Create a strategy looking for a succinct, but powerful 150 or less. on what the S cards trying to accomplish.
E-mail from Chris Harolds on Shomei's Strategy Statement
To: You, Analyst
From: Chris Harolds
Subject: Shomei strategy statement
E-mail from Chris Harolds on Shomei's Strategy Statement
Your next assignment is to come up with a strategy statement for Shomei. We are looking for a succinct, but powerful statement—a paragraph or two that really captures what we are trying to accomplish at Shomei Cards.
In addition to the material I've already sent you, I think you'll be interested in watching a newscast on the greeting card market earnings that features Shomei.
Also, to help you prepare the Strategy Statement, I asked our human resources and marketing managers to gather some information from company employees as well as some of Shomei's customers and suppliers. I hope you find this information useful.
Why don't you e-mail me your proposed strategy statement? Also, I've asked several people to draft strategy statements so that we can get a variety of input. I'd like you to give me your comments on some of the other statements.
I look forward to seeing your work!
Chris
Shomei Cards Overview:
Shomei Cards History:
In 1980, Chris and Bob Harolds, a young married couple, started Shomei Cards from their home in Wareham, Massachusetts. The couple designed their greeting cards using objects found in nature, such as wildflowers, leaves, feathers, and moss. After collecting the materials, they dried and glued them onto washi, a thick, cottony paper imported from Japan. Once the materials were dried, the couple wrote short sayings and poems inside with a black calligraphic pen. These cards made up the Shomei Impressions line of greeting cards.
Soon, the Harolds moved their growing operation to a warehouse on the outskirts of Wareham and hired a group of 10 artists. There they began to produce new styles of Shomei Impressions cards decorated with nonnatural objects, including wire, wicker, and plastic. By 1986, they decided to manufacture washi themselves, instead of importing it from Japan, so they built a factory in Portland, Oregon, and began making paper. This is the only washi-making plant in the United States. The Harolds financed this project by taking their company public in February 1986.
The increased production capacity allowed the Harolds to distribute their cards at more outlets, including coffee shops, museum gift shops, large bookstores, specialty boutiques, and gourmet grocery stores throughout the country. The increased volume also allowed them to significantly reduce the cost of producing cards. Though it costs Shomei more than its competitors to produce a card, it earns greater margins per card and provides higher profits to its retailers and more differentiation to its customers.
As time passed, the Harolds developed new lines of cards. In addition to the Shomei Impressions line, the couple created a new collection called the Shomei Fine Artist line. This collection of cards featured the artwork of up-and-coming artists in the United States. The Harolds solicited artists to work for them through an innovative program called the Shomei Artists Program (SAP). The enormous response to the program and the subsequent culture that emerged around Shomei Cards resulted in explosive growth for the company.
As the demand for Shomei cards increased steadily, the Harolds decided to create a new line of cards printed on high-quality non-washi style paper, which they purchased from commodity suppliers. The cards in this line—Simply Shomei—sold for $3.50 apiece. The company then planned to scale distribution to increase volume. Thanks to the success of the SAP program, the Harolds were able to establish small offices in communities with high concentrations of artists.
Other card companies have had difficulty replicating Shomei's designs and processes. Shomei has the sole proprietary right to mass produce washi in the United States, and it owns patents on a special nano-piezo ink-jet printer and a unique surface-adhesion process. These technologies have revolutionized the company and helped it achieve the most creative, elegant, and professional images for its greeting cards.
Current Situation:
Shomei's growth is flat, and its stock price is falling. Though the company remains profitable, its volume of new orders has dropped, and this year, for the first time in the company's history, its first-quarter earnings were down. The greeting card industry as a whole is struggling, and analysts think Shomei may have no more room to grow unless it makes dramatic changes.
Chris Harolds thinks the Internet is responsible for the slowdown in sales. She recently attended a Greeting Card Industry Executive Council meeting in New York, where she learned about new trends in the industry and how they are affecting the traditional greeting card market. In particular, Chris heard that consumers today are interested in making their own cards on computers at home or sending e-greetings, which they can personalize to their own tastes. She is worried that Shomei will fail if the company doesn't respond to these changes by developing a web presence.
To complicate matters, competitors are threatening to take away some of Shomei's market share. Hercules Cards plans to release a line of high-end cards, which could compete with Shomei for consumer attention. Though Atlas Cards has not expressed interest in moving into this card segment, analysts do not dismiss the possibility. After all, Atlas and Hercules have been vying for control of the supermarkets and drug store chains for years. Shomei needs to stay aware of its surroundings and keep on top of consumer tastes and preferences if it wants to remain in its position as the No. 3 greeting card company in the nation.
On a positive note, the industry executive council noted the shift in demand from holiday cards to everyday cards. These everyday cards are used to express sentiments—the core of Shomei's business. There is also a shift in the traditional card buyer from older women to men and young professional men and women. This new market is one that Shomei has successfully targeted.
When she returned home from the meeting, Chris discussed what she learned with her husband, Bob. Bob isn't worried about the Internet's effect on their company. After all, he believes electronic cards can't replicate the intricate designs featured on Shomei cards. And people want the sensory experience that touching a greeting card produces. Unlike his wife, Bob believes Shomei should keep on doing what it's doing to stay successful, instead of roaming into territory they know little about.
Still, Chris remains uncomfortable. As a result, the Harolds have retained Kegan Strategy to help them evaluate Shomei's competitive positioning and their strategic options for moving forward.
Marketing and Branding of Shomei Cards:
Welcome! We are very excited to have you on the Shomei Cards sales team. As you know, we pride ourselves on the extraordinary service levels we offer our customers and consumers.
I have been a Shomei representative for more than 15 years. I am proud of what I do because I stand for a quality product.
— Charles Claude, senior sales representative at Shomei Cards
We at Shomei Cards believe people deserve a high-quality personalized product. We are fortunate to display both the original creations of up-and-coming young artists and renditions of classic art pieces on our cards. As an employee of Shomei, you represent this brand image. When you are in the field serving retailers, you personify Shomei.
About Our Company:
Shomei Cards, the nation's third-largest greeting card company, is in a class of its own. We distinguish ourselves from other companies through the use of first-class materials and a high-tech production system. But that is only part of what we have to offer. We are the only card company that provides original designs by tomorrow's art stars.
We are finding that our consumers buy cards and add their own art. Shomei cards have pulled through the sale of additional items. They are a retailer's dream to work with.
— Andrea Ellis, assistant manager, Virelli's Card Shop
Since our company was founded in 1980, it has risen faster and become stronger than any of its competitors in the industry. We have consistently enjoyed a 14 percent growth rate. Even without the luxury of selling to the large retail outlets, we have been able to increase our market share to 7 percent.
We used to carry Hercules cards. Unfortunately, they took up too much space and were unrelated to our target market. As a result, our sales were slow. But our patrons love Shomei cards. They browse and buy two or three extra cups of coffee while composing their own sentiments onto these unique cards.
- Aaron Rumberg, regional manager, Cappy Chino's coffee shop, Ann Arbor, Michigan
Your Customers:
Shomei caters to two types of people: consumers and customers. Customers are the store owners who are selected to become licensed Shomei retailers. Your job is to make these retailers happy. Consumers are the people who actually buy the cards from the customers/retailers.
Shomei is my easiest vendor. John (my representative) has become a good friend. I find myself hoping to sell more Shomei cards so John can come by for a visit.
— Bridget Cole, owner of Artist Spot, New York
We at Shomei Cards have chosen not to distribute our cards to mass-market outlets and grocery stores. Instead, we have decided to focus on smaller, more intimate settings. Because consumers can't get Shomei cards at other locations, our retailers are not threatened by competition from outside sources.
Shomei cards augment our mission of bringing fine art to all people. And the company's vendors are the best at replenishing our stock quickly. We never seem to run out of the favorites. We place these cards with our art items rather than with the sundries and postcards because of their high quality and brilliant designs.
— Guy Bernard, manager, Pasadena Museum of Contemporary Art, California
Our keen understanding of our target market has helped us successfully distribute our cards. Some of our most popular retailers include the following companies:
Cappy Chino's, the nation's largest coffee shop chain
Museum gift shops, including those in world-famous museums in New York, Los Angeles, Philadelphia, and Chicago
Sunny Side Boutique, one of the country's top specialty gift stores
Gourmet food stores, including Gordon Gourmand's, Gabriella's Kitchen, and Les Repas, which can be found in all major metropolitan areas
Art stores such as Denious Art, which has more than 300 franchise stores throughout the country
Our Consumers:
Shomei consumers do not resemble card buyers of the past. We have tapped into a new generation of card consumers—a younger, trendier, professional crowd that includes more male consumers than in the past and a more diverse audience in general. Tired of the traditional sentiment market, these people are eager to be the vanguard in the new "art for the masses" movement that is sweeping the country.
The man in me loves the quality; the consumer in me loves the price; the artist in me appreciates the designs. Shomei satisfies me.
— Dalton Smedley, art collector, Lake Forest, Illinois
Shomei card buyers are looking for high-quality missives that impart a sentiment to the recipient. The sentiment is conveyed not only through words but also through illustrations and the choice of card design. Our consumers have demonstrated through their buying power that they are turning away from traditional cards with their focus on soft sentiments and toward more powerful and artistic greeting cards narrated with meaningful words or simply left blank inside.
Shomei cards are so great. Who else sells cards I can frame and hang in my apartment? Give me a Shomei over a Hercules card any day. I don't want to send the same kind of card my mom sends. Nobody says that corny stuff anymore.
— Hiroshi Ishikawa, student, Philadelphia, Pennsylvania
Your Role:
Your job is to make sure that your existing customers are pleased with the level of service they are receiving and that they remain active members of the Shomei community. You will learn that most retailers are enjoyable to work with. They are clear and reasonable about their expectations of you. Once you establish a relationship with a retailer, it should be easily maintainable.
The Shomei line has increased my retail traffic significantly. My profit per square foot of space for Shomei is twice that of other cards—and 20 percent above my store average.
— Gertrude Corell, owner of 31 Corell Gift Shops around the country
Distribution:
Your sales team will include a strong network of upbeat service representatives—art school and college students who tend to patronize the stores they are stocking. These representatives are responsible for closely monitoring the inventory levels at retail outlets; shop owners should never have to ask for new inventory.
Another strong point of Shomei Cards is our ability to replenish our shelves more quickly than any of our competitors. We never run short on stock, because we can print small quantities on short notice. Because we can perform small card runs at the touch of a button, we do not need to keep large stocks of inventory on hand. This lessens our risk of being left with large oversupplies of cards.
Frequently Asked Questions by Retailers
Q: Why should I carry Shomei cards?
A:
Shomei cards enable retailers to record the highest profit margin in the industry. Shomei offers nearly 50 percent profit, whereas our competition tops out at 26 percent.
Q: How is Shomei able to afford giving away such generous profit margins?
A:
Because of our strong brand identity and our loyal following, we are able to spend less on marketing than our competitors. This aspect of our business is heavily reliant on you, the retailer, so we want to make sure you are appropriately rewarded.
Q: As a smaller card store, how do I know that I will have appropriate inventory?
A:
As a licensed Shomei retailer, you will have a personal relationship with your service representative. Together, you will develop the optimal inventory system for your location. All of Shomei's retailers are small and have personal needs. Our representatives are trained to meet those needs. If you have to call us, we guarantee that we will replenish your inventory within 24 hours.
Q: What does it take to become a licensed Shomei retailer?
A:
Commitment, at least a one-year contract, and 3 percent retail space in the store. More important, we ask that our retailers recognize the importance of the art community. Before becoming a licensed Shomei retailer, you and your representative will explore whether your beliefs align with the company's. Being a licensed Shomei retailer means that the community will look to you as an artisan-friendly shop. They will interpret your license as a message that you support the art community.
Q: If sales of Shomei cards are dependent on other stores, how do I know they won't let me down?
A:
Licensed Shomei retailers have a say in the way Shomei does business. Retailers are voting members of the Shomei Artists Program (SAP). Every year we ask retailers to evaluate the stores in their area. This information is then exchanged at a regional meeting. Although the focus of the annual meeting is on Shomei Cards, it has evolved into a fun networking opportunity for retailers. Being a licensed Shomei retailer admits you into a resource-rich community.
Our Card Lines:
We speak to people's needs by offering three distinct collections of high-quality greeting cards. Each card line maintains its own flavor and style, while supporting our ideal of high artistry and sensitivity to sentiment.
Shomei Impressions line
This is our original line of cards. These cards are well known for their handcrafted look and feel. Our consumers consider the Shomei Impressions line of cards as gifts in and of themselves. We have two categories of cards:
Nature: Cards are decorated with objects found in nature. Cards are produced on washi paper with a simple, elegant, peaceful presentation.
Non-natural objects: Cards are decorated with non-natural objects, such as wire, wicker, straw, and wax. Cards are produced on washi paper. Card presentation is bold and colorful, yet elegant.
Shomei Impressions cards come in two forms:
Blank cards
Cards with Shomei-composed sayings inside, all for non-holiday occasions
Retail card price: $7.50 per card
Retail box price: $35 per 10-card box and $20 per five-card box
Shomei Fine Artist line
A series of cards illustrated with fine art produced by artists from around the country. Card designs are printed on washi paper with the artist's signature and personal art philosophy on the back. Cards in the Shomei Fine Artist line have broad appeal among our customers while retaining their individual uniqueness—one of Shomei's trademarks.
Renowned artists: Cards are produced by a select number of nationally recognized artists.
Up-and-coming artists: Cards are produced by a large number of highly talented, aspiring artists.
Cards in the Shomei Fine Artist line come in two forms:
Blank cards
Cards with Shomei-composed sayings inside, all for non-holiday occasions
Renowned artist retail price: $7.50 per card
Up-and-coming artist retail price: $5 (6"x 4")
Simply Shomei line
This line features non-washi paper cards that are decorated with simple yet beautiful ink designs. The cards are blank inside. Our Simply Shomei cards follow the Shomei brand image of quality art that meets the current mood and imagination of the masses at a lower price.
Retail card price: $3.50 per card
Shomei Cards Interviews
Interviews with Shomei Employees
Chris Harolds, CEO:
Why do you think people choose Shomei cards?
People want the sensory experience they get with Shomei cards. They like the high quality and natural designs of our cards. Plus, they can add their own sentiments, which makes our cards more personal than the typical greeting card.
Mike Marconi, vice president of marketing
What is Shomei's brand image with consumers?
People identify Shomei as the leader in high-quality, artistic cards. In particular, we are known for the fine materials we use.
How is this accomplished?
Shomei uses only the best materials. In addition, we manufacture our own washi paper. This helps us ensure that our cards meet our high standards. Shomei has a commitment to quality and is always looking for process improvements that will make our product better.
Charles Claude, senior sales representative at Shomei Cards
How do you feel about working for Shomei Cards?
I have been a Shomei representative for more than 15 years. I am proud of what I do because I stand for a quality product.
Jane Farmer, vice president of finance
How do you feel about working for Shomei Cards?
What I love about Shomei is that we continually focus on the customer. Sure, we want to make a profit and are always looking for opportunities to reduce costs, but we never do this at the expense of the customers. Shomei's commitment to quality is number one. Hercules might sell more cards than we do, but when people receive a Shomei card they know that the person who sent it really cares.
Interviews with Suppliers
Andrea Ellis, assistant manager, Virelli's Card Shop
Why do you carry Shomei Cards?
Shomei cards offer me the best margins in the business! Plus, Shomei Cards have a great artistic feel. They are definitely high quality! That's what I want in my shop. People won't come into Virelli's if the cards we carry are the same ones they can get at the big discount chain down the street.
Aaron Rumberg, regional manager, Cappy Chino's coffee shop, Ann Arbor, Michigan
Why do you carry Shomei Cards?
We switched to Shomei because its product is a better fit with our image. Cappy's is a place where people can come and relax. When we had Hercules cards, the place was cluttered with rack after rack of cards. It took away from our relaxed feeling. Shomei cards are beautiful and unique. And because Shomei concentrates on quality over quantity, we make the same profits on Shomei cards as we did on Hercules — with half the volume!
Guy Bernard, manager, Pasadena Museum of Contemporary Art, California
Why do you carry Shomei Cards?
Shomei cards augment our mission of bringing fine art to all people. And the company's vendors are the best at replenishing our stock quickly. We never seem to run out of the favorites. That's what is great about Shomei — their people. They have the same commitment to quality that we do.
Interviews with Consumers
Leslie Eve, personal trainer, New Canaan, Connecticut
Why do you buy Shomei Cards?
I love the personal feel of Shomei cards. The designs are so original. Plus, I love being able to write my own message rather than just sending a card with some corny message someone else wrote.
Jeongjin Lee, art student, Chicago, Illinois
Why do you buy Shomei Cards?
Shomei has found a way to combine art and value. When I buy a Shomei card, I always think it is money well spent!