Office Furniture Manufacturer Marketing Plan

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Confidentiality Agreement
The undersigned reader acknowledges that the information provided by

_________________________ in this marketing plan is confidential; therefore, reader agrees not to
disclose it without the express written permission of ________________________.
It is acknowledged by reader that information to be furnished in this marketing plan is in all respects
confidential in nature, other than information which is in the public domain through other means and
that any disclosure or use of same by reader, may cause serious harm or damage to
_________________________.
Upon request, this document is to be immediately returned to _________________________.
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Signature
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Date
This is a marketing plan. It does not imply an offering of securities.

Table of Contents
1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.0 Situation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2.1 Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 The Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2.1 Market Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2.2 Market Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2.3 Market Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2.4 Macroenvironment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3.2 Product Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3.3 Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3.4 SWOT Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3.4. Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3.4. Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3.4. Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3.4. Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3.5 Historical Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.4.1 Direct Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.0 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

3.1 Value Proposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2 Critical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.3 Financial Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.4 Marketing Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.5 Target Market Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.6 Strategy Pyramids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.0 Marketing Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

4.1 Product Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2 Promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3 Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.4 Sales Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.5 Channels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.5.1 Channels of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.6 Implementation Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.0 Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.2 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2.1 Sales by Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.2.2 Sales by Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.2.3 Sales by Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.3 Expense Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.3.1 Expense by Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.3.2 Expense by Segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.3.3 Expense by Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.4 Linking Expenses to Strategy and Tactics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.5 Contribution Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.0 Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.1 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.2 Market Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.3 Contingency Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Table of Contents
6.4 Marketing Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Willamette Furniture
1.0 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.
2.0 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.
2.1 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 --
Page 1
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.
2.2 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.
Table: Market Analysis
Market Analysis
2000 2001 2002 2003 2004
Potential Customers Growth CAGR
Corporate Executives 2% 144,000 146,304 148,645 151,023 153,439 1.60%
Small Business Owners 3% 150,000 153,750 157,594 161,534 165,572 2.50%
Home Offices 5% 440,000 462,000 485,100 509,355 534,823 5.00%
Other 5% 100,000 105,000 110,250 115,763 121,551 5.00%
Total 3.99% 834,000 867,054 901,589 937,675 975,385 3.99%
Page 2
Market Analysis (Pie)
Corporate Executives
Small Business Owners
Home Offices
Other
2.2.1 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.
Page 3
Table: Market Demographics
Market Demographics
Market Segments Computer Usage Age Income Issues Decision Maker

Corporate Executives Medium 40-65 $200,000 and up Prestige Staff
Small Business
Medium 30-65 $50,000 and up Comfort User
Owners
Home Offices High 25-65 $100,000 and upo Space User
Other - - - - -
2.2.2 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 Analysis (Trends)
600,000
500,000
400,000
300,000 Small Business Owners

Home Offices
200,000 Other
100,000
0
2000 2001 2002 2003 2004
Page 4
2.2.3 Market Growth
According to [source omitted], the market for office furniture is growing at XX percent per
year, and is projected to increase. The market for PC-related office furniture is growing even
faster, at YY percent per year, and is projected to top $XX billion by the year 2005.
Most important is the growth in home offices with personal computer equipment. As the cost
of the computer goes down, steadily, the number of home offices goes up. According to
[source omitted], this is about 33 million right now, growing at 15 percent per year.
Households spent $XX billion last year to equip home offices, and 15 percent of that was
spent on furniture.
Market Analysis (C.A.G.R)
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
2.2.4 Macroenvironment
At a large scale, market research demonstrates that the high-end market that we are
catering to is growing and changing to our benefit. Generally, there is a trend toward
executive turnover in large companies today. That is, corporate restructuring, increased small
business development, and the growth of the home office sector is providing for a younger
market in the executive, small business owner, and home office positions.
Research indicates that this new generation of executives implements technology to a much
higher degree than past trends have indicated. Therefore, with the emergence this new
generation of executives, the appreciation of quality craftsmanship and materials in office
furniture that provides for an effective office environment, combined with the utilization of
emerging technologies for greater efficiency, dictates that our product line will increase in
popularity.
Page 5
2.3 The Company
Willamette Furniture Mfr. is a privately-owned specialty manufacturer of high-end office

furniture for computer users who care about elegant office space. Our customers are in all
levels of business that can afford very high quality office furniture, plus a growing portion of
high-end home offices.
Willamette Furniture Mfr. is an Oregon corporation, subchapter S, owned entirely by Jim and
Susan Graham. It was created in 1992. At that time the product line and industrial property
rights (including trademarks) were purchased from the heirs to the Willamette Association,
which was a 1970s commune in rural Oregon.
Willamette Furniture Mfr. had actually existed since the 1970s as a "hippy commune," but its
present existence began in 1992 when the furniture line was purchased by Jim and Susan
Graham. The Grahams moved to Oregon from California and purchased the business as part
of the move.
Sales took a big jump in 1997, when we reached more effective channels of distribution. The
key was winning a place in the Premier Executive office furniture catalog, which led to
winning the interest of the Needham furniture distributors, and display space in several
hundred stores.
Profitability and working capital were problems during our recent growth, but we believe we
now have costs and cash flow under control.
2.3.1 Mission
Willamette helps create pleasant, productive office environments with well-designed furniture
that incorporates new technology into the classic office model, in which real people can work
happily. We are sensitive to the look and feel of good wood and fine furniture, as well as to
high-powered personal computing. We always provide the best possible value to our
customers who care about quality office environments, and we want every dollar spent with
us to be well spent.
We also create and nurture a healthy, creative, respectful, and fun office and workshop
environment, in which our employees are fairly compensated and encouraged to respect the
customer and the quality of the product we produce. We seek fair and responsible profit,
enough to keep the company financially healthy for the long term and to fairly compensate
owners and investors for their money and risk.
2.3.2 Product Offering
Willamette offers very high quality office furniture designed to effectively incorporate
computer machinery into the executive office or home office. 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, but is intended to accommodate the personal computer. Each piece is
available in either oak or cherry.
1. Our main line is the Willamette computer desk in several versions. This is an elegant
piece of office furniture designed to look good in executive office or home office, and
at the same time, be ideal for real use of the computer. The two critical elements of
Page 6
ergonomics -- keyboard height and angle, and monitor height and angle -- are
completely adjustable. Cable runs and shelving add to the utility of the executive
desk, without sacrificing elegance.
2. We also make complementary pieces to fill out the office suite, including file cabinets,
printer stands, and bookcases.
3. In addition, we make custom designs to fit exact measurements.
Further supporting our competitive edge is our assembly strategy, which is based on
interlocking wood pieces of such high quality that assembly is not only a pleasure for our
customers, it is actually a feature that enhances the sense of quality.
In 2001 we will introduce the new custom option to our executive desk line based on the
laptop computer, with a docking station to connect to a network. The new furniture has a
different configuration to assume easy access to the docking station, and better use of the
space that doesn't have to be dedicated the the CPU case.
We are also going to accommodate larger monitors, the 17," 19," and 21" sizes that are
becoming much more common, particularly in our high-end market. We will also be watching
for technological developments, allowing us to be the first to provide custom furniture for
wall-mounted flat screens, liquid crystal displays, and similar technologies.
2.3.3 Positioning
Our competitive edge is our dominance of high-technology ergonomics and traditional high-
quality furniture workmanship. Although there are many computer furniture manufacturers,
and many computer lovers, few have brought the two crafts together as we have.
We focus on a special kind of customer, the person who wants very high quality office
furniture customized to work beautifully with modern technology including personal
computers, scanners, Internet connections, and other high-tech items. Our customer might
be in larger corporations, small or medium business, or in a home office with or without a
home-office business. What is important to the customer is elegance, fine workmanship, ease
of use, ergonomics, and practicality.
The product strategy is also based on quality, in this case the intersection of technical
understanding with very high quality woodworking and professional materials, and
workmanship.
An important competitive edge is our assembly strategy, which is based on interlocking wood
pieces of such high quality that assembly is not only a pleasure for our customers, it is
actually a feature that enhances the sense of quality.
Page 7
2.3.4 SWOT Summary
We are on the brink of major opportunity. We have the strength of a combined expertise in
high-tech ergonomics and furniture manufacturing, and the opportunity of a growing market
and new channels of distribution. We have the weakness of a small company without a lot of
experience, and the threat of new competition taking aim at our niche.
2.3.4.1 Strengths
• Strategic market segmentation and implementation strategies.

• Combination of skills in ownership. As co-owners, Jim and Susan jointly develop
business strategy and long-term plans. Jim is strong on product know-how and
technology, and Susan is strong on management and business know-how.
• Diversified market segments: Corporate executives, small business owners, home
offices.
• Increased capital from successful historical growths in sales.
2.3.4.2 Weaknesses
• High-end, high priced product line limits sales volume.

• Addition of in-house catalog design and publishing will add an aspect to Willamette's
functions that has not been previously experienced.
• Direct marketing through the development of the above catalog creates the need for
further research, data gathering, and analysis.
• Establishment on the Internet will produce technological challenges.
2.3.4.3 Opportunities
• New channels of distribution.

• Internet marketing and sales.
• Specific niche: High-end appreciation for quality materials (cherry and oak),
ergonomics, and technology (and integration therein).
• Employee turnover and corporate restructuring is causing an increased employee
turnover at the highest levels. The new generation of corporate executives, small
business owners, and home offices has a far greater appreciation of technology and
the needs driven by its implementation, such as office environment quality and
integration.
Page 8
2.3.4.4 Threats
• Growth in the high-end office furniture market invites competition. This competition
could emerge from a variety of given sources including:
1. Established mass-market companies' development of new lines.
2. New start up companies generated by healthy economic growth nation-wide.
3. New marketing strategies for established products and companies.
• Existing competition.
2.3.5 Historical Results
The following historical results table is based on research and some simplifying assumptions:
1. We used the Imarket Inc. website at www.imarketinc.com to find an estimate for

wood office desks. The total market in the U.S. was estimated at $140 million in 1996.
2. We estimated growth at 2.5% per year, using the average growth of the entire office
furniture industry as reported by the U.S. Census in Cendata
(http://tier2.census.gov/cgi-win/asm/ASMDATA.EXE).
3. We estimated an average of $500 per desk to calculate unit numbers from market
numbers.
4. We simplified our own financial history somewhat, because this makes the analysis
more useful for decision making. We rounded some numbers and consolidated, so that
our numbers are an accurate reflection.
Looking at the table, we can see that we may soon begin to have measurable market share,
as our new channels allow us to contemplate future growth. Our present market share is a
function of dividing our numbers, since we don't show up in any industry surveys -- yet.
Table: Historical Data
Historical Data
Variable 1997 1998 1999

Industry Revenue $143,820,000 $146,696,400 $149,630,328
Company Market Share 12% 13% 14%
Company Revenue $17,258,400 $19,070,532 $20,948,246
Industry Variable Costs $84,600,000 $86,400,000 $87,900,000
Company Variable Costs $8,413,470 $9,535,266 $10,100,047
Industry Gross Contribution
$59,220,000 $60,296,400 $61,730,328
Margin
Company Gross Contribution
$8,844,930 $9,535,266 $10,848,199
Margin
Marketing Expenses $23,600 $27,600 $43,000
Company Net Contribution Margin $8,821,330 $9,507,666 $10,805,199
Page 9
2.4 Competition
Within our niche we have three significant competitors, Ethan Allen, Acme Computer
Furniture, and ABC Manufacturing. Acme is a bigger company, operating mainly in our same
niche, whose marketing is better than its product quality. ABC is a subsidiary of Haines
Furniture, a major furniture manufacturer, which has recently targeted our niche. Ethan Allen
is a furniture manufacturer which produces some office furniture products and markets to the
high level consumer.
In general, however, our competition is not in our niche. We compete against generalized
furniture manufacturers, cheaper computer-related furniture, and the mainstream
merchandise in the major furniture channels and office supply stores. It is not that people
choose our competitors instead of our product, it is that they choose lesser quality,
mainstream materials instead of the higher quality furniture we offer.
In the mainstream business, channels are critical to volume. The manufacturers with impact
in the national sales are going to win display space in the store, and most buyers seem
content to pick their product off the store floor. Price is critical, because the channels take
significant margins. Buyers are willing to settle for laminated quality and serviceable design.
In direct sales to corporations, price and volume is critical. The corporate buyer wants trouble-
free buying in volume, at a great price. Reliable delivery is as important as reliable quality.
In the high-end specialty market, particularly in our niche, features are very important. Our
target customer is not making selections based on price. The ergonomics, design,
accommodation of the computer features within the high-quality feel of good wood, is much
more important than mere price. We are also seeing that assembly is critical to shipping and
packing, but our customer doesn't accept any assembly problems. We need to make sure
that the piece comes together almost like magic, and as it does, it presents a greater feel of
quality than if it hadn't required assembly at all.
2.4.1 Direct Competition
Acme Computer Furniture

Acme has been operating since the middle 1980s, and grew up with computer-related
furniture. It was one of the first, certainly the first we are aware of, to develop personal
computer desks and market through advertising in computer magazines. Today they are
about twice our size. They have a very nicely done catalog and good relationships with two
distributors.
Strengths: good marketing, strong advertising budget, relationships with distributors, strong
direct sales.
Weaknesses: the product is more standardized, and of lesser quality, with less sense of
design and materials and workmanship.
ABC Manufacturing
ABC Manufacturing is a division of Haines Furniture, the second largest manufacturers of
mainstream home furnishings. Haines bought ABC three years ago and is focusing on our
niche. We see very good quality product, and an excellent sense of design, but little
movement in channels or catalogs.
Strengths: financial backing, product quality.

Weaknesses: ABC has not seemed to understand our niche, where to find the buyers, how to
Page 10
market as a specialty niche instead of the more traditional furniture channels.
Table: Growth and Share Analysis
Growth and Share
Competitor Price Growth Rate Market Share

Acme Computer
$800 8% 3%
Furniture
ABC
$1,500 1% 10%
Manufacturing
Ethan Allen $2,500 3% 15%
Office Depot $400 12% 32%
Staples $400 4% 10%
Office Max $400 15% 30%
Average $1,000.00 7.17% 16.67%

Total $6,000.00 43.00% 100.00%
Competitor by Growth and Share
20%
Acme Computer Furniture
15%
ABC Manufacturing
10%
Ethan Allen
5%
Office Depot
0%
Staples
-5%
Office Max
10 20 30 40 50 60 70 80 90 100 110
3.0 Marketing Strategy
Willamette furniture is moving toward internal marketing control by establishing programs

such as an in-house catalog publishing and distribution department, detailed customer
service vehicles that will allow us to track the success of our marketing and sales, and further
integration with established quality catalog vendors, such as Shaper Image.
Our target markets present great opportunities for company growth, as our niche is not at all
saturated at this point. We will dominate the high-end office furniture market by stressing the
quality in workmanship and materials of our product lines, keeping up with and integrating
technological advances in the personal computing environment, and by increasing our market
research and customer service in order to constantly satisfy our markets' needs.
The home office, small business owner, and corporate executive will greatly benefit from our
quality products in terms of , comfort, and appreciation of the office environment. The key to
reaching this market is to make them aware that our products are available. We do not need
Page 11
to convince them of anything but the assurance of quality in manufacturing and ergonomic
design.
3.1 Value Proposition
Willamette Furniture Mfr. gives the discriminating personal computer user, who cares
aboutdesign and quality furniture and quality of working environment, a combination of
highestquality furniture and latest technology, at a relatively high price.
3.2 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. 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?
3.3 Financial Objectives
1. To grow our sales more than three times over during a five-year period, from
$450,000 in 2000 to $1.6 million in 2004.
2. To significantly decrease our sales and marketing expenses as a percent of sales:
from 34.5% this year to 26% by 2004.
3. To increase contribution margin from 40% to 48% over five years.
3.4 Marketing Objectives
Our marketing strategy assumes that we need to go into specialty channels to address our
target customer's needs. The tie-in with high-end quality catalogs like Sharper Image is
perfect, because these catalogs cater to our kind of customers. We position as the highest
quality, offering status and prestige levels of purchase.
Our presence on the World Wide Web will increase the availability of our products to the
specific market segments that we wish to target. Because Willamette's product offerings
concentrate on the integration of PC technologies, Web presence is a natural objective in
reaching appropriate potential customers.
Finally, our movement into internal catalog publishing will provide Willamette's marketing
managers with additional control over the content and recipients of our direct marketing.
With experience gained through our inclusion in other high-end catalog merchants, and our
managers' publishing experience, our internal catalogs will undoubtedly prove to generate
great sales increases for Willamette Furniture.
Page 12
3.5 Target Market Strategy
Our segment definition is of itself strategic. We are not intending to satisfy all users of office
furniture intended for use with personal computers, but, rather, only those who are most
demanding. We are definitely out to address the needs of the high-end buyer, who is willing
to pay more for quality.
In our particular market, we also seek the buyer who appreciates two attributes: the quality
of furniture workmanship and the excellence of design, with an understanding of technology
and ergonomics built in.
• Corporate executives: our market research indicates about 2.5 million potential
customers who are managers in corporations of more than 100 employees. The target
customer is going to be at a high executive level, in most cases, because the purchase
price is relatively steep compared to standard office furniture.
• Small business owners: our customer surveys indicate a strong market among the
owners of businesses with fewer than 100 employees. There are 11 million such
businesses in this country, most of them with concentrated ownership that makes the
owners potential customers.
• Home offices: the home office business has proliferated during the 1990s, and we
also have home offices for people employed outside the home. This is a big market,
some 36 million home offices, growing faster than other markets.
3.6 Strategy Pyramids
Our main strategy at Willamette Furniture is to position ourselves at the top of the quality
scale, featuring our combination of superb technology and fine old-fashioned woodworking,
for the buyer who wants the best quality regardless of price.
Tactics underneath that strategy include research and development related to new designs
and new technology, choosing the right channels of distribution, and communicating our
quality position to the market.
Programs are mainly those listed in the milestones table, including new design programs,
new equipment to keep up with design, channel development, channel marketing programs,
our direct sales, and our continued presence in high-end catalog channels and new presence
in the web.
4.0 Marketing Mix
Our marketing mix depends mainly on the product and product marketing, but we are also
leveraging a lot more in our presence in channels than on our direct national branding. The
channels are the key to our recent growth and our prospects for additional growth.
Page 13
4.1 Product Marketing
Our product marketing has to emphasize the benefits of our unique combination of
technological expertise, ergonomics, and fine furniture craftsmanship. We need to sell pride
of ownership and workmanship, and prestige. That has to come out in our packaging,
finishing, shipping, and collaterals.
Product marketing's most important challenge is the problem of assembly and packaging. We
know we have the best product when we deliver it locally. That isn't necessarily so when we
send it in boxes to be assembled. We have to make sure that the assembly is truly easy.
4.2 Promotion
Our promotion 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.
4.3 Service
The service aspect of Willamette's marketing mix is limited in traditional terms. That is, due
to our high degree of quality in manufacturing and assembly, our product lines do not require
continued maintenance or service. However, we do consider our customer service to be key
to the retention of customers.
Willamette manufactures many accessories in addition to our main, executive desk lines. As a
result, we offer a fully integrated office environment, including peripherals such as lamps,
cabinets, tables, and chairs. Therefore, a Willamette Furniture customer is not considered to
be a one time buyer. The establishment of a quality office environment can be an on-going
process. Willamette will continue to offer additional pieces to our customers, targeting them
based on their previous purchases.
4.4 Sales Plan
Our strategy focuses first on maintaining the identity with the high-end buyer who
appreciates the best available quality, but is also very demanding regarding computer
systems and technology. We've been able to find these customers using a combination of
direct mail catalogs and direct sales to distributors.
For the next year we continue to focus on growing presence in the high-end direct mail
catalog that finds our specialty customer. We will work with Sharper Image and Broadview
more than ever, and we expect to gain position in the major airline catalogs as well. Specialty
retail is a new channel that could become important for us.
Page 14
Our work with distributors has been promising. We hope to continue the relationship with
distributors selling directly to larger corporations, even though this takes working capital to
support receivables.
4.5 Channels
Our past marketing strategy assumes that we need to go into specialty channels to address
our target customer's needs. The tie-in with the high-end quality catalogs like Sharper Image
is perfect, because these catalogs cater to our kind of customers. We position our products as
the highest quality, highest price offering in any channel mix.
By including our products in these high-end catalogs, we were able to successfully target the
specific niche that was our marketing milestone. This has provided the foundation for a move
to internal catalog production. With a higher degree of information control internally, these
catalogs will target the same audience, but will include more extensive information in terms
of quality, examples, testimonials, and information tailored to past sales experiences.
4.5.1 Channels of Distribution
The four main manufacturers are selling direct to the office superstores and buying discount
clubs. This accounts for the main volume of distribution. The office furniture customer seems
to be growing steadily more comfortable with the retail buy in the chain store.
The major corporate purchases are still made directly with manufacturers. Although this is a
major channel for some of the more traditional manufacturers, it is essentially closed to new
competition. The direct channel is dominated by two manufacturers and two distributors. The
distributors will occasionally take on a new line -- happily, this has helped Willamette -- but
the main growth is in retail.
Published research indicates that 51% of the total sales volume in the market goes through
the retail channel, most of that major national chains. Another 23% goes through the direct
sales channel, although in this case direct sales includes sales by distributors who are buying
from multiple manufacturers. Most of the remainder, 18%, is sold directly to buyers by
catalogs.
In the mainstream business, channels are critical to volume. The manufacturers with impact
in the national sales are going to win display space in the store, and most buyers seem
content to pick their product off the store floor. Price is critical, because the channels take
significant margins. Buyers are willing to settle for laminated quality and serviceable design.
In direct sales to corporations, price and volume is critical. The corporate buyer wants trouble-
free buying in volume, at a great price. Reliable delivery is as important as reliable quality.
In the high-end specialty market, particularly in our niche, features are very important. Our
target customer is not making selections based on price. The ergonomics, design,
accommodation of the computer features within the high-quality feel of good wood, is much
more important than mere price. We are also seeing that assembly is critical to shipping and
packing, but our customer doesn't accept any assembly problems. We need to make sure
that the piece comes together almost like magic, and as it does, it presents a greater feel of
quality than if it hadn't required assembly at all.
Page 15
Table: Channel Analysis
Channel Analysis
Channel Reach Comarketing Payments Cost Risk

Outside Catalogs 10 8 1 5 7
Internal Catalogs 2 1 8 2 2
Websites 4 7 9 2 9
Other 0 0 0 0 0
Table: Channel Forecast
Channel Forecast
Channel Growth 2000 2001 2002 2003 2004 CAGR

Outside Catalogs 20% 120 144 173 208 250 20.14%
Internal Catalogs 40% 200 280 392 549 769 40.03%
Websites 40% 100 140 196 274 384 39.99%
Other 0% 0 0 0 0 0 0.00%
--------- --------- --------- --------- --------- ---------
Total 35.19% 420 564 761 1,031 1,403 35.19%
Channel Forecast (Pie)
Outside Catalogs
Internal Catalogs
Websites
Other
4.6 Implementation Schedule
Willamette Furniture will begin the year 2000 by continuing to strengthen our alliances with
established partners in distribution. We will prepare our catalog placements internally,
submitting them by the middle of January 2000. Simultaneously, the internal catalog plan will
be polished and submitted by the end of January 2000. This will be possible with the
expertise of Rebecca King and James Black, who have brought their industry knowledge to
the marketing department of Willamette Furniture.
With the completion of this plan, design stages will occur from February 2000 through to the
middle of March 2000. This time frame is accurate because we have experience in the design
stage, as we have historically submitted our own designs to outside catalog vendors.
As in past years, Spring and Fall Trade Shows will occur at their normal times. These shows
Page 16
will provide test cases for our internal catalog design. , 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. These distributors will increase our customer base
nationwide.
Table: Milestones
Milestones
Advertising Start Date End Date Budget Manager Department

First Catalog Placement 1/1/2000 1/11/2000 $50,000 Jack Ads
Second Catalog 1/10/2000 1/31/2000 $40,000 Jack Ads
Third Catalog 1/15/2000 2/5/2000 $30,000 Jack Ads
Other 1/1/2000 1/15/2000 $0 ABC Department
Total Advertising Budget $120,000
PR Start Date End Date Budget Manager Department
Spring Trade Show - preparation 1/5/2000 3/5/2000 $5,000 Terry PR
Spring Trade Show 3/10/2000 3/15/2000 $15,000 Terry PR
Fall Trade Show - preparation 7/1/2000 8/30/2000 $5,000 Terry PR
Fall Trade Show 9/1/2000 9/10/2000 $15,000 Terry PR
Total PR Budget $40,000
Direct Marketing Start Date End Date Budget Manager Department
New Distributor 3/15/2000 3/25/2000 $5,000 Cassidy Tavel
In-House Catalog Plan 1/5/2000 2/19/2000 $3,000 Cassidy Sales
In-House Catalog Design 2/21/2000 3/22/2000 $0 Bertha Other
In-House Catalog Mailing 3/25/2000 3/30/2000 $2,000 Bertha Other
Total Direct Marketing Budget $10,000
Web Development Start Date End Date Budget Manager Department
Websites 2/1/2000 5/31/2000 $20,000 Jack IT
Name me 1/1/2000 1/15/2000 $0 ABC Department
Total Web Development Budget $20,000
Other Start Date End Date Budget Manager Department
Laptop Product Test 2/1/2000 4/1/2000 $5,000 Terry Other
Laptop Product Release 4/1/2000 4/16/2000 $1,000 Sampson Other
Total Other Budget $6,000
Totals $196,000
5.0 Financials
The financial picture is quite encouraging. We have been slow to take on debt, but with our
increase in sales we do expect to apply for a credit line with the bank, to a limit of $150,000.
The credit line is easily supported by assets.
We do expect to be able to take some money out as dividends. The owners don't take overly
generous salaries, so some draw is appropriate.
Page 17
5.1 Break-even Analysis
Our break-even analysis is based on running costs, the "burn-rate" costs we incur to keep the
business running, not on theoretical fixed costs that would be relevant only if we were
closing. Between payroll, rent, utilities, and basic marketing costs, we think $30,000 is a
good estimate of fixed costs.
Our assumptions on average unit sales and average per-unit costs depend on averaging. We
don't really need to calculate an exact average, this is close enough to help us understand
what a real break-even point might be.
The essential insight here is that our sales level seems to be running comfortably above
break-even.
Table: Break-even Analysis
Break-even Analysis
Monthly Units Break-even 26

Monthly Revenue Break-even $40,144
Assumptions:
Average Per-Unit Revenue $1,518.86
Average Per-Unit Variable Cost $383.80
Estimated Monthly Fixed Cost $30,000
Break-even Analysis
$20,000
$10,000
$0
($10,000)
($20,000)
($30,000)
0 8 16 24 32 40
Monthly break-even point
Break-even point = where line intersects with 0
Page 18
5.2 Sales Forecast
Our sales forecast assumes no change in costs or prices, which is a reasonable assumption
for the last few years.
We are expecting to increase sales grow from $350 thousand last year to $450 thousand this
year. The growth forecast is in line with our last year, and is relatively high for our industry
because we are developing new channels. In 2001 and 2002 we expect growth closer to 60%
per year, to a projected total of more than $1 million in 2002.
For 2000 we plan to internally develop a company catalog, which will include some other
products for the same target customers. The focus will be an executive level office catalog,
with furniture, lamps, and other accessories.
Our Oregon location is a distinct advantage for local wood. We can buy higher quality oak and
cherry than either of our competitors (one in California, one in New York). Since our sales
increased over the last two years, we have been able to buy at better prices, because of
higher volumes.
We work with three wood suppliers, all local. Bambridge supplies most of our oak, and a bit
of cherry and some other specialty woods. Bambridge has been in business for as long as we
have, and has given us good service and good prices. This is a good, stable supplier. Duffin
Wood Products is a good second source, particularly for cherry and specialty woods. We've
used Merlin supplies as well, frequently, for filling in when either of our main two suppliers
were short.
We also work with a number of specialty manufacturers for furniture fittings, drawer
accessories, glass, shelving accessories, and related purchases.
Although we aren't a major player compared to the largest furniture manufacturers, we are
one of the biggest buyers of the custom materials we need. Most of our suppliers are selling
through channels to hobbyists and carpenters, so they treat us as a major account.
We depend on our dominance of the latest in technology of ergonomics, combined with

classic design elements of fine furniture. We must remain on top of new technologies in
display, input and output, and communications. For example, our latest models are already
assuming the desktop digital scanner as a frequent accessory, and audio for use in creating
presentations, email attachments, etc.
Our assembly patents are an important competitive edge. No competitor can match the way
we turn a drawback -- having to assemble the product -- into a feature. Our customer
surveys confirm that customers take the interlocking assembly system as an enhancement to
the sense of quality.
In 2000 we will introduce the new line based on the executive laptop computer, with docking
station to connect to a network. The new variation on the executive desk line has a different
configuration to assume easy access to the docking station, and better use of the space that
doesn't have to be dedicated the the CPU case.
Page 19
Table: Sales Forecast
Sales Forecast
2000 2001 2002
Unit Sales
Executive Desk Oak 209 350 600
Executive Desk Cherry 32 35 40
Other Furniture Oak 43 50 50
Other Furniture Cherry 7 10 10
Custom Designed Furniture 6 10 20
Total Unit Sales 297 455 720
Unit Prices 2000 2001 2002

Executive Desk Oak $1,600.00 $1,600.00 $1,600.00
Executive Desk Cherry $1,750.00 $1,750.00 $1,750.00
Other Furniture Oak $900.00 $900.00 $900.00
Other Furniture Cherry $1,000.00 $1,000.00 $1,000.00
Custom Designed Furniture $2,500.00 $2,500.00 $2,500.00
Sales
Executive Desk Oak $334,400 $560,000 $960,000
Executive Desk Cherry $56,000 $61,250 $70,000
Other Furniture Oak $38,700 $45,000 $45,000
Other Furniture Cherry $7,000 $10,000 $10,000
Custom Designed Furniture $15,000 $25,000 $50,000
Total Sales $451,100 $701,250 $1,135,000
Direct Unit Costs 2000 2001 2002

Executive Desk Oak $400.00 $400.00 $400.00
Executive Desk Cherry $525.00 $525.00 $525.00
Other Furniture Oak $180.00 $180.00 $180.00
Other Furniture Cherry $300.00 $300.00 $300.00
Custom Designed Furniture $625.00 $625.00 $625.00
Direct Cost of Sales

Executive Desk Oak $83,600 $140,000 $240,000
Executive Desk Cherry $16,800 $18,375 $21,000
Other Furniture Oak $7,740 $9,000 $9,000
Other Furniture Cherry $2,100 $3,000 $3,000
Custom Designed Furniture $3,750 $6,250 $12,500
Subtotal Direct Cost of Sales $113,990 $176,625 $285,500
Sales Monthly
$60,000
$50,000
$40,000 Executive Desk Oak

Executive Desk Cherry
$30,000
Other Furniture Oak
$20,000 Other Furniture Cherry

Custom Designed Furniture
$10,000
$0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Page 20
5.2.1 Sales by Manager
Willamette's sales in terms of our management structure are represented in the following
table. Jack and Cassidy are our strongest generators of sales because of their established
relationships with past customers and channels.
We will bring on two new managers due to our progress on the Internet and through internal
catalog publishing. Although the first year sales projections for Sampson and Bertha are not
extremely high, their positions and customer interactions will increase exponentially with the
completion of our websites and internal catalogs.
Willamette has decided to bring them on early because Peggy will be taking a leave of
absence during the summer months of 2000. The overlap will also allow Sampson and Bertha
to become quite familiar with our product offerings before their respective departments are
online.
Table: Sales Breakdown by Manager
Sales by: Manager

2000 2001 2002
Sales
Jack 78 126 223
Peggy 30 71 152
Sampson 57 80 109
Cassidy 78 86 103
Bertha 48 92 133
Other 6 0 0
Total 297 455 720
Average 50 76 120
Sales Breakdown by Manager Monthly
$40
$35
$30
Jack
$25 Peggy
$20 Sampson
Cassidy
$15
Bertha
$10 Other
$5
$0
Page 21
5.2.2 Sales by Segment
Willamette's sales by program forecasts are a direct result of past performance stemming
from outside catalog marketing and market research. Our expanding markets are, by default,
heavy users of the World Wide Web. With our technological integration that is key to
Willamette's product offerings, it can be assumed that our target customers will find our
products via the Internet (with a relatively aggressive Internet marketing scheme).
Table: Sales Breakdown by Segment
Sales by: Segment

2000 2001 2002
Sales
Corporate Executives 109 215 362
Small Business Owners 94 136 203
Home Offices 90 104 155
Other 4 0 0
Total 297 455 720
Average 74 114 180
Sales Breakdown by Segment Monthly
$40
$35
$30
$25 Corporate Executives

$20 Small Business Owners
Home Offices
$15
Other
$10
$5
$0
5.2.3 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. With historical experience in targeting
these market segments, Willamette will only increase in its market share due to expansions
in marketing programs tailored to our past success.
Page 22
Table: Sales Breakdown by Program
Sales by: Program

2000 2001 2002
Sales
Outside Catalogs 122 134 176
Internal Catalogs 82 152 232
Websites 77 144 207
Customer Service 13 25 105
Other 3 0 0
Total 297 455 720
Average 59 91 144
Sales Breakdown by Program Monthly
$40
$35
$30
$25
Outside Catalogs
Internal Catalogs
$20
Websites
$15 Customer Service
Other
$10
$5
$0
5.3 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. We will be moving into the realm of Internet marketing and sales in
the year 2000. The initial costs are high relative to the maintenance costs involved after the
websites' creation.
Similarly, the development of an in-house catalog design and publishing department will incur
higher start-up expenses than maintenance costs after the initial publication. 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.
Page 23
Table: Marketing Expense Budget
Marketing Expense Budget 2000 2001 2002

Outside Catalogs $24,000 $50,000 $100,000
Internal Catalogs $72,000 $104,000 $125,000
Customer Service $30,000 $40,000 $50,000
Websites $30,000 $30,000 $40,000
Other $0 $0 $0
------------ ------------ ------------
Total Sales and Marketing Expenses $156,000 $224,000 $315,000
Percent of Sales 34.58% 31.94% 27.75%
Monthly Expense Budget
$14,000
$12,000
$10,000
Outside Catalogs
$8,000 Internal Catalogs
Customer Service
$6,000
Websites
$4,000 Other
$2,000
$0
5.3.1 Expense by Manager
Willamette Furniture's expenses in terms of manager are directly proportionate to the

managed program's potential. As our market share increases and capital is generated, we will
support further marketing programs and the expansion of current programs, thus increasing
our managment budgets for these specific departments and projects.
Table: Expense Breakdown by Manager
Expenses by Manager
2000 2001 2002
Expenses
Jack $36,000 $46,000 $61,000
Peggy $31,200 $41,200 $56,200
Sampson $31,200 $41,200 $56,200
Cassidy $24,000 $34,000 $49,000
Bertha $33,600 $43,600 $58,600
Other $0 $18,000 $34,000
Total $156,000 $224,000 $315,000
Average $26,000 $37,333 $52,500
Page 24
Expense Breakdown by Manager Monthly
$14,000
$12,000
$10,000 Jack
Peggy
$8,000
Sampson
$6,000 Cassidy
Bertha
$4,000
Other
$2,000
$0
5.3.2 Expense by Segment
Willamette Furniture's expenses in terms of marketing programs are directly proportionate to

the proposed and historical success of these programs. As our market share increases and
capital is generated, we will support further marketing programs and the expansion of
current programs.
Table: Expense Breakdown by Segment
Expenses by Segment
2000 2001 2002
Expenses
Corporate Executives $84,000 $94,000 $109,000
Small Business Owners $48,000 $58,000 $73,000
Home Offices $24,000 $34,000 $49,000
Other $0 $38,000 $84,000
Total $156,000 $224,000 $315,000
Average $39,000 $56,000 $78,750
Page 25
Expense Breakdown by Segment Monthly
$14,000
$12,000
$10,000
$8,000
Small Business Owners
$6,000 Home Offices
Other
$4,000
$2,000
$0
5.3.3 Expense by Program
Willamette Furniture's expenses in terms of market segment are directly proportionate to the
segment's potential. As our market share increases and capital is generated, we will support
further marketing programs and the expansion of current programs.
Table: Expense Breakdown by Program
Expenses by Program
2000 2001 2002
Expenses
Websites $30,000 $40,000 $55,000
Other $0 $28,000 $59,000
Total $156,000 $224,000 $315,000
Average $31,200 $44,800 $63,000
Page 26
Expense Breakdown by Program Monthly
$14,000
$12,000
$10,000
Outside Catalogs
$8,000 Internal Catalogs
Customer Service
$6,000
Websites
$4,000 Other
$2,000
$0
5.4 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. For example, it is proven that an Internet presence will increase
our sales anywhere from 3-10%.
Therefore, it is worth an initial expenditure of $30,000 for design and staffing in order to
maintain the websites. Website expenses increase as website importance increases. We will
use our increased capital to make wise infrastructure purchases such as internal catalog
publishing capabilities and additional design and manufacturing tools.
Page 27
Sales vs. Expenses Monthly
$60,000
$50,000
$40,000
$30,000 Sales
Expenses
$20,000
$10,000
$0
5.5 Contribution Margin
Willamette's sales will increase as a result of market growth, market share increase, and
Internet presence. Our gross margin will remain steady at approximately 75%. 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.
These second year expense decreases will offset the increases in retained customer
expenses, custom product line development, and outside catalog expansion.
Table: Contribution Margin
Contribution Margin
2000 2001 2002
Sales $451,100 $701,250 $1,135,000
Direct Costs of Goods $113,990 $176,625 $285,500
Other Variable Costs of Sales $0 $0 $0
------------ ------------ ------------
Cost of Goods Sold $113,990 $176,625 $285,500
Gross Margin $337,110 $524,625 $849,500

Gross Margin % 74.73% 74.81% 74.85%
Marketing Expense Budget 2000 2001 2002

Websites $30,000 $30,000 $40,000
Other $0 $0 $0
------------ ------------ ------------
Total Sales and Marketing Expenses $156,000 $224,000 $315,000
Percent of Sales 34.58% 31.94% 27.75%
Contribution Margin $181,110 $300,625 $534,500

Contribution Margin / Sales 40.15% 42.87% 47.09%
Page 28
Contribution Margin Monthly
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$0
6.0 Controls
The executive furniture market is steadily increasing at an average calculated annual growth
rate of 7.75 percent. With this in mind, our marketing programs will expand accordingly. The
addition of an internally created catalog will allow Willamette to market to this expanding
number of potential customers. Sales will increase accordingly, providing working capital for
internal product development, marketing department growth, and Internet development. A
presence on the Internet will be a key milestone to expanding sales and marketing potentials
through the utilization of new channels.
6.1 Keys to Success
The keys to Willamette's success have historically been effective market segmentation and
implementation strategies. Along these lines of proven success, Willamette will implement
direct marketing strategies based on our success in distribution through high-end channels
such as the Sharper Image. Our catalog marketing will turn to in-house production for more
specific, extensive product descriptions.
• Uncompromising commitment to the quality of the product: quality wood, quality

workmanship, quality design, quality of end result.
• Successful niche marketing: we need to find the quality-conscious customer in the
right channels, and we need to make sure that customer can find us.
• Almost-automatic assembly: we can't afford to ship fully-assembled desks, but
assembly must be so easy and automatic that it makes the customer feel better about
the quality, not worse.
Page 29
6.2 Market Research
Due to the market segmentation that Willamette Furniture has established, we will require
constant updates in terms of the potential sizes, distributions, and purchasing patterns of the
quality conscious, technology utilizing executive markets. We will use our historical
performance to establish a customer database containing this information. This will allow
Willamette to target customers more efficiently as a result of actual experience. Furthermore,
as our customer service and follow-up are key to establishing retained customers, the
marketing database will allow us to divide the potential buying patterns of customers into
categories based on future needs.
6.3 Contingency Planning
Willamette Furniture is unique in its discovery and utilization of the high quality, executive
level computer integrated office furniture niche. Therefore, it is possible that with our success
and superior design, other, well-established furniture manufacturers may release a
competitive product line. However, Willamette focuses specifically on the high-end,
technologically integrated aspect of office furniture. With this exclusive concentration,
Willamette can continue to focus its resources on producing the best executive level office
furniture available. Another possible challenge would be the emergence of a new company in
our niche. This however, would not be quite as threatening, as their initial market share
would be minuscule, allowing for us to strategize further for continued success. Finally, an
established furniture company my choose to begin marketing to our target market. 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.
6.4 Marketing Organization
Susan Graham, President, is responsible for overall business management. Our managers of
finance, marketing, and sales report directly to Susan. Susan had a successful career in retail
before becoming half owner of Willamette. She was an area manager of Ross Stores, a buyer
for Macy's, and merchandising assistant for Sears and Roebuck. She has a degree in
Literature from the University of Notre Dame.
Jim Graham, designer, is responsible for product design and development, assembly, and
manufacturing. Our workshop manager reports directly to him. Jim designed furniture for
Haines Manufacturing before becoming half owner of Willamette. He was responsible for one
of the first executive desks designed to include customized fittings for personal computers,
and was one of the first to design the monitor inside the desk under glass. He has an B.S.
and M.S. in industrial design, from Stanford University and the University of Oregon,
respectively.
As co-owners, Jim and Susan jointly develop business strategy and long-term plans. Jim is
strong on product know-how and technology, and Susan is strong on management and
business know-how.
Terry Hatcher, 34, is marketing manager. Terry joined Willamette from the marketing
department of the Thomasville Furniture chain, having been in charge of national catalog
production and catalog advertising. Terry also managed direct sales at one of the furniture
distributors that has since died to industry consolidation. Terry has a B.A. degree in literature
from the University of Washington.
Page 30
Our sales and marketing managers are in the process of revolutionizing the way in which
Willamette Furniture reaches its customers. Both of these departments have been integrated
with our Information Technology area in order to sell and market Willamette's product
through our own, internal website. In addition, we have started the publication of our own
catalog. Due to the success in marketing with high-end retailers and catalog merchants, such
as Sharper Image, we have decided to implement this new, internal strategy for future
growth and increased market share. If the executive level employees nationwide are aware of
our product offerings, Willamette furniture will soon become a part of every quality office
environment.
Page 31
Appendix
Appendix Table: Sales Forecast
Sales Forecast
Unit Sales
Executive Desk Oak 0% 14 16 16 16 15 12 12 15 15 26 27 25
Executive Desk Cherry 0% 3 3 3 3 2 2 2 2 3 4 3 2
Other Furniture Oak 0% 4 4 4 4 3 3 3 4 4 1 5 4
Other Furniture Cherry 0% 0 1 0 0 0 1 0 1 1 1 1 1
Custom Designed Furniture 0% 1 0 0 1 1 0 1 0 0 1 1 0
Total Unit Sales 22 24 23 24 21 18 18 22 23 33 37 32
Unit Prices Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Executive Desk Oak $1,600.00 $1,600.00 $1,600.00 $1,600.00 $1,600.00 $1,600.00 $1,600.00 $1,600.00 $1,600.00 $1,600.00 $1,600.00 $1,600.00
Executive Desk Cherry $1,750.00 $1,750.00 $1,750.00 $1,750.00 $1,750.00 $1,750.00 $1,750.00 $1,750.00 $1,750.00 $1,750.00 $1,750.00 $1,750.00
Other Furniture Oak $900.00 $900.00 $900.00 $900.00 $900.00 $900.00 $900.00 $900.00 $900.00 $900.00 $900.00 $900.00
Other Furniture Cherry $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
Custom Designed Furniture $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00 $2,500.00
Sales
Executive Desk Oak $22,400 $25,600 $25,600 $25,600 $24,000 $19,200 $19,200 $24,000 $24,000 $41,600 $43,200 $40,000
Executive Desk Cherry $5,250 $5,250 $5,250 $5,250 $3,500 $3,500 $3,500 $3,500 $5,250 $7,000 $5,250 $3,500
Other Furniture Oak $3,600 $3,600 $3,600 $3,600 $2,700 $2,700 $2,700 $3,600 $3,600 $900 $4,500 $3,600
Other Furniture Cherry $0 $1,000 $0 $0 $0 $1,000 $0 $1,000 $1,000 $1,000 $1,000 $1,000
Custom Designed Furniture $2,500 $0 $0 $2,500 $2,500 $0 $2,500 $0 $0 $2,500 $2,500 $0
Total Sales $33,750 $35,450 $34,450 $36,950 $32,700 $26,400 $27,900 $32,100 $33,850 $53,000 $56,450 $48,100
Direct Unit Costs Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Executive Desk Oak 0.00% $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00 $400.00
Executive Desk Cherry 0.00% $525.00 $525.00 $525.00 $525.00 $525.00 $525.00 $525.00 $525.00 $525.00 $525.00 $525.00 $525.00
Other Furniture Oak 0.00% $180.00 $180.00 $180.00 $180.00 $180.00 $180.00 $180.00 $180.00 $180.00 $180.00 $180.00 $180.00
Other Furniture Cherry 0.00% $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00 $300.00
Custom Designed Furniture 0.00% $625.00 $625.00 $625.00 $625.00 $625.00 $625.00 $625.00 $625.00 $625.00 $625.00 $625.00 $625.00
Direct Cost of Sales

Executive Desk Oak $5,600 $6,400 $6,400 $6,400 $6,000 $4,800 $4,800 $6,000 $6,000 $10,400 $10,800 $10,000
Executive Desk Cherry $1,575 $1,575 $1,575 $1,575 $1,050 $1,050 $1,050 $1,050 $1,575 $2,100 $1,575 $1,050
Other Furniture Oak $720 $720 $720 $720 $540 $540 $540 $720 $720 $180 $900 $720
Other Furniture Cherry $0 $300 $0 $0 $0 $300 $0 $300 $300 $300 $300 $300
Custom Designed Furniture $625 $0 $0 $625 $625 $0 $625 $0 $0 $625 $625 $0
Subtotal Direct Cost of Sales $8,520 $8,995 $8,695 $9,320 $8,215 $6,690 $7,015 $8,070 $8,595 $13,605 $14,200 $12,070
Page 32
Appendix
Appendix Table: Sales Breakdown by Manager
Sales by: Manager

Sales
Jack 5 6 5 6 6 6 5 6 6 9 10 8
Peggy 3 3 3 3 0 0 0 3 3 4 5 3
Sampson 4 5 5 5 5 2 2 4 5 7 7 6
Cassidy 5 6 6 6 6 6 5 6 6 8 9 9
Bertha 3 4 4 4 4 4 4 2 2 5 6 6
Other 2 0 0 0 0 0 2 1 1 0 0 0
Total 22 24 23 24 21 18 18 22 23 33 37 32
Average 4 4 4 4 4 3 3 4 4 6 6 5
Page 33
Appendix
Appendix Table: Sales Breakdown by Segment
Sales by: Segment

Sales
Corporate Executives 8 10 9 9 8 6 7 8 9 12 13 10
Small Business
7 8 8 7 6 6 5 7 7 11 13 9
Owners
Home Offices 5 6 6 8 7 6 6 7 7 10 11 11
Other 2 0 0 0 0 0 0 0 0 0 0 2
Total 22 24 23 24 21 18 18 22 23 33 37 32
Average 6 6 6 6 5 5 5 6 6 8 9 8
Page 34
Appendix
Appendix Table: Sales Breakdown by Program
Sales by: Program

Sales
Outside Catalogs 19 17 16 11 8 7 9 7 7 8 7 6
Internal Catalogs 0 0 0 8 8 6 4 8 9 12 15 12
Websites 0 6 6 5 5 4 4 5 6 11 13 12
Customer Service 1 1 1 0 0 1 1 1 1 2 2 2
Other 2 0 0 0 0 0 0 1 0 0 0 0
Total 22 24 23 24 21 18 18 22 23 33 37 32
Average 4 5 5 5 4 4 4 4 5 7 7 6
Page 35
Appendix
Appendix Table: Marketing Expense Budget
Marketing Expense Budget Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Outside Catalogs $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Internal Catalogs $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000
Customer Service $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Websites $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Sales and Marketing
$13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000
Expenses
Percent of Sales 38.52% 36.67% 37.74% 35.18% 39.76% 49.24% 46.59% 40.50% 38.40% 24.53% 23.03% 27.03%
Page 36
Appendix
Appendix Table: Expense Breakdown by Manager
Expenses by Manager
Expenses
Jack $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 $3,000
Peggy $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600
Sampson $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600
Cassidy $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Bertha $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800 $2,800
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000
Average $2,167 $2,167 $2,167 $2,167 $2,167 $2,167 $2,167 $2,167 $2,167 $2,167 $2,167 $2,167
Page 37
Appendix
Appendix Table: Expense Breakdown by Segment
Expenses by Segment
Expenses
Corporate Executives $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000
Small Business
$4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000 $4,000
Owners
Home Offices $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000
Average $3,250 $3,250 $3,250 $3,250 $3,250 $3,250 $3,250 $3,250 $3,250 $3,250 $3,250 $3,250
Page 38
Appendix
Appendix Table: Expense Breakdown by Program
Expenses by Program
Expenses
Websites $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000
Average $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600 $2,600
Page 39
Appendix
Appendix Table: Contribution Margin
Contribution Margin
Sales $33,750 $35,450 $34,450 $36,950 $32,700 $26,400 $27,900 $32,100 $33,850 $53,000 $56,450 $48,100
Direct Costs of Goods $8,520 $8,995 $8,695 $9,320 $8,215 $6,690 $7,015 $8,070 $8,595 $13,605 $14,200 $12,070
Other Variable Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Cost of Goods Sold $8,520 $8,995 $8,695 $9,320 $8,215 $6,690 $7,015 $8,070 $8,595 $13,605 $14,200 $12,070
Gross Margin $25,230 $26,455 $25,755 $27,630 $24,485 $19,710 $20,885 $24,030 $25,255 $39,395 $42,250 $36,030
Gross Margin % 74.76% 74.63% 74.76% 74.78% 74.88% 74.66% 74.86% 74.86% 74.61% 74.33% 74.84% 74.91%
Marketing Expense Budget Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Websites $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Sales and Marketing Expenses $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000
Percent of Sales 38.52% 36.67% 37.74% 35.18% 39.76% 49.24% 46.59% 40.50% 38.40% 24.53% 23.03% 27.03%
Contribution Margin $12,230 $13,455 $12,755 $14,630 $11,485 $6,710 $7,885 $11,030 $12,255 $26,395 $29,250 $23,030
Contribution Margin / Sales 36.24% 37.95% 37.02% 39.59% 35.12% 25.42% 28.26% 34.36% 36.20% 49.80% 51.82% 47.88%
Page 40

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1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2.0 Situation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

3.0 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

4.0 Marketing Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

1.0 Executive Summary

2.0 Situation Analysis

2.1 Market Needs

2.2 The Market

Table: Market Analysis

Market Analysis (Pie)

2.2.1 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

Table: Market Demographics

Market Segments Computer Usage Age Income Issues Decision Maker

2.2.2 Market Trends

Market Analysis (Trends)

300,000 Small Business Owners

2.2.3 Market Growth

Market Analysis (C.A.G.R)

2.3 The Company

Willamette Furniture Mfr. is a privately-owned specialty manufacturer of high-end office

2.3.2 Product Offering

2.3.4 SWOT Summary

• Strategic market segmentation and implementation strategies.

• High-end, high priced product line limits sales volume.

• New channels of distribution.

2.3.5 Historical Results

1. We used the Imarket Inc. website at www.imarketinc.com to find an estimate for

Table: Historical Data

Variable 1997 1998 1999

2.4.1 Direct Competition

Acme Computer Furniture

Strengths: financial backing, product quality.

Table: Growth and Share Analysis

Growth and Share

Competitor Price Growth Rate Market Share

Average $1,000.00 7.17% 16.67%

Competitor by Growth and Share

3.0 Marketing Strategy

Willamette furniture is moving toward internal marketing control by establishing programs

3.1 Value Proposition

3.2 Critical Issues

3.3 Financial Objectives

3.4 Marketing Objectives

3.5 Target Market Strategy

3.6 Strategy Pyramids

4.0 Marketing Mix

4.1 Product Marketing

4.4 Sales Plan

4.5.1 Channels of Distribution

Table: Channel Analysis

Channel Reach Comarketing Payments Cost Risk

Table: Channel Forecast

Channel Growth 2000 2001 2002 2003 2004 CAGR

Channel Forecast (Pie)

4.6 Implementation Schedule

Advertising Start Date End Date Budget Manager Department

5.1 Break-even Analysis