Knirps® - The Original

Topics: Strategy; Marketing; Branding;

Internationalization; Licensing

 
• Background: ’Knirps‘ the inventor of
collapsible umbrellas, used to be a well known
and valuable brand. This case is set in 2007,
when two former competitors took over the
company and tried to revive the brand.
'Knirps' is the only international umbrella
brand, but has made a lot of mistakes in the
past. What has to be undertaken for things to
improve in the future?
• CASE SYNOPSIS
Few inventions become world-famous brands.
Knirps®, the umbrella that is extremely small but
expands to full size when required, is one of
them.
• Knirps® as a brand, - and protected by many
patents - has, for nearly 80 years, succeeded due
to its quality, durability, practicality and “pocket-
friendly“ size.
•  
• Recently, this company has changed hands,
and the new owners expect from Michael
Lackner, Managing Director proposals on the
future strategic and marketing direction of the
firm. He is contemplating the former and
current situation of the famous collapsible
umbrella and the Knirps® future direction.
•  
 History
Products
X1 Line
• innovative design
• ultralight
• small & handy
• windproof & flip-resistant
• Knirps® Quality
Alu Line
• ultralight
• small & handy
• windproof & flip-resistant
• user-friendly
• Knirps® Quality
Fiber Line
• Combines light weight with extreme durability
• stormproof
• state-of-the-art materials
• Knirps® Quality
Steel Line
• long durability
• harmonious blend of materials, design &
craftsmanship
• unique comfort of use and wear
• Knirps® Quality
• Like many major brands, the story of Knirps®
began with a revolution. In 1928 the engineer
Hans Haupt invented the first telescopic,
pocket umbrella.
• Like all great brands it was copied. To prevent
this the Knirps® brand was modernised in the
mid 1950´s, and the unique Red Dot symbol
was added, which became established world
wide, and which remains unmistakable to this
day.
• Of course, we also gave it a modern "facelift".
With the Knirps®X1 we set the standard that
satisfies the requirements of the modern
consumer, where modernity, functionality and
quality are important
 Point Of Sale
The Knirps®Presentation furniture
Modern shopfitting as a flexible module system.
• High stock levels achieved from limited floor
space
• High profitability and an outstanding brand
presentation
Packing material for pocket umbrellas
Two different sizes
• manual umbrellas
• automatic umbrellas
 Knirps® Roundabout

Modern X1 shopfitting system

• High stock levels achieved from limited floor
space
• High profitability and an outstanding brand
presentation
 TIMELINES OF THE CHANGES IN
OWNERSHIP
• In 1928 Hans Haupt devised the first collapsible
umbrella, “Knirps®” (German for “small guy”)
• Manufacturers were not ready to invest in the
new business because of the difficult economic
situation around that time, marked by
– a dramatic drop in export in the German umbrella
business
– the depreciation of the British Pound and
– the declining demand for umbrellas in general.
• Fritz Bremshey recognized the economic
importance of Han’s innovation; he bought it,
enhanced the “Knirps” and registered the
name as a trademark.
 
• In 1932, Bremshey founded the Knirps®
consortium
• Obtaining the Knirp® frames as semi-finished
products from Bremshey, and uphostering
them with their own line of drapery (fabric);
he made sure that the unique technique of
the Knirps® frames quickly prevailed.
• Arranged for a standard designed advertising
and promotion campaigns
• Priced the product in the upper segment of
the market.
• Innovative design and the highest quality
standard was highly successful resulting in
strong brand loyalty and brand asset
– A large-scale market research study in 1973
confirmed that 95% of the Germany population
replied to the question “Can you name an
umbrella brand?” with “Yes, Knirps! “
 End of 1970s - 1990s

•  End of the 1970s strong concentration

movements in the global umbrella industry
led to the bankruptcy of lots of manufacturers
including Bremshey (in 1982)

• Kortenbruck & Rauh acquired all the rights of

the brand Knirps® and all associated technical
patents,
• The new company manufactured the frames in
Portugal, Lesotho, and China, shifting the entire
production to China in the nineties.
• Due to the inferior quality of the Knirps®
umbrellas from the Chinese production and the
increasingly better products of competitors,
Knirps lost market share dramatically.
• Kortenbruck & Rauh suffered losses, and was
declared bankruptcy in 1999.
 In 2000, Thomas Herriger acquired all rights
and patents from Kortenbruck & Rauh;
• Invested heavily in the development of new,
trendy (up to the minute/facshionable)
products
• Revised or reduced the number of frames and
article.
• Updated brand mage, logo and the Point of
Sales Presentations
• Established subsidiaries in France, Benelux,
Switzerland and Hong Kong (Asia Pacific)
• Set up licensees in Italy, Spain, Portugal,
Greece, Austria and Canada.
• In 2003, Herriger founded today’s Knirps®
License Corporation (KLC) with the purpose of
marketing and licensing of the Knirps® brand
internationally
•  
• In 2004, the latest company was on the brink of
bankruptcy;

• Herriger started looking for new shareholders in

KLC; Ernest & Doppler Co. Ltd (Germany leader).
and its Swiss partner, Strotz AG, participate with
a minority stake in KLC

• Since November, 2005, the companies Doppler

and Strotz are the two sole owners of the firm.
• The KLC subsidiaries in France, Benelux and
Hon Kong were taken over by the parent
companies and are now licensees of KLC.
• The subsidiary in Switzerland was closed;
Swiss license of KLC is now Strotz AG.
• Doppler and Strotz are convinced that the
brand can be rebuilt and positioned
successfully in the international markets.
•  
 Company Profile today

• The purpose of the firm is “the purchase and sale

of trademarks and licenses, and the granting of
licensees, especially of the brand Knirps®”.

• Main revenues of the Company consist of

royalties and currently amount to around one
million Euros, with half the market in Germany,
and with Canada, Benelux and Japan contributing
about 10% each of the total turnover.
• The license fee amounts to 8.5% of net sales;
a minimum license fee agreed upon in
advance, which increases by steps of 5% for
the following years.
 
 
 Strength

• HR is the key strength of the company

• Michael Lackner (38, CEO holds MBA, with a

broad experience in marketing at home and
abroad).
– Managing and monitoring of the company
– Customer relations / expansion of relations with
licensees
– Acquisition of customers (licensees)
– Monitoring of patents and registered designs.
• Elfi Falterbauer (42, Assistant to the CEO, has
many years of experience as a production
manager and has a College degree.)
– Administrative Activities
• Knut Schroeder (54, Technicians, was
employed by Knirps® GmbH, the only
umbrella engineer in Europe, with a unique
know-how in the construction of collapsible
umbrellas.
– Product Development
– Quality Management
– Research & Development
• Lackner and Falterbauer are working in the
KLC office in Braunau; Schroeder lives in
Germany and has a home office.
•  
 Weakness

• Hindrance to larger new investment

• The company is still reducing existing debt at

the time of the takeover
 
 THE PRODUCT RANGE

• KLC provides its licensees with four products

lines to choose from.Each product line may
consist of several umbrellas, which are
different in function or size.
 Product line 1: X1, X2, etc

 
• Features
• Innovative Design with Style
• The product line X stands out due to novel
design. This can be done by an unusual
protective cover, or a special grip
demonstrating a modern style.
 
 Patterns and benefits

• X basic:
– Cloths are plain and simple.
– Besides monochrome fabrics, also a simple
pattern may be used.
– A stylish, modern quality umbrella of a premium
brand, which can be worn with any attire.
• X Limited Edition:
– Trendy and outlandish; correspond to the current
fashion trends are introduced to the markets at
least twice a year in a limited edition.
– Fabrics are made of high-quality micro fibres with
up to 75% UV protection.
• An absolutely trendy and stylish umbrella of a
quality premium brand, which should be worn
with the latest fashion

• Customers: Mainly women between 20 and 50

years, more modern, medium to high income
class, living in the city or the suburbs and
loving design, style and brands.
 Product line 2: AluLine

• Features
• Light weight
• The frames are made of aluminium, which is
relatively inexpensive and, above all, a light
material.
 
Patterns and benefits
• Basic colours such as black, blue, and red are
available throughout the year.
• Fabrics for all seasons available
• Fabrics are made of high-quality light
polyester with Teflon coating
• Light weight, not too expensive quality
umbrella, which can worn with any attire.
• Customers:
– 70% are women, 30% men
– Aged between 30 and 70 years
– More conservative attitude, living in city or the
suburbs.
 Product line 3: FibreLine

Features
• Innovation:
• Frames are made of resilient, but very light fibre
material.
• Handle design is very modern and noble.

Patterns and benefit

• Only available in black.
• This colour emphasizes its elegance and high value.
• Elegant quality of a premium brand, provided with
innovative materials and newest design, which is
perfect for a business outfit.
• Customers
– 60% are women
– 40% men, living in the city or the suburbs.

• People who love design, technology and brands,

looking for an umbrella, which combines quality with
technology, medium high income class.
 
 Product line 4: SteelLine

Features
• Tradition: represents the original Knirps umbrella.
• Its steel frame makes the product heavier, but very
durable.
 
Patterns and benefit
• The colours of the high-quality fabrics are dark and
can either be monochrome or with a pattern.
• In any case, it must be a classic one.
• Only available in black.
• A traditional quality umbrella, showing its
German origin.
• Customers
– More than 90% are men, who have a conservative
attitude, and are between 40 and 70 years old.
– They live in the city or the countryside, look for an
umbrella with good quality and know the brand
Knirps,
– Medium to high income class.
 THE SUPPLIERS

• Since the 90s, the Knirps umbrella have been

produced in China at MIT, headed by Max
Wang, until 2002, the exclusive supplier of
Knirps umbrellas and Knirps frames.
• Max Wang acquired an immense knowledge
of the brand Knirps and its products.
• All machinery, which was especially designed
and built for Knirps, was also in his possession.
• Key advantage of single sourcing: reduction in the
complexity of managing supplier relations
 
Risk of single supplier
• Very strong dependence on MIT
• High risk of supply problems in case of production
downtimes
• Price dependency; MIT determines the price
• Know how transfer; MIT acquire important knowledge
about Knirps
•  
 Need for alternatives

Why it took a long time to look for alternatives:

• A change in supplier is connected with high
switching costs. The production line is owned
by MIT.
• It was feared that MIT, with its large Knirps®
know-how, would produce unauthorized
copies.
 In search of a new supplier

 
• Increasingly, MIT produced no longer in the
required quality.
• The company Citta; got orders for new Knirps®
umbrellas, without the knowledge of MIT.
• From 2002 to 2006, there were two producers
for Knirps® umbrellas, MIT and Citta.
• MIT got fewer orders; and since Max Wang knew
of expired Knirps® patents, he began to copy
Knirps umbrellas and sold them in the US and
Korea.
• These developments forced KLC to terminate
the contract with MIT and began looking for a
new partner.
• Futai, a longtime supplier of Doppler and
Strotz, provides a unique quality and is the
world’s largest manufacturer of umbrella
parts.
• While the quality of Citta leaves room for
improvement the one of Futai is flawless.
• In the meantime MIT is trying to compete with
close imitations; using old patents, but does
not dispose of the brand name Knirps®.
• The licensees in Europe are sometimes
producing Knirps® umbrellas with special and
exclusive fabrics for those who insist on
European quality. The production series are
very small and they are sold at a huge markup.
 THE LICENSEES

• The licensees have lots of freedom.

• They determine which items out of the
Knirps® range they want to sell in their
territories, at what price, and through which
distribution channel.
• They are also largely responsible for the
quality control, because the delivery process
runs as follows:
– 1st The licensee communicates its order quantity
to KLC at its own risk.
– 2nd KLC in turn collects the different orders and
combines them to “omnibus orders”, which are
forwarded to the suppliers; and the licensee can
still order small quantities.
– 3rd While the manufacturer produces the goods,
the licensee offers retailers the various Knirps®
products.
 THE BRAND

 
• The role of KLC
• KLC patented numerous products in various
countries.
• The patents protect a variety of technical
functions, such as the strengthening of the cane
of collapsible umbrellas or the carbon-steel parts
in the frames.
• KLC guarantees its licensees that all the patents
are registered in the countries in which the
licensees are active.
• KLC patented its innovations in potentially
interesting markets such as the United States,
Norway, South Africa and Russia as well.
• Patents are valid for twenty years and cannot
be renewed.
• Various pictures and logos are registered and
thus protected in many countries; the
protection lasts for ten years, but can be
reviewed again and again.
Quality in the Umbrella business
• The main feature related to the Knirps® brands is
“quanlity”; quality in the umbrella business has
two dimensions:
• Product Design:
– Knirps® is expected to use the latest technology and
the latest innovation in frames and handles.
– The aesthetics of a product, however, relates to a
very subjective assessment of quality and is
dominated by personal attitudes and preferences.
• Longevity / Durability:
– Knirps® frames are very robust. Furthermore,
– Only the best fabrics are used; they are
impenetrable.
• Knirps®, by the way, is the only existing global
umbrella brand.
 
 THE COMPETITION

Competitors
• Cheap umbrellas: simple no-name umbrellas, with
monotonous, boring colors, sold in discount stores.

• National brand umbrellas: Each manufacturer can

create its own collections, which is sold under a certain
brand name mostly in the domestic market.

• Designer umbrellas: sold as a fashion accessory to the

respective designer collections, e.g. umbrellas by Louis
Vuitton, Giorgio Armani, S. Oliver, etc.
 
The vendors
• Differ significantly in relation to the following
criteria:
• Retail price
• Quality in terms of longevity
• Product design
• Fashion
 Retail Price Quality P-Design Fashion
Cheap
umbrellas
National
brand
umbrellas
International
brand
umbrellas
Designer
umbrellas
 WAY FORWARD

• This case is set in 2007, when two former

competitors took over the Knirps and tried to
revive the brand. Knirps is the only international
umbrella brand, but has made a lot of mistakes in
the past.
• Identify their past mistakes and challenges
• What has to be undertaken for things to improve
in the future?
• What should be Knirps future direction in terms
of suppliers and range of products?
See notes on:
• Marketing Management & Strategic Marketing (To
fashion out future strategic and marketing direction)
• The supplier relationship (Single supplier or multiple
suppliers?)
• The competition (Explore Porter’s generic competitive
strategies: cost or differentiation leadership or both?)
• Segmentation (Repositioning in the light of
competition)
• Branding (Brand loyalty and brand asset)
 
 SUPPLIER RELATIONSHIPS

• All successful companies build strong relationships

with their suppliers. Companies are not isolated
entities that simply purchase goods and services
from individuals who happen to be able to supply
them at that particular time. Companies typically
make larger purchases.

• In reality, successful companies recognize the need

to build bridges between their organization and the
vendors that they work with by establishing strong
buyer/seller relationships.
 
• Supplier relationships are different from
simple purchasing transactions in several
ways. First, there can be a sense of
commitment to the supplier. For example, if a
vendor sells light bulbs, he can feel confident
that the buyer will come to him the next time
the company he represents requires a new
shipment of light bulbs.
• Another element of these supplier
relationships is advanced planning. Buyers
don't just communicate with suppliers when a
procurement need arises; they also contact
them in order to discuss their future needs
and to determine how best to satisfy those
needs by working together.
• While both of those distinguishing features
are easy to spot, a third element is also
important. The company's attitude and view
of its suppliers matters a lot for business
success. Companies that forge supplier
relationships think of these vendors as
partners and not just simple commodity
providers.
• This difference in orientation can have a
profound effect on the way an organization
communicates and works with its suppliers.
This in turn affects efficiency and profitability.
• One ramification is a vendor’s knowledge of
the buyer's business. When vendors are
viewed as commodity providers, they
generally don't take the time or are not given
the opportunity to learn the details of the
business or its vision for the future.
• However, vendors that are deemed to be
partners are encouraged to become
knowledgeable about the company, its
processes, its products, and its goals.
• The result is greater buyer satisfaction with
the services provided by the supplier. A study
of IT directors found that vendors who were
considered commodity providers delivered
unsatisfactory service almost half of the time
while suppliers who were thought of as
partners delivered excellent service some of
the time and good service most of the time.
• Another result of this attitude of partnership
and difference in knowledge level has to do
with handovers, which is a top priority among
most IT directors. After all, if the handover is
unsuccessful or is poorly handled, it minimizes
the benefits the business hoped to achieve
with the project.
• Businesses that viewed their suppliers as
commodity partners, according to the poll,
viewed the way their vendors handled this critical
process as unsatisfactory nearly half of the time.
• On the other hand, vendors who were
considered partners handled handovers
excellently nearly some of the time and good
most of the time. Clearly, the change in attitude
does make a significant difference.
• Obviously, these two examples illustrate how
important it is to have strong supplier
relationships, but many businesses simply
don't know how to foster an environment
where purchasing personnel have an attitude
of partnership with vendors. The change is not
as difficult as they may think. It does not have
to cost them the savings they achieve by
shopping around either.
• First, businesses need to find a small number
of suppliers to work with. Companies should
carefully evaluate potential vendors and their
backgrounds in order to select the suppliers
from the group that will best fit the needs of
the business.
• After they pick these vendors, companies
need to negotiate contracts with the vendors
and to sit down with them in order to engage
in some forward planning. Both of these steps
are critical in establishing the stability in the
supplier relationship that is necessary for both
parties to feel comfortable.
• Furthermore, the future planning makes it
more likely that the vendor will have the
resources and qualified staff available when
the buying company requires them.
• Overall, vendors and buyers are both better
served when they come together to form
strong, mutually beneficial, and secure
business relationships for non-commodity
type goods and services. When these
relationships exist, they can drive the growth
and profitability of both organization and
prevent purchasing and execution problems.
 licensing
• Licensing is where your own organization
charges a fee and/or royalty for the use of its
technology, brand and/or expertise.
• Franchising involves the organization
(franchiser) providing branding, concepts,
expertise, and infact most facets that are
needed to operate in an overseas market, to
the franchisee. Management tends to be
controlled by the franchiser. Examples include
 Licensing
• Definition:
• Method of foreign operation whereby a firm
in one country agrees to permit a company in
another country to use the manufacturing,
processing, trademark, knowhow or some
other skill by the licensor.
• Advantages:
• · entry point with risk reduction,
· benefits to both parties,
· capital not tied up,
· opportunities to buy into partner or royalties
on the stock.
• ii) "Lumpy investment" building capacity long
before it may be currently utilised e.g. port
facilities
• iii) Time - processing, transport and storage -
so credit is needed e.g. Argentina beef.
• iv) Transaction costs - logistics, market
information, regulatory enforcement.
• Disadvantages:
• · limited form or participation,
· potential returns from marketing and
manufacturing may be lost,
· partner develops knowhow and so license is
short,
· partner becomes competitor,
· requires a lot of planning beforehand.