Case Analysis on:

Classic Knitwear and Guardian: A Perfect Fit

for course
Written Analysis and Communication
as a part of
WAC Final Assessment

-Nidhi Dhokare, 2210117

1. Understanding and Defining Problem:
Classic Knitwear, a distributor and manufacturer of unbranded casual knit apparel in
US market was doing good among its competitors with 16.5% market share in the
screen-print channels (believed to be #2 player) which constituted 75% of the
Classic’s revenue. Classic was following a high volume, low cost production strategy
which was earning them low gross margin (18%) because there was no opportunity to
differentiate. Differentiation and branded apparel led to high gross margin. In order
to do so, Classic decided to explore a new branded line of insect- repellent men’s
apparel in partnership with Guardian (manufacturer of insect repellent) This might
help create differentiation in the market but the question was, for how long?
To start this new line of clothing, two things were to be done:
a. Negotiate partnership contract with the Guardian: The t-shirts would have
Guardian logo and Classic’s name will not be included to maintain the product’s
innovative insect- repellent positioning. Classic were also liable to increase the
sales for 4 continuous years from the year of contract (as mentioned in the
contract).
b. To do the marketing of the new clothing line: Classic with the help of
Consumer.com did a market survey for 4 types of t-shirts having high and low-
price range. It should be able to leverage the outcome of this survey to properly
place its product in the market and reach their target of displays in retail stores.
They had to achieve this with a marketing budget of 3 million dollars. This also
includes hiring necessary resources required.

Problem Definition:
Introduction of the new product line: Taking everything into consideration
(marketing cost, advertising cost, company’s cost structure), should Classic introduce
the new product in the market, such that they achieve breakeven with the sales.

2. State objectives:
The short-term objective of the company is to decide whether to introduce the new
product line and if yes, it should focus on achieving the display targets and reach to
the customers.
Long term objective is to increase the Gross margin by creating differentiation in the
product. (brand recognition

3. Generation and Evaluation of the options:

 Alternative 1: To introduce insect repellent clothing line;
To achieve this Classic has to partner with Guardian where no name is created for the
Classic Knitwear. This option helps them achieve the higher gross margin goal. This
option requires extensive marketing to create awareness about the product which the
brand recognition of the Guardian comes to help.
Since the respondent of the survey were just 0.185% of the total, the data obtained
cannot be relied upon completely.

Alternative 2: To not introduce the insect repellent clothing line

This alternative does not require to partner with Guardian. Classic can work on
introducing its own branded clothing line in order to increase its gross margin. It can
do the marketing such that a brand name for Classic’s is created in the market.

4. Recommended option
It is recommended that Classic Knitwear partner with Guardian for a short period of
time and introduce the insect repellent clothing line in the market. This can help us
achieve our target of the high gross margin but cannot be seen as a sustainable option.
But at the same time Classic should conduct market surveys and work on developing
its own branded clothing line. This will help them achieve a brand name in the market
as well as higher gross margin which can be sustained for a longer time with
continuous research of the consumer needs.

5. Contingency plan:
R&D contract with Guardian: In partnership with Guardian, Classic should form a
contract of research and development, in order to look for differentiation in the future.

Conduct customer needs survey: Independently Classic should conduct surveys to

establish its own brand name in the market. So even if the partnership with Guardian
fails, Classic will have its own product line in progress.
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7. Contingency plan