Brand Transition Strategy Britt Miller and Rebecca Orsher

EXECUTIVE SUMMARY

• Background: Acquisition of Paul Logan Home Furniture Division – Add strengths of design, brand awareness, market leadership,

distribution channels

• Problem: Design a brand transition strategy to transfer Paul Logan brand to Manchester Home

• Analysis: 5 “Cs” • Recommendation: Gradual transition first linking Paul Logan

to the Manchester name to build brand awareness then phasing out Paul Logan once target brand awareness has been reached as measured by another target consumer survey – Utilize both push and pull marketing strategies to drive

distribution channels and consumers

ACQUISITION BACKGROUND & OVERVIEW

MANCHESTER

• Leading manufacturer of premium office furniture

• Revenues $2.33 billion in 2004

• Home lines currently include Recliner, Home office, Media/Entertainment furniture

• Home sales expected to grow 30% in 2005, from $260 million

• Want to leverage manufacturing expertise and production capacity into household furniture

• Goal: To provide a complete family of household furniture products in the mid- to upper-price points.

• Furniture Division revenues $990 million in in 2004

• Number 1-2 in market share and brand recognition

• Well established sales force; strong ties to leading distribution channels; talented design team

• Sold Furniture Division to refocus on its competencies in fashion and textile design.

PAUL LOGAN

Company • Manchester Home expanded household furniture division

by adding market leader PLFD – Addition of 990 million in PLFD revenues – Addition of established sales force, talented design teams – PLFD’s Signature Style line very popular with consumers

• Ability to combine PL design skills with MH engineering and manufacturing – Manufacturing expertise and ergonomic designs

• Concerns – How to tie-in PL’s bold designs with MH’s conservative style – Customer confusion over new brand name

5C’S OF THE ACQUISITION

Company • Companies’ strengths and weaknesses complement each

other

5C’S OF THE ACQUISITION

Customers • Target consumers ages 34-55; Income over $50K

– MH consumers are categorized as conservative elegance – PLFD consumers are more fashion-conscious, trend setters – Will need a way to reach both customer segments

• Results from target consumer surveys – Low brand loyalty – 60% would change brands – High information search – Style, design, quality, comfort most important qualities – all covered

by MH/PL – PL has high brand awareness, almost double that of MH, will help to

co-brand them to raise awareness for MH

5C’S OF THE ACQUISITION

Collaborators • Manchester already has network of office distribution

channels, now they gain access to household distribution channels through Paul Logan. – PL sales force has strong ties to leading distributions channels – PL strength in upscale furniture stores, specialty stores,

department stores

• Strong relationship with buyers – Concern over brand going away, necessary to create a smooth

brand transition so consumers make the switch

• Push strategies important to build strong relationships with distribution network – 90% of PL shipments include Purchase Allowances

5C’S OF THE ACQUISITION

Competitors • Paul Logan was market leader • Household Furniture Industry

– $36.64 billion in 2004; positive % growth projections – A mature industry – Large number of corporate consolidations – Low-cost imports from Asia/Mexico moving into higher price levels – Domestic companies ready to attack the vulnerability of the new

brand and position

• We need strong advertising and marketing mix • Many competitors have company owned stores

– Crucial to leverage our distribution channels to gain market access

5C’S OF THE ACQUISITION

Context • Office furniture sales growth tied to employment

growth and new business formation. – Burst of dot.com bubble and recession have

decreased demand for office furniture

• Rise in ‘teleworking’ could increase demand for home office

• Demand for home furniture is tied to new home construction and home sales.

• Innovative and stylish products to bolster demand

5C’S OF THE ACQUISITION

MOVING FORWARD

• Drop the Paul Logan name right away – Losing their current brand awareness – Need to educate customers – Strong distribution channel relationships could be damaged

• Keep using the Paul Logan name for the entire allotted three years – Ad agency advises against this option, as they don’t want to allocate

advertising dollars to a brand with a three year shelf life

• Transition mid-point – Leverage the Paul Logan name to build strong brand awareness for

Manchester – Continue to use the PL name in subtext for 1.5 yrs.; conduct consumer

research to reevaluate after this time. – Business recommendation to convert the name 100% to Manchester

Home after 1.5 yrs.

ANALYSIS OF FUTURE BRANDING: OPTIONS

• Brand name transition:

– First 6 months: Manchester Home: The New Home for Paul Logan Furniture

– Following year: Manchester Home: The Home for Paul Logan Furniture

– After 1.5 yrs.: Conduct consumer research to reevaluate transition

• Business recommendation is to drop the Paul Logan name

• Want to ensure the Manchester Home brand has achieved a sufficient awareness before removing PL

ANALYSIS OF FUTURE BRANDING: OPTIONS

OUR FUTURE

• Strong campaign is critical to the success of the new brand name – $184 million allotted for 2005 – Includes national and cooperative advertising for both PLFD and MH products

• Push vs. Pull – MH to allocate more $ towards Push advertising – Heavy Push & Pull the first 1.5 yrs. – Marketing & Communications mix to form long-term company image

• Promotional Programs – Purchase allowances – Recommend amending the planned 2005 marketing expenditures to allow for

purchase allowances.

• Currently based on % of sales – Due to brand transition, allocate a fixed amount to advertising to ensure the

levels do not drop

ADVERTISING STRATEGIES

• Continue to use the Paul Logan name to leverage brand awareness and channel partnerships

• Focus strongly on both Push and Pull strategies the first 1.5 yrs. to communicate the acquisition – Amend proposed 2005 advertising plan to incorporate

more Push strategies, specifically Purchase Allowances that contributed to the success of the PL distribution network

• After 1.5 yrs., the business goal is to transition brand officially to Manchester Home

RECOMMENDATIONS

QUESTIONS?