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Classic Knitwear And Guardian A Perfect Fit Case Solution

Solution Id Length Case Author Case Publisher
1596 808 Words (3 Pages) John A. Quelch and Patricia Girardi Harvard Business School : 4217
This solution includes: A Word File A Word File

Classic knitwear was a company that had had a low gross margin being almost 18%. This gross margin was lower than what other knitwear producing companies in the industry enjoyed. The new product offered a higher gross margin for the company that was approximately 38-39%. This product would improve the margins for the company and get higher profitability. 

Guardian had patented its knitwear that repelled insects. As a result of this, the company has gained awareness among customers. The new product was also innovative, having a great potential in the market. The company has an advantage of production efficiency, which when combined with the demand of the product would allow the company to gain a sustainable advantage over other competitors.

Following questions are answered in this case study solution

  1. Evaluate the product-company fit?

  2. Evaluate the product-market fit?

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

  4. What are the advantages and disadvantages of the licensing agreement?

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

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

Case Analysis for Classic Knitwear And Guardian A Perfect Fit Case Solution

The company enjoys an advantage over its competitors because of its efficient production capacity that allows it to supply high volumes of knitwear. Although the cost is low, the high volume advantage gives Classic an advantage over its competitors. However, the new product would add 16 SKUs for the company that might lead to a lower efficiency advantage that previously. 

2. Evaluate the product-market fit?

The knitwear market consisting of non-fashion branded knitwear is dominated by three major players. James Brands, Flower Knit, and Greenville Corporation. Classic Knitwear was not amongst this category. It competed with the unbranded category that included players like B&B active wear that held a 23.6% market share. ‘Big Three’ was also a knitwear manufacturer in the unbranded sector. James Brands had a market share of almost 18% that was the highest market share as compared to the other two branded manufacturers. Flower Knit held a 5.1% market share while Greenville Corporation’s sales held a 2.58% market share in the non-fashion knitwear industry. The new product is innovative as there is no such category available in the low-cost knitwear industry. The companies that manufacture such knitwear sell it to niche markets, not accessible to those who cannot afford it. In the insect repellent industry, the customers are not completely satisfied with the products that are being offered. The new product will have to develop an industry in the market. 

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

The retailers are currently offered a 50% profit margin on knitwear that is branded. The unbranded knitwear offers a 40% margin to the retailers. The new product is to offer a 45% profit margin to the traders. The product will take up space on the display shelves. The margin offering is lower than what is offered by branded knitwear (50%), which will not be enough to make the retailer’s stock the product. However, the allowance for advertising and other benefits such as trade promotions would be enough to encourage them to stock the product in their shops. The company has decided to launch the product in discount stores, sporting goods stores, apparel stores, and general merchandise retailers. The company does not have any prior experience of supplying products through these retail channels that will be a challenge for the company.

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