few years.Break-even Analysis Monthly Units Break-even Monthly Revenue Break-even 26 $40.

and has given us good service and good prices. input and output. Duffin Wood Products is a good second source. frequently. We depend on our dominance of the latest in technology of ergonomics. and communications. Sales Forecast 2000 Unit Sales Executive Desk Oak 209 350 600 2001 2002 .We work with three wood suppliers. we are one of the biggest buyers of the custom materials we need. and audio for use in creating presentations. shelving accessories. email attachments. For example. We must remain on top of new technologies in display. for filling in when either of our main two suppliers were short. No competitor can match the way we turn a drawback -having to assemble the product -. drawer accessories. Our assembly patents are an important competitive edge. The new variation on the executive desk line has a different configuration to assume easy access to the docking station. our latest models are already assuming the desktop digital scanner as a frequent accessory. particularly for cherry and specialty woods. stable supplier. etc. Most of our suppliers are selling through channels to hobbyists and carpenters. Although we aren't a major player compared to the largest furniture manufacturers. Bambridge has been in business for as long as we have. We also work with a number of specialty manufacturers for furniture fittings. and a bit of cherry and some other specialty woods. and better use of the space that doesn't have to be dedicated the the CPU case. Bambridge supplies most of our oak. and related purchases. We've used Merlin supplies as well. Our customer surveys confirm that customers take the interlocking assembly system as an enhancement to the sense of quality. This is a good. all local. with docking station to connect to a network.into a feature. so they treat us as a major account. combined with classic design elements of fine furniture. In 2000 we will introduce the new line based on the executive laptop computer. glass.

Executive Desk Cherry Other Furniture Oak Other Furniture Cherry Custom Designed Furniture Total Unit Sales 32 43 7 6 297 35 50 10 10 455 40 50 10 20 720 Unit Prices Executive Desk Oak Executive Desk Cherry Other Furniture Oak Other Furniture Cherry Custom Designed Furniture 2000 $1.00 $1.00 2001 $1.00 $1.000 $451.000 $701.00 $1.00 2002 $1.600.00 $900.00 $900.000.250 $45.000 $50.000 $10.750.000 $25.000 Direct Unit Costs 2000 2001 2002 .700 $7.00 $2.250 $960.500.000 $15.000 $1.00 Sales Executive Desk Oak Executive Desk Cherry Other Furniture Oak Other Furniture Cherry Custom Designed Furniture Total Sales $334.00 $2.00 $1.00 $1.000.100 $560.135.000 $45.500.400 $56.00 $1.000.600.000 $38.500.600.000 $70.750.750.00 $2.000 $10.000 $61.00 $900.

100 $3.00 $180.00 $525.600 $16. The overlap will also allow Sampson and Bertha to become quite familiar with our product offerings before their respective departments are online.990 $140.000 $3. .00 Direct Cost of Sales Executive Desk Oak Executive Desk Cherry Other Furniture Oak Other Furniture Cherry Custom Designed Furniture Subtotal Direct Cost of Sales $83.00 $400.375 $9.500 Sales by Manager Willamette's sales in terms of our management structure are represented in the following table.00 $625.000 $9. Willamette has decided to bring them on early because Peggy will be taking a leave of absence during the summer months of 2000.00 $525. their positions and customer interactions will increase exponentially with the completion of our websites and internal catalogs. Jack and Cassidy are our strongest generators of sales because of their established relationships with past customers and channels.800 $7.500 $285.00 $525.000 $21.000 $6.000 $3.740 $2.00 $625.00 $400.00 $180.00 $180.250 $176.00 $300. We will bring on two new managers due to our progress on the Internet and through internal catalog publishing.00 $300.000 $18.000 $12.Executive Desk Oak Executive Desk Cherry Other Furniture Oak Other Furniture Cherry Custom Designed Furniture $400. Although the first year sales projections for Sampson and Bertha are not extremely high.00 $625.625 $240.750 $113.00 $300.

With our technological integration that is key to Willamette's product offerings. . heavy users of the World Wide Web. Our expanding markets are.Sales by: Manager 2000 2001 Sales Jack Peggy Sampson Cassidy Bertha Other Total Average 78 30 57 78 48 6 297 50 126 71 80 86 92 0 455 76 223 152 109 103 133 0 720 120 2002 Sales by Segment Willamette's sales by program forecasts are a direct result of past performance stemming from outside catalog marketing and market research. by default. it can be assumed that our target customers will find our products via the Internet (with a relatively aggressive Internet marketing scheme).

Willamette will only increase in its market share due to expansions in marketing programs tailored to our past success. With historical experience in targeting these market segments.Sales by: Segment 2000 Sales Corporate Executives Small Business Owners Home Offices Other Total Average 109 94 90 4 297 74 215 136 104 0 455 114 362 203 155 0 720 180 2001 2002 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. .

Sales by: Program 2000 Sales Outside Catalogs Internal Catalogs Websites Customer Service Other Total Average 122 82 77 13 3 297 59 134 152 144 25 0 455 91 176 232 207 105 0 720 144 2001 2002 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. Similarly. We will be moving into the realm of Internet marketing and sales in the year 2000. 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. The initial costs are high relative to the maintenance costs involved after the websites' creation. . the development of an in-house catalog design and publishing department will incur higher start-up expenses than maintenance costs after the initial publication.

000 $224.000 $30.000 $30.000 $30.Marketing Expense Budget 2000 Outside Catalogs Internal Catalogs Customer Service Websites Other $24.000 34.94% 27.000 $0 -----------2002 $100. thus increasing our managment budgets for these specific departments and projects.000 $125.000 $50.000 $0 -----------Total Sales and Marketing Expenses Percent of Sales 2001 $50.000 $72. .000 $315.75% Expense by Manager Willamette Furniture's expenses in terms of manager are directly proportionate to the managed program's potential. we will support further marketing programs and the expansion of current programs.000 $40.000 $40. As our market share increases and capital is generated.000 $0 ------------ $156.000 $104.58% 31.

000 $56.000 $52.000 $31.000 $26.000 $58.Expenses by Manager 2000 Expenses Jack Peggy Sampson Cassidy Bertha Other Total Average $36.000 $43.000 $33.200 $31.600 $18.200 $56.000 $224. As our market share increases and capital is generated.600 $0 $46.200 $49.500 2001 2002 $156.200 $41.000 $37.000 $41. we will support further marketing programs and the expansion of current programs.000 $315.333 Expense by Segment Willamette Furniture's expenses in terms of marketing programs are directly proportionate to the proposed and historical success of these programs.600 $34.200 $24.200 $34. .000 $61.

000 $94.000 $224.000 $315.Expenses by Segment 2000 Expenses Corporate Executives Small Business Owners Home Offices Other Total Average $84.000 $24.000 $109.750 2001 2002 Expense by Program Willamette Furniture's expenses in terms of market segment are directly proportionate to the segment's potential.000 $73. . we will support further marketing programs and the expansion of current programs.000 $39.000 $0 $156.000 $34.000 $58.000 $84. As our market share increases and capital is generated.000 $49.000 $48.000 $78.000 $38.000 $56.

000 $97.000 $40.000 $31. For example.000 $315. Therefore.200 $34.800 $49.000 $40.000 $30. Website expenses increase as website importance increases.000 $59.000 $0 $156. it is worth an initial expenditure of $30.000 $44.000 2001 2002 Linking Expenses to Strategy and Tactics Willamette's growth in sales revenue will happen as a result of the implementation of new marketing programs in accordance with market growth. The expenses generated by these new marketing strategies will be greater in the initial design and implementation stages than in later maintenance stages. . it is proven that an Internet presence will increase our sales anywhere from 3-10%.000 $28.000 $72.000 $55.Expenses by Program 2000 Expenses Outside Catalogs Internal Catalogs Customer Service Websites Other Total Average $24.000 $224.000 $30.000 for design and staffing in order to maintain the websites.000 $55. We will use our increased capital to make wise infrastructure purchases such as internal catalog publishing capabilities and additional design and manufacturing tools.000 $63.000 $82.

Contribution Margin Willamette's sales will increase as a result of market growth. Contribution Margin 2000 2001 2002 . Our gross margin will remain steady at approximately 75%. custom product line development. market share increase. The contribution margin will steadily increase as a result of the initial expenses involved with starting marketing programs such as internal catalog publication and website development. and Internet presence. and outside catalog expansion. These second year expense decreases will offset the increases in retained customer expenses.

625 $1.81% $849.990 Gross Margin Gross Margin % $337.625 74.110 74.135.000 $104.990 $0 ------------ $701.75% Contribution Margin Contribution Margin / Sales $181.500 47.000 $315.000 $30.000 $40.625 42.000 34.87% $534.500 $0 -----------$285.500 Cost of Goods Sold $113.000 $285.000 $125.110 40.250 $176.Sales Direct Costs of Goods Other Variable Costs of Sales $451.000 $30.100 $113.000 $0 ------------ 2002 $100.58% 31.94% 27.000 $72.000 $0 ------------ 2001 $50.09% Controls .000 $50.000 $40.000 $0 ------------ Total Sales and Marketing Expenses Percent of Sales $156.500 74.73% $524.15% $300.85% Marketing Expense Budget Outside Catalogs Internal Catalogs Customer Service Websites Other 2000 $24.625 $0 -----------$176.000 $30.000 $224.

and sales report directly to Susan. and merchandising assistant for Sears and Roebuck. technology utilizing executive markets. distributions. designer. Therefore. Along these lines of proven success. other. Market Research Due to the market segmentation that Willamette Furniture has established. Susan had a successful career in retail before becoming half owner of Willamette. and Internet development. the marketing database will allow us to divide the potential buying patterns of customers into categories based on future needs. Successful niche marketing: we need to find the quality-conscious customer in the right channels. Our catalog marketing will turn to inhouse production for more specific. as our customer service and follow-up are key to establishing retained customers. it is possible that with our success and superior design. assembly. President. Jim Graham. in industrial design. not worse.S. Almost-automatic assembly: we can't afford to ship fully-assembled desks. an established furniture company my choose to begin marketing to our target market. With this exclusive concentration. She has a degree in Literature from the University of Notre Dame. 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. and we need to make sure that customer can find us. Finally.75 percent. as their initial market share would be minuscule. but assembly must be so easy and automatic that it makes the customer feel better about the quality. and M. marketing. our marketing programs will expand accordingly. Our workshop manager reports directly to him. However. We will use our historical performance to establish a customer database containing this information. a buyer for Macy's. He has an B. would not be quite as threatening. A presence on the Internet will be a key milestone to expanding sales and marketing potentials through the utilization of new channels.S. allowing for us to strategize further for continued success. . is responsible for overall business management. Keys to Success The keys to Willamette's success have historically been effective market segmentation and implementation strategies. marketing department growth. Marketing Organization Susan Graham. Jim designed furniture for Haines Manufacturing before becoming half owner of Willamette. technologically integrated aspect of office furniture. • • • Uncompromising commitment to the quality of the product: quality wood. from Stanford University and the University of Oregon. quality of end result. executive level computer integrated office furniture niche. She was an area manager of Ross Stores. He was responsible for one of the first executive desks designed to include customized fittings for personal computers. is responsible for product design and development. quality design. Sales will increase accordingly. Willamette can continue to focus its resources on producing the best executive level office furniture available. providing working capital for internal product development. and purchasing patterns of the quality conscious. This however. Our managers of finance. and was one of the first to design the monitor inside the desk under glass.The executive furniture market is steadily increasing at an average calculated annual growth rate of 7. With this in mind. and manufacturing. quality workmanship. Willamette will implement direct marketing strategies based on our success in distribution through high-end channels such as the Sharper Image. we will require constant updates in terms of the potential sizes. Contingency Planning Willamette Furniture is unique in its discovery and utilization of the high quality. extensive product descriptions. Another possible challenge would be the emergence of a new company in our niche. well-established furniture manufacturers may release a competitive product line. The addition of an internally created catalog will allow Willamette to market to this expanding number of potential customers. This will allow Willamette to target customers more efficiently as a result of actual experience. respectively. Furthermore. Willamette focuses specifically on the highend.

we have started the publication of our own catalog.A.As co-owners. Terry also managed direct sales at one of the furniture distributors that has since died to industry consolidation. Willamette furniture will soon become a part of every quality office environment. Terry has a B. degree in literature from the University of Washington. Both of these departments have been integrated with our Information Technology area in order to sell and market Willamette's product through our own. Terry joined Willamette from the marketing department of the Thomasville Furniture chain. is marketing manager. internal strategy for future growth and increased market share. Our sales and marketing managers are in the process of revolutionizing the way in which Willamette Furniture reaches its customers. Jim is strong on product knowhow and technology. If the executive level employees nationwide are aware of our product offerings. Jim and Susan jointly develop business strategy and long-term plans. we have decided to implement this new. Terry Hatcher. and Susan is strong on management and business know-how. internal website. having been in charge of national catalog production and catalog advertising. In addition. 34. Due to the success in marketing with high-end retailers and catalog merchants. such as Sharper Image. .

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