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Classic case Solution

Classic case Solution

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Published by binzidd007
Classic case Solution
Classic case Solution

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Published by: binzidd007 on Oct 12, 2013
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03/27/2014

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CASE ANALYSIS
Classic Knitwear and Guardian:A Perfect Fit?
MARKETING-IIDATE OF SUBMISSION-03.11.2012
SUBMITTED BY:-SECTION-C, GROUP 13:Abhijit Das- 2012PGP005Ashwin Vijayan- 2012PGP073Kumar Abhishek- 2012PGP178Payal Anand- 2012FPM10Rajat- 2012PGP292Sumit Bapuji Gedam- 2012PGP382Vikash Kumar- 2012PGP438
 
1.Product Market Fit
Classic Knitwear operated in $24.5 billion category of non-fashion casualknitwear.
The branded side of non-fashion knitwear market was dominated by three largemanufacturers: JamesBrands ($4.5 billion), FlowerKnit ($1.25 billion) andGreenville Corporation ($0.63 billion). These big brands operated on grossmargin of around 30-40%.
In unbranded segment, Classic competed with little known firms like B&BActivewear which held market share of 23.6% and the “Big Three” were alsoinvolved in this market.
CompanySalesMarketShare
JamesBrands$4.5 billion18.37%FlowerKnit$1.25 billion5.10%Greenville Corporation$0.63 billion2.58%
There was a customer need for protection against the rising insect-borne illnessand the customers were dissatisfied with few prevention products available in themarket. The category is virtually non-existent in the mass market as the present players in the insect repellant clothing only sold in niche markets.
Product Company Fit
The product offered gross margin 38~39% which would enhance the margins of Classic Knitwear from 18% which was substantially lower compared to industrialstandards.
Guardian brand had high level of awareness and it had patented insect-repellantclothing technology. The product had a good market potential due to itsinnovativeness. This advantage can be leveraged by the production efficiency of the company to achieve a sustainable competitive advantage.
The company had a moderate cost advantage over other US producers due tohigh-volume, low SKU production runs. The addition of the new product meantaddition of 16 SKUs. This new product might lead to some inefficiency in its present system.
2.Response of the trade(channel)
Presently, the retailers were provided with 50% margin on branded knitwear and 40%margin on private-label knitwear. The new product would provide the trade a 45%margin. Our opinion is that displays would occupy a large amount of retailers spaceand also the retailer margin is on lesser side i.e.
45% Vs 50%
offered by other 
 
 brands. This would not encourage the retailers to stock the product. But the provisionof trade promotion and advertising allowance might induce them to stock the product.
The company projected sales would be 10,000 displays within two years of productlaunch, of which 50% would be in discount stores, 25% in general merchandisestores, and 25% in sporting goods and apparel stores. We think that as the companyhas no experience in selling to these retail channels, it has to spend considerableresources to develop the channel.
The company would make the Guardian shirts available to its existing wholesaleclients for distribution to interested screen painter in a later period as it has currentlydecided to brand the product as “Guardian Apparel”.
Response of the Consumers
Based on the consumer research, 18.5% of the thousand respondents (185 respondent)were interested in the product. Based on past market research experience,
60%
of therespondents who indicated they would definitely try (
38%
) would do so (
22.8 %
)within the two-year introduction period. The company also predicted that at least 50%(
11.4%
) would buy an additional shirt the following year.
3. Analysis of proposed marketing program:
They are launching the product in the sole brand name of ‘Guardian Apparel’, andhave decided not to include the name ‘Classic Knitwear’
The launch is scheduled in January 07, which might not be the perfect time to launchthis product as its sales are supposed to be seasonal, it would be better to launch at theend of winter so that the sales pick up instantly
The number of SKUs is 16 which include 4 designs in 4 different colors. As the product is specifically meant for outing, the number of SKUs can be reduced by usingonly the two most popular colors.
Retail prices are comparable to other national brands which is an apt decision to provide sufficient trade margin as the pricing is not supposed to hinder the sales
The market research is not extensive and should not be relied upon fully for makingimportant decisions
Initial distribution is planned through major sporting goods and apparel chains whichwould support the establishment of the brand in the introductory phase. The 3 No. of sales reps to focus on this sector might not be sufficient for the whole country.
4. License Agreement
This agreement forced Classic to meet series of steadily rising annual net sales targetover the first four years and target for 4
th
year must be met in each subsequent year. If it failed to meet the requirements then the license would be cancelled and void.

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