Brand Transition Strategy

Britt Miller and Rebecca Orsher

EXECUTIVE SUMMARY
Background: Acquisition of Paul Logan Home Furniture Division
Add strengths of design, brand awareness, market leadership, distribution channels

Problem: Design a brand transition strategy to transfer Paul Logan brand to Manchester Home Analysis: 5 Cs Recommendation: Gradual transition first linking Paul Logan to the Manchester name to build brand awareness then phasing out Paul Logan once target brand awareness has been reached as measured by another target consumer survey
Utilize both push and pull marketing strategies to drive distribution channels and consumers

ACQUISITION
BACKGROUND & OVERVIEW

MANCHESTER

Leading manufacturer of premium office furniture Revenues $2.33 billion in 2004 Home lines currently include Recliner, Home office, Media/Entertainment furniture Home sales expected to grow 30% in 2005, from $260 million Want to leverage manufacturing expertise and production capacity into household furniture Goal: To provide a complete family of household furniture products in the mid- to upper-price points.

PAUL LOGAN
Furniture Division revenues $990 million in in 2004 Number 1-2 in market share and brand recognition Well established sales force; strong ties to leading distribution channels; talented design team Sold Furniture Division to refocus on its competencies in fashion and textile design.

5CS OF THE ACQUISITION

Company
Manchester Home expanded household furniture division by adding market leader PLFD
Addition of 990 million in PLFD revenues Addition of established sales force, talented design teams PLFDs Signature Style line very popular with consumers

Ability to combine PL design skills with MH engineering and manufacturing

Manufacturing expertise and ergonomic designs

Concerns
How to tie-in PLs bold designs with MHs conservative style Customer confusion over new brand name

5CS OF THE ACQUISITION

Company
Companies strengths and weaknesses complement each other

5CS OF THE ACQUISITION Customers

Target consumers ages 34-55; Income over $50K
MH consumers are categorized as conservative elegance PLFD consumers are more fashion-conscious, trend setters Will need a way to reach both customer segments

Results from target consumer surveys

Low brand loyalty 60% would change brands High information search Style, design, quality, comfort most important qualities all covered by MH/PL PL has high brand awareness, almost double that of MH, will help to co-brand them to raise awareness for MH

5CS OF THE ACQUISITION

Collaborators
Manchester already has network of office distribution channels, now they gain access to household distribution channels through Paul Logan.
PL sales force has strong ties to leading distributions channels PL strength in upscale furniture stores, specialty stores, department stores

Strong relationship with buyers

Concern over brand going away, necessary to create a smooth brand transition so consumers make the switch

Push strategies important to build strong relationships with distribution network

90% of PL shipments include Purchase Allowances

5CS OF THE ACQUISITION

Competitors Paul Logan was market leader Household Furniture Industry
$36.64 billion in 2004; positive % growth projections A mature industry Large number of corporate consolidations Low-cost imports from Asia/Mexico moving into higher price levels Domestic companies ready to attack the vulnerability of the new brand and position

We need strong advertising and marketing mix Many competitors have company owned stores
Crucial to leverage our distribution channels to gain market access

5CS OF THE ACQUISITION

Context Office furniture sales growth tied to employment growth and new business formation.
Burst of dot.com bubble and recession have decreased demand for office furniture

Rise in teleworking could increase demand for home office Demand for home furniture is tied to new home construction and home sales. Innovative and stylish products to bolster demand

MOVING FORWARD

ANALYSIS OF FUTURE BRANDING: OPTIONS

Drop the Paul Logan name right away
Losing their current brand awareness Need to educate customers Strong distribution channel relationships could be damaged

Keep using the Paul Logan name for the entire allotted three years
Ad agency advises against this option, as they dont want to allocate advertising dollars to a brand with a three year shelf life

Transition mid-point
Leverage the Paul Logan name to build strong brand awareness for Manchester Continue to use the PL name in subtext for 1.5 yrs.; conduct consumer research to reevaluate after this time. Business recommendation to convert the name 100% to Manchester Home after 1.5 yrs.

ANALYSIS OF FUTURE BRANDING: OPTIONS

Brand name transition:
First 6 months: Manchester Home: The New Home for Paul Logan Furniture Following year: Manchester Home: The Home for Paul Logan Furniture After 1.5 yrs.: Conduct consumer research to reevaluate transition
Business recommendation is to drop the Paul Logan name Want to ensure the Manchester Home brand has achieved a sufficient awareness before removing PL

OUR FUTURE

ADVERTISING STRATEGIES
Strong campaign is critical to the success of the new brand name
$184 million allotted for 2005 Includes national and cooperative advertising for both PLFD and MH products

Push vs. Pull

MH to allocate more $ towards Push advertising Heavy Push & Pull the first 1.5 yrs. Marketing & Communications mix to form long-term company image

Promotional Programs
Purchase allowances Recommend amending the planned 2005 marketing expenditures to allow for purchase allowances.

Currently based on % of sales

Due to brand transition, allocate a fixed amount to advertising to ensure the levels do not drop

RECOMMENDATIONS
Continue to use the Paul Logan name to leverage brand awareness and channel partnerships Focus strongly on both Push and Pull strategies the first 1.5 yrs. to communicate the acquisition
Amend proposed 2005 advertising plan to incorporate more Push strategies, specifically Purchase Allowances that contributed to the success of the PL distribution network

After 1.5 yrs., the business goal is to transition brand officially to Manchester Home

QUESTIONS?