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    Classic Knitwear and Guardian

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    Dana Stefy
    The document evaluates a potential partnership between Classic Knitwear and Guardian brand to produce and market insect-repellent clothing. [1] The Guardian product has higher margins that would improve Classic's, and leverages Guardian's brand awareness and patented technology. However, adding new SKUs could reduce Classic's production efficiencies. [2] The insect-repellent clothing category is untapped in mass markets, representing an opportunity. But retailers may resist stocking the product due to its display space needs and lower margins compared to other brands. [3] Consumer research found 18.5% interest in the product, and the company projects sales of 10,000 displays in the first two years

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    Classic Knitwear and Guardian

    Uploaded by

    Dana Stefy
    4K views3 pages
    The document evaluates a potential partnership between Classic Knitwear and Guardian brand to produce and market insect-repellent clothing. [1] The Guardian product has higher margins that would improve Classic's, and leverages Guardian's brand awareness and patented technology. However, adding new SKUs could reduce Classic's production efficiencies. [2] The insect-repellent clothing category is untapped in mass markets, representing an opportunity. But retailers may resist stocking the product due to its display space needs and lower margins compared to other brands. [3] Consumer research found 18.5% interest in the product, and the company projects sales of 10,000 displays in the first two years

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    Classic Knitwear and Guardian

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    The document evaluates a potential partnership between Classic Knitwear and Guardian brand to produce and market insect-repellent clothing. [1] The Guardian product has higher margins that would improve Classic's, and leverages Guardian's brand awareness and patented technology. However, adding new SKUs could reduce Classic's production efficiencies. [2] The insect-repellent clothing category is untapped in mass markets, representing an opportunity. But retailers may resist stocking the product due to its display space needs and lower margins compared to other brands. [3] Consumer research found 18.5% interest in the product, and the company projects sales of 10,000 displays in the first two years

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    4K views3 pages

    Classic Knitwear and Guardian

    Uploaded by

    Dana Stefy
    The document evaluates a potential partnership between Classic Knitwear and Guardian brand to produce and market insect-repellent clothing. [1] The Guardian product has higher margins that would improve Classic's, and leverages Guardian's brand awareness and patented technology. However, adding new SKUs could reduce Classic's production efficiencies. [2] The insect-repellent clothing category is untapped in mass markets, representing an opportunity. But retailers may resist stocking the product due to its display space needs and lower margins compared to other brands. [3] Consumer research found 18.5% interest in the product, and the company projects sales of 10,000 displays in the first two years

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3
    At a glance
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    The key takeaways are that Classic Knitwear is evaluating a new product line under the Guardian brand which provides insect repellent clothing. This new line has the potential to increase Classic's margins and market share but may require significant investment to develop new retail channels.

    The advantages include higher demand, competitive advantage and brand awareness. The disadvantages are risk of losing market share if Guardian pulls out, products may be more male oriented, and customers may be reluctant to try something new.

    Break even sales volume for Classic's 2 year marketing program.

    Classic Knitwear and Guardian

    A perfect fit?


    1. Evaluate the product-company fit?

    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 industrial standards.
    Guardian brand had high level of awareness and it had patented insect-repellant clothing
    technology. The product had a good market potential due to its innovativeness. 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 to high-volume, low
    SKU production runs. The addition of the new product meant addition of 16 SKUs. This new
    product might lead to some inefficiency in its present system.

    2. Evaluate the product-market fit?
    Product Market Fit

    Classic Knitwear operated in $24.5 billion category of non-fashion casual knitwear.
    The branded side of non-fashion knitwear market was dominated by three large manufacturers:
    JamesBrands ($4.5 billion), FlowerKnit ($1.25 billion) andGreenville Corporation ($0.63
    billion). These big brands operated on gross margin of around 30-40%.
    In unbranded segment, Classic competed with little known firms like B&B Active wear which
    held market share of 23.6% and the Big Three were also involved in this market.


    There was a customer need for protection against the rising insect-borne illness and the
    customers were dissatisfied with few prevention products available in the market. The category
    is virtually non-existent in the mass market as the present players in the insect repellant clothing
    only sold in niche markets.

    3. Will consumers and the trade respond to the Guardian marketing program?

    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 space and 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 provision of 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 product launch, of
    which 50% would be in discount stores, 25% in general merchandise stores, and 25% in sporting
    goods and apparel stores. We think that as the company has no experience in selling to these
    retail channels, it has to spend considerable resources to develop the channel.
    The company would make the Guardian shirts available to its existing wholesale clients for
    distribution to interested screen painter in a later period as it has currently decided 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 the respondents 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.
    4. What are the advantages and disadvantages of the licensing agreement?
    Pros
    DEMAND IS HIGHER THAT THE NEEDED AMOUNTTO BREAK EVEN !!!!!!
    Wholesalers sold to screen-print channels customized t-shirts and other knitwear with
    logos
    Competitive advantage
    Opportunity to reach the outdoor enthusiast market
    Positive perception of the brand ( 58% recognizing Guardians pioneering status )
    Brand high level of awareness and positive costumers associations
    Low marketing investment ($3 millions)

    Cons
    More man oriented products
    Classic would suffer an immediate loss of its market share and also sales revenue in case
    Guardian decides to pull its offer
    Customers may be reluctant towards the new products
    No guarantee that Classic would be able to achieve the level of acceptance within two
    years
    Continue to have no brand recognition

    5. What sales volume is required to break-even on Classics 2-year marketing program?

    6. If Classic implements all of Millers recommendations, what is the estimated demand for
    the new product line over the 2-year launch period?

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