bed MATTRESS
Kuecker
Landry
Michael
McMillan
Wagoner
Schultz
Arends
TABLE OF CONTENTS Objectives
3
Target Market
4 Getting it Done 5 Competitive Analysis SWOT Analysis
6
9
Divide and Conquer
11
Footing the Bill
15
2 bed MATTRESS
OBJECTIVES 1,800
1
members in a loyalty program for recent graduates
Increase market share by 5% 2
Increase store traffic by10%
Increase mattress sales by 5%
1There are nine four-year colleges and universities in the Milwaukee and Madison areas, and our goal of 1,800 members is 10% of all of the graduating classes combined.
2 In a recent survey polling mattress purchasers Steinhafels’ had the majority of the market share. Of those surveyed, 27% had recently bought a mattress and 8.5% of the total bought a mattress from Steinhafels. This is 31.5% of the market share, so the new goal would be for Steinhafel’s to have 36.5% of the market share.
3 bed MATTRESS
TARGET MARKET Our research has shown that Steinhafels should use men ages 22-24 as their target market. Using the most recent consumer information available, we have found that single men in this category are between three to four times more likely to purchase a mattress right now. Interestingly, this group does not apply to men in college, whom are significantly less likely to purchase a mattress. Instead, it points to either someone who has never attended college or to someone who has recently graduated. However, these two groups have very different spending patterns. Men who have not attended any college are known to have polarizing spending habits, but are up to four times more likely to purchase a mattress than the average individual. Simmons research shows that they are most likely to purchase a mattress that is under 50 dollars; however, they will still strongly consider mattresses in the 250-500 dollar range, or the over 1000 dollar range. Strangely, their likelihood of making a mattress purchase inbetween these ranges is low. Their college graduate counterpart, however, has a highly predictable spending trend. In all categories, except one, they follow a standard deviation consistent with the rest of the population. However, when shopping for 250-500 dollar mattresses, they are nearly three times as likely to make a purchase than the average individual. In light of our research, we have decided to focus our campaign on 22-24 year old men who are shopping for a 250-500 dollar mattress. This specific price point will not only attract the recent college graduate, but also overlaps with the man who is not college educated but is shopping in the same price point. In both cases, the men who are purchasing these mattresses are most likely single, employed, and rent rather than own a home.
4 bed MATTRESS
GETTING IT DONE To reach Steinhafels’ mattress target market we will focus primarily on marketing to this group in the spring and summer. We will advertise all year round in order to keep up brand awareness, but the majority of our funds will be spent in the spring and summer. This is the best time of the year to advertise to our target market, because it is a major transitioning period for them. Most recent graduates will be moving, and this is when they will need a new mattress. This purchase is a fairly large commitment, but at this time it will probably be one of many like it. We want to make sure that a new mattress is positioned in their minds as a necessary purchase. In general, this is a good time because most people buy and sell houses from early spring to late summer, so other target audiences would be more likely to buy during this time of year as well. Taking a look at this from a weekly perspective, we propose a flighting plan. We would like to reinforce the idea throughout the week, so by the time the weekend approaches, they've been exposed to our ads several times. Our target market is gainfully employed, so therefore they have less time to shop for a mattress on the weekdays and will probably shop on the weekend. For this reason, Monday will start with very little advertising, but as the week goes on, the amount of advertising will build up to Thursday night when we have the most. This is because we want our advertisements to be fresh in their minds as the weekend approaches. We’ll have advertising in several capacities throughout the weekend as a reminder, but it will be slightly less than Thursday. There are some aspects that will be 24 hours a day, such as online advertising and social media, but these play more of a supportive role to our traditional advertising. It is important to use social media, however, because our target market consumers are the main users of this medium. Twitter will have an estimated 18 million users by the end of 2009 and Facebook currently has over 200 million users. To ignore this medium would be ignoring an opportunity to reach a wide audience. Through this plan our goal is to build awareness in multiple mediums; focusing our attention on the mediums most popular with the taget market.
5 bed MATTRESS
COMPETITIVE ANALYSIS Colder’s Colder’s is a furniture, appliance, and electronics retailer. It competes directly with Steinhafels in the mattress market and its target market is thus similar. Colder’s focuses on name brand products; it carries Serta mattresses exclusively and also features Serta’s Vera Wang designer mattresses. Colder’s also offers mattress accessories through a company called Protect-a-Bed that provides mattress covers, protectors, and pads. As a distributor for Serta, Colder’s offers many of the discounts and promotions of the mattress company in addition to its own incentives. Colder’s recently offered its “Full Back” incentive for select furniture, allowing customers store credit equal to the purchase price. Colder’s has offered this deal in the past as well, often in conjunction with “Half Back” and “Quarter Back” incentive programs. This means that when a customer purchases furniture or a mattress and box spring set, they can get half or quarter the amount back to spend on other products that American carries. The only drawback to this program is that the item must be paid for in full and this offer is exclusive to Serta Perfect Sleeper, Perfect Day, and Vera Wang mattresses and box springs. Another weakness for Colder’s is even though it may be a retailer specializing in name brands and instant availability, its selection is limited.
6 bed MATTRESS
COMPETITIVE ANALYSIS American American is also a tri-player, selling electronics, furniture and appliances. Mattresses are definitely not its first priority. However, it still has a rather large selection; over 100 different mattresses, according to its website. The company specifically promotes different mattress options online consisting of a selection varying in price point, brand and type. It offers mattresses ranging from $79 to over $3,000 as well as nine varieties such as firm, ultra-plush, and latex; however, it only advertises three brands. American has various strengths that include a patented “price check” system which guarantees the lowest price through a computerized pricing system. This system automatically adjusts American’s price to be the low price based on detailed competitive shopping information which is checked daily. Another sizable strength is American’s Rest Assured Promise. This guarantees the price for 30 days or the consumer gets double the difference. This means that if a consumer purchases a mattress for $1,000 but finds it for $800 elsewhere, they get back $400 ($200 doubled). In this, American realizes that families do not have a lot of time to shop around, but still want to be budget conscious. American also offers a low price guarantee, 200% price protection, and a comfort guarantee. All of these services work to give American a reliable and affordable reputation. In addition, American offers a delivery service that includes Saturdays, evenings, and even very next week day delivery. American definitely targets consumers who are looking for the best find and who shop for convenience (hence the delivery service).
7 bed MATTRESS
COMPETITIVE ANALYSIS Verlo Mattress Factory Verlo Mattress Factory Stores have a distinctly different business model than Steinhafels. Verlo specializes in custom-made mattresses. Upon arriving at the store, the customer is greeted and fitted for a bed through a three step process. This process then narrows down the mattress choice to three separate mattress and box spring combinations at varying price points. Although Verlo does offer mattresses for under $300, the lowest option presented after a fitting is close to double that much. Along with the custom mattress fitting, Verlo also offers custom pillow fitting and provides services to protect against allergens. As an added advantage, Verlo has a promotion where the consumer can get a free spine consultation in store from a chiropractor. This continues to contribute to their focus on a target market with nearly $1,000 on average to spend on bedding. The custom made mattresses Verlo offers has some strengths in that the bed is customized to fit a person’s individual sleep preferences. There really is no price-point in which to compare a mattress because it is customized. Each individual alteration and addition a customer makes increases the price so they may end up spending well over $3,000 for a mattress. Though they are spending a lot for a mattress, there is a 180 day assessment where they can alter their sleep set to their comfort level; however they can only alter their sleep set once. The Comfort Promise is only to specific models and length of coverage may vary by model. Verlo definitely targets a segment of the target market that has enough disposable income to customize a bed. This is a strength for Verlo because it sets them apart from the competition, but also is a weakness in that the company can only target a select few for their product. They also offer free mattress delivery, but charge a four dollar take away fee for each bedding item to be disposed. Amongst all three competitors, each has great strengths and weaknesses that set them apart in their target market.
8 bed MATTRESS
SWOT ANALYSIS Steinhafels rivals these three main competitors with its strengths. Some of the company’s strengths over these competitors include that Steinhafels has a clear and useful website for purchasing mattresses. When consumers select a mattress online, they can either make a purchase online or go to a location were the mattress is in stock at local stores. Another strength is the customer profile function on Steinhafels’ website. By creating a profile, consumers can schedule service for their merchandise, schedule or change future deliveries, view past order history and payments, update account and billing information, join an email list to receive special offers, and make online Steinhafels charge card payments. Having consumers join to become members acquires their information, which strengthens the customer database significantly. Steinhafels has a lot of strengths, but there are also places for improvement that can make the company even more successful. A weakness is the fact that they are not involved enough in social networking, in particular Facebook and Twitter. They could be creating loyal customers through promotions on Facebook, displaying information about their products and services, or allowing people to post comments, and more. Additionally, Steinhafels does not have an account on Twitter. This is a great opportunity to create loyal customers as well. Having a Twitter account can allow consumers to post their questions, concerns, and dissatisfactions then in which Steinhafels can respond, answer and receive valuable feedback on products and/or services. Steinhafels should also be using these social networking sites as an additional way to advertise their company and its many sales for free.
9 bed MATTRESS
SWOT ANALYSIS Even with Mattress Firm entering the Milwaukee market, opportunities still exist for Steinhafels. Utilizing social networking sites to help promote sales and more is a great opportunity. In addition, based on American’s poor advertising, an opportunity exists for Steinhafels to grab the attention of consumers more efficiently. Another opportunity is that Verlo has had 2 stores recently go out of business, allowing for Steinhafels to have more of a market share. A future competitive threat for Steinhafels has been recently established. Mattress Firm, a Houston based franchise chain, will be opening two stores in the city of Milwaukee. It is also one of the largest mattress chains in the U.S. and it could potentially threaten Steinhafels by the large number of people it is likely to attract. Some existing competition that poses a threat to Steinhafels include American, Colder’s, and Verlo Mattress Factory. Verlo has a new online feature. Customers can now shop and customize their mattresses without leaving their home. The company is also having a 50th anniversary sale event with up to $400 in free comfort layer. The company’s recent successes and media attention serves as a threat to Steinhafels. Steinhafels can capitalize on the current economic downturn by pulling in its desired target market through incentives and promotions that rival or surpass its competitors, thereby advancing its quality product out into the market. Even though certain threats currently exist or will exist that could potentially hinder Steinahfels’ success, there are also new opportunities present for Steinhafels to grasp. In addition, Steinhafels strengths clearly set it apart from the competition, allowing the company to alter its weaknesses in its favor.
10 bed MATTRESS
DIVIDE AND CONQUER We will divide the budget according to the number of stores in the area. There are nine stores total; two are in Madison and seven are in the Milwaukee metro area. We will divide the budget so that it is approximately proportionate. Madison will have 35% of the budget (37,800) and Milwaukee will have 65% of the budget ($70,200) for total budget of $108,000. (This does not include the $12,000 in the contingency fund). This is also proportionate to the population of each of the areas. Milwaukee has approximately 950,000 people and Madison has approximately 225,000 people. If we look at that as a total population, 19% of people live in Madison and 81% of people live in Milwaukee. One of the more traditional forms of media in our mix is television. We want our target audience to see us when they and return home from work. It’s reasonable to assume that many people in our target audience will be resting and watching television during the 6:30 p.m. to 7 p.m. prime access and 7 p.m. to 10 p.m. primetime show times. We will be using a flighting strategy; Monday will start with minimal advertising, but the number of advertisements will increase until Thursday, which will have the most. This is because it is the most watched night of television. Friday Sunday we will still run ads to drive more customers to the store on the weekends; however, we will run less advertisements because less people watch television on those nights.
11 bed MATTRESS
DIVIDE AND CONQUER For radio advertising we plan on running ads heavily from May to August. We will run radio advertisements throughout the year, but it would be on a lesser scale from September to April. During the week we would follow a flighting plan, with less advertisements on Saturday, Sunday and Monday and gradually increasing through Friday. The radio ads would run in the early morning, afternoon drive, and on the weekend. This would catch our target audience on their way to work, on their way home, and while they are running errands on the weekend since radio is most listened to while driving. Internet will be an important component in our media mix. A popular approach to finding local businesses by using Google to search. Right now, Steinhafels is the first result returned when searching for “Mattresses Milwaukee” on the popular search engine. However, before Google displays this result, it also displays three sponsored links and seven local map results. Two of these map results are currently Steinhafels, leaving the consumer looking at three repetitions of the brand’s name before scrolling down. Although this appears promising, the consumer still has to pass over the names of six other mattress stores before encountering the Steinhafels name. We believe that in order to become a more established brand in the consumers mind, Steinhafels needs to be higher on this list. In order to do this, we will be utilizing Google Adwords in a Pay Per Click format. Doing this, we can target each person specifically by both location and interest. We will focus on the words “Milwaukee”, “Mattress”, “Bed”, “Inexpensive” and “Cheap”. We found that Steinhafels was especially buried under other brands on search results that focused on price such as “Inexpensive” or “Cheap”. In this format, each click will cost approximately $0.80. This will also be accompanied by Google Analytics, which will give us comprehensive information about not only who is going to the Steinhafels website, but also what led them to the website.
12 bed MATTRESS
DIVIDE AND CONQUER Steinhafels’ website would be the main hub of the communication. Radio and television would drive people to Steinhafels website. At the website, consumers could participate in the “Tell us your mattress story” in which people would submit their funny, crazy, or interesting stories about the oldest, most dilapidated condition mattress they have had or currently have. We would turn this into a contest to win a new mattress from Steinhafels. The benefit of this is that we could collect contact information from participants and have the opportunity to market to them in the future. Twitter is another way to reach the target market. Steinhafels can use Twitter to tweet facts of the day, sales, promotions, and other announcements. A fact of the day would be an interesting and lighthearted way to catch the attention of the audience. There would be a link on Steinhafels’ website to take you to Twitter where all the facts of the day would be posted. Another online component of this campaign will be banner ads focused on the website ApartmentTherapy.com. This website attracts people who are living in small spaces on a limited budget, but want to have an appealing living space. Essentially, it is built for our target audience. The website holds discussions in which people can participate. Many discussions revolve around the topic of mattresses, so this would be a great opportunity for those looking for a new mattress to see an ad from Steinhafels. Google Analytics will help to keep the campaign tracked, evaluated and updated.
13 bed MATTRESS
DIVIDE AND CONQUER Creating a loyalty program for recent graduates will allow Steinhafels to reach the young men and women that constitute their next generation of loyal customers. After graduation students spread out and are much harder to find, so we want to take advantage of the fact that they are densely populated while still in school. For this reason it is essential we reach students before graduation. Since access to student addresses and phone numbers is limited, non-traditional approaches will prove more effective in reaching college seniors. This could consist of sponsoring senior week events or contests at local bars. The three main campuses to focus on are UW-Madison, UW-Milwaukee, and Marquette University, but there are a total of nine in the Milwaukee and Madison area. Reaching seniors on these campuses will establish an email database by which we can later contact recent graduates. This part of the strategy could vary widely in cost, therefore we will execute it toward the end of the campaign using money from the contingency fund. Our campaign is planned so that each of the mediums used supports each other. Television, radio, social media and online ads will drive the audience to the store and the website. By planning it this way a person in our target audience should be touched by our advertisements in several mediums. This will help position Steinhafels at the forefront of the target’s minds andhave them consider buying a new mattress.
14 bed MATTRESS
FOOTING THE BILL
15 bed MATTRESS
FOOTING THE BILL
16 bed MATTRESS
FOOTING THE BILL Radio and TV expenditures follow a flighting pattern throughout the year with the highest concentrations in the spring and summer months. The following table explains the percentage of funds allocated to each month:
Jul '10
12%
Aug '10
10%
Sep '10 Oct '10
8%
6%
Nov '10
5%
Dec '10 Jan '11 Feb '11 Mar '11 Apr '11
5%
5%
5%
8%
10%
May '11
12%
Jun '11 Total
14% 100%
17 bed MATTRESS