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Herman Miller Marketing Essay

The main purpose of this paper is to propose, after Introduction: a brief introductory commentary such as: “The purpose of this paper is to propose and discuss an original Product Innovation Charter for a major competitor in the international office furniture business… This PIC may be considered as complementary to the Company’s ordinary annual new product development operations… etc…” Use your own words, your own intentions and you may then say as much or as little as you want at this stage – but at least the reader will understand immediately what is going on.

Executive summary

BACKGROUND

General information about the company

Herman Miller is a company that designs solutions for several environments, such as corporations, health care, home office and government. The company manufactures its products mainly in the USA, the UK and China and market them worldwide. Their range of products includes furniture, lighting, textiles, storage system, etc. The company is looking for opportunities in several areas that are beyond the office solutions.

Herman Miller is a company proud of its long time tradition to innovate, not only in the design field, but also in the management issues and with environment commitment. The company has an extense list of awards not only in the design field, but also regarding their managerial and ecological expertise.

One of the leading companies in furniture and office systems manufacturing, Herman Miller is second to Steelcase in sales. Other relevant players are direct competitors of the company: Haworth and HNI. The Herman Miller operations are in more than 40 countries around the globe, having about 80% of sales coming from United States; in fact, the US government is Herman Miller’s first customer, being responsible for 14% of sales.

Herman Miller does not only manufacture the products, but is in charge of all processes starting with research, design, manufacturing, and also distributing its own products. The company is widely recognized both for its innovative products and business practices, including the use of industry-leading, customer-focused technology. Herman Miller employee-owners value and foster good design, participative management and environmental responsibility (www2.basf.us/businesses/plasticportal/ktn_news_08-03_Award-wning_Herma.html)

History Overview

Herman Miller is an American company located in Zeeland, Michigan. Its foundation dates back 1923 when D.J. De Pree his father-in-law bought the Michigan Star Furniture Company from Dutch immigrants who were very skilled in crafting furniture. Like the majority furniture companies in the surroundings, it was a high-end manufacturer of home furnishings that were copycats of the European designs at the time. The name of the company was changed in the homage of De Pree’s father-in-law, Mr. Herman Miller, who gave him the money to buy the company. By 1930, Herman Miller was producing fine home furniture for living rooms and bedrooms, and the company was near to become bankrupt.

One year later, Gilbert Rohde (1894-1944), the industrial designer from New York, entered the Herman Miller showroom to speak to Mr. De Pree about his new ideas in furniture design. He was then hired to design a new line of furniture for the company. Rhode is known for his straightforward ideas and his modern design furniture set the grounds to define the mid-century modernism.

Rohde believed in the decrease of the size of modern houses, and for so, it would need smaller and simpler furniture. In five years, almost all the furniture makers had been inspired by his work with Herman Miller and started to adopt functional design and simpler styles.

1940s – Herman Miller Launches the Office Furniture

In the search for an office that was more functional and less decorative, Gilbert Rhode, designed different desktops, drawers and table foots that could be mixed and matched into desks to better suit the needs of the user. Rhode also introduced a new design for a sofa and an L-shape desk that influenced other designers in the following years. With such revolutionary designs, the Herman Miller sales started to grow and the manufacturing of traditional furniture was abandoned.

The partnership with Rhode was so successful, that Herman Miller partnered with several relevant designers such as Alexander Girard, George Nelson, Isamu Noguchi and Charles and Ray Eames. These partnerships not only originated iconic products like the “pretzel armchair”, the “Noguchi table”, the “storagewall shelves” and the “Eames chair” but also helped to build the company’s reputation as innovative. Those designs are still copied today by other companies in the furniture business.

1960 – Changing the Offices Floor plan Configuration

In 1964, Herman Miller introduced The Action Office System which consisted in several office furniture that could be combined to suit individual work needs. The System included files, desks, drawers that were interchangeable and changed forever the offices lay out. Four years later, Action Office replaced the concept of the built in individual work space with panels that supported the components of the desk and that could be arranged easily for better usage of the space.

The Action Office was not only innovative at the time, but it was also cheaper than the traditional furniture once used. It was the first open plan system ever designed and it broke the boredom of the plans, gave privacy to the workers and also facilitated communication between co-workers.

In 1976 the company designed another successful product: the Ergon chair, created by Bill Stumpf following the study of ergonomics, was very used in offices trough America. Around 1985, Herman Miller profits began to fall, specially due to the several companies copying and selling Herman Miller designs for a lower price.

1990s – The Company’s Struggle

By 1990, Herman Miller saw the need to enlarge its scope and began to buy other companies and to diversify its industry. For example, the Action Office System becomes to be marketed for the Healthcare Industry to solve space issues, like hospital rooms and nursing stations.

At the same time, Herman Miller became to be aware of issues regarding sustainability and natural resources conservation, and since then the company has won relevant awards for their efforts to preserve the environment.

In 1994, the Aeron chair was introduced, it was designed following ergonomic rules, and its design won several awards being nominated “Design of the Decade”, by Business Week magazine. The chair was also included in the 20th Century Design Collection of New York’s Museum of Modern Art.

Herman Miller entered the residential furniture segment again, with the reedit of the company’s classics from the 1940s, 1950s, and 1960s, and also with some new designs.

Competitor analysis

The office furniture industry is a highly competitive market, the Herman Miller brand believes that its strengths is its focus on development and research in creating innovative furniture and nowadays more and more “solutions”.

(http://www.wikinvest.com/stock/Herman_Miller_%28MLHR%29)

As Herman Miller is trying to recreate themselves constantly new in different ways and different segments, they have a chance to stay a market leader. The challenge is to choose the right section on the long-term. Herman Miller’s history shows that they know how to manage crises, but the world is constantly moving and changes and new benchmarks are being set in no time. The priority is to keep on being number on in setting new trends and to shake up the industry every now and then.

Herman MillerPeer group:Ratios based on Mon, 16 May 2011.

Haworth

We consider Haworth as prospect in regards to competition. “Adaptable. Sustainable. Ergonomic.  These are hallmarks of the Haworth Brand.” (http://www.haworth.com/en-us/Industries/Pages/Industries.aspx) The Haworth company is developing to a competitor not yet on the office furniture, but very much on other segments such as: education, healthcare and government. In these three industries they address the same target groups as the Herman Miller brand does. The way Haworth has developed in the recent years it seems to be a great aim to get a serious competitor for Hermann Miller.

Steelcase

Steelcase, based in Michigan, USA, is one of the main competitors of Herman Miller as they also are a company with nearly 100 years know how, but also positioned themselves very well in Europe with an impressive distribution network. In regards to their portfolio they are quite similar to Herman Miller and the other competitors.

Steelcase provides also visual communication products, web-based communication tools and surface materials primarily to architects and designers for use in business, residential, healthcare, and hospitality applications. Steelcase Inc. wants to grow their company by offering solutions for new ways of working, new customer markets, and new geographies. (http://www.wikinvest.com/wiki/Steelcase_%28SCS%29#_note-Company)

Steelcase has not yet achieved the same enterprise value as Herman Miller brand, but they are very close and it is their great aim to overtake them.

HNI Corporation

HNI Corporation is the second-largest office furniture manufacturer in the world, and also the largest manufacturer and marketer of gas- and wood burning fireplaces. (http://www.hnicorp.com/index2.htm)

HNI’s hearth products are sold through dealers, distributors and company-owned retail outlets to home construction companies, builders and individual customers. The company sells approximately 70% of its products to the constructors and builders of new homes. Builders typically purchase hearth products during the construction of new homes, and homeowners during the renovation of existing homes.

One of HNI’s strength, which is their ability to sell their products with a lower price than their domestic competition, is in danger in regards to the increasing low-cost imports by the Chinese market.

(http://www.wikinvest.com/wiki/HNI_Corporation_%28HNI%29#_note-0)

Conclusion:

The whole furniture industry seems to shift the decreasing market of classical office furniture to completely new segments, like healthcare. All of the above mentioned companies are very strong on innovating and it is quite obvious how though that market is. The main players in the office furniture industry are focusing on the same segments, which make it very hard to differentiate. The challenge is to innovate something really new…..

Herman Miller’s Innovation Profile

Despite its long time history, Herman Miller never stopped to innovate. They are very proud of their continuous innovation, and they also call it their central strategy. The innovation in the design, for the brand, means more than just good looking objects.

Of course, style and aesthetics are very important; there are almost 50 products of Herman Miller in the Museum of Modern Arts’ design collection. But for the company design is a reaction to changes in the society scenario and is conceived in terms of research-based problem solving. “So, rather than thinking about aesthetic elements, our starting point is whether (a design) solves problems, and if there’s an opportunity for us to enhance the lives of our customers,” said Mark Schurman, Director of Corporate Communications at Herman Miller. (www.hollandchamber.org/clientuploads/Magazine/iSSUE3%2520-%2520fULL.pdf)

The company is very forward focused, although they solve issues that have always existed, they never forget to try to anticipate issues of the future reality, with internal and external ideas to improve the process. External as well as internal minds help the idea process. “We’ll put a problem to multiple independent designers for preliminary thinking, and out of that arrive at a number of potential solution directions. Out of the ideas that have been given to us, we’ll determine which ones hold the most promise,” said Mark Schurman, Director of Corporate Communications at Herman Miller. (www.hollandchamber.org/clientuploads/Magazine/iSSUE3%2520-%2520fULL.pdf)

“If you’re really innovative, and reaching for innovative ideas, you’ll find that a great number of those ideas do not pan out. We only pursue those ideas that are easily done, and they usually stretch us toward true innovation. If you’re successful over time, you’re going to have a string of projects that do reach commercialization and ultimately grow commercial success,” said Mark Schurman, Director of Corporate Communications at Herman Miller. (www.hollandchamber.org/clientuploads/Magazine/iSSUE3%2520-%2520fULL.pdf)

Staying ahead is extremely important to compete in the globalized market, since Herman Miller is not a low-cost business. They spend great amount of money and time with R&D, they also have high manufacturing standards, qualified raw materials, sustainable initiatives, among other factors, increase the price of the final product. “If you’re going to have success as a business in a high-cost infrastructure, it is far harder to be commercially successful on low margin, high-volume products, because those things can be replicated virtually anywhere.” said Mark Schurman, Director of Corporate Communications at Herman Miller. “leading in the development of new products and technologies that are really dependant on innovative ideas, we have the opportunity to carve out markets that are more rewarding and less subject to those cost factors.”

(www.hollandchamber.org/clientuploads/Magazine/iSSUE3%2520-%2520fULL.pdf)

Focus

With their continuous research to anticipate future trends, in the beginning of the 2000s, Herman Miller anticipated that the work in traditional offices would became to fade within the years, especially in the USA, the company main market. That was clearly a threat to the company, who has made its reputation developing products to the white-colar workforce.

From that moment, the company decided to search for new streams of revenue. It was definitely not a familiar market for the company. Some adjustments needed to be made in order to evolve their traditional office interiors (furniture and cubicles) to meet the new market requests. (www.strategy-business.com/article/10206?pg=all)

The company started from the point of identifying the unsolved problems going way beyond of thinking only in the formal aspects of the workplace. The questions even enquired for example, to what lighting would be better appropriated to the workplace. The research of this initial phase took years to be complete and involved not only product designers, but architects and technologists, leading to the development of several new concepts using the expertise of companies in different fields. (www.strategy-business.com/article/10206?pg=all)

Technology

In regards of lighting for example, Herman Miller teamed up with GE, Philips and Osram Sylvania to substitute the traditional incandescent lights with new concepts of illumination. They’ve focused in the use of LEDs to create lighted objects, wearable light, light tunnels and walls, changing the traditional overhead lighting into integrated them into the furniture. (www.strategy-business.com/article/10206?pg=all)

Programmability was another concept born from this experience, allowing office workers to use devices, like their own personal computer, to reprogram and reconfigure the physical workspace. This led to a change in how people would perceive the office environment. In the end of the research phase, Herman Miller filled 25 patent applications. (www.strategy-business.com/article/10206?pg=all)

As with their furniture design, the idea was not only to create visually beautiful effects, but a problem-solving design. Like their famous Eames chair, that is considered a piece of art by some people, has behind it years of studies of ergonomics, shape, human body, comfort, etc.

Charles Eames held that the first task of a designer was to recognize “constraints,” including factors like price, size, production time, strength, and support, and that the best design was the one that best balanced them. Does it solve a problem? Is it serviceable? How is it going to look in ten years?”. His thinking has become Herman Miller’s thinking. And even today, company managers talk about business in Eames’s terms of constraints and problem solving. (www.strategy-business.com/article/10206?pg=all)

Herman Miller always made partnerships with outside designers and then made the development inside with the company engineers. Since 2000 though, the company decided to shift that practice transferring the R&D into a separate office. The focus of the group was to search for trends and to study products that were already at the market.

The result was that “incumbent companies plied the waters of many established, but separate, oceans of commerce – but none were exploring the uncharted waters between them.” The company found there a “grey space”. (www.strategy-business.com/article/10206?pg=all).

The Strategic Arena

The focus of the company is to define together with the company strategy the innovation path that will be taken. It is important for the creative process, driving the company to where there are great opportunities to innovative ideas. (www.strategy-business.com/article/10206?pg=all).

Since the aim of Herman Miller is not only to make furniture, but to offer space solutions, the type of product may vary, according to its application that could reach the dimension of a completely new market, for instance: “programmable workspace”. This new market category consists in the merge of hardware and software resulting in a modular electrical system that can be programmed by the user. (www.strategy-business.com/article/10206?pg=all).

This kind of innovation will fulfill a future furniture niche to the company. The possibility of users to personalize their space, lighting, temperature and sound to better suit the needs of the moment. It’s important to keep the partnership with Microsoft and Phillips, for example, to keep evolving in the new markets and fields, and also adding a value that competitors can’t copy easily.

Trends

This kind of teaming up is very important since the trends reinforce the need for new space solutions. One of the most prominent trends relates to the change in the workplace. Now, things are getting more horizontal and transparent as it used to be. Now people don’t need a big chair to show status anymore. (http://www.psfk.com/2010/10/with-less-materials-how-do-we-create-something-thats-truly-innovative.html)

It’s not only at the office that things are changing. When the Herman Miller designers where to design some new desks for the home, they perceived a little change in how people were using the living room. The company also points out that the way people work from home is changing too and the furniture has to follow these trends. (http://www.psfk.com/2010/10/with-less-materials-how-do-we-create-something-thats-truly-innovative.html)

Goals

Goals – increasing revenues and more market share and achieve the first position in revenue (our information is that steelcase in number 1) and keeping ahead in the market. – JULIA

Objectives

Objectives –  develop  new work space solution products in cooperation with potential joint venture partners in the advanced personal technology (Google / Apple / Microsoft / etc.) and evolved life style (Starbuck’s / McDonald’s / etc.) markets … – JULIA

Guidelines

The history of Herman Miller has always been known by its innovative and forward thinking and it should continue to follow this path to be perceived as a company that updates itself.

In order to achieve that, the company must be first-to-market in degree of innovativeness, although it is a risky strategy, pioneering in the industry of furniture makes all the difference among the consumers that are not just buying a commodity, but also a lifestyle in order to solve their problems regarding office or home space solutions.

Degree of Innovativeness

There are three ways to be the first-to-market: state-of-the-art breakthrough, leveraged creativity and applications engineering. During all Herman Miller’s history, the company teamed up with designers to better understand the evolving needs of its consumers, and the swifts in the space solutions. The company has always been followed by other companies that insisted in copy their design. Now that competition becomes more fierce every day, and companies like Ikea can easily sell Herman Miller’s award winning products for a much lower price, it is necessary that the company positions itself again to avoid the copy of its competitors.

Herman Miller innovativeness approach can be the applications engineering. It can be achieved by teaming up with partners to research and develop new solutions that meet with the swifts in the space trends, leading to patent-protected projects that makes even harder to competitors to copy the products.

Being the first-to-market, pioneers, promises a great potential of increasing revenue and brand equity, but it can also be very risky. Companies could also choose an approach of adapting an existing product, which consists in improving an existing product. Or, finally, a company can adopt the least risky approach, the imitation that focus to enter late on the market with products that have been copied from other firms with the intention to compete on price, location, or whatever other characteristic of the products that have leadership advantage. (http://www.enq.ufsc.br/disci/eqa5216 /material_didatico /DEVELOPINGNEWFOOD/TX67784_03.pdf)

Patent

Awareness and consumer interest rise as a company develop an aggressive spending plan, leading to a rise in the interest for the category and causing the growth of the category. For example, Schick has been following Gillette the new product introductions for a long time. This allows them to save the enormous costs of advertising and R&D, but in the other hand, followers are almost always number 2 or 3 or worse in the category. (http://www.enq.ufsc.br/disci/eqa5216 /material_didatico /DEVELOPINGNEWFOOD/TX67784_03.pdf)

Since Herman Miller aims to be the leading company in their industry, they need to be first-to-market and set the standards so that followers cannot reach them. Besides, the company’s new developments must be patented, to assure that new innovations will not be used, sold or distributed by others without permission. The patent is a good way to keep copycats in distance.

The company also needs to keep investing money, as it has been doing since their beginning, in R&D. The research and development process is not quick, and may take years to lead to a satisfactory result, but it is the most important way to anticipate trends and technologies. Since the year 2000 the company has added to their R&D professionals of several areas, like designers, engineers, architects, to be able to provide integrated results of the new demands of the evolving society.

CONCLUSION

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