Group: 10

INSTITUTE OF RURAL MANAGEMENT ANAND

PGDRM-42 Term II
MMT

CASE: Classic Knitwear and Guardian: A Perfect Fit?

1. Statement of the decision situation

Classic knitwear is partnering with a chemical company, Guardian, to introduce insect repellent
shirts, with the goal of increasing profit margins. The company's revenues came mostly from
wholesalers and mass retail outlets, but it lacked brand recognition. It also featured the
merchant's name or an in-house brand produced by the business that has limited its awareness. It
has the opportunity to distinguish itself through its offerings by entering into the licensing
agreement with Guardian, an insect repellent producer, to create insect repellent T-shirts. Insect
repellent clothing is a rapidly increasing niche sector with few competitors. Hence, classic now
wants to invest a heavy market share in this domain.

2. The alternatives that exist as per the case as a part of solution

1. Introduce a new range of T-shirts under the name "Guardian":

Advantages: Guardian is already a well-known brand in the insect repellent lotion & spray
segment, half of the target audience (males between the ages of 18 and 35) already had favorable
impressions about Guardian. As a result, less marketing expense is required to promote this new
product with the brand 'Guardian,' and gross margins can be increased by 40%.

Disadvantages: If Classic agrees to partner with Guardian to develop a new product line under
the moniker "Guardian," Classic will lose out on opportunities to increase brand awareness
among customers. It also needs to pay Guardian license fees and royalties. Classic would be in
trouble if Guardian decided to end the contract.

2. Introduce a new T-shirt line called 'Classic Knitwear':

Advantages: Classic will have the opportunity to raise brand awareness among clients and
increase gross margins.

Disadvantage: Customer awareness of the Classic brand is low, hence greater marketing
investment is required to reach the target group. Currently Classic can’t afford to invest $8-$10
million in this.

3. Don't launch any new insect-repellent T-shirt lines & focus only on increasing production
efficiency.

Advantage: Classic won't have to invest money on new product development. It also won't have
to spend money on marketing and won't have to pay Guardian any license fees or royalties. Also
just focusing on production efficiency is a less risky alternative than getting into a new market.
 Group: 10

Disadvantages: It will be unable to increase gross margins and will miss out on the opportunity
to increase client brand recognition.

4. Introduce the new insect repellent t-shirt range with Guardian but keep Classic also in the new
brand logo along with Guardian-

Advantage- Guardian already has goodwill in the eyes of people but Classic wants to establish
itself as a recognized brand in the eyes of customers so the new product range should not be
entirely identified as Guardian instead Classic should take this as an opportunity to position itself
in the market.

Disadvantage- It is a marketing strategy that may lead to lower returns than expected because
people will take time to recognize Classic as a Brand.

3. The solution selected by the group with appropriate logic

If Classic wants to increase the Gross margin it needs to diversify its business to get benefit in
the future for this it is advisable to launch these insect repellent t-shirt range along with Guardian
but with Classic as an emerging brand, this product should not be completely known by the name
Guardian. Classic instead should go for Co-Branding this product line. Also to increase the reach
Classic should use Benefit positioning & Quality positioning as marketing strategies.

4. Any workings, calculations etc. as annexure

Marketing plan Fixed cost Year1 Year2 Total

10000 displays for 2 years at $100 each 500000 500000 1000000
Salary of 3 new sales rep 255000 255000 510000
Advertising cost by the end of 2years 600000 600000 1200000
Licensing fees 100000
Total 1455000 1355000 2710000

2nd
Per unit incurring($) 1st Year
Year
SP of Classic 17.87 17.87
COGS 10.82 10.82
Trade Promotion 0.8935 0.8935
Royalty 0.8935
Advertising allowance 0.3574 0.3574
Profit 5.7991 4.9056

Demand for 1st year 250901

Demand for 2nd year 276215