The paper "Strategic Marketing for Classic Knitwear Company" is an outstanding example of a marketing case study. Strategic marketing is the critical tool in attaining the competitive edge in world markets over the competitors. Baker (2010) stated that technology advancement and the rising globalization has intensified competition as business cross borders to search for new markets to maximize their revenues. In the process, modern managers seek the best strategies in expanding to the new markets. Some of the best and effective strategies which have been mentioned in the entry of new markets or market segmentation are strategic partnerships, direct entry, licensing and exporting among others (Hitt, Ireland & Hoskisson, 2012).
Similarly, this strategy can also be used to launch a new product in collaboration with an established company. Quelch & Girardi (2013) claimed in 2005, Classic Knitwear was contemplating introducing insect repellent clothing and the opportunity presented in a well-established company in the market. To enhance the profit margins, the firm considered partnering through a licensing with Guardian company, the insect repellent manufacturer which had produced quality repellent technology for the clothing.
This paper will, therefore, conduct external and organizational analysis SWOT & TOWS of Classic Knitwear Company, develop objectives and alternative strategic sets which the company can use, and evaluate these alternative strategic sets. External and organizational Analysis Observations; External Analysis Strategic Implications The use of the Apparel market has many market players (Platzer, 2014) The US clothing industry consists of firms which design and manufactures cloths (Lu, 2014). Even though Classic Knitwear Company is one of the players in the industry, they are more established companies which operated over the years. The strategic implication of this is that the consumer has several choices to choose. Baranda (2012, p. 37) stated that the US apparel industry has several products offered by different companies. 2.
Product designed in this market consists of basic categories like the underwear and vest, to luxury products such as bedsheets, curtains cashmere, alligator-skin handbags and sweaters (Baranda, 2012, p. 41). In the past, an apparel firm sold their items on the wholesale basis that then marked-up products and traded to consumers at large profits. According to Kapferer (2012), the strategic implication is that consumers have varieties of products to choose from.
It also gives them high bargaining power. The product is sold into two categories wholesale or retail (Quelch & Girardi, 2013) Quelch & Girardi (2013) contended that in the past firms either sold their product to the wholesaler or the retailers. Nonetheless, it has become more complex to draw the line between retailers and wholesalers as the majority of the apparel firm now work under these forms of operations (Spencer, n.d). The advantage of selling to both categories is because it enables companies to maximize profits. Profitability and trend On the recent years, the U. S.
apparel stores have been more profitable compared to the last decade (Spencer, n.d). The growth was slowed in 2008 just after Classic Knitwear Company had signed licensing agreement with the Guardian company to use its technology and other opportunities to introduce a new product line (Quelch & Girardi, 2013). The slow growth was as a result of the global financial crisis of 2008. However, the industry improved significantly from 2011 (Biery, 2014). The growth and trend help Classic to make the decision which can ensure it exploits the growth. Market size Today, the industry is today worth $225bn (Biery, 2014).
According to Platzer (2014), the U. S. clothing industry is ranked as the world largest with 28% market share. The textile and Apparel are among the largest companies worldwide. Globally the total apparel exports are estimated to be worth USD 412 billion while textile company exports USD 294 billion globally (Biery, 2014). The strategic implication of knowing the market size is to make classic understand growth and competition of the industry it operates it. Product life circle The increased risk of the concentration in the market share is characterized to the positions by the retailers' in Company.
The clothing company in the United States of America is slowly growing, highly fragmented, mature, and large (Baranda, 2012). The apparel purchased in U. S.A is manufactured both internationally and domestically. Customers who are college graduates prefer purchasing a few products but are of high quality while others prefer purchasing many. Nguyen (2004) claimed that the most important thing is to have good value and 93 percent of customers say that both the quality and the price of a product matters hence preferring some retailers and not others.
Understanding product life circle can enable Classic to understand and cope with the challenges of developing products. Observations; Organizational Analysis Strategic Implications The company has a state-of-the-art production plant (Quelch & Girardi, 2013, p. 2) The state-of-the-art plant enables Classic Knitwear to compete with other players in making the latest design of clothing. Product development Classic Knitwear embraces product development and innovation so as to differentiate its product portfolios from other market players. Due to innovation and competition taking place in the US industry, in 2006, Chief Marketing Officer, Brandon Miller announced a plan to launch a new product line which is insect repellent clothing with an aim of increasing the gross margins (Quelch & Girardi, 2013, p. 1) Market segmentation The classic uses psychographic segmentation to casual wearers and satisfy their needs.
Similarly, the segment has a rapid growth in the US market (Quelch & Girardi, 2013, p. 2). Critical Issues Competition – the company face competition domestically and internationally from well-established companies. Limited financial base – the company has a low capacity plant hence low production. Low production is a recipe for low profits. Market share- the company has an insignificant market share thus posing less competition in the market. SWOT Analysis Strengths weaknesses The company operates in the fast-growing casual knit clothing market segment. Modest cost advantage. Market research. Product development. Presence in many countries, e.g.
the US and Dominican Republic (Quelch & Girardi, 2013, p. 2). The company is a weak brand. The company also suffers from low brand equity and poor brand marketing relations. Inadequate financial base. Low production. Opportunities Threats Improving disposable income in the US Use of Guardian technology. Partnership with established company Guardian. Competition in both unbranded and branded knitwear. The fluctuation of the economy. Source of Competitive advantages Focusing on unbranded casual wears Partnership with Established company Product Development, i.e.
insect repellent clothing (Quelch & Girardi, 2013, p. 1). PEST Analysis Political decisions normally influence how companies operate. The US government placed tariff in the clothing industry, a situation which is likely to reduce imports and favor Classic Knitwear Company in terms of sales (EmergingTextiles. com, 2006). Economic factors have been a major challenge to the US apparel industry. Even though the cloth is a basic need, purchase consistency largely depends on disposable income. The trend of buying clothes after the global economic downtown improved significantly due to the economic growth of the United States.
In fact, in 2010, the US apparel industry witnessed a massive growth of sales by 14 percent in value terms (Biery, 2014). However, this was not in the favor of Classic Knitwear Company since the company was overshadowed by more established companies. It is for search reasons why the company is using one of the strong brands in the industry, Guardian company to launch its new product. The clothing of the US has also greatly impacted technology.
Hutt & Speh (2010) argued that the use of technology has improved marketing and sales because companies can now communicate their products to a larger market. The advancement in technology in the industry is an opportunity for Classic Knitwear Company which is contemplating introducing insect-repellent apparel (Quelch & Girardi, 2013). Since Guardian has a patented technology which manufactures insect-repellent apparels, getting into a licensing contract with it is an opportunity to use the infrastructure. The profitability of this company is determined by components of Porter’ s Five Forces. Threats of the new entrants In the US apparel market, the threat of new companies joining the market is high because of low regulation (Doeringer & Crean, 2005).
This situation is likely to create fierce competition in the US in future as more companies join the market. This means Classic Knitwear Company must differentiate its products to remain competitive. When an economy is less regulated, many entrants get into the market making it highly competitive with fewer profits. Furthermore, a large sum of money is required to start and manage the business in terms of branding and advertising (Ferrell & Hartline, 2011).
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