Steinhafels by gail landry

first time buyers 1

table of contents

Lisa Jensen Heidi Stieber Kelly Lerash James Endsley Amanda DeCock Jacob Weisenberger

Executive Summary

Problem History

Budget at a Glance

Target Audience

Competitors

Objectives, Strategies, & Tactics

Budget Allocation

Works Cited

Veronica Rodriguez

executive summary Steinhafels is a family owned furniture company located in Madison, Milwaukee, and surrounding areas. They have a vast selection of mattresses, bedroom sets, and leather upholstery. Their current target market is women aged 25 – 54. However when the housing market crashed it directly affected the furniture market. Due to this problem, the company’s success in the market has started to decline and they are looking for a new customer base, specifically first time buyers. Steinhafels prides themselves in being a quality furniture provider. It is important for people looking to purchase for the first time to understand that furniture buying is an investment rather than an impulse buy. Steinhafels is attempting to change first time buyer’s perception of furniture purchasing. To reach a younger generation of furniture buyers, less traditional forms of communication must be implemented in addition to Steinhafels’ current marketing strategies.

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problem history Today, Steinhafels wants to reach a target audience with minimal disposable income. Due of their prestigious reputation, this is not a viable or appealing option to a younger target market. To reach this specific demographic they will need to use unconventional methods in addition to their traditional tactics.

budget at a glance The total budget after deductions is $111,600. The remaining 30% of the budget (111,600) is allocated to the two Madison stores. The two Madison stores budget totals $33,400. Each store individually has a budget of $16,740. We put 70% of the remaining budge ($111,600) into the three Milwaukee stores. Each store individually has a budget of $26,040. Some of the Milwaukee promotions have a larger budget than Madison because there is a larger target market. The totals are accurate and are done on a monthly basis, by specific activity, and campaign approach.

target audience APPROACH Because furniture and mattresses are visual purchases, Steinhafels strives to reach their customer base through TV. To avoid people skipping through the commercials via DVR, most of the segments are run during local news and live sports. Steinhafels has begun developing an one-to-one e-mail base, offering customers coupons and discounts. They have considered using social media to get in touch with genY, but have not figured out an effective way to execute this media. Direct mail is currently used to reward their best customers with special discounts. They do have some print ads, but it is not their main focus.

PROFILE Steinhafels’ goal is to target first time furniture buyers into their stores. A prominate way to excecute this is to to specifically target first time buyers are 25-45 years-old females. The percentage of single women buying homes has increased these past few years. Single women account for 22% of all home purchases. According to a NAR study, the median age of first time home buyers is 30, down from 31 in 2007. The median income is $60,600 and the typical first buyer’s home cost $165,000. They plan to stay in the home for 10 years (Molony). For those first-time buyers who made a down payment, 69% used savings, 26% used money from a friend or relative, another 7% received a loan from a relative or friend and 16% used money from their investments.

PURCHASING PROCESS The purchasing process for first time furniture buyers is one of high involvement. Purchasing furniture is a large investment that entails a high involvement to buyers. The decision-making process for first time furniture buyers involves a few steps before deciding on a final furniture

purchase. The first step, known as need recognition, takes on a unique role in this market. First time buyers tend to be younger couples that are new to furniture buying. They now have their own house or apartment separate from their parents. They need to fill this living space with furniture. First time buyers then start to research and seek information pertaining to furniture. In this stage, first time buyers will seek information from many different sources. Being young and inexperienced, new furniture buyers value the opinion of their parents pertaining to quality furniture for their budget. Then, new furniture buyers additionally complete their own research online, reading reviews. When the information stage is through, new furniture buyers start to evaluate the alternatives to their preferred choice. In this stage, furniture buyers begin to weight the pros and cons of their potential new furniture against that of the competitions furniture or style. After this stage, first time buyers make their purchase.

MARKET SIZE ESTIMATES Because the target market is not clearly defined there is little room to identify the market size. With the state of the current economy, the home furniture market size has increased 1.2 percent since 2008 but has slightly decreased. The decrease is a direct result of consumer’s preference to purchasing low price items. Many furniture companies experiencing decreased revenue have now partnered with realtors in the hopes of increasing profit and market share. Despite the decrease in sales of the past few years, the market projections until 2012 are expected to have a slight increase.

MEET ROB & HOLLY Rob, 26, and Holly, 25, recently purchased their first home—a three-bedroom 10 year-old ranch in Trevor, WI. Holly graduated with her Doctorate of Pharmacy recently and has obtained a position as assistant manager at Wal-Mart. Rob has been working full-time as an auto repair technician for the past 5 years. They became engaged in January and plan to get married in August. They have furnished the house with remainders from dorm life, hand-me downs from friends and family and occasional finds at garage sales. They are using the tax credit to make necessary repairs and upgrades to their home, and the remainder will go towards their wedding. Their monthly income goes toward school loans, credit card repayments, car loans, their mortgage and saving for their upcoming wedding.

COMPETITORS DIRECT COMPETITOR: COLDER’S

DIRECT COMPETITOR: ASHLEY FURNITURE HOMESTORES Strengths

Weaknesses

Asshley Furniture is the largest home furnishing manufacturer in North America enabling them to compete in many markets in different geographical locations. Ashley Furniture also makes a concentrated effort to keep up with different forms of technology to reach their customers. The company uses email databases and CRM techniques but they recently developed an SMS to reach current customers on a more personal level. Ashley Furniture utilizes various creative techniques to stay in touch with customers and appeal to potential new customers. One of the biggest events they conducted to gain and retain customers was through a campaign. The store launched a country music event in which they transformed more than 450 of their store showrooms to mimick country music venues. At these venues they conducted special events such as barbeques, battle of bands, CD and T-shirt giveaways to drive traffic to the stores.

Ashley Home Furniture Stores and Ashley Furniture are different. Ashley Home Furniture Store is privately owned. Customers have had problems with the warranties specifically with Ashley Home Furniture Store. Customers that had problems with Ashley Furniture reported the store did not stand by the provided warranty. The company encountered a large customer service problem when it closed stores across the US and did not deliver the furniture prior to the closings.

Ashley Furniture is an environment friendly company. They go out of their way to recycle all wood, plastic, and electronic devices at their stores.

Strengths

Weaknesses

Colder’s furniture is unique because it is more than a furniture store. They carry and sell various electronic and home appliance products. The addition of these products allows the company to be an “all service provider” for house purchases and as a result customers tend to spend more time in their respective stores. Customers have the opportunity to apply for a Colder’s credit card. They will receive various discounts and benefits by accumulating points when using their credit card. Colder’s is always looking towards the future, specifically genY.

Colder’s stores are located relatively close together causing trouble for the company to market to new customer bases. Customer complaints are regarding the lack of truthful information given by employees. Additionally former employees have stated that some managers try to increase individual monthly sales by undisclosed incentives. Colder’s does not utilize promotional activities like Ashley Furniture and Steinhafels to reach customers on a more personal level.

DIRECT COMPETITOR: AMERICAN FURNITURE Electronics Appliances STORE Strengths

Weaknesses

American Store biggest strength is their price check system. They have a computerized system that checks competitor’s prices daily to maintain the lowest price. If at any point a customer finds a store with a lower price American Store will refund the purchase and pay the customer 10%. Additionally, the company will display competitors pricing to customers. The store is also acknowledged for its outstanding customer service.

One of the biggest weaknesses American Store is their reputation for being an electronic storethey are more known for their electronic section.

Competitive Trends I. Future competitive threats: - A lot of bigger stores are attempting to have their products sold at more consumer friendly stores, like Target, Costco, Wal-Mart, etc. - Ashley Furniture is offered nationwide. - Ashley furniture has a lot of partnerships and their furniture is available at other retail locations such as Pier 1 Imports. II. Recent successes from competitors, other recent initiatives: - American is available across the Midwest. - At Colder’s Furniture, whatever you buy, you get an equal amount to spend at the store.

SteinhafelS swot analysis STRENGTHS • Own Delivery (no third party) • Stain safe 7 year warranty • Well made, quality furniture. • Stores in two major Wisconsin cities • Family owned • Dominant market share in mattress, bed sets, leather upholstery • Direct Mail one-on-one marketing & high response rates • Defined Target Market (Women 25-45 who are decision makers) • Family turnover • Rely on TV • Avoiding DVR through commercials on local news

OPPORTUNITIES • Stores in two large markets (Milwaukee and Madison) • Gain market share • Real Estate • Partner with housing market, college graduates, Newlyweds, moving families/couples • Younger audience into the store • Instant gratification

WEAKNESSES • Does not have a state presence • Not involved in social marketing • Does not follow behavioral targets • Family turnover • Not connecting with younger generations

THREATS • Economy • Competitors (Colder’s, American, Ashley Furniture) • Furniture purchasing is high in investment • National Players • Ready to use furniture that will “do for now”

OBJECTIVES, STRATGIES & TACTICS Objective 1: Get first time buyers to purchase Steinhafels’ products. STRATEGY 1: Generate traffic into the store.

Objective 2: Gain brand loyalty among first time buyers. STRATEGY 1: Trial period which then leads to product purchase

Tactic 1: Develop in store home decorating workshop (Early November; Print, Social Media: Social media is up and coming, Print because “furniture is visual”) Price: $ 2,000.00 (two hour workshop taught by professional interior designer at all five stores)

Tactic 1: Swap out mall furniture for Steinhafels’ furniture and have representative target young people by handing out coupons (October through December; Print coupons) Price: Price: $4,000 (Includes storage for furniture in 5 malls: 2 in Madison and 3 in Milwaukee metro)

Tactic 2: Offer a kids day (kids will be entertained while the adults shop. Mini day care, obstacle course, clowns, face painting, bounce house, etc.) (Summer; Radio: Kids are out of school, nowhere to go, hard to shop) Price: $2,500.00 (includes a face painter, Clown, and one day rental of bounce house at all five locations)

Tactic 2: Text Boom (text a special event to specific people who opted to be on a permission based texting list). (Spring and Fall; Print, fill out forms to create a database)

Tactic 3: College Booth (Have a sales representatives at Undergraduate and Professional Studies graduations handing out coupons and discounts). (End of May, Beginning of June) Strategy 2: Get first time buyers to experience the products. Tactic 1: Swap out mall furniture for Steinhafels’ furniture. (October-Mid January) Price: $4,000 (Includes storage for furniture in 5 malls:2 in Madison and 3 in Milwaukee metro) Tactic 2: Have Milwaukee’s and Madison’s sports teams use Steinhafels’ furniture in their suites. (Late August-Mid March; Television, Print and LED screens). Price: $5,000.00 (Includes storage of furniture August through March) Tactic 3: Have tent set up at Milwaukee Festivals so people have somewhere to sit. (Relaxing lounge). (End of June-Middle of August; Signs at the event) Price: $10,000.000 (30 X 60 Tent rental for 8 weeks of summer)

Tactic 3: Loyalty card/program (Customers would get incentives > Early bird specials, point system leading to discounts or gifts, top 10 loyal customers will get alone time in the store to shop) (Continuous; actual loyalty card). STRATEGY 2: Build relationship with buyers Tactic 1: Send out Holiday, Birthdays and Anniversary cards acknowledging that they are part of the Steinhafels family. (Continuous) Price: $700 (includes design, printing and postage) Tactic 2: Loyal card/program (Customers would get incentives > Early bird specials, point system leading to discounts, top 10 loyal customers will get alone time in the store to shop) (Continuous; actual loyalty card). Tactic 3: Every $50 purchase will enter the buyer into a sweepstakes to win a Superbowl viewing party in a Steinhafels store. (Room will have couches, and chairs and will provide food). (September – January; Television (increased as the season progresses) Price: $ 1,000 (Includes food, projection television for 20 people)

Objective 3: Gain market share among first time home buyers.

Dividing the Budget Geographically The budget was divided by the 5 Madison and Milwaukee stores with nearly equal allocation for each store. Budget= $150,000.00 (before deductions) Creative Budget= $30,000.00 Contingency Fund= $8,400.00 Budget= $111,600.00 (after deductions) Madison Budget (30%) = $33,480.00 Milwaukee Budget (70%)= $78,120.00 12

Strategy 1: Partner with Real Estate Agencies Tactic 1: Have coupons available at open houses and models homes for potential buyers or people viewing. (Spring and Fall; Print in newspaper, or bulletins) Price: $200 (Includes print Material) Tactic 2: Have model homes be furnished with Steinhafels products. (Spring and Fall; Print in newspaper, or bulletins) Price: (Cost of Furniture)

works cited

BUDGET ALLOCATIONS SteinhafelS Budget Chart July 2010 - June 2011

Articlesbase.com. “Demographic Profile of American Home Buyers.” 12 Feb. 2007. <http://www.articlesbase.com/real- estate-articles/demographic-profile-of-american-home-buyers-103749.html>

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Market/Promotional Activity

July '09

August '09

September '09

October '09

November '09

December '09

January '10

February '10

$375 $375 $375 $250 $250 $250 $250 $250 $200 $200

$375 $375 $375 $250 $250

March '10

April '10

May '10

June '10

Totals

In Home Decorating Workshop Milwaukee #1 (84th & Capitol) Two Hour Workshop Milwaukee #2 (Layton Ave) Two hour Workshop Milwaukee #3 (Highway 16) Two Hour Workshop Madison #1 (2164 West Beltline Hwy) Two Hour Workshop Madison #2 (85 East Towne Mall) Two Hour Workshop Milwaukee #1 Workshop Print Ad Milwaukee #2 Workshop Print Ad Milwaukee #3 Workshop Print Ad Madison #1 Workshop Print Ad Madison #2 Workshop Print Ad

$375 $375 $375 $250 $250 $250 $250 $250 $200 $200 Kids Day

Milwaukee #1 Kids Day Event Milwaukee #2 Kids Day Event Milwaukee #3 Kids Day Event Madison #1 Kids Day Event Madison #2 Kids Day Event Milwaukee #1 Kids Day Radio Spot Milwaukee #2 Kids Day Radio Spot Milwaukee #3 Kids Day Radio Spot Madison #1 Kids Day Radio Spot Madison #2 Kids Day Radio Spot

$350 $350 $350 $350 $350 $350 $350 $350 $200 $200

$300 $300 $300 $300 $300 $300 $300 $300 $100 $100 College Booth

Milwaukee #1 College Booth Event Milwaukee #2 College Booth Event Milwaukee #3 College Booth Event Madison #1 College Booth Event Madison #2 College Booth Event

$500 $500 $500 $500 $500

Mall Furniture Swap Out Milwaukee #1 Mall Furniture Swap Out Milwaukee #2 Mall Furniture Swap Out Milwaukee #3 Mall Furniture Swap Out Madison #1 Mall Furniture Swap Out Madison #2 Mall Furniture Swap Out

$875 $875 $875 $750 $750

Skybox Suites Milwaukee #1 Skybox Event Milwaukee #2 Skybox Event Milwaukee #3 Skybox Event Madison #1 Skybox Event Madison #2 Skybox Event Milwaukee #1 TV Spot Promotion Milwaukee #2 TV Spot Promotion Milwaukee #3 TV Spot Promotion Madison #1 TV Spot Promotion Madison #2 TV Spot Promotion Milwaukee #1 Print Advertisement Milwaukee #2 Print Advertisement Milwaukee #3 Print Advertisement Madison #1 Print Advertisement Madison #2 Print Advertisement

$700 $700 $700 $300 $300 $300 $300 $300 $250 $250 $250 $250 $250 $250 $250

$700 $700 $700 $300 $300 $300 $300 $300

Milwaukee Summer Festivals Milwaukee #1 Summer Festival Event Milwaukee #2 Summer Festival Event Milwaukee #3 Summer Festival Event Madison #1 Summer Festival Event Madison #2 Summer Festival Event

$8,000 $8,000 $8,000 $4,000 $4,000 Text Boom

Milwaukee #1 Text Boom Print Advertisement Milwaukee #2 Text Boom Print Advertisement Milwaukee #3 Text Boom Print Advertisement Madison #1 Text Boom Print Advertisement Madison #2 Text Boom Print Advertisement

$100 $100 $100 $100 $100

Holiday/Birthday Cards Milwaukee #1 Holiday, Birthday Print Advertisement Milwaukee #2 Holiday, Birthday Print Advertisement Milwaukee #3 Holiday, Birthday Print Advertisement Madison #1 Holiday, Birthday Print Advertisements Madsion #2 Holiday, Birthday Print Advertisements

$840 $840 $840 $640 $640 Superbowl Sweepstakes

Milwaukee #1 Superbowl Sweepstakes TV AD Milwaukee #2 Superbowl Sweepstakes TV AD Milwaukee #3 Superbowl Sweepstakes TV AD Milwaukee #1 Superbowl Party Milwaukee #2 Superbowl Party Milwaukee #3 Superbowl Party Madison #1 Superbowl Party Madison #2 Superbowl Party

$800 $800 $800 $200 $200 $200 $500 $500 Open House

Milwaukee #1 Coupon Print Advertisement Milwaukee #2 Coupon Print Advertisement Milwaukee #3 Coupon Print Advertisement Madison #1 Coupon Print Advertisement Madison #2 Coupon Print Advertisement Milwaukee #1 Model Home Furnishing Milwaukee #2 Model Home Furnishing Milwaukee #3 Model Home Furnishing Madison #1 Model Home Furnishing Madison #2 Model Home Furnishing Milwaukee #1 Model Home Furnishing Print Advertisement Milwaukee #2 Model Home Furnishing Print Advertisement Milwaukee #3 Model Home Furnishing Print Advertisement Madison #1 Model Home Furnishing Print Advertisement Madison #2 Model Home Furnishing Print Advertisement Monthly Totals

$200 $200 $200 $200 $200 $1,000 $1,000 $1,000 $1,000 $1,000 $500 $500 $500 $500 $500 July '09 $19,000

August '09 $21,050

September '09 $9,950

October '09 $11,625

November '09 $10,500

December '09 $10,500

January '10 $7,350

February '10 $1,625

March '10 $1,700

April '10 $2,400

May '10 $4,700

June '10 $11,200

$1,500 $1,500 $1,500 $1,000 $1,000 $500 $500 $500 $400 $400 Total=$8,800 Running Total=$8,800 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $500 $500 Total=$9,000 Running Total=$17,800 $1,000 $1,000 $1,000 $1,000 $1,000 Total=$5,000 Running Total=$22,800 $3,500 $3,500 $3,500 $3,000 $3,000 Total=$16,500 Running Total=$39,300 $3,500 $3,500 $3,500 $1,500 $1,500 $1,500 $1,500 $1,500 $500 $500 $500 $500 $500 $500 $500 Total=$21,500 Running Total=$60,800 $8,000 $8,000 $8,000 $4,000 $4,000 Total=$32,000 Running Total=$92,800 $500 $500 $500 $500 $500 Total=$2,500 Running Total=$95,300 $840 $840 $840 $640 $640 Total=$3,800 Running Total=$99,100 $800 $800 $800 $200 $200 $200 $500 $500 Total=$4,000 Running Total=$103,100 $200 $200 $200 $200 $200 $1,000 $1,000 $1,000 $1,000 $1,000 $500 $500 $500 $500 $500 Total=$8,500

Associated Press. “Number of first-time home buyers is increasing.” MSNBC. 9 Nov. 2008. < http://www.msnbc.msn. com/id/27631021/ns/business-real_estate/> Molony, Walter. “NAR Home Buyer and Seller Survey Shows Rise in First-Time Buyers, Long-Term Plans.” Realtor.org. 8 Nov. 2008. <http://www.realtor.org/press_room/news_releases/2008/11/home_buyer_and_seller_survey_ shows>

Campaign Total=$111,600