NUIG Marketing Policy & Strategy-MK311

Crestfield Furniture Industries, Inc. (B)

Group 3
Ken Fuller, Francis Gray, Emma Harney, Mairead Guihen & Eoin Clarke.

22nd of March

Introduction Introduction to Crestfield Furniture Industries, Inc.

Crestfield Furniture Industries, Inc. is a manufacturer of medium to high-priced woos bedroom, living room and dining room furniture. The company was formed in the early 1900s by Charlton Bates great-grand father. This family company then merged with Lea-Meadows, Inc. in April 2004 after Charlton Bates Father-in-law died suddenly leaving his daughter with controlling interest of LeaMeadows. This merger was not a planned move but a necessary one. The two firms were located on adjacent properties and the two firms maintained as much autonomy as was economically justified. Also, Lea-Meadows filled a gap in the firms product mix. The two firms retained their own identity and brand names.

Main issue
The main issue concerned with the merger was the selling efforts. Crestfield had its own sales force, but Lea-Meadows relied on sales agents to represent them. The question which plagued Bates was, Do we give the upholstery line of chairs and sofas to our sales force or do we continue to use the sales agents? there was mixed views from the staff of each firm.

Lea-Meadows, Inc.
Lea-Meadows, Inc. is a small privately owned manufacturer of upholstered furniture for use in living and family rooms. The companys sales have increased by 7% annually over the past five years, and company executives believed this growth rate would continue for the foreseeable future. Lea-Meadows employed 15 sales agents to represent its products. These sales agents also represent other manufactures of noncompeting furniture and non-furniture firms. Lea-Meadows, Inc. paid an agent commission of 5% of net company sales for these services. In 2003 Lea-Meadows spent $50,000 on each sales agents for 10% - 15% of their in-store time on Lea-Meadows products according to Moorman. Considering the firm hired 10 sales agents, this amounted to $500,000 in total sales agents costs in 2003. Although the company y did not attempt to influence the type of retailers that agents contacted, it was implicit in the agency agreement that agents would not sell to discount houses. An estimated 1,000 retail accounts were called on in 2002 and 2003. All agents had established relationships with their retail accounts and worked closely with them.

Crestfield Furniture Industries, Inc.

The company employed 10 full time sales representatives, who called on 1,000 retail accounts. These individuals performed the same function as sales agents but were paid a salary plus a small

commission. In 2003, these salaries amounted to $700,000, plus the small commission of $375000, plus $130,000 in administration cost coming to a complete total of $1,205,000. Crestfields sales people were highly regarded and were known for their professionalism and knowledge within the industry.

Recommendations
Both firms have many advantages and limitations to their selling methods which Moorman and Bott both disagree about. John Bott believes that the Lea-Meadows should assign the line to the Crestfields sales force, whereas, Martin Moorman feels that it is important to keep sales agents for the firm. Both parties present excellent arguments although it is clear from the financials that it is more profitable for the firm to stick with their own sales agents, which are the way Crestfield, have been operating. This does however leave Martin Moorman, a close family friend, without a position. We feel that now that Moorman is 58 he will possible be retiring in the near future, and a position could be made available for him to fill as an advisor to the firm.