Serta, Inc. - Company Profile, Information, Business Description, History, Background Information on Serta, Inc.

325 Spring Lake Drive
Itasca, Illinois 60143

Company Perspectives:

From the company's founding in the early Thirties to the present, Serta's people have always made the difference. Throughout every factory, in every office and with each sales representative in the field, Serta employees have crafted their own 67-year history of growth, innovation and leadership. And their expertise and dedication over the years have brought impressive results. Proud of the past and poised for the future, Serta remains committed every day and in every aspect of its business to both the spirit and the promise inherent in its trademark, "Serta: We Make the World's Best Mattress."

History of Serta, Inc.

Serta, Inc. is the second largest manufacturer and distributor of sleeping mattresses in the world, directly behind Sealy, Inc. Although the company has been in business since the early 1930s, it was during the 1990s that Serta grew to become one of the dominant firms in the industry. Serta has a list of accomplishments that would impress any industry analyst, including such significant achievements as: outperforming industry sales growth by more than two and a half times since the beginning of the 1990s; representing more than 30 percent of the total mattress manufacturers' growth, comprised of over 700 firms, since 1989; maintaining double digit sales increases from 1994 to the present, the only major mattress manufacturer to do so; and developing not only to become one of the leading mattress brands throughout Canada, but growing to become one of the largest suppliers to hotels, motels, and holiday resorts around the world. From 1989 to 1997, Serta reported that it had captured a 17 percent market share of the entire mattress industry. Not surprisingly, this kind of market dominance could only be achieved and sustained by means of an extensive network of 31 factories across the United States and Canada, as well as 23 manufacturing facilities located in such diverse countries as Venezuela, Taiwan, Saudi Arabia, New Zealand, Mexico, India, Iceland, and Chile.

Early History

Serta, Inc. was established during the worst years of the Great Depression. From the stock market crash in 1929 through the 1930s, the entire economy of the United States was hit by a depression of enormous magnitude. Family fortunes were lost overnight due to stock market losses; corporations and small businesses went bankrupt, farmers lost their farms because of foreclosures, many banks closed their doors to the public and, perhaps worst of all, numerous people lost their jobs and had no prospect of employment in the foreseeable future. President Coolidge maintained that the economy would correct itself sooner or later, and rejected requests from various interest groups to get the government involved in a strategy that would alleviate some of the economic hardship.

As prospects for a quick economic recovery, under the non-interventionist government strategy devised by Coolidge, were acknowledged by businessmen across the nation as unlikely, more and more independent small businesses began to form associations to strengthen the chances of their survival. One such association was a large group of independent mattress manufacturers who all agreed that their economic livelihood and future depended on their ability to compete with larger, well-established firms that combined brand-name recognition with significant amounts of money for advertising campaigns. Having debated the merits and demerits of working together, an assembly of 13 independent mattress manufacturers formally organized in 1931 and incorporated their businesses under one name, Sleeper, Inc.

The first decision made under the new flagship company was to establish strict guidelines for all of the products Sleeper, Inc. would manufacture, and then devise a strategy for marketing those products under an agreed-upon brand name. All of the independent businessmen that had formed the new company were thoroughly convinced that only a brand-name product could successfully compete with the larger mattress companies. Not wasting any time, therefore, Sleeper, Inc. quickly researched and developed its first brand-name mattress, Perfect Sleeper, in 1932. The first tuftless mattress ever made, the Perfect Sleeper was an immediate success. The combination of a nationally recognized brand-name mattress, along with an extensive network of companies committed to providing both retailers and consumers with high-quality products and services, meant that the independent mattress manufacturers that formed Sleeper, Inc. would survive the worst years of the Great Depression after all.

World War II and the Postwar Era

Just before U.S. entry into World War II in December 1941, the association of companies comprising Sleeper, Inc. voted to change the name of the company to Serta-Sleeper Associates. Not yet satisfied, they shortly afterward changed the firm's name again, this time to Serta, Inc. Thus christened, the company continued to increase sales of its brand-name mattresses, even though the war years demanded sacrifices on the part of consumers across the United States.

Serta, Inc. had done its homework during the 1930s and early 1940s, and was well-prepared for the dramatic increase in demand for consumer goods during the immediate postwar period. The company had previously initiated an intensive marketing research campaign to determine what kinds of products Americans were most likely to purchase. During the course of its research, the company found that consumers wanted to own recognizable brand-name items, not just any product on the market. In fact, Serta discovered that the vast majority of consumers would be more than willing to spend larger amounts of money for brand names that they knew and had come to trust, rather than pay less for products without brand-name recognition. This market research corroborated Serta's long-held belief that having a familiar and trustworthy brand name was imperative for its success.

As the market environment for consumer products developed at a hectic pace during the 1950s, with more and more products introduced by companies competing both for the attention and the buying power of U.S. consumers, Serta made the strategic decision to increase its advertising investment. In an attempt to heighten awareness within the general public, distinguish its products, narrow the consumer's choices, and make the shopping experience a more pleasurable activity, Serta was one of the first companies to advertise its products on such television programs as "The Bob Hope Show" and "The Tonight Show." Up to this time, radio and the print media were the two primary avenues for advertising Serta mattresses. But television helped the company to dramatically influence the public's preference for the Serta name.

The 1960s were good years for Serta. Sales increased steadily as the company's advertisements, especially on television, provided a high-profile visibility for its quality mattresses. In keeping with its tradition of conducting market research, Serta discovered that its mattresses were now one of the most recognizable consumer products in the United States. A culture of comfort had spread across the American landscape, and every item that contributed to a better, happier, and easier lifestyle was in greater and greater demand. Serta mattresses, of course, provided an individual with a sound and peaceful sleeping experience and, according to the company's advertisements, was worth the higher than normal market price. As sales increased, management decided it was an appropriate time to develop a strategic expansion plan for North America. Thus by the end of 1965, Serta had expanded its organization to include 39 plants and facilities across the United States and Canada, including new operations in Montreal, Toronto, Vancouver, and Winnipeg, as well as in Clear Lake, Iowa; Beloit, Wisconsin; Houston, Texas; and other U.S. cities.

Growth and Expansion During the 1970s and 1980s

Perhaps it was due to the sleepless nights caused by the disquieting Vietnam War, widespread civil unrest, or Watergate--whatever the case, the decade of the 1970s brought ever-increasing revenues to Serta. The company was selling its brand-name mattresses in record amounts across the United States, and management decided that a research and development department should be established with enough funds to conduct extensive research on sleep habits and new mattress technology. By 1976 the company's research and development personnel had developed the industry's first Pillow Soft mattress, designed specifically for people who had difficulty sleeping on a hard mattress. The Pillow Soft mattress, which combined elements of a firm spring mattress with a soft, pillow-like exterior, was one of the most successful products in the history of the company.

As sales continued to rise and the company's prospects looked more and more promising with each passing year, in 1980 management made the decision to implement a major overseas expansion program. The first stage involved the establishment of facilities in both Mexico and Puerto Rico, two counties in central America that had enough of a growing middle class to afford mattresses made by Serta. The second stage of the company's expansion effort was more complicated, and involved establishing a network of facilities both in Australia and Japan. Extensive market research was performed before company management had made the decision to expand into these two countries, but once made the effort was well worth it, with very promising revenues the first two years of operation, and the potential for larger revenues in the following years. During this time, of course, the company's research and development department was hard at work. In 1983 the department introduced a revolutionary continuous coil innerspring, and pioneered the use of convoluted foam in designing an improved version of the company's Perfect Sleeper line of mattresses.

The 1990s and Beyond

During the 1990s, Serta made a major capital investment to improve the equipment at its Research and Development center. State-of-the-art testing equipment such as the Comfort Sensor, which enabled engineers to measure pressure points on the body, contributed to the company's ability to translate ideas and concepts into industry innovations. This attention to research and development led to the introduction of the Serta Triple Beam bed frame, widely regarded as the strongest and most durable in the industry, and the Perfect Night luxury mattress collection, which soon became Serta's most successful product to date. Astute enough to coordinate this major investment in research and development with a comprehensive marketing strategy, Serta in 1992 tripled its advertising investment. A year later, the company introduced one of the most successful advertising campaigns in the history of the industry with the tag line, "Serta: We Make The World's Best Mattress." The campaign was designed to play on the emotions of customers, while communicating the company's values of comfort, quality, and trust. What was most unique about this particular advertising campaign, however, was that it specifically targeted women, proven through the company's marketing research to be the primary buyers of mattresses for their households.

By the end of 1998, Serta had developed into a $670 million company, with 31 mattress factories and facilities throughout North America, and 23 plants and offices overseas. With its position as the second largest manufacturer of mattresses in the world quite secure, Serta is confident of and preparing to become number one in the industry.

Additional Details

Further Reference

Garau, Rebecca, "Firms Wonder, 'What's in a Name?'," HFN, October 7, 1996, p. 20.----, "Luxury Bedding's Heyday: Not Just for the Rich and Famous Anymore," HFN, April 14, 1997, p. 21.----, "Reach the Purse Via the Heart," HFN, October 7, 1996, p. 20.----, "Serta's New Assertiveness: Aiming to Put More Sizzle in the Sell," HFN, March 17, 1997, p. 51.Orenstein, Alison, F., "Bedding Debuts and Anniversaries," HFN, April 15, 1996, p. 32.Rush, Amy Joyce, "Target Market," HFN, April 14, 1997, p. 59."Serta Lawsuit Claims Simmons Infringed on Mattress Patent," Wall Street Journal, June 24, 1998, p. B10.

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