Haverwood Furniture, Inc. (A)
Haverwood Furniture, Inc. is a family owned manufacturer of medium to high priced wood furniture founded in the 1900’s. Nationwide the company sells high quality bedroom, living room and dining room furniture through 1,000 department and speciality stores. In 2007 Haverwood Furniture, Inc. net sales neared $75 million with a $37 million before-tax profit (Kerin, 2013 p. 296).
A very selective distribution policy, a dedicated 12-person sales team and the allocation of $3,675,000 for total promotional expenditures proved beneficial influencing profit increases in a highly competitive market. Haverwood Furniture, Inc.
Sales in the household furniture industry are forecasted to increase by 4% so there is an opportunity to for Haverwood Furniture, Inc. to continue to grow. It is proposed that Haverwood Furniture, Inc. add $225,000 to advertising …show more content…
can take. The first course of action involves accepting the proposal and increasing advertising by $225,000 taking the total expenditure to $3,900,000. The advertising increase would take total expenditures for 2008 to $3,900,000 which is 900,000 more than the $3,000,000 increase in sales forecasted for 2008.
Uncertainties in the Lancer Gallery case include competitor’s response. Haverwood Furniture, Inc. is competing against roughly 1,000 other furniture manufacturers. One-third of the household furniture industry dollars belong to the top ten competitors while the top 25 account for just about half of U.S. furniture sales (Kerin, 2013). Many of the competitors have the financial strength to lower prices, increase promotion and advertising as well as offer lower quality products for less money.
Additional uncertainties are consumer confidence, purchase behavior, consumer disposable income, higher material cost, and the incidence of new residential construction projects beginning (Kerin, 2013 p.
Haverwood Furniture, Inc. is a family owned manufacturer of medium to high priced wood furniture founded in the 1900’s. Nationwide the company sells high quality bedroom, living room and dining room furniture through 1,000 department and speciality stores. In 2007 Haverwood Furniture, Inc. net sales neared $75 million with a $37 million before-tax profit (Kerin, 2013 p. 296).
A very selective distribution policy, a dedicated 12-person sales team and the allocation of $3,675,000 for total promotional expenditures proved beneficial influencing profit increases in a highly competitive market. Haverwood Furniture, Inc.
Sales in the household furniture industry are forecasted to increase by 4% so there is an opportunity to for Haverwood Furniture, Inc. to continue to grow. It is proposed that Haverwood Furniture, Inc. add $225,000 to advertising …show more content…
can take. The first course of action involves accepting the proposal and increasing advertising by $225,000 taking the total expenditure to $3,900,000. The advertising increase would take total expenditures for 2008 to $3,900,000 which is 900,000 more than the $3,000,000 increase in sales forecasted for 2008.
Uncertainties in the Lancer Gallery case include competitor’s response. Haverwood Furniture, Inc. is competing against roughly 1,000 other furniture manufacturers. One-third of the household furniture industry dollars belong to the top ten competitors while the top 25 account for just about half of U.S. furniture sales (Kerin, 2013). Many of the competitors have the financial strength to lower prices, increase promotion and advertising as well as offer lower quality products for less money.
Additional uncertainties are consumer confidence, purchase behavior, consumer disposable income, higher material cost, and the incidence of new residential construction projects beginning (Kerin, 2013 p.