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MASTERBRAND CABINETS

MASTERBRAND CABINETS. HAWAII TERRITORY REVIEW January 2011. REP COVERAGE. Susan Wagner spends 70% of her time dealing with Hawaii 30% of time on administrative duties, payroll, ordering product for training, etc. 15 year relationships with Hawaii dealers

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MASTERBRAND CABINETS

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  1. MASTERBRAND CABINETS HAWAII TERRITORY REVIEW January 2011

  2. REP COVERAGE • Susan Wagner spends 70% of her time dealing with Hawaii • 30% of time on administrative duties, payroll, ordering product for training, etc. • 15 year relationships with Hawaii dealers • Handles many routine calls from dealers as well as all correspondence and administration • Pam, Dick and Chris copied and discussed at Highline-Southwest meetings • Derrick makes regular sales calls/warranty • Quarterly visits by Susan, Dick, Pam, Chris • Last visit: Susan, October 2010 • Next visit: Chris and Pam, February 27, 2011

  3. LOCAL REP COVERAGE • Derrick Partain • 20 year Hawaii resident • Former Kitchen Craft, Diamond, Decora’, & Omega dealer • Accomplished, award-winning designer: kitchen featured on cover of Hawaii Home • Active member of Honolulu chapter of NKBA • Maintains contacts and relationships within the industry • NAHB Certified Green Professional • 20/20 trainer Derrick spends about 40% of his time on MBCI • Flexible time as construction project manager • Provides intensive 20/20 training for dealers

  4. HAWAII MARKET TRENDS • All Plywood Construction STRONGLY preferred due to consumer perception that APC holds up better in Hawaii’s humidity • Small percentage of builders will accept MDF, usually on lower-end projects • Frameless cabinets much more prevalent than on Mainland - over 50% in dealer channel • Miter-corner doors pretty much not sold due to joint expansion. • There is demand for exotic woods i.e. Bamboo, African mahogany

  5. HAWAII MARKET CONDITIONS • In a recent survey of 33 dealers on Oahu, 13 had gone out of business • Most featured high-end lines, but mid-priced lines affected as well • Hawaii is first US stop for low-end Chinese lines resulting in an even higher penetration than in Southern California

  6. WEST COAST COMPETITION Most frameless competition is from West Coast Manufacturers • DeWils • Framed and Frameless: Washington • Market leader • Columbia • Frameless : British Columbia • Canyon Creek • Aristocratic • Huntwood • Pacific Crest • Hertco • Kama'ainaLocal Hawaiian Cabinet Manufacturer • used by 10% of dealers • All feature “GREEN PRODUCT” on their websites

  7. DeWILS IS PRIMARY COMPETITOR • Came to Hawaii early with both framed and frameless and developed a good reputation • Plywood construction only – no MDF • Framed: Alder, Maple, Cherry, Hickory, RedOak, Qt sawn White Oak, all at the same price • Frameless: Alder, Maple, Cherry, Oak, African Mahogany and Bamboo all at the same price

  8. DeWils • Consumer recognition due to full page monthly advertising in Hawaii Home magazine, listing dealer locator • Frameless 15% higher than Framed • The list price is higher on the frameless line • 4 week lead time framed • 6 week lead time frameless

  9. DeWils • Mods: 2 prices • $175 for all minor mods, i.e. moving a rail on an oven cabinet. • $350 for major mods requiring engineering. • Increased width, height in 1/8” increments - flat charge • Reduced width or height –next price up. • Mods are the same price for both framed and frameless • Special Pricing on projects only • No promos because of all wood species same as oak • Product to Hawaii is will-called at plant by freight forwarder; dealer arranges for ocean shipment

  10. DeWILS • 6 simple price buckets based on door style. • Good Customer Service • “Easy to work with” • “Fair with credits”

  11. DeWILS • Less expensive than Decora in popular wood species • Cherry is priced like oak • ¾“ construction, APC, DT, full extension, soft close drawer standard • Frameless - ¾” box, solid wood edge banding • Small, privately-held company • $25 million in sales • No co-op. Provides monthly magazine ad for dealers

  12. DeWILS • Mainland rep visits every 2-3 months. • No help with ocean freight • Express Response program • Small items are sent Fed-Ex • ER cabinets picked up by the freight forwarder • Dealer may wait until the next full order is ready to be picked up, otherwise expensive.

  13. SHARED MBCI/DeWILS DEALERS • Kona Kitchen and Bath • Kona Building Supply

  14. DeWILS DEALER TARGETS • Hawaii Planing Mill (4 locations – Big Island) • Hawaii Carpet One • Highline Kitchen Systems • Island Home Building Materials • Emee Kitchen and Bath • Busekrus • Pacific Source- packaged sales – 3 island locations

  15. MBCI vsDeWILS • 18 cabinets, incl. end panels, fillers, toekick • DeWils cost Framed $3,565 • Decora’ cost 35% higher $4,813 • Diamond cost 28% higher $4,579 • DeWils cost Frameless $4,100 • Kitchen Craft 6% higher $4,356

  16. COLUMBIA • Privately held =flexibility and fast reactions • Higher-priced than DeWils • Normally 15-25% higher than KC on standard sku’s • with 10% off promo can get pretty close, depending on the style • Becomes less expensive than KC on many jobs because of no charge or “next-size-up” mods • Matt finish similar to Medallion, preferred by many over the higher KC sheen • 5/8” box, good joints, very nice matt finishes • Kitchen Craft has better paints, but not sold much in Hawaii due to joint expansion in humidity • Aggressive Promos: • $5800 vacation contest entered with points from sales • On-going$20 a box spiff

  17. WELLBORN • Homeowners Design Center • Wellborn owner flew to Hawaii and then flew owner, manager and designers to Alabama for plant tour • Offered free displays • Came back obligated to Wellborn and Rutt

  18. HAWAII DEALERS

  19. HOMEOWNERS DESIGN CENTER • New in 2010 • $10,000 sales in 2010 • Kitchen Craft, Schrock, AOK, Omega • Competition in showroom: Wellborn, Rutt, Canyon Creek • Ready to order Kitchen Craft Display • Offer free display • Costco call with Mike Land well received • Filling out Costco questionnaire • MSA planning proposed to be presented by Brad in Hawaii • Free displays for Kitchen Craft, Omega, Schrock selection center • No-upcharge APC Feb 28 – May 27 • $10 spiff matched by $5 Highline-Southwest • Patrick Littel sent to Hawaii for formal training

  20. MAUI HOMES • Secured Brookfield Homes 98 home project with Kitchen Craft on the Big Island • Aggressive SDA • Model home order has been placed, with 3 to 4 to follow every few weeks. • Projected as $615,000. • Most projected to ship in 2011 • 2010 sales $178

  21. KONA KITCHEN AND BATH • An MBCI dealer for 10 years • Diamond, Kitchen Craft, Decora, AOK • Competition in showroom: DeWils, Hertco • Has struggled the last couple of years, however, he has revived State of Hawaii Diamond project • 22 unit third phase of a state project. A SPA has been approved at .2045 collect, to help secure this project that the state sent back to vendors to re-bid. • Ran January pre-select for 10% off cherry, maple, alder and rustic alder • DeWils is major competitor • MSA Planning • No up-charge APC all brands Feb 28 – May 27 • $25,000 Diamond sales in 2010 • down from $80,000 2008

  22. HONSADOR LUMBER • 10 year Kitchen Craft dealer • $76,000 2010 sales, mostly from the Oahu main branch • Competition • Local custom “house” brand, used for projects • Canyon Creek. • Locations on all major islands. • MSA planning • Free KC sales centers for branches • No up-charge APC February 28 – May 27, 2011 • $10 MBCI spiff • January Pre-select : 5% off $10 spiff

  23. EXCLUSIVELY YOURS • Nicest showroom on Maui with many brands • 10 year MBCI showroom • Columbia taking market share due to $20 a box spiff • $70,000 in Decora business in 2009, $120,000 in 2008 • Took Decora out 3rd qt 2010 because of presence at Home Depot • Took Schrock out with introduction into Lowes • Target this account for Omega/Dynasty • MSA Planning • No up-charge APC Feb 28- May 27 • MBCI $15 spiff matched with $5 Highline-Southwest • Kitchen Craft display 70% off credit memo 30% 12 mo • Free Omega Dynasty display • Promote Costco

  24. COLLABORATIVE SOLUTIONS • New in 2010 • Brought container load of Contractor’s Choice into stock • Bringing in APC product from Indiana adds too much freight to compete with local Chinese cabinets • Re-visit when CC APC available from Las Vegas • Recently multi-branded this account with Diamond and Decora’ • Secured Decora’ for NAHB “New Hawaiian Home” • MSA Planning • No up-charge APC Feb 28 – May 27

  25. CONCEPTS 2 COMPLETION • New in 2010 with Kemper • Just multi-branded with Kitchen Craft • MSA Planning • No up-charge APC Feb 28-May 27

  26. Kona Building Supply • Mostly project work with Kitchen Craft • $92,000 sales in 2010 • Current approval for an SDA of .23 to secure a 93 home upscale project in Waikaloa • Six kitchens and baths ordered on 3rd phase of HR Horton project • Request for SDA of .23 wood and .22 thermofoil to “keep” these 60 homes from going to local competition • Using January pre-select to try to “get him into our book” for other than project work. • Competition in showroom: DeWils, Canyon Creek • Obstacle: He doesn’t sell maple. Alder is preferred and KC only offers APC on maple and cherry • MSA Planning • Offer free KC display • No up-charge APC on all KC wood species • No up-charge APC Feb 28 – May 27

  27. TARGETS

  28. FERGUSON’S DESIGN CENTER • Honolulu location • Not currently selling cabinets • Interested, but some hesitation because they are very close to Homeowner’s Design Center, which refers appliance sales to Ferguson’s • Target Omega, KC and Schrock as National Account

  29. HARDWARE HAWAII • Decided to stay with local Ohana product for low end. • Target with Decora’ for higher end market • MSA planning • Offer no UP-charge APC • Free display

  30. EMEE KITCHEN AND BATH • Target with Kitchen Craft • Looking for something less expensive than Columbia • MSA planning • Offer no up-charge APC on all wood species • Free display or sales center

  31. HAWAII CARPET ONE • Target this DeWils dealer with Omega & Diamond • Discuss Costco program • Offer free display • Offer no up-charge APC

  32. MIKAKE CONCRETE • Oahu and Maui locations: • Interested in Contractor’s Choice, Diamond • MSA planning • Offer no up-charge APC • Free sales center for each location

  33. APC FOR ARISTOKRAFT • Addition of All Plywood Construction to the Aristokraft product available in Las Vegas May 2011 • Will open up new opportunities in the Hawaii market • Offering a no up-charge for APC in Hawaii would help compete with the Chinese product

  34. SUMMARY • Five member rep team alternating visits will bring individual expertise to Hawaii market • MSA Planning to grow territory • Aggressive promos • Free displays • No up-charge APC for Hawaii territory Feb 28 – May 27 • NEED: SDA for KC dealers to order APC on all wood species • Approach Homeowners Design Center as partner • Provide factory training on island • Target new dealers with above plan to take market share • Attack the competition!

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