Haverwood Furniture, Inc.
Opportunity- Charlton Bates as president of the Haverwood Furniture, Inc. was introduced to a promotional budget proposal by Mike Hervey and Bernham leaders of their advertising program for 2008. The proposal suggested that the company increase the advertising expenditures by 225,000 and place that entire amount into the consumer advertising program for ads in several shelter magazines. The advertising program believes that due to the baby boomers affect (baby boomers represent 47% of the U.S households) as consumers’ age they will become more home oriented and replace old cheaper furniture with new more expensive furniture. The advertising program believes that more money spent on advertising will positively affect brand image, brand awareness, etc. Besides increasing the advertising budget, John Bott the president of sales believes that adding another sales representative is necessary because the company is expecting 50 new accountants of service, all together adding more money to the promotional budget. Causes-The household furniture industry estimated 31 billion dollars in manufacturer prices in 2007 and dollar sales are expected to grow by 4% percent in 2008. The estimated price for furniture was accumulated by three different categories of furniture: upholstered, wood, and assembled furniture. According to Kerin and Peterson, each category represented a percentage of the total household sales, upholstered represent 50%, wood 40%, and all other forms 10%; the bedroom and dining room furniture accounted for majority of the sales. The manufacturers for wood in recent years have increased their emphasis on quality and in 2007 the wood industry grew by 2.5%.
Other causes to consider is that 1% of U.S household’s disposable income is spent for household furniture and home furnishings and manufacturers of household furniture spend approximately 3.5% of annual net sales for advertising of all types. The advertising that is spent for...
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