Classic Knitwear Case Study

The product is being launched under the brand name of Guardian apparel and it has decided not to include the name Classic Knitwear. Classic knitwear label should be mentioned along with Guardian label in the product. As the all the cost of advertising/marketing is being borne by Classic Knitwear, it should probably create a line extension to avoid confusion with its other non-fashion knitwear segment offerings.

The number of SKUs include 4 designs in 4 different colours. The number of SKUs can be reduced by using only the 3 most popular colours in 2 most popular styles.

This way the SKUs can be reduced to 6 units and this will ensure that the company can concentrate on the colours and styles most in demand rather than spread its resources thin by launching many SKUs.

The market research is not extensive, only 1000 respondents were sent requests. This should not be relied upon entirely for making such important decisions. More respondents should be interviewed before coming to a conclusion.

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Initial distribution is planned through major sporting goods and apparel chains which would support the establishment of the brand in the introductory phase. However, the sale at discount stores and sports & retail outlets simultaneously is inappropriate- the prices must not differ extensively across all outlets. This agreement forced Classic to meet series of steadily rising annual net sales targets for the first four years and target for 4th year must be met in each subsequent year. If it failed to meet the requirements then the license would be cancelled and void.

Only the Guardian logo is being used on the product. It may be a headache for Classic if there is any conflict between companies over their agreement in the future. With this agreement a short term benefit can be realised as the determined marketing investment has been reduced to $3 million from initial expectation of $8-10 million. As the brand value of Guardian will increase by its promotion they should also bear some part of marketing expense. Moreover, the clause about termination of agreement should be removed/relaxed as it may lead to an investment loss on part of Classic.

Conclusion:
The Company is able to cater to the demand of insect repellent clothes which is much higher than the break even sales required for company. So, the company can earn profit margins which are much higher than the current levels. Also, company can break into the Niche and the Retail market through this project. Financial Viability and the other recommendations mentioned above, make it attractive for the company to go ahead with Guardian Project.