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(1) Williams-Sonoma is a company with a long history and loyal customers that prefer fashionable and high-end furniture and goods for their homes. Wise management and combination of both retail and direct-to-customer channels resulted in the success of the company, which became a giant furniture retailer in less than fifty years. Though the combination of retail and direct-to-customer channels is not unique for the industry, the success of a company depends on the efficiency of such combination. Williams-Sonoma has a very efficient combination of the two distribution channels, and this is one of its most important competitive advantages.

Extensive diversification policy is another key to the success of the company. It started as a retailer of culinary and serving equipment under the Williams-Sonoma brand. The acquisition of Pottery Barn in 1986 was a turning point in the history of the company as now Pottery Barn brand and its extensions are the driving forces of the company’s development and expansion (Rouse, 2005).

With the popularity of the Internet, the company, as well as the entire industry, began exploiting the limitless opportunities of electronic commerce. Though goods catalogs were effective, electronic commerce did not require additional expenses for printing and purchasing paper and facilities for releasing catalogs. Although the cost of serving websites was relatively high and the auditory of the internet was relatively low, the prospects of such expansion were huge.

In result, the business strategy of the company combined two channels of distribution, high-quality products for all customer tastes and target markets. Such a diversified strategy has driven the company to success, and it is expected to continue doing so. All performance indicators were very high, and nothing is expected to change in the next five years. The company’s use of technology and information innovations was the most important factors in reaching success.    

(2) The company’s existing strategy was the right one, and the evidence proves it. High level of revenues growth and the increasing popularity of the company’s products were usual for the company. In result, the strategy of the company used in 2004 was very effective, and it should be used for the future development.

Competing with a huge amount of other companies and satisfying changing tastes of customers is a big challenge, which requires immense expenses for marketing and promotion. In addition, changing tastes of the customers would require adjustments of the company’s strategy. The Internet popularity created even more prospects for companies to go on-line. That is why internet sales and promotion should become the primary destination of the company’s development.

Furthermore, there are other things, which should be taken into consideration. First, the company should focus on its core products and develop those continuously. The company should quickly respond to changing consumer demands, and specific marketing researches are the most appropriate tools for determining those. Brand recognition and good customer relations should be another important aspect of the company’s business strategy. This aspect can be performed through direct-to customer channel of distribution with an intensive use of catalogs and internet resources.

Proper pricing is another important issue to consider. Due to high level of competition, price is one of the crucial determinants of the demand on the company’s products. In order to decrease price without decreasing profitability, reducing fixed cost in one of the possible solutions. The company leases huge buildings, which cost a lot. Such costs can be reduced by decreasing the number of stores and moving to the internet sales, which do not require high costs for staff and rent.

(3) Competitors of Williams-Sonoma use different strategies depending on their brand image and customers targeting. The biggest differences in their strategies are caused by the fact that their products are not as diversified, and they have more specific target markets. The common characteristic of their strategies is the combination of different channels of distribution with additional attention devoted to promotion through the Internet.

Crate & Barrel, for example, is a niche player, which suggests good quality products that consumers can afford. Beautiful store displays are the most effective sales promotion tools of a company, because such displays are unique and usually difficult to copy. In result, competitors of the company cannot use the same tool.

Restoration Hardware is the biggest competitor of Williams-Sonoma, and the company that has the most similar business strategy to the one used by Williams-Sonoma. The company targets only high income consumers as its prices are very high. The recent expansion between 1998 and 2000 required huge marketing expenses, but it was a proper decision as it produced great results.

Pier 1 Imports uses three chains of distribution and operates in the countries of North America with numerous stores. The company uses international diversification and marketing strategies, and is continuously searching for potential markets with good prospects.

The Bombay Company is another furniture retailer with many stores in the U.S. and Canada. The company is known for accessories, which accounted for 43% of revenues in 2003. The market of accessories is not as competitive as the market of furniture, and the company is a leader in the former one.

In addition, there are smaller regional retailers, which are specific niche players. Door Store is a regional retailer, which operates nine retail locations only. However, the company sells its products nationwide via its websites and the Internet. Rolling Pin Kitchen Emporium is another small niche player, which uses its catalogs and websites to promote sales nationwide.           

(4) Direct-to-customer channel of distribution through the internet is one of the most attractive, cheap, and promising ways of conducting business nowadays. More and more companies are moving to the Internet as it ensures huge audience with many potential customers. Furthermore, many companies exist only in the Internet and do not have real offices or facilities. Williams-Sonoma is not an exception, and it uses the Internet framework as much as possible. The company claims to have “a highly successful e-commerce site” with all needed services that ensure comfort for potential customers (Williams-Sonoma, 2013).

The history of the company conducting business in the Internet started in 1999 with the introduction of wedding and gift registry in the website. The next website was launched in 2001, and two more - in 2003. These are specific websites, which sell different kinds of goods and furniture for customers’ homes. However, there is the major official Williams-Sonoma website, which contains information about all products of the company.

A potential customer can enter the websites of the company and search for needed goods using numerous categories and tools that simplify the search. There are pictures and descriptions that make potential customers acquainted with products they are interested in. In result, if such a customer goes to a Williams-Sonoma store, he will know what to buy.

Furthermore, there is a possibility to make orders and get desirable products through the Internet only. The customer just has to choose products, provide information, and fill in the order form in order to get products delivered. This is a very flexible way of buying goods, and its popularity is increasing.

Furthermore, internet website is a very useful tool for developing brand recognition, providing information about sales and order opportunities, and feedback between a company and its customers. Furthermore, this is a way of decreasing fixed costs of the company, as it was mentioned above. In result, Williams-Sonoma should continue developing its on-line resources, that include website and mobile applications, which can be used for customization the customers’ purchasing experience.

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