"Classic Knitwear: Expanding with Insect-Repellent Shirts"

Introduction

Classic Knitwear, founded in 1995, emerged as a prominent manufacturer and distributor specializing in unbranded casual knit apparel within the United States market. The company, helmed by a seasoned leadership team comprising Brandon Miller as the Chief Marketing Officer, Robert Ortiz as the CEO, and Sandra Chong as the CFO, established itself as a key player in the non-fashion casual knitwear sector. With a keen focus on U.S. sales, Classic Knitwear carved out a niche for itself, leveraging its expertise in screen-printed channels, which accounted for a substantial 75% of its revenue.

The remaining 25% came from mass retail channels, primarily through private-label merchandise.

Product Development

In early 2006, Classic Knitwear's marketing team embarked on an ambitious journey to explore potential product innovations. After extensive research and brainstorming sessions, they stumbled upon a groundbreaking idea: chemically-treated knitwear capable of repelling insects. This novel concept sparked the creation of a new line of high-quality men's and boys' insect-repellent shirts, presenting an exciting opportunity for market differentiation and expansion.

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Recognizing the significance of strategic partnerships, Classic Knitwear initiated negotiations with Guardian, a renowned manufacturer of insect repellents known for its odorless protection against a myriad of pests, including mosquitoes, ticks, flies, and no-see-ums. This paved the way for a promising licensing partnership that would allow Classic Knitwear to harness the power of the Guardian brand name, lending credibility and market appeal to its innovative product line.

Market Analysis

The landscape of the non-fashion casual knitwear market, valued at a staggering $24.5 billion, presented both opportunities and challenges for Classic Knitwear.

T-shirts, representing a significant portion of this market, emerged as a key focus area for the company, particularly in the screen-print sector where it had established a strong foothold. However, amidst fierce competition from players like B&B Activewear and The Big Tree, Classic Knitwear also faced formidable rivals in the private label business, including JamesBrands, FlowerKnit, and Greenville Corporation's TopTops Division. Understanding the dynamics of trade partnerships and consumer preferences was critical for Classic Knitwear's successful market entry with its insect-repellent shirts. Retailers were offered competitive margins to incentivize adoption, with 50% on branded knitwear and 40% on private label knitwear. A meticulously crafted sales projection strategy aimed at deploying 10,000 displays over two years across various retail channels, including discount stores, general merchandise stores, and sporting goods and apparel outlets.

Marketing Program

To effectively position the new product line and capitalize on Guardian's brand equity, Classic Knitwear made a strategic decision to market the insect-repellent shirts under the Guardian Apparel brand, eschewing its own name. This branding approach aimed to leverage the established reputation and consumer trust associated with the Guardian name, enhancing the perceived value and marketability of the innovative shirts. However, the company's marketing strategy was anchored on limited market research, primarily relying on the findings of an online survey conducted through Consumer.com. Despite potential data reliability concerns, Classic Knitwear remained optimistic about consumer interest, with 60% of survey respondents expressing a definite intention to try the product within the first two years of its launch.

License Agreement

The licensing agreement forged with Guardian presented both opportunities and challenges for Classic Knitwear. While it granted access to Guardian's patented insect-repellent technology, enabling the development of a cutting-edge product line, the agreement imposed stringent annual net sales targets over a four-year period. Failure to meet these targets risked license termination, underscoring the importance of robust sales and marketing strategies. Moreover, the branding implications of the partnership raised concerns, as the exclusive use of the Guardian logo on the product could potentially limit Classic Knitwear's brand visibility and autonomy. Furthermore, budget constraints compelled Classic Knitwear to scale back its initial marketing investment from $8-$10 million to a modest $3 million, posing additional challenges in product promotion and market penetration.