Herman Miller Inc

Topics: Gross profit margin, Charles and Ray Eames, Profit Pages: 9 (2752 words) Published: April 21, 2015

1. Herman Miller, Inc employs a broad differentiation strategy. The essence of a broad differentiation strategy is to offer a unique product or service attributes that a wide range of buyers find appealing and worth paying for, and Herman Miller (HMI) does just that through innovative products and processes. Unlike most firms, especially those in mature industries and most of its office furniture rivals, Herman Miller pursued a path distinctively marked by reinvention and renewal. The company obtained a competitive advantage by studying buyers’ needs and behaviors carefully in order to learn what buyers think has value and what they are willing to pay for. Even in downturns, it invested in millions of dollars in research and development. This not only allowed a wider product variety, but it improved product quality as well and in turn enhanced differentiation. We see throughout the case the results of Herman Miller’s high-quality inputs and innovation in the launch of award-winning product after product. Some of the inputs and superior product features include the physical and functional features of the furniture, first-on-the-market victories, and successful marketing and brand management activities. The Ergon Chair is a good example as it was the first design based on scientific observation and ergonomic principles. And with the help of designers such as Gilbert Rhode, Alexander Girard, Charles and Ray Eames and George Nelson, Herman Miller has been able to consistently deliver innovative designs in order to keep up with the ever-changing wants and needs of the consumer. Not only that, but also effectively communicate product information; increasing the value of the product in the consumers’ mind. For Rhode’s designs the emphasis was on simplicity and how people are important, not furniture. More recently the ‘Living Office’ highlighted the shift of importance to camaraderie, connection and group expression to bring an organization’s strategy to life. Herman Miller communicated relevant information to the consumer and therefore it reached and resonated with the consumer. Herman Miller doesn’t just differentiate through tangible features, but through lowering the buyer’s costs, coordinating with suppliers and incorporating intangible features as well. It all started in 1981 when the company took initiative to become more efficient and environmentally friendly. One of the first initiatives was for its energy center to generate both electrical and steam power to run its 1-million-square-foot facility by burning waste. Some of the buildings at Herman Miller were even used to establish Leadership in Energy and Environmental Design (LEED) standards. To speak to something product related, in 1990 Herman Miller discontinued using endangered rosewood in its award-winning Eames lounge chair and ottoman, and substituted cherry and walnut from sustainable sources. Another good example is the Mirra Chair, introduced in 2003, and how environmentally friendly it was due to being made of 45 percent recycled materials and 96 percent of its materials were recyclable. Assembly of the chairs used 100 percent renewable energy. The use of green marketing to sell products appealed to the environmentally conscious consumers. Herman Miller also appealed to the price conscious consumer with the launch of the SAYL line of chairs in 2010 accentuating affordability while offering a full-featured, ergonomically sound chair. This further supports HMI’s use of a broad differentiation strategy because buyers’ needs and preferences are too diverse to be fully satisfied by a standardized product or service. As far as coordinating with suppliers, Herman Miller’s order entries were digitally linked among the company and its suppliers, distributors and customers. This allows the company to expedite orders and improve their accuracy. This close coordination with suppliers enhances differentiation by speeding up new-product...
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