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 pocketfriendly size. ‡

and the new owners expect from Michael Lackner. He is contemplating the former and current situation of the famous collapsible umbrella and the Knirps® future direction. ‡ . this company has changed hands. Managing Director proposals on the future strategic and marketing direction of the firm.‡ Recently.

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 .

design & craftsmanship ‡ unique comfort of use and wear ‡ Knirps® Quality .Steel Line ‡ long durability ‡ harmonious blend of materials.

. In 1928 the engineer Hans Haupt invented the first telescopic. pocket umbrella. the story of Knirps® began with a revolution.‡ Like many major brands.

. which became established world wide. To prevent this the Knirps® brand was modernised in the mid 1950´s. and which remains unmistakable to this day.‡ Like all great brands it was copied. and the unique Red Dot symbol was added.

‡ 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.

‡ In 1932.‡ Fritz Bremshey recognized the economic importance of Han s innovation. Bremshey founded the Knirps® consortium . he bought it. enhanced the Knirps and registered the name as a trademark.

and uphostering them with their own line of drapery (fabric). ‡ Arranged for a standard designed advertising and promotion campaigns . he made sure that the unique technique of the Knirps® frames quickly prevailed.‡ Obtaining the Knirp® frames as semi-finished products from Bremshey.

Knirps! . ‡ 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.‡ Priced the product in the upper segment of the market.

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. .

Lesotho. and was declared bankruptcy in 1999.‡ The new company manufactured the frames in Portugal. shifting the entire production to China in the nineties. Knirps lost market share dramatically. and China. . ‡ Kortenbruck & Rauh suffered losses. ‡ Due to the inferior quality of the Knirps® umbrellas from the Chinese production and the increasingly better products of competitors.

trendy (up to the minute/facshionable) products ‡ Revised or reduced the number of frames and article. Thomas Herriger acquired all rights and patents from Kortenbruck & Rauh. ‡ Updated brand mage.In 2000. ‡ Invested heavily in the development of new. logo and the Point of Sales Presentations .

Spain.‡ Established subsidiaries in France. Herriger founded today s Knirps® License Corporation (KLC) with the purpose of marketing and licensing of the Knirps® brand internationally ‡ . Austria and Canada. Greece. Switzerland and Hong Kong (Asia Pacific) ‡ Set up licensees in Italy. ‡ In 2003. Benelux. Portugal.

and its Swiss partner. Ltd (Germany leader). 2005. . Ernest & Doppler Co. ‡ Herriger started looking for new shareholders in KLC. Strotz AG. the companies Doppler and Strotz are the two sole owners of the firm. the latest company was on the brink of bankruptcy.‡ In 2004. participate with a minority stake in KLC ‡ Since November.

‡ . ‡ Doppler and Strotz are convinced that the brand can be rebuilt and positioned successfully in the international markets. Swiss license of KLC is now Strotz AG.‡ The KLC subsidiaries in France. ‡ The subsidiary in Switzerland was closed. Benelux and Hon Kong were taken over by the parent companies and are now licensees of KLC.

. 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 the granting of licensees.Company Profile today ‡ The purpose of the firm is the purchase and sale of trademarks and licenses. Benelux and Japan contributing about 10% each of the total turnover. and with Canada.

5% of net sales. which increases by steps of 5% for the following years.‡ The license fee amounts to 8. a minimum license fee agreed upon in advance. .

.Strength ‡ HR is the key strength of the company ‡ Michael Lackner (38. ± Managing and monitoring of the company ± Customer relations / expansion of relations with licensees ± Acquisition of customers (licensees) ± Monitoring of patents and registered designs. CEO holds MBA. with a broad experience in marketing at home and abroad).

‡ Elfi Falterbauer (42. Assistant to the CEO. has many years of experience as a production manager and has a College degree.) ± Administrative Activities .

± Product Development ± Quality Management ± Research & Development . with a unique know-how in the construction of collapsible umbrellas. was employed by Knirps® GmbH. Technicians. the only umbrella engineer in Europe.‡ Knut Schroeder (54.

‡ . Schroeder lives in Germany and has a home office.‡ Lackner and Falterbauer are working in the KLC office in Braunau.

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. which are different in function or size.Each product line may consist of several umbrellas. .

or a special grip demonstrating a modern style. X2.Product line 1: X1. . This can be done by an unusual protective cover. etc ‡ Features ‡ Innovative Design with Style ‡ The product line X stands out due to novel design.

± Besides monochrome fabrics. .Patterns and benefits ‡ X basic: ± Cloths are plain and simple. also a simple pattern may be used. modern quality umbrella of a premium brand. ± A stylish. which can be worn with any attire.

. ± Fabrics are made of high-quality micro fibres with up to 75% UV protection. correspond to the current fashion trends are introduced to the markets at least twice a year in a limited edition.‡ X Limited Edition: ± Trendy and outlandish.

medium to high income class. . which should be worn with the latest fashion ‡ Customers: Mainly women between 20 and 50 years.‡ An absolutely trendy and stylish umbrella of a quality premium brand. more modern. style and brands. living in the city or the suburbs and loving design.

above all. which is relatively inexpensive and.Product line 2: AluLine ‡ Features ‡ Light weight ‡ The frames are made of aluminium. a light material. .

Patterns and benefits ‡ Basic colours such as black. and red are available throughout the year. blue. . which can worn with any attire. not too expensive quality umbrella. ‡ Fabrics for all seasons available ‡ Fabrics are made of high-quality light polyester with Teflon coating ‡ Light weight.

‡ 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. ‡ Handle design is very modern and noble. ‡ This colour emphasizes its elegance and high value. but very light fibre material. Patterns and benefit ‡ Only available in black. .

‡ Elegant quality of a premium brand. . living in the city or the suburbs. which is perfect for a business outfit. medium high income class. which combines quality with technology. ‡ Customers ± 60% are women ± 40% men. looking for an umbrella. ‡ People who love design. provided with innovative materials and newest design. technology and brands.

it must be a classic one. ‡ In any case. . ‡ Its steel frame makes the product heavier. Patterns and benefit ‡ The colours of the high-quality fabrics are dark and can either be monochrome or with a pattern. but very durable.Product line 4: SteelLine Features ‡ Tradition: represents the original Knirps umbrella.

‡ Customers ± More than 90% are men. . ± They live in the city or the countryside. ± Medium to high income class. who have a conservative attitude. showing its German origin. and are between 40 and 70 years old.‡ Only available in black. look for an umbrella with good quality and know the brand Knirps. ‡ A traditional quality umbrella.

the Knirps umbrella have been produced in China at MIT. was also in his possession.THE SUPPLIERS ‡ Since the 90s. ‡ Max Wang acquired an immense knowledge of the brand Knirps and its products. ‡ All machinery. the exclusive supplier of Knirps umbrellas and Knirps frames. . until 2002. which was especially designed and built for Knirps. headed by Max Wang.

‡ 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 acquire important knowledge about Knirps ‡ . MIT determines the price ‡ Know how transfer.

The production line is owned by MIT.Need for alternatives Why it took a long time to look for alternatives: ‡ A change in supplier is connected with high switching costs. with its large Knirps® know-how. ‡ It was feared that MIT. . would produce unauthorized copies.

without the knowledge of MIT.In search of a new supplier ‡ Increasingly. got orders for new Knirps® umbrellas. ‡ MIT got fewer orders. ‡ From 2002 to 2006. there were two producers for Knirps® umbrellas. MIT and Citta. and since Max Wang knew of expired Knirps® patents. ‡ The company Citta. . he began to copy Knirps umbrellas and sold them in the US and Korea. MIT produced no longer in the required quality.

. ‡ Futai.‡ These developments forced KLC to terminate the contract with MIT and began looking for a new partner. 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.

. 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.‡ In the meantime MIT is trying to compete with close imitations. using old patents. The production series are very small and they are sold at a huge markup.

‡ They determine which items out of the Knirps® range they want to sell in their territories. at what price. and through which distribution channel.THE LICENSEES ‡ The licensees have lots of freedom. because the delivery process runs as follows: . ‡ They are also largely responsible for the quality control.

which are forwarded to the suppliers. and the licensee can still order small quantities. ± 2nd KLC in turn collects the different orders and combines them to omnibus orders . the licensee offers retailers the various Knirps® products. . ± 3rd While the manufacturer produces the goods.± 1st The licensee communicates its order quantity to KLC at its own risk.

THE BRAND ‡ The role of KLC ‡ KLC patented numerous products in various countries. 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. ‡ The patents protect a variety of technical functions.

but can be reviewed again and again.‡ KLC patented its innovations in potentially interesting markets such as the United States. ‡ Various pictures and logos are registered and thus protected in many countries. the protection lasts for ten years. ‡ Patents are valid for twenty years and cannot be renewed. . South Africa and Russia as well. Norway.

Quality in the Umbrella business ‡ The main feature related to the Knirps® brands is quanlity . . however. relates to a very subjective assessment of quality and is dominated by personal attitudes and preferences. 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.

is the only existing global umbrella brand. they are impenetrable. ± Only the best fabrics are used.‡ Longevity / Durability: ± Knirps® frames are very robust. Furthermore. ‡ Knirps®. by the way. .

e. etc. with monotonous. ‡ National brand umbrellas: Each manufacturer can create its own collections. sold in discount stores.g. Oliver.THE COMPETITION Competitors ‡ Cheap umbrellas: simple no-name umbrellas. . umbrellas by Louis Vuitton. ‡ Designer umbrellas: sold as a fashion accessory to the respective designer collections. boring colors. Giorgio Armani. which is sold under a certain brand name mostly in the domestic market. S.

The vendors ‡ Differ significantly in relation to the following criteria: ‡ Retail price ‡ Quality in terms of longevity ‡ Product design ‡ Fashion .

Retail Price Cheap umbrellas National brand umbrellas International brand umbrellas Designer umbrellas Quality P-Design Fashion .

Knirps is the only international umbrella brand. ‡ 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? . but has made a lot of mistakes in the past. when two former competitors took over the Knirps and tried to revive the brand.WAY FORWARD ‡ This case is set in 2007.

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. successful companies recognize the need to build bridges between their organization and the vendors that they work with by establishing strong buyer/seller relationships. ‡ In reality.

. if a vendor sells light bulbs. there can be a sense of commitment to the supplier. For example. 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.‡ Supplier relationships are different from simple purchasing transactions in several ways. First.

they also contact them in order to discuss their future needs and to determine how best to satisfy those needs by working together. Buyers don't just communicate with suppliers when a procurement need arises. .‡ Another element of these supplier relationships is advanced planning.

Companies that forge supplier relationships think of these vendors as partners and not just simple commodity providers. . a third element is also important.‡ While both of those distinguishing features are easy to spot. The company's attitude and view of its suppliers matters a lot for business success.

This in turn affects efficiency and profitability. .‡ This difference in orientation can have a profound effect on the way an organization communicates and works with its suppliers.

‡ One ramification is a vendor s knowledge of the buyer's business. 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. . When vendors are viewed as commodity providers.

‡ However. vendors that are deemed to be partners are encouraged to become knowledgeable about the company. its products. . its processes. and its goals.

. 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.‡ The result is greater buyer satisfaction with the services provided by the supplier.

‡ 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. it minimizes the benefits the business hoped to achieve with the project. After all. . if the handover is unsuccessful or is poorly handled.

according to the poll. vendors who were considered partners handled handovers excellently nearly some of the time and good most of the time. the change in attitude does make a significant difference. viewed the way their vendors handled this critical process as unsatisfactory nearly half of the time. ‡ On the other hand. . Clearly.‡ Businesses that viewed their suppliers as commodity partners.

It does not have to cost them the savings they achieve by shopping around either. . these two examples illustrate how important it is to have strong supplier relationships. The change is not as difficult as they may think. but many businesses simply don't know how to foster an environment where purchasing personnel have an attitude of partnership with vendors.‡ Obviously.

businesses need to find a small number of suppliers to work with.‡ First. 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.

and secure business relationships for non-commodity type goods and services. vendors and buyers are both better served when they come together to form strong. When these relationships exist. mutually beneficial.‡ Overall. they can drive the growth and profitability of both organization and prevent purchasing and execution problems. .

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brand and/or expertise. Examples include . ‡ Franchising involves the organization (franchiser) providing branding. expertise. to the franchisee. concepts.licensing ‡ Licensing is where your own organization charges a fee and/or royalty for the use of its technology. Management tends to be controlled by the franchiser. and infact most facets that are needed to operate in an overseas market.

.Licensing ‡ Definition: ‡ Method of foreign operation whereby a firm in one country agrees to permit a company in another country to use the manufacturing. knowhow or some other skill by the licensor. processing. trademark.

‡ Advantages: ‡ · entry point with risk reduction. . · benefits to both parties. · opportunities to buy into partner or royalties on the stock. · capital not tied up.

Argentina beef. transport and storage so credit is needed e. market information. .‡ ii) "Lumpy investment" building capacity long before it may be currently utilised e.logistics. ‡ iv) Transaction costs . port facilities ‡ iii) Time . regulatory enforcement.processing.g.g.

· partner develops knowhow and so license is short. . · partner becomes competitor.‡ Disadvantages: ‡ · limited form or participation. · requires a lot of planning beforehand. · potential returns from marketing and manufacturing may be lost.

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