Professional Documents
Culture Documents
Analy
sis
Classic Knitwear and
Submitted by :
Guardian
Group 1
Abhilasha Jas (2013IPM004)
Aishani Verma (2016PGP023)
Akanksha Wasnik (2016PGP030)
Amandeep (2016PGP048)
CASE FACTS
Problems:
Whether to launch the Guardian insect repellant shirts or to continue to pursue
production efficiency using traditional methods?
Causes:
1. Classic knew it would be only a short time before the competitions realize similar
superior manufacturing efficiencies.
2. Neither controlled labels nor tie-in promotions could ever push overall gross margins
consistently over 20%.
3. Downgrade of classics stock if the company didnt communicate compelling plans
for margin growth.
4. How should they launch their new product as a different product or as a new product
under Classic (including the name Classic Knitwear)?
Options Available:
1. Launch Guardian as Guardian
2. Launch Guardian as Classic
3. Dont launch Guardian
Option 1
Pros:
Leveraging guardians positive reputation
Competitive advantage over competitors(i.e. B&B,Activewear)
Allows Classic access to new distributors (i.e. LL Bean).
Cons:
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Option 2
Pros:
Increase brand recognition for Classic.
Help in achieving the target gross margin of 20% in the coming years.
Does not confuse the current distributors.
Cons:
The new product might affect the sales of the existing Classics products.
Market is hesitant to try out the new product.
Will require additional marketing efforts for brand building.
Option 3
Pros:
Less risky as no extra marketing cost and efforts
Continue enjoying cost advantage over other US producers.
Cons:
Will remain in the 18% gross margin.
Continue to have problem of no brand recognition
Recommendations:
Fixed costs
Break
Even Volume
Advertising
Manufacturers
selling price
Salary
COGS
Total fixed costs
Trade promotion (5%)
Advertising allowance (10% for 20%
retailers)
Contribution margin per shirt
Breakeven Volume
2 | Page
30,00,000
17.87
5,10,000
10.82
35,10,000
0.89
0.35
5.81
6,04,130
100,000,000
.00
95,000,000.
00
55,100,000.
00
13,775,000.
00
6,887,500.0
0
6,887,500.0
0
Consumers
survey
Consumers
would buy
Consumers
year
Consumers
year
1,274,187.5
0
145,257.38
726,286.88
As the demand over the two years is greater than the break even, it is recommended to launch
the new product.
This product has a gross margin of 37%-40%, this can drive up the gross margin of the whole
firm.
According to the research Mens Fleece is not that much in demand as compared to other
products, so it needs to be relooked after the pilot launch.
Need to look at the low price options along with the high price options so as to increase the
sales volume.
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Additional market research should be conducted and a pilot launch for the product before the
actual launch.
4 | Page