Should Crestfield accept the proposal to increase consumer advertising of its product line in 2004 by $225,000? Student Learning Goals
1.) Present an analysis of how consumers buy furniture given the data in the case that is relevant for Crestfield management. (30 points)
Crestfield Industries uses a unique approach to selling their furniture and I feel it is important to understand their go to market selling strategy prior to determining how consumers buy from Crestfield. For starters, Crestfield employees 10 full time regional sales managers in the field that are factory trained to assist the distributors on the “Best Practices” of selling the features and benefits of the Crestfield furniture product offering. Additionally, Crestfild has two Regional Sales Managers who are tasked with training the sales staff and developing new markets and distributors. A direct sales force in the furniture industry is an anomaly and the original owner of Crestfield Industries; Charlton Bates was credited for being “before his time by having factory direct sales staff in the field”. I feel it is relevant to point out the direct sales team at Crestfield is commission based and they are tasked with motivating the retail sales people they work with to “push” the product line. Additionally, by having a committed sales person as a resource, retail sales staff can gain assistance on how to set up and market the furniture at their individual stores. This article claims that 50% of all Crestfield sales can be traced to the direct efforts of a factory sales representative. Now that I have reviewed the Crestfield factory approach to selling Furniture I can look at how consumers purchase furniture to determine how effective the Crestfield approach to selling really is.
Distribution, furniture is sold through 100,000 specialty furniture and home furnishing stores, department stores, and mass-merchandising stores in the United States. Specialty furniture (Crestfield Industries) and home furnishing stores account for 68% of retail sales. This is an important percentage for Crestfield to pay attention to. Furniture retailers can be broken down into 6 sub-sets of retail including Gallery Stores, Design Center showrooms, Furniture stores, Department stores, Antique stores and finally lifestyle stores. With all these options to sell through, Crestfield Industries has chosen to market their product using 1,000 high quality department stores. Their approach is simple, align the company with the best department stores in the industry and push sales by up selling the product with your factory direct sales staff. Department stores and mass-merchandising stores account for 15 and 12% of retail sales respectively.
Consumers purchase furniture by making a number of decisions prior to entering a furniture store. Consumers learn about furniture by reading advertisements in Better Homes and Gardens magazines along with County living and possibly internet searches. Additionally, research has shown that consumers are poorly educated to the features and benefits of furniture products. Crestfields approach to selling furniture with direct sales staff answers this need. Statistics from a Better Homes and Gardens survey show that 99% of all furniture buyers “ When shopping for furniture and home furnishings, I like the salesperson to show me what alternatives are available, answer my questions, and let me alone so I can think about it and maybe browse around”. Based on this feedback I feel it is imperative that Crestfield continue to offer factory direct sales staff to train the retailers on the features and benefits of the Crestfield furniture product offering. Statistics also show that consumers lack the knowledge of furniture features and benefits and Crestfield will need to develop a marketing strategy that teaches consumers why their furniture is better than the competitions. As a consumer, I like the show room (Gallery) approach to...