Free Essay

Marketing Plan

In: Business and Management

Submitted By ldubinsky
Words 8629
Pages 35


Executive Summary………………………………………………………………. 3

Situational Analysis…………………………………………………………...….. 4

S.W.O.T. and Issues Analysis……………………………………………………. 16

Goals and Objectives……………………………………………………………... 19

Marketing Strategy……………………………………………………………….. 20

Action Plans and Programs……………………………………………………….. 25

Financial Analysis…………………………………………………………….….. 28

Controls and Contingencies…………………………………………………….… 29

Executive Summary

Market Overview
The kitchen cabinet industry consists of over 10,000 manufacturers with 2010 estimated sales of $9.7 billion. Industry revenue is concentrated within top manufacturers with the top 50 accounting for 65% of the revenue. Cabinet manufacturers have witnessed a drastic reduction in overall sales with a decline in sales of 45% over the past four years. Industry experts are predicting that the market will stabilize by the end of 2010 with industry sales increasing to $15.2 billion by 2014. Due to the drastic decline in the market, over the past four years, manufacturers have been focusing on cost cutting initiatives and efficiency improvement to achieve profitability.

Cabinet manufacturers view fasteners (staples and nails) as a commodity primarily due to the lack of differentiation. Generic fasteners have slowly increased their presence, through distributors, resulting in increased focus on price. Fasteners are used during the assembly process to join the wood components until the glue dries providing the long term bond. Currently, poorly placed fasteners account for approximately 3%-5% rejection rate during production resulting in cabinet re-work or replacement costing cabinet manufacturers two to three times the cost of the fastener.

Enginuity by Duo-Fast is an application based assembly system consisting of tools, fasteners and placement guides specific to cabinet assembly. ITW Industrial Fastening (IIF) analyzed assembly methods and cabinet performance to determine the products that make up the system. The fasteners were selected through cabinet weight load and separation tests allowing engineers to determine the best fastener for each cabinet assembly application. The tools are high quality meeting the demands of high production environments and the guides provide fastener placement consistency drastically reducing or elimination re-work caused by poorly placed fasteners.

The products within the system are supported by an application specific fastener cross reference chart, on and off-site tool repair and application engineers providing on-site assembly evaluations/recommendations. Enginuity provides solutions required by cabinet manufacturers to achieve efficiency and improved product quality.

The primary goal is to increase revenues and profit margins within IIF. This will be achieved by a direct sales initiative targeted toward the top 45 cabinet manufacturers located in seven key regions within the United States and establishment of cabinet focused distributors responsible for targeting the remaining manufacturers within the industry. This will be supported by a highly focused promotional campaign establishing Enginuity as the premiere brand within the cabinet market.

Situational Analysis
It is the goal and objective for ITW Industrial Fastening (IIF) to become the premier fastening solutions provider to Original Equipment Manufacturers (OEM) for the cabinet, window and door industries. IIF will achieve this objective by providing these industries with Enginuity by Duo-Fast. Enginuity will provide innovative products and solutions through a consultative sales approach supported by market and assembly expertise.

History of Duo-Fast and Business Activity
IIF is a manufacturer of pneumatic tools and fasteners used within multiple manufacturing industries. Over the past five years IIF has witnessed declining sales caused by the economic downswing and increased generic market share within the existing distributor channel. With the current distributor customer base accounting for 98% of total sales, IIF is losing money because of this dependence. Three ago, the decision was made to focus on direct selling initiatives to large cabinet manufacturers. As a result, IIF discovered an opportunity to provide engineering support and application specific solutions resulting in increased sales and profits within the cabinet segment. This resulted in the creation of the Enginuity by Duo-Fast brand. Table 1 provides the sales and profit margins for the past five years, illustrating the success of the direct selling initiative with increased sales and margins.

Table 1- Sales and Profit Margin History
|Sales & Profit |
| Sales |30,281,379 |31,395,570 |27,769,231 |23,638,323 |16,522,624 |19,452,742 |
| Profit % |34.51% |47.63% |45.57% |44.80% |30.07% |45.23% |
|Direct: |
| Cabinet |0 |0 |9,528 |113,896 |277,841 |512,637 |
| Millwork |0 |0 |127,681 |100,920 |10,170 |14,754 |
| Other |596,371 |317,107 |133,385 |81,139 |40,150 |3,656 |
| Total |596,371 |317,107 |270,594 |295,955 |328,161 |531,047 |
| Profit % |40.64% |50.50% |48.79% |60.29% |58.63% |71.60% |

The limited success of Enginuity has shown that there is a need for this solutions based system in the market. To capitalize on this need and achieve the objectives listed above, IIF needs to determine the best way to market and launch Enginuity throughout the industry.

Current Marketplace
Duo-Fast has been positioned as a premium manufacturer of tools and fasteners in multiple markets. Promotion and sales of the Duo-Fast brand has historically been handled by distributors. This creates a vulnerable situation as all our eggs are in one basket. Our approach to this would be to create a direct focus with our end users, develop a new product and channel mix that applies specific solutions for cabinet manufacturers while concurrently restructuring our distribution system.

Customer Analysis
Duo-Fast currently has two different customers, using a different channel to reach them both. We use a direct sales approach to reach the top 12 cabinet manufacturers. All other manufacturers are sold Duo-Fast products through distribution. This distribution channel has two segments; general fastener distribution and focused cabinet distribution. At this time, Duo-Fast only uses general fastener distribution.

Characteristics of Cabinet Manufacturers • Sales range anywhere from $100,000 to $1.5 billion (2,000 companies with annual sales greater than $1 million)

• Over 10,000 cabinet manufacturers nationally

• Outside of the top 20, they sell regionally and locally

• Want to be called on by knowledgeable salespeople that understand the industry and their operations

• Want a hands on, consultative approach that provides efficiencies and product enhancements, then they want to be left alone to order electronically either via email or a website

Characteristics of General Fastener Distributors • Sell all types of fasteners to anybody who uses them (may sell to cabinet manufacturers, pallet shops, construction sites, etc.)

• Large distributors with a sales force, looking for larger customers

• Want manufacturer salespeople to go on joint calls with them to visit customers

• Decide which products to sell based more on their margins or incentives from their suppliers

• Salespeople normally have to pay for their own tools out of pocket

• Provide service on the tools they sell to their customers

• Want to feel needed and conflict is created when their suppliers sell direct to customers

Characteristics of Focused Cabinet Distributors • Sell all products used to assemble cabinets, from fasteners to hinges to stain

• Focus on smaller cabinet manufacturers (typically less than $10 million in sales)

• Knowledgeable sales force that knows the cabinet industry

• Offer on-line and print catalogs for easy ordering

• Do not service the tools they sell

• Want incentives and low prices from their suppliers

• Fasteners are a small percentage of sales

Total Available Market (TAM) and Served Available Market (SAM)
Using distribution channels, Duo-Fast’s TAM is the entire cabinet manufacturing industry. As you can see in Figure 1, cabinet manufacturers are spread out across the U.S., but the vast majority resides in the eastern half of the country.

Figure 1 - Cabinet Manufacturer Locations (Total Available Market)

Duo-Fast’s SAM has been identified as the 7 regions where the top 45 cabinet manufacturers are located. This has been decided because IIF has service personnel located close to its direct sales customers. As stated above, the focused cabinet distributors do not service tools they sell. Rather than hiring service representatives or paying service companies to repair Duo-Fast tools for its clients, we can use the current service representatives to call on all Duo-Fast users within these regions. The 7 regions are identified in Figure 2.

Figure 2 – 7 Geographic Regions (Served Available Market)

Market Size and Sales Analysis
The consumer cabinet industry consists of over 10,000 manufactures, falling into three different classifications: 1. Custom (10% of market) a. Wide selection of wood, stain, door styles, and configurations of cabinets b. Primarily sell through independent dealers and direct to homeowners 2. Semi-Custom (44% of market) a. Large door style and wood selection b. Standard cabinet construction/offerings c. Sold through independent dealers and “big box” 3. Stock (46% of market) a. Limited wood and door styles b. Typically constructed of particle board c. Sold through distributors, dealers, and “big box”

The cabinet industry was an estimated $10 billion market in 2009[1]. Production in the cabinet industry has been steadily decreasing with economic and housing market decline in the U.S. The cabinet industry reached its peak in 2007 when it was a $17.7 billion industry. The market is showing signs of stabilization. Estimates for 2010 revenue are $9.7 billion, a .86% contraction from 2009. Analysts believe the market will begin growing in the next 4 years, showing average annual growth of 7.4% to an estimated market size of $15.2 billion by 2014[2].

The industry has also seen diluted market share. In 2007, the top 20 cabinet manufacturers accounted for 80% of industry sales. In 2009, the top 20 manufacturers only accounted for 58% of sales. The sales mix of cabinets has also widened between purchases for remodeling versus purchases for new construction. In 2007, 60% of purchases were for home remodeling, while 40% was for new construction. Current estimates show 80% of cabinet purchases is for remodeling, whereas only 20% are for new construction.

Fastener Market
Cabinet manufacturers use fasteners (staples and nails) mainly to hold the cabinet together while glue dries. Fasteners are used to assemble the following applications: 1. Face frame to side assembly 2. Top/Bottom to front assembly 3. Back to side assembly 4. Door assembly 5. Drawer assembly 6. Miscellaneous (supports, packaging, etc.)

Fasteners are viewed throughout the industry as a commodity product that doesn’t serve any performance benefit. Manufacturers believe the structural stability of a cabinet stems from the adhesive used, rather than the fastener holding the wood together while the adhesive dries. Duo-Fast has completed trials that prove using the proper fastener for specific applications does increase the payload and structural integrity of the cabinet by up to 33%.

It is estimated that fasteners cost 1/1000th of the cabinet sale price. Based on 2009 cabinet sales data, the fastener market is a $10 million dollar market. Fasteners are primarily used in the assembly of semi-custom and stock cabinets. Most custom cabinets are glued and clamped, thus eliminating the need for a fastener.

As with any business, cabinet manufacturers are seeking ways to become more efficient. It is estimated that scrap costs from assembly defects account for 3% - 5% of sales for semi-custom and stock manufacturers. The leading cause of having to scrap a cabinet is poor fastener placement. Manufacturers are looking for solutions to reduce scrap expenses. They are also searching for automation efficiencies and innovations in the adhesives that they use.

Duo-Fast’s two biggest non-direct competitors are generic brands that are built in China (branded by distributors) and adhesives. Many large distributors will order shipping containers of fasteners from China and brand them with their generic logo. These are sold to cabinet manufacturers at a much cheaper rate than Duo-Fast and other premier brands.

With the perception that the fastener is merely a means of holding the cabinet together while the adhesive dries, it is no surprise that Duo-Fast fasteners are threatened by adhesives. If adhesive manufacturers ever find a way to produce an immediate dry adhesive, the existence of the fastener market will likely be immediately challenged.

Primary Research
In order to understand the needs of both sets of our customers, 3 surveys were conducted. Details of those surveys are: • Distribution Survey

• Sent to 106 distributors

• 44 responses were received (42% response rate)

• 10 questions were asked covering 3 main topics

• Which products they prefer to sell

• Reasons for pushing the products they sell

• Incentives they wish to receive

• Manufacturer Survey

• Sent to 81 manufacturers

• 17 responses were received (21% response rate)

• 24 questions were asked covering the following categories

• Reasons why they use the tools and fasteners they do

• What they want from their suppliers

• Servicing of tools

• Order preference

• Tool mounted guides

• Manufacturer Packaging Survey

• In April, 2009, IIF completed a survey focusing on packaging needs of manufacturers

• Sent to 161 manufacturers

• 31 responses were received (19% response rate)

• 18 questions were asked covering the following categories

• Package construction

• Package size

• Fastener Identification

Distributor Survey
Distributors are most concerned with low price offerings and incentives. Key takeaways from the distributor survey are: • When asked the primary reason a distributor pushes a specific product, the respondents answered it was a combination of price, quality and the sales program

o Using a Likert Scale from 1 to 5, with 5 being the most important, we asked distributors what the most important attributes are for them. Product quality ranked first with an average score of 4.05, followed by price with an average score of 3.53

o We then asked the distributors to rate Duo-Fast tools and fasteners on a scale of 1 to 5, with 1 being low quality and 5 being high quality. 84% of respondents viewed Duo-Fast fasteners as above average or high quality. Likewise, 66% rated Duo-Fast tools as above average or high quality

• When asking which incentives are most important in a distribution program, we received the following responses (ranked based on percentage of most important selections):

o Tool Co-Op (33%)

o Quarterly Sales Promotions (23%)

o Sales Literature (18%)

o Promotional Merchandise Co-Op (11%)

o On-Line Ordering (5%)

• All respondents used the general comments section to make recommendations on how IIF can make the distribution program better. The most common responses revolved around the sales program. Distributors are looking for an easy sell. The most common responses along these lines were:

o Have the field sales staff from the supplier make joint sales calls with the distributor

o Create brand recognition within the cabinet manufacturing industry so their customers understand the brand before they enter their plant

o Provide training programs to the distributor’s sales staff

o Provide easy product literature that can be carried by the sales staff and given to the cabinet manufacturer

Cabinet Manufacturer Survey
Like most end users, the cabinet manufacturers do not base their decisions solely on price. While they view the fastener as a commodity, they are willing to pay more for value. Manufacturers are constantly looking for efficiencies to reduce costs. Key results from the manufacturer surveys come from 4 areas: criteria for fastener selection, preferred method of ordering, use of tool mounted position guides and packaging. • Criteria for Fastener Selection:

o 59% of respondents have selected their fasteners as a result of internal testing

o 23% of respondents have selected their fasteners because that is “what they have always used”

o 12% have selected their fasteners based on their supplier’s recommendation

o This tells us there is a need to educate manufacturers on the impact the proper fastener can have in creating efficiencies and a stronger product

• Preferred Method of Ordering:

o 58% of respondents would like to place their orders online

o Only 11% currently place their orders online

o Manufacturers are looking for ease of ordering solutions

• Use of Tool Mounted Positioning Guides:

o 69% of manufacturers currently use tool mounted positioning guides. All of these guides were produced internally or contracted out to a local fabricator

o 94% of respondents stated they would purchase manufacturer created tool mounted positioning guides from their supplier

o There is a definite need in the marketplace for tool mounted positioning guides

• Packaging:

o 49% prefer to see fastener dimensions on the fastener package

o 77% feel a reference chart would be beneficial in selecting the correct fastener for each assembly application

o With manufacturers using different tools and fasteners for different assembly applications, they are looking for a quick, easy way to select the fastener that fits the tool they are using and is best suited for the assembly application they are currently working on

Product Line Analysis
The Duo-Fast tools are perceived as high quality from the cabinet market. Our tools are priced above average and have observed minimal margins of profit over the last few years. Our direct channel marketing provides tools at no cost to the end user. This approach is similar to the razor blade business through other distribution channels and provides tools at no cost or steep discounts as a means to obtain fastener business. IIF offers a full line of Duo-Fast tools to meet the needs of the OEM business.

Our full line of fasteners are manufactured at our ITW facility in the Dominican Republic. The prices of our fasteners are 20% to 30% above generic fasteners, but comparable to other branded product. IIF has invested heavily in internal testing of our fasteners. This testing has been used to determine the optimal fastener that meets or exceeds Kitchen Cabinet Manufacture Association (KCMA) standards. Our specified fasteners align the proper tool to be used with the appropriate fastener. Our developed tests are being embraced by the marketplace, as no other fastener provider is supplying this type of industry data.

Completing the Enginuity System is the placement guides. These guides were first developed for direct business channels and provide a strong niche and differenation amongst our competitors. These guides are manufactured from an injection mold prototypes, pricing is being well received and manufactures are eager for their availability. The price point for our guides will be $25.00 to $40.00.
Tool Fasteners Guides

Other Product Trends
Manufactures are looking to use tools that require less air and are lighter. They are also starting to question the quality of generic fasteners, as foreign production standards and overall consistency has been identified as a problem.

Competitive Analysis
With over 10,000 manufacturers covering the cabinet industry, there is a distinct differentiation between the top 45 and the remaining 9,955. We also have to compete against the perception that the adhesive is the sole provider of joint integrity within cabinet assembly. As it stands, fasteners are considered a commodity and the market perception is that the integrity of the cabinet is a result of the adhesives being used.

Direct Competition
• Market share leader within the cabinet market • Distribution Channel o Direct o Focus Cabinet o General Fastener & Tool • Service o Direct service through company service representatives o No service support for distribution accounts • Price o Premium price
Porter Cable: • Strong positioning within focus cabinet distribution channel • Distribution Channel o Focus Cabinet • Service o No service support provided • Price o Mid to low price
• Recently purchased by Black & Decker • Distribution Channel o Currently exiting direct channel o General Fastener & Tool • Price o Premium price
• Primarily manufactured in China with high minimum order quantities • Distribution Channel o General Fastener & Tool o Focus Cabaient • Price o Low price

Secondary Competition
PUR (no specific company) • Potential replacement of staples through quick set properties • Distribution o Direct to large manufacturers o Focus Cabinet • Price o High

Stiles • Custom automation manufacturer • Distribution o Direct • Price o Very high

Points of Parity and Points of Difference

|Senco |Tool and fastener product offering |Cabinet distribution channel, |Application based system |
| |and direct sales to top |larger field sales staff, |including guides, market |
| |manufacturers |recently filed bankruptcy |knowledge and financial |
| | | |resources/stability |
|Porter Cable |Tool and fastener product offering |“Hobby” tools, broad product |Quality tools and fasteners |
| | |group (routers, saws, etc), |providing solutions based system|
| | |cabinet distribution channel |and guides |
|Bostitich |Tool and fastener product offering |Exiting direct channel end of |Market focused, direct sales to |
| |and distribution channel |year and retail distribution |market leaders and guides |
| | |focus | |
|Generic |Fastener offering |Low price, limited and poor |Brand recognition, full line of |
| | |quality tool, low fastener |products, market focused, |
| | |quality and do not sell direct |placement guides. |

|PUR |Assembly solutions within cabinet|Elimination of staples |Continual improvement (not just |
| |market | |focused on staples/nails), |
| | | |re-work/scrap reduction, |
| | | |staples add strength |
|STILES |Assembly solutions within cabinet|Fully automated |Cost effective solutions, allowing |
| |market | |for “quick change”, continual |
| | | |improvement |

Macroeconomic Overview
In the cabinet manufacturing and assembly marketplace, small, medium and large manufacturers require several key factors that contribute to the success and profitability in their organizations. These factors are: • Integrity – cabinet’s that meet or exceed KCMA strength and endurance standards • Quality - cabinets that are built and assembled correctly the first time • Productivity – cabinets that are built efficiently, fast and are the most cost effective for increased production • Safety – being sure that your employees are safe and free from known and recognized hazards during the cabinet assembly process • Price – Provide competitive pricing to ensure our pricing is competitive within the market channels for big box, direct, dealers and distributors

These factors help to contribute to the organization’s bottom line, ensure a better built / better quality product and can reduce the overall cost of the assembly process.

Macro-Environment Condition

It is essential for IIF to recognize and assess key macro-environment conditions.

Demographic Trend

• Overall population growth is decreasing. • Smaller family unit size • Assessment (Figure 3) • Decreasing population growth will have an impact on the economy overall • The aging population affects the economy as life styles, spending habits, etc shift ▪ Spending is more likely to be on travel, food and entertainment ▪ Spending is less likely to be on new homes or major home remodeling • Smaller families will prefer smaller homes with simple structure resulting in fewer

Figure 3- Aging Population Trend

Economic Trend

• Slow recovery from the recession • High unemployment rate • Unstable residential and commercial real estate market • Assessment • Slow recovery in economy and high unemployment rate deters overall spending • Declines in residential and commercial real estate markets are directly effecting the cabinet industry (sales plummeted 30-50% over the past 4 years)

Technology Trend

• Efficiency and innovation is essential • Evolving technologies • Difficult to protect patents • Assessment • Due to continuing innovation and evolving technologies, consumer’s expectations regarding quality, safety and technology is high • Competitors are focusing on automation or innovation to eliminate tools and fasteners in cabinet manufacturing • Difficult to govern patent protection outside of the US

Political/Legal Trend • Government is increasing its influence within business • Increasing trade deficit • Assessment • New credit/mortgage regulations are contributing to slow recovery in the housing market • Unfavorable international trading policy weakens competitiveness of domestic companies, such as IIF, against foreign competitors (mainly from China) • Federal Reserve’s attempts to stabilize the economy have had a limited effect on the housing market

Social/Cultural Trend

• Increasing “Do It Yourself (DIY)” populations • Housing trends moving towards urban area • Green Initiatives • Assessment: • TV shows such as DIY attracting new concepts and design that will have a direct effect on the cabinet industry and an indirect effect on fasteners • Energy costs are dictating housing location selection (closer to work) resulting in smaller homes. Smaller homes have fewer cabinets. • Recycled materials and “fast growing” (replenishable) woods are becoming a popular replacement to slow growing wood species currently used within cabinets. Different materials will have an effect on fastener drive and performance during assembly.

S.W.O.T. and Issue Analysis
• Tool and Fastener Quality o Establishing quality as the most important attribute has provided benefits to overall brand reputation. Through the recent distributor survey, 84% rated fastener quality as above average and 66% rated tool quality above average. With the cabinet manufacturers survey showing quality as the most important attribute, we are properly aligned with the needs of the target market. • Cabinet assembly and performance knowledge o Currently, fasteners are perceived as a commodity with companies focusing on price as the primary differentiating factor. IIF has taken the approach of providing value through validation and testing. Determining the optimal fastener provides a benefit that is not offered by any other fastener or tool manufacturer. • Financial stability o As a division of Illinois Tool Works, IIF has strong financial backing from a company committed to the industry. • Technical and knowledge resources o Along with the financial stability of the parent company, IIF also has an incredible resource in the other 800+ business units. With each business unit manufacturing unique products, technologies exist that can assist IIF in continue new product development and innovation within the cabinet market. • Market focused system o Enginuity is the only fastening system offered within the cabinet industry. The combination of quality products along with application specific solutions, including placement guides, provides an offering that is a value to cabinet manufacturers.

Weakness • Weak distribution channel o Currently, 98% of sales are through one group of distributors. These distributors are geographically focused with an opportunistic market approach. They currently define all markets using tools and fasteners as the opportunity rather than identifying key markets and developing market knowledge. As a result, IIF’s presence within the mid to small sized cabinet manufacturing market is weak. • Lack of resources (sales staff) o Due to declining sales within the existing distribution channel, restructuring has resulted in the elimination of the distribution field staff. As a result, the sales team is made up of one distributor sales representative and one direct sales representative for the cabinet industry. The limited field resources results in a challenge in establishing new direct and distributor accounts. • Low market awareness (promotion and understanding of value) o With the market focus approach being relatively new and the existing distribution channel having a limited presence within the cabinet market, a low market awareness level exists within the cabinet industry. • Execution/credibility issues • IIF began using guides and testing fastener performance within specific cabinet assembly applications approximately 2 years ago. Approximately 1 ½ years ago, IIF displayed the guides and application specific solutions within a woodworking trade show. The response was very strong with over a hundred cabinet manufacturers requesting more information and in some instances wanting to buy on the spot. However, the system was not fully developed and the manufacturer’s requests were not fulfilled. As a result, cabinet manufacturers may be hesitant in the new launch. • Lack of market focused sales program o Tools, fasteners and guides exists today but there is not a tailored sales program to present to cabinet manufacturers and prospective distributor accounts.

Opportunities • Currently, an application based assembly system does not exist in the market: o No other pneumatic tool/fastener manufacturer offers a complete package of tools, fasteners and application specific guides. The current market consists of “me too” products with very little differentiation or focus towards cabinet assembly solutions. • Need for a fastener expert within the cabinet market: o Historically, tool and fastener development have been focused on large opportunities such as home construction. With the cabinet market opportunity being a $10 million, a technical focus has not been provided. The cabinet market has been forced to select from products that have been primarily developed for other industries. • Top 100 manufacturers account for 70% of sales: o Market revenues are heavily weighted towards the top. This allows an incredible opportunity to focus on the few manufacturers that provide the greatest revenue return. • Geographical concentration within 7 key regions: o The top 45, or slightly over 60% of the industry market share, is concentrated in seven geographic regions. This provides an opportunity to create operational efficiencies regarding shipping, service, and sales travel. • Weak supply by competition: o Last year, the market leader within fastener supply to the cabinet industry (Senco) filed bankruptcy. The financial difficulties resulted in poor delivery and drastic personnel reductions within their organization. Senco has been purchased by an investment group with no experience within the industry. Also, Bostitich was sold to Black & Decker and they are now pulling out of the direct supply within all markets. It appears that the new strategy for Bostitich is to focus on the “big box” retailers such as Home Depot and Lowes. This provides a great opportunity for IIF to become the market share leader.

Threats • Slumping sales due to economy: o Cabinet manufacturers have witnessed a drastic loss in sales over the past 3 years. In speaking with 3 of the top 5 manufacturers, sales are down approximately 50%. If the housing market does not stabilize and grow, in the near future, many cabinet manufacturers would be in jeopardy of going out of business. • New entries into the market that would replace staples/nails: o Adhesive manufacturers have been testing polyurethane within cabinet assembly. With the primary function of staples and nails being used to hold the material together until the glue dries, this product development could result in the demise of staple/nail use within the industry. • Demographic changes (smaller houses): o Homebuilders are beginning to build smaller homes to accommodate the budget conscious buyer. Smaller homes result in fewer cabinets potentially decreasing the market opportunity further. • Fasteners are viewed as a commodity (hold material together until glue dries): o Cabinet manufacturers have defined fasteners as a commodity. Fasteners are grouped with other commodities that are routinely purchased and are viewed as having minimal value in the manufacturing process. This perception threatens the ability to obtain a premium for improved solutions. • Sourcing efficiency (purchase “commodity items” from one supplier) o During these trying times, manufacturers are focusing on efficiencies. Efficiencies can be gained through single sourcing to reduce the number of orders and purchasing agents within an organization. IIF only offers tools and fasteners. The threat exists that fasteners could be moved to a supplier offering “one stop shopping”. • Steel pricing: o The increased global demand of steel and rising production costs has resulted in an unstable pricing environment for steel. With steel being 65% of the overall cost of a fastener, prices are always fluctuating. As a result, cabinet manufacturers are constantly monitoring steel prices to ensure current suppliers are aligned.

Issues Analysis • How to take the product to market: o Our direct initiative cannot support the entire market. Due to the lack of market knowledge and focus through the existing distribution channel, we must find a new channel to reach the end users. Potential solutions are: expand the internal sales force, manufacturer’s representatives, and market focused distribution. • Service: o The recent survey results from cabinet manufacturers sites the need for tool service. A service staff exists for the large direct customers but limited resources will not allow for service throughout the market. An efficient program needs to be developed to meet the needs of the market. • Promote and generate interest in product and build brand o A direct initiative allows for increased brand awareness but only to small portion of the market. With distributors typically carrying many different products, it is also difficult to implement a “push” strategy ensuring the needed promotion is provided to the end user. IIF has to select the appropriate promotional strategy to have the end user “pull” the product through the distribution channel. • Price o What price will the market be willing to pay for Enginuity by Duo-Fast? With the current mindset that fasteners are a commodity, will the end users justify a value to pay a premium price? • Packaging o There are a variety of ways to package the tools/guides/fasteners. Should they be packaged as a system or individually?

Goals & Objectives
• Increase market share to 45% by 2016 becoming the market leader • Sales from cabinet market initiatives to increase IIF revenues by 37% in 2016 • Cabinet segment initiatives to be profitable by the end of 2013


• Market leadership within the cabinet market. Market leadership will be achieved through Enginuity by focusing on: o Product – Quality products providing application specific solutions o Price – Priced to be the best value in the market o Place – To cabinet manufacturers using direct sales and distribution o Promotion – Utilizing various promotional mediums to educate and establish brand awareness. • Our fifth “P”, People, will focus on developing our employees to fully understand the Enginuity system and its benefits to our customers and to IIF. • Margin enhancement through product improvements and manufacturing efficiencies providing operational excellence.

Marketing Strategy
Kitchens have become the focal point of the home and one of the most expensive aspects of remodeling or new construction. When a homeowner inspects their kitchen for the first time, they expect perfection and showroom quality. This high expectation reinforces the need for cabinet manufacturers to have quality and production consistency. However, productivity is also crucial to the bottom line for cabinet manufacturers. Typically, an individual cabinet is assembled in 60 seconds and the assemblers have very little training. As mentioned earlier, cabinet companies also have very little knowledge regarding the types of fasteners used and the effect that their selection will have on the overall structural integrity of the cabinet.

By definition, Enginuity is the combination of engineering and ingenuity. This solutions based system provides cabinet manufacturers with the assurance that their products will achieve optimal structural integrity and be produced efficiently with minimal to no re-work due to poor fastener placement. This system is a custom package specific to cabinet manufacturers supported by engineering, testing/validation, and assembly expertise that will provide a competitive advantage within the market place along with increased profitability through the efficiencies gained within assembly.

Positioning Statement
To cabinet manufacturers desiring improved product quality and increased production efficiencies, Enginuity by Duo-Fast provides assembly solutions through application specific tools, guides and fasteners allowing you to achieve optimal structural integrity and operational excellence.

Figure 4- Product Positioning Map

Through the positioning map above, Enginuity is positioned as the highest quality supplier supported by the greatest cabinet assembly knowledge. As noted within the competitive analysis, other brands within the industry have either positioned themselves as the low cost supplier, have very little focus within the industry, or have financial difficulties that do not allow for new product development or specialization within a somewhat small market ($10 million) opportunity. The primary brands of Senco and Bostitich have targeted the larger retail markets through “big box” stores such as Home Depot and Lowes.

Product Strategy
The Duo-Fast brand has been in existence for over 50 years. With IIF’s market focus approach, Enginuity by Duo-Fast has been created to provide solutions with exceptional service and product quality in identified market opportunities. Standard tools and fasteners will continue to be offered under the Duo-Fast brand using the existing product focused distribution channel. Enginuity by Duo-Fast will offer Duo-Fast tools and fasteners along with additional new product innovations and services specific to cabinet market needs. Enginuity products will be constantly evolving, establishing Enginuity as the premier assembly solutions partner for the cabinet market.

The cabinet industry is the first identified market opportunity for Enginuity. Figure 5 below illustrates the product strategy using the customer-value hierarchy.

Figure 5- Customer-Value Hierarchy

In addition to physical product, Enginuity also offers services that will be available dependent on the targeted customers size and overall sales opportunity. The following is a breakdown of the services that will be provided with the implementation/availability being discussed further in the channel strategy section.

• E3 Analysis o On-site assembly audit consisting of time trials, tool use, inventory management, and observation of assembly practices. o The on-site audit will result in the development of a formalized proposal providing improvement recommendations consisting of custom guides, inventory management solutions, and other identified assembly improvement solutions. • Tool Service o A dedicated field representative will be assigned to the account. They will be responsible for tool/guide use and safety training, tool repair, preventative maintenance and inventory levels are properly maintained. • Tool Loan Program o “Razor for the blade”- This program will be available to large manufacturers in which the fastener usage justifies a quick payback of the tool investment resulting in the tools being provided at no charge in exchange for exclusive fastener use. • Color Coded Reference Chart o The chart allows cabinet manufacturers to select the correct fastener, tools, and guides by application. This provides a user friendly approach that will allow manufacturers to obtain the best product for each application (off-site engineering support). • Tool Co-Op Program o Accumulative rebate program based upon a percentage of sales that can be applied towards tool purchases. • Merchandise Co-Op Program o A credit, based on sales, to be used to “purchase” Enginuity branded and co-branded merchandise. • Off-Site Tool Repair o Fee based program available for cabinet manufacturers to ship tools to the national service center where they will be repaired and preventative maintenance will be performed. • Truckload Discount o Discount for customers that purchase products in “bulk” and ship directly from the fastener manufacturing facility to their plant.

Channel Strategy
Enginuity will be distributed through direct and distribution channels. Both have unique requirements and advantages. Due to differences in products and services, each channel strategy will be discussed individually.

Direct Channel
The top 45 cabinet manufacturers within the US will be pursued directly by IIF market focused sales representatives. This channel represents a $6.2 million opportunity with 89% concentrated within the top 12 accounts. The average sales opportunity within the top 12 is $458,000 and the average sales opportunity within the 13-45 ranked companies is approximately $22,000. There is a sizable difference between the two groups, but over 90% of the 13-45 companies are located in close proximity to the top 12 plants, thus creating operational efficiencies and increased profitability within each region (opportunity sale).

The top 12 clients will be offered the following services/products: • E3 Analysis- Tailored program specific to the company’s needs provided by IIF applications engineer • Tool Service- Premiere on-site training and tool service, strengthening overall relations • Tool Loan- Provide tools at no cost in exchange for exclusive fastener supply • Placement Guides- Custom and standard guides available for purchase separately

The 13-45 clients will be offered the following services/products: • E3 Analysis- Review of the company’s needs with recommendations based upon standard Enginuity products performed by the IIF sales representative • Tool Service- Premiere on-site training and tools service, strengthening overall relations • Tool/Guide Bundle- Tool and standard guides provided as a package offering a discount

IIF field sales representatives will be responsible for establishing and building relations with market focused distributors. The distributors will provide the needed field sales presence to obtain market penetration within the remaining 10,000 smaller accounts. The average fastener opportunity per account is low (approximately $500). However, the opportunity to sell a package of tools, guides, and fasteners represents a $5+ million opportunity. Distributors will be provided with the standard Enginuity product line of tools, guides, and fasteners along with the following services: • Cross Reference Chart- Provides an easy to use solution in adding value without having product expertise • Tool Co-Op Program- Incentive to sell product and increase profits • Merchandise Co-Op- An incentive allowing the distributor to promote the Enginuity brand and distributor’s company thru apparel and miscellaneous items • Off-Site Tool Repair- A great value for distributors that currently is not offered by other manufacturers • Truckload Discount- Distributors are able to consolidate orders providing price savings

One area of that could be of concern is the potential for channel conflict between the direct and distribution initiatives within the market. Through one on one interviews with leading market focused distributors, it was communicated that their focus is the small distributors. Because these distributors do not offer on-site service, they are not capable of meeting the demands of larger accounts. Their focus is towards manufacturers with less than $10 million in annual sales. $10 million is the approximate cut off between the top 45 and the remaining market.

However, the existing product focused distributors target larger opportunities in their geographic market. The top 45 cabinet manufacturers fall within this “focus”. As a result, if Duo-Fast product is within a targeted account through product focused distribution, IIF will not pursue as a direct relationship. If a product focused distributor is supplying competitive product to a targeted cabinet account, IIF will pursue a direct relationship and compete against the distributor. This direct focus will be communicated to the product focused distributor at the time of Enginuity product launch.
Promotional and Communication Strategy
The primary promotional and communication strategy will be targeted towards the end users. Due to the number of products that market focused distributors carry, it is very difficult for them to focus on one specific product. Because of this, a “pull” strategy is critical to bring the end user to the distributor or directly to IIF depending on the company size. Overall, the theme of the communications will promote solutions that Enginuity provides. The following is a breakdown and brief description of the promotion and communication components:

• Press Releases o “Free” advertising within market focused trade publications o The press releases will be informative and provide detail of the overall benefits o The major emphasis toward press releases will be during the initial launch to create brand awareness • Trade Publication Advertisements o Quarterly ads will be placed within Wood & Wood magazine, which was noted as the most read and respected trade publication within primary research o Ads will be a mix of information and visuals with the purpose of creating brand recognition and product knowledge • Mailing Campaign o A one page mailer that will be similar to the trade publication advertisement o The mailer will be distributed regionally in coordination with sales representative’s direct and distributor efforts o Targeting the seven geographic markets will assist in creating brand awareness and increase the potential for product requests to distributors forcing them to embrace Enginuity • Trade Shows o 2 trade shows per year within the KCMA trade meetings ▪ Roundtable presentation targeted towards the large direct prospects o International Woodworking Show ▪ Largest woodworking show in US ▪ Target all cabinet manufacturers allowing for companies to see the product and speak to sales/marketing representatives • Web Site o Interactive web site that will allow manufacturers to post questions with answers provided within 24 hours o Site will provide information regarding the products and technical information o Color coded reference chart will be available o Promotional merchandise will be sold to build brand recognition o Customer testimonials and distributor locations will be provided

• Cold Calling o Direct sales representatives will be in the field calling on prospects to create company/brand awareness and develop relationships o Distributor representative will be calling on distributors and small cabinet shops to increase brand awareness and broaden representation of the brand within the seven geographic markets • Banner Ads o Advertise on the web within trade sites to increase brand awareness • Distributor Web Sites o Feature product listings and advertisements to promote availability

Pricing Strategy
The primary objective is for Enginuity to become the Product Quality Leader within the cabinet market. The combination of existing products (guides, application specific fasteners and reference charts) and continual improvement makes Enginuity by Duo-Fast unlike any other brand on the market. Enginuity is a value added solution! Also, the primary competition either lacks focus or the financial resources and an unwillingness to follow. Finally, IIF’s production capabilities and structure allows for low run quantities at a cost effective price providing above average profit margins.

The pricing strategy will be competitive but at the high end when compared to other premiere products. Enginuity possesses the unique advantage of offering multiple products providing unique “package” opportunities. Packaging guides with tools provides a unique offering, making it difficult for cabinet manufacturers to compare prices of similar products. This provides an opportunity for higher margins at a competitive price.

Action Plans and Programs
The components of Enginuity by Duo-Fast have been presented and sold to the top 12 manufacturers for the past 3 years. However, promotion of the Enginuity by Duo-Fast brand and direct sales to the 13-45 manufacturers does not currently exist. IIF needs to develop a launch plan for Enginuity by Duo-Fast within the distribution channel, create a promotional strategy, and establish a promotional schedule/plan for the entire market.

Figure 6 below is a timeline of the proposed Enginuity by Duo-Fast roll-out to cabinet focus distributors.

Figure 6-Roll Out Timeline


Figure 7 below provides the communication components to be used during each stage to build a relationship with the cabinet manufacturers within the market.

Figure 7- IMC

IIF will launch Enginuity one region at a time, until roll-out has been competed in the 7 identified regions. In the first 12 months, 2 regions will be targeted along with national web based cabinet focused distributors. Targeting to specific regions requires the promotional campaign to be aligned with the sales initiatives. Table 2 below provides the promotional schedule for the first 12 months of launch along with the estimated start-up costs.

Table 2- Promotion Schedule


People, Processes, Environment
• Professional development plans and training efforts to enforce: o Expertise in the industry o Commitment to research and development initiatives providing continuous improvement and innovation o Continuous education on the market, manufacturer’s needs and new product launches o Customer focused approach where the customer is #1
• New distributor and direct channel initiatives to be developed as user friendly, efficient and focused on improved production and safety outcomes • Redesign current customer service model to be more customer facing
• Corporate culture needs to be professional and customer focused • Enhance current culture of expertise in the industry • Continue to focus on technical advancement and patent protecion

Financial Analysis

|Income Statement | | | | | |
| | | | | | |
|In Thousands except for % | | | | | |
| |2011 |2012 |2013 |2014 |2015 |
|Market Size |$12,270 |$13,178 |$14,153 |$15,200 |$16,325 |
|Industry Growth* | |7.4% |7.4% |7.4% |7.4% |
|Market Share |24.0% |31.0% |38.0% |42.0% |45.0% |
| | | | | | |
|Sales | | | | | |
|Direct |$2,500 |$3,543 |$4,500 |$5,200 |$5,900 |
|Distributor |$400 |$525 |$900 |$1,200 |$1,500 |
|Total Sales |$2,900 |$4,068 |$5,400 |$6,400 |$7,400 |
|Cost of Sales | $1,210 |$1,627 |$2,214 |$2,560 |$2,960 |
|Gross Profit |$1,690 |$2,441 |$3,186 |$3,840 |$4,440 |
| | | | | | |
|Expenses | | | | | |
|SG&A |$1,073 |$1,505 |$2,106 |$2,496 |$2,886 |
|Labor |$750 |$750 |$750 |$550 |$550 |
|Advertising |$150 |$150 |$175 |$200 |$225 |
|Promotions |$75 |$125 |$150 |$175 |$200 |
|Operating Expenses |$2,048 |$2,530 |$3,181 |$3,421 |$3,861 |
| | | | | | |
|Net Income |($358) |($89) |$5 |$419 |$579 |

*Fredonia Industry Study August 1, 2010

Our target market in the first year of operations is $12.27M, and anticipating industry growth of 7.4% year over year based on Fredonia Industry Study. We are expecting to capture market share as illustrated above by focusing on our direct marketing initiatives to the top 45 and new segment within distribution. We are going to allocate higher percentage of revenues to marketing expenses in the first three years in effort to build brand awareness and brand equity. We are anticipating a net loss for the first two years, turning the corner in year three. During the fifth year we expect to make up the aggregate loss fueled by being the market share leader.

Breakeven Analysis

|Monthly Units Break -Even | |Unit price |
|Fastener |1,970 | |
|Guide |500 | |
|Tools |263 | |
|Total |2,733 | |
| | | |
|Monthly Sales Break-Even | | |
|Fastener | $ 177,300 | $ 90 |
|Guide | $ 37,500 | $ 75 |
|Tools | $ 52,533 | $ 200 |
|Total | $ 267,333 | |
| | | |
|Average Per-Unit Revenue | $ 121.67 | |
|Average Per-Unit Variable Cost | $ 9.44 | |
| | | |
|Estimated Monthly Fixed Cost | $ 151,917 | |
|Monthly Variable Selling Expenses | $ 18,750 | |
|Cost of Sales | $ 96,667 | |
|Total Monthly Expenses | $ 267,333 | |

Total monthly expenses are approximately $267K. In order for us to breakeven, we need combined sales of 2,733 units among fasteners, guides, and tools. Please see above table for breakdown on unit sales, and unit price to reach the breakeven point.

Controls & Contingencies
Enginuity is a process of constant innovation and research to provide the best solutions to cabinet manufacturers. In order to effectively grow Enginuity, we will have to be equally as diligent at monitoring our focal control points as we are at providing new solutions to our customers. We have identified 4 control areas that need to be monitored in order to make Enginuity successful. • Sales Growth

o The success of Enginuity will be measured more on sales growth than any other financial indicator

o To do this, we will create a monthly dashboard report to compare actual sales to our forecasts

• Market Share

o We project to grow market share by 180% over the next 5 years

o A big part of this market share will come from the top 45 manufacturers that will be targeted through direct initiatives

o The monthly dashboard will also track product placement within the top 45 and cabinet focus distribution initiatives within each region

• Profitability

o Since our margins will be quite different between the direct and distribution channels, these channels will be reported separately on our income statement

o Profitability for both channels will be tracked monthly and adjustments will be made to pricing and sales strategy based on our monthly results

• Customer Satisfaction

o Enginuity is focused on the customer and giving them the efficiency and cost savings they require. To accomplish this, we have to stay close to our customers; both direct manufacturers and our distributors

o We will aggressively seek customer feedback on our programs

o We will send out semi-annual surveys to both sets of customers to gain feedback on our product quality, selling programs and service

Contingency Plan
Even with controls in place to measure the success of Enginuity, there is still the chance for some surprises along the way. While it is difficult to predict these unforeseen events, table 3 shows some possibilities and the actions we can take to overcome them.

Table 3 – Contingency Plan
|Unexpected Event |Contingency |
|Competition Duplicates our Guides |Increase advertising to raise awareness of not only guides, but the value added component of|
| |the Enginuity brand |
|New Distributors Don’t Promote |Evaluate distributor incentive plan to determine what is needed to ensure Enginuity is sold |
|Enginuity |as the premier brand through distributors. Focus more on direct advertising to manufacturers|
| |to create demand to pull the product through the channel |
|Distributors are Unable to Sell |Assess current product offerings and distributor program ensuring offering is aligned with |
|Product |distributor and manufacturers needs |
|Demand for Guides Exceeds Production|Have contracts with guide manufacturer to be able to supply a predetermined number of guides|
| |within 24 hours of our request, or contract with a second manufacturer to handle over-flow |
| |caused from large demand or when our main supplier has production issues |
|Cannot Educate Manufacturers on the |Look inside ITW for possible partners to supply glue to cabinet manufacturers, or look to |
|Need for Fasteners |acquire a glue manufacturer. Adding this product to the Enginuity brand may increase |
| |awareness and further bundle the entire cabinet assembly product by controlling all products|
| |used in assembly |

[1] KCMA 2009 Trends of Sale (
[2] Fredonia Group – August 2010…...

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...M-X251 Marketing Plan In this paper, Team A will represent the top marketing team for the corporation General Dynamics. They will present a brief overview of General Dynamics, and describe a new product that the company will be selling in the near future. Additionally, Team A will describe the role marketing has played in the success of General Dynamics. After which, the team will present a SWOTT (strengths, weaknesses, opportunities, threats, and trends) analysis on the new product that General Dynamics hopes to sell. In order to properly market this product, research will have to be done in order to develop a marketing strategy for this new product. Team A will explain that research approach as part of this first phase in marketing General Dynamic’s new product. General Dynamics General Dynamics Corporation is a company that has historically built its business on military defense contracts. Tracing their roots back to 1896 building military submarines, they are now the fourth largest defense contractor in the world (Defense Systems Staff, 2011). Headquartered in West Falls Church, Virginia, General Dynamics is a publicly owned corporation currently traded at the NYSE under the ticker symbol GD. Recently developed high profile military products include the Aegis Combat System, advanced submarine technologies, and military grade security for smart phones and tablets (General Dynamics Corporation, 2012). According to their Annual Report filed in 2011,...

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Premium Essay

Marketing Plan

...MARKETING PLAN Name: Course Course Code Tutor: School: Date: Table of Contents Executive summary 3 Marketing plan for Pasty Restaurant business 4 Market research 4 Environmental analysis 6 Porter’s five forces 6 PEST analysis 7 SWOT analysis 8 Marketing Mix 10 Pasty Restaurant target marketing 14 Conclusion 15 References 16 Executive summary In any business, whether small or large, a marketing plan is very essential. This plan designs a strategy through which the end goal, profit maximization, is achieved. In this report, the guiding objective analyzing a marketing strategy that incorporates price, product, place, promotion and people as some of the important components of marketing mix. The study also examines how the marketing practices, theories and current practices integrate with marketing mix for successful development of Pasty Restaurant marketing plan. In this marketing plan, every business operation aspect has to be incorporated. Marketing plan is hence developed in such a way that it investigates the customer’s wants and needs in order to ensure that these needs will be satisfied while at the same time ensuring that this business is continuously making profits. In the research and analysis, various activities will be incorporated. These activities will include customer service, sales, publicity, promotions, product development and marketing research analysis....

Words: 3829 - Pages: 16