An admired West Michigan business leader, Philip Miller, chairman of the Howard Miller Co., has developed a method of handicapping the manufacturing costs calculated by his company's offshore factories and suppliers. Miller includes adjustments for normal employer costs and other factors that unfairly penalize American workers. The equalizing handicap gives his U.S. factories a better chance to compete against the company's worldwide manufacturing options. Howard Miller's manufacturing managers know the target costs they must match, which gives them a better chance to save jobs. The factor adds a handicap of approximately 10 percent to the cost of products from offshore factories. This adjustment has allowed them to retain manufacturing assignments for several of the company's product lines.
Thrift and discipline are deep in the Howard Miller Co.'s DNA. I know they would not make this accommodation lightly. Based on my opportunities for observation, the company takes a long view of its opportunities, and is flexible about many things, but it does not tolerate waste or laziness.
When I first came to know this company in the early 1970s, it was an upstart player in the decorative clock business. It quickly took a major position in the industry with good design, efficient manufacturing and smart marketing. Today the company has eclipsed every competitor in the clock industry and has acquired the competitor that dominated the industry in the '70s. I am confident they have more than a 50-percent share of market, meaning they are larger than everyone else put together. This is industrial hegemony!
Design, material, craftsmanship and marketing can each be either a handicap or an advantage. As an industry we seem to be consumed with the issue of manufacturing costs, often overlooking the counter-balancing options we have in design and marketing.
The current downturn in the American furniture and cabinet manufacturing industry is pressuring companies to make changes in their practices, and some are becoming more creative. Several companies are trying to increase their visibility by promoting themselves alongside more widely recognized brand names. For example, Lexington Furniture has recently applied Donald Trump's name to a bar cabinet. Theodore Alexander Co. is marketing two reproduction collections, one tied to the Hermitage Museum in Russia and another collection attributes its value to the great Althrop English Estate. The Winterthur and Williamsburg museums are both promoting their licensees in the furniture industry. The tactic is not especially fresh, but it can still improve sales. Promotions only work if the product and the market are well matched.
The tide of consumer trends is deeper and faster.
The reason why some companies choose quick and easy promotional tools is because they don't know what their customers want. They might be taking a shot in the dark with cliche tactics. Good strategy requires deep research and rigorous planning.
The marketplace has become much more democratic.
The prevalence of Asian manufacturing in our industry has lowered the bar on furniture purchases for the consumer, and leveled the playing field. Some subtle qualities of craftsmanship may have suffered, but the American consumer has a far larger range of furniture that they can afford.
The average American consumer isn't looking for a Pinnacle Award recipient or a feature in Architectural Digest. Our new customer is much more independent and self-assured.
Design and marketing can be twin competitive advantages.
Leading international companies now need to concentrate much more of their attention on responsible design and professional marketing. Our industry might also need to play "catch up." For most of us in the furniture and cabinet industry, "marketing research" amounts to knowing what was sold at the last furniture market or what is rumored to be selling at retail. We may need to follow the lead of large consumer marketing companies such as Procter & Gamble and General Motors that conduct continuous market research and strategic marketing planning, so that they can anticipate consumer reactions to their products. Our industry has not been prone to professional research or planning of the caliber that is used in the consumer packaged goods field. It might be time for us to get on board.
Building products also float on this tide.
The same principles apply to the home building and cabinet industry. It is not just income or wealth that determines the customer's choice of building and furnishing options; it is also their personal style and priorities. Affluent homeowners sometimes spend hundreds of thousands of dollars in finely detailed and finished kitchen projects. Some of this same wealthy class of customers may instead select minimalist, inexpensive cabinets from the Scandinavian chain Ikea. How do we influence these customers?
Strategic marketing plans and advice can be purchased from consulting firms. But even if a good and effective plan is produced by an outside expert, entrenched attitudes may stall the follow-through. It might be better if the process is conducted by people who know the company's prevailing attitudes. There are advanced executive training opportunities such as the Strategic Marketing course at Wharton, which I attended prior to writing a plan for the Baker, Knapp & Tubbs division of North American Phillips. The teamwork in writing a comprehensive plan unites marketing, sales, finance and manufacturing perspectives. It can help drive a company to a position of leadership, as it once did for Baker. Today there are many Asian companies that are availing themselves of American marketing education. American furniture companies that are not employing these techniques and practices need to go back to school. There are many fine colleges and universities across the country that provide executive courses in marketing.
A search through Google for marketing education will reveal the resources that are available nearby.
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