1. How do you explain the rise of the new wave of DTC mattress companies?

The new wave of DTC mattress companies all stemmed from the same root
cause. They were all trying to disrupt the mattress industry that had been dominated by
long standing players, some of whom had merged recently creating more pricing power
within the market. The disruption was mainly accomplished by changing the value
proposition of creating an easy shopping experience and having a mattress delivered
straight to your doorstep. This new process cut out the middleman and significantly
reduced the cost to consumers. For example, Purple’s mattress was initially offered at
$999 while similarly, luxury competitors were selling for $4,000. All of the new entrants,
Casper, Leesa, and Purple, offered similar policies on trying the mattress risk free for
about 100 nights as consumers initially could not try them out in stores before making
their purchase.

Consumer preferences also played a big part in the rise of the DTC mattress
companies. Consumers continued to make more and more of their purchases online
and other industries were also disrupting long standing practices, Warby Parker and
glasses for example. Other DTC companies helped pave the way by warming
customers up to these offerings that came either at better prices than brick and mortar
retail stores or came with an improved customer experience. As shoppers became more
accustomed to making large purchases online there became a larger opportunity for
these DTC mattress companies to capitalize on.

2. Define Purples value proposition and contrast it with other industry players?

The key factors involved with Purples value proposition included convenience
through direct to consumer shipping, lower cost through cutting out the middleman, and
high quality through innovation. Purple disrupted the traditional mattress industry along
with other new entrants by offering their products through direct to consumer. Buyers
could easily go to their website, order a mattress, and it would arrive at the front door.
This new model played to the convenience factor of shoppers as they didn’t have to
spend time driving to different mattress stores to find the right one for the right price.
The downside to this model is that people wouldn’t have the option to try out their
mattress before buying it. However, Purple supplemented this by allowing a 100 day risk
free policy where buyers could try the mattress at home for 100 days and if they did not
like it, they would be able to return it. By shipping the mattresses initially only through
direct to consumer this allowed Purple to keep their margins and pass along value to
consumers by offering their mattresses at lower prices that comparable competitors who
lost out on margin to wholesalers and retailers.

Purple delivered on high quality through years of innovation. Their mattress was
made of a completely new material compared to existing box store mattresses as well

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 as direct to consumer offerings that were just improvements on existing options.
Purple’s comfort technology was continuously developed over numerous years and they
continued to make further innovations as they expanded so that they would continue to
sell the most comfortable mattresses. They also expanded their comfort line outside of
mattresses to include pillows and seat cushions as well so that consumers could have a
completely comfortable sleep thanks to Purple.

3. Highlight key elements of the mattress buyer customer journey, specifically

cite "moments that matter". Compare channel differences.

Stage Awareness Consider Decision Delivery & Use Loyalty & Advocacy
ation

Customer See online ad Compare & Choose Make the Receive or pick up Assemble Order another Share their
Activity (Purple), see TV evaluate mattress and purchase mattress and sleep mattress for experience
ad, hear from mattress add to on mattress another room with the
friend alternatives shopping cart company
or go to store with friends
and family

Customer No goals yet Find the Convenient Efficient and Convenient delivery Ease of If reordering, Help other
Goal right shopping effortless or pick up use, repeat positive people enjoy
mattress for experience payment/order comfortabili experience the products
them and or ing ty throughout
(convenienc website
e, price,
etc)

Business Increase Increase Increase Increase sales On time and Create Increase retention Turn
Goal awareness and visits to value of and convenient product to rate and customers
interest in brand websites, overall conversion pickup/delivery match frequency of into
stores, etc. shopping cart rate expectation orders advocates
and s and
conversion convenienc
rate e

Moment Yes, purple is a No, Yes, ease of No, online Yes, people expect Yes, No, repeat Yes, we have
that new brand comparison use for payment is delivery to be on consumers purchases would used up all
Matters? is in hands website to simple time and convenient need to like be great, but new the easy new
of customer ensure sales the product customers are customers
close better and need
more buyers

Channel All online DTC Some Cannot “try Online Delivery will take Increased SImply reorder on Same for
Differences brands rely customers out” online ordering is longer than buyer computer in DTC, DTC and in-
heavily on will not be mattresses, simple and purchasing in store, involvemen do not need to store.
facebook, comfortable however it is people are however, customers t in revisit store and
google, etc. purchasing easier to comfortable may prefer delivery assembly go through that
a mattress compare with the over movers when DTC process
online, specs on process, bringing a mattress
others may computer unable to in. Considerations
be have around old mattress
salesman recycling?
pushing sale

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 4. Thinking about a campaign to drive traffic to partner offline stores. Who would
you target, what type of message would you convey?

Purple had tremendous success via its online and direct to consumer channels
from 2015 to 2018, however, like its competitors, it had begun hitting a critical mass.
The DTC model was quick and easy to start, but expensive and difficult to scale. Thus,
Purple created a 70:30 online to instore sales benchmark. To hit this benchmark, Purple
will need to target an older audience, evolve its marketing mix, and modify its message.

Starting with the target customer, Purple should begin to target older customers
(age 40-60) who prefer to shop in stores. This demographic uses Purple’s main
marketing platforms, Facebook and YouTube, less than younger generations, so will be
less familiar with Purple’s brand. Additionally, this demographic is more skeptical of
online claims made by companies and online reviews left by customers (or robots). To
better reach this group, Purple will need to utilize channels where this group is present.

First, for no reason should Purple reduce its use of digital marketing via
Facebook or Youtube as this is where its main success and majority of customers are
currently coming from. Instead, as its marketing spend and efforts increase, Purple
should slowly move into new media such as TV. This will allow Purple to maintain its
style while reaching new eyes. Purple should be wary of other media such as print,
search ads, and radio because it will be more difficult for it to convey its humorous yet
scientific message.

While purple should maintain its humorous, scientific, and slightly sarcastic
personality, it will need to slightly modify its message for its new target audience. An
example of how to do this could include poking fun at itself while appealing to its
audience. Purple could continue its video ads including goldy locks and the eggs and
combine this with its ‘purple boy’ partnership with comedians Time Heidecker and Eric
Wareheim. In this video ad, Purple could continue to conduct its raw egg test while the
comedians comment on the test, stating how they think it's rigged or fake. This would
push the comedians in store to verify the performance of the mattress and encourage
Purple’s new audience to do the same.

Lastly, Purple should be heavily involved with the in store sales of its mattress.
Purple’s brand is significantly different from its retail partners’ and it won't want to lose
this strength through the in store experience. Where possible, Purple should train and
staff its own salespeople and ensure they convey the same upbeat and personable yet
serious and scientific massaging. These salespeople should also be prepared to meet
the needs of the expected older in store shoppers and be trained to satisfy their
mattress shopping concerns and in store preferences.

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