Strategy and Implementation Summary
Poppi Designs will pursue a differentiation strategy by offering a specific line of solid, hand-carved furniture to the selected customer segments in the limited geographic areas. Such sales of both finished and unfinished high-quality and high-margin furniture that appeals to the Specialty Retail, Designer, and Unfinished Furniture customer segments will be mostly achieved through the direct sales channel handled by Kate Jackson.
5.1 Competitive Edge
To further entrench in its niche market, Poppi will utilize its established connections with the Italian manufacturers of high-quality furniture, which provide the company an opportunity to offer unique products in the selected U.S. markets. Further, the company will utilize unique industry experience and superb selling skills of it co-owner, Kate Jackson, to achieve the desired sales penetration.
5.2 Marketing Strategy
The following sections illuminate the pricing, promotion and distribution strategies for Poppi Designs.
5.2.1 Pricing Strategy
The present pricing structure for Poppi’s products is to charge list price to the designer segment of the market. The designer segment of the market is typically making purchases which are time-sensitive and in small quantities.
We will allow a 12% discount to both of the Retail segment (Specialty Retailers and Unfinished Furniture Retailers). For a full container, or very large orders, Poppi offers a 36% discount off of the list price.
5.2.2 Promotion Strategy
Brand identity is not a key issue with consumers. Direct mail is planned in the form of post card-sized mailings. A copy of one is included in the appendix. These have proved useful in identifying interested interior designers, as these individuals cannot economically be called upon in person.
Since getting Poppi Designs’ chairs into an outlet is the toughest hurdle, some promotional strategy should be devised to help along the retailer’s initial decision to try carrying Poppi’s products. For the first 60 days, the retailer might be given an arm chair free for every five side chairs purchased. Once the outlet carries Poppi’s chairs, and the sales persons have been properly instructed concerning the chairs’ sales features, re-ordering seems to proceed along smoothly unassisted.
For the unfinished furniture outlets, attaching a tag with a photo of a suggested finish might be very useful to encourage sales in this segment. Step-by-step instructions to achieve this finished look in the photo by “do-it-yourselfers” could be made available. Naming a local refinisher who will do the work at an agreed reasonable price might be another option for the “do-it-yourselfer” who couldn’t get around to it.
5.2.3 Distribution Strategy
At the present time, Poppi Designs plans only one level between itself and the consumer. In most cases this will be the retailer. Some thought has been given to selling directly to the consumer via classified ads in mail-order publications, but this proposal requires further study.
5.3 Sales Strategy
Key to the sales strategy is direct sales calls on all market segments targeted in this plan with the exception of interior designers. These sales calls need to be made by the owner, Kate Jackson, by virtue of her background and knowledge of the products and competitors. Experience has proven that the more time she devotes to sales, the more sales result. A full-time team member needs to be found and added as soon as possible. Without this person, too much of Kate’s time is deflected away from her major task of selling.
Forty-four specialty retailers have been identified, as well as 16 unfinished furniture retailers. With proper geographical planning and appointment scheduling handled by a competent team member, three or four sales calls could be achieved in a day. This would mean that Kate could pay a visit to all 60 prime prospects over a three week period.
5.3.1 Sales Forecast
For purposes of projections, the most popular chair (#155) was used with a landed cost of $78.43. Sales prices used are recent sales prices for this chair ($157 to retailers, $178 to the design trade, and $114 wholesale). Although various chairs and other pieces of furniture will be imported, it is assumed that the profit spread realized with chair #155 will be maintained. The weighted average sales price is $154.80. Sales are all assumed to be on an unfinished basis. Although much of sales are expected to be on a finished basis, we have assumed that the added sales price for finishing will merely be paid out to Poppi’s refinishers who perform the work. A similar comment applies in respect to upholstery.
Sales projections reflect reasonable success from Poppi’s marketing efforts explained earlier. It is assumed that these efforts will result in unit sales of chairs of 900, 1200, and 1500 in years 1998, 1999, and 2000 respectively. Monthly unit sales in 1998 will gradually grow from 65 monthly (April-July) to 90 units by January 1999. It is further assumed that sales will continue to reflect historical experience in respect to discounts. Eighty percent of sales will go to retailers, with 10 percent each to wholesalers and the design trade.
|FY 1999||FY 2000||FY 2001|
|Direct Cost of Sales||FY 1999||FY 2000||FY 2001|
|Subtotal Direct Cost of Sales||$55,728||$74,304||$92,880|
5.4 Strategic Alliances
As a result of the several years spent at High Point, North Carolina, Poppi Designs has recently developed alliances with showrooms at the design centers in both Columbus, Ohio and New York. Both of these showrooms will begin to display Poppi chairs in May of 1998.
Poppi has also established an alliance with Mercator Upholstery in Boston. Mercator services the high-end design trade with upholstered chairs, etc. Mercator has agreed to set aside space within their upholstery facilities to display Poppi chairs. This will help designers and their clients to reach a decision on chair selection which will result in a rather unique product (specially selected upholstery treatments and fabric on a chair frame not found in every retail outlet). This is just the kind of alliance that is perfectly suited to Poppi products. Attempts will be made to increase this type of alliance with other upholsterers (such as Hondius Upholstery which also caters to the design trade).