Group no:

Section: F

Meghwant Tha
Harish Ravikan
Stephen Stanl
Sameeksha Sh
Shah Aakash
Mohammad Sh
Varun Lakra

Porters Five forces Model

Rivalry among existing competitors (Low)
In the private label non fashion knitwear market, the branded line of insect repellant clothing has
limited competition (some insect repellant apparel which could handle only 25 washings as
compared to 70 washings of Guardians technology was already successfully selling in small
niche markets)
Bargaining power of buyers (Low)
Since the product is the unique and superior, targeted buyers have limited bargaining power
Bargaining power of suppliers (High)
Since Guardian can terminate the licensing agreement on its sole judgment, they can always
renegotiate the royalty terms. On the other hand, the fabric suppliers may have limited
bargaining power.
Threat of new entrants (Low)
The technology used is patented so barriers to entry are high.
Threats of substitute products (High)
People may not be willing to pay such a high price just to buy a product with higher longevity
(75 washes instead of 25). People may find it economical to buy insect repellants and shirts
separately.

Ansoff Matrix
Existing Product
New Product
Existing Markets
Market Penetration
Product Development
New Markets
Market Development
Diversification
The company is going to launch a new product (Insect repellant clothing) first in a new market
(outdoor enthusiast) so it will diversify. Later it plans to launch the same product in the existing
markets (wholesale clients)-Product development. Diversification may be justified subject to
breakeven analysis and demand forecasts.
Strengths
1. Patented technology.
2. High level of awareness for
Guardian brand.
3. Convenience of not having to carry
traditional repellents
Opportunities

Weaknesses
1. High price
2. Unproved technology
3. Small target customer segment

Threats
1. Change of EPA norms.
Existing wholesale clients-Potential Market
2. Guardian may terminate the licensing
agreement on its own discretion.
opportunity.
3. Competitors may buy the licensing
rights to the inferior technology (25
washings).

Viewpoint of trade (channels)

1. Wholesalers comprise about 75% of Classics present revenue and 25% from retail
channels (private label merchandise).
2. The traders will receive a complimentary display unit on order of up and above 12 dozen
shirts.
The new guardian shirts that are produced do not contain the manufacturer, Classic
Knitwears name according to the potential alliance, rather, only the name
GUARDIAN as the brand. As the Classic Knitwear was the 2nd player in the sector with
a market share of 16.5%, the name Guardian might not be the attention grabber. Also the
wholesalers might have a dilemma of the product not being sold to its potential extent
that the company forecasted as the brand guardian was famous for its insect repellents
and lotions, but, not high priced shirts. This new product associating the brand guardian
might not be accepted by the customers due to its presence in the insect repellent market.

Viewpoint of Customers
According to the survey 185 on 1000 have filled the survey and majority have posted a positive
response to the product. Among these 185 men, 38% have replied that they would definitely buy
the product, 44% probably would buy, 13% might or might not buy, 3% probably would not buy,
2% definitely would not buy.
1. As the brand guardian is associated only with insect repellent and lotions, customers
might hesitate in buying.
2. The T-Shirt will have Guardian printed in the same fashion as on the insect repellents.
3. Looking from the other side the customers who find it inconvenient towards the
traditional way of applying the insect repellents and lotions might buy the product.

4Ps analysis of the new product marketing:

Product:
Classic Knitwear has signed a licensing partnership with Guardian to collaborate and develop
knitwear treated with insect repellents using the opportunity to increase its gross margin. Classic
knitwear used the current circumstances that were present of insect-borne illness such as Lyme
disease and the West-Nile virus to develop this new product. It is planning to introduce 4 styles
of shirts namely Mens Short-Sleeve Tee, Long-Sleeve Tee, Mens Polo and Mens Fleece. All
the four shirts are of equal quality, though Classic has more experience in T shirts, it feels that all
the four styles will have demand.

Price:

Description

Retail Price
Manufacturers
Selling Price

Men's ShortSleeve Tee

Single
$24.9
9
$13.7
4

Dozen
$299.8
8
$164.9
3

Long-Sleeve
Tee
Singl
e
Dozen
$29.9 $359.8
9
8
$16.1 $197.9
9
3

Men's Polo
Singl
e
Dozen
$34.9 $419.8
9
8
$19.2 $230.9
4
3

Men's Fleece
Singl
e
Dozen
$39.9 $479.8
9
8
$21.9 $263.9
9
3

The prices planned for the four styles of shirts are shown in the above table
These shirts are priced at par with branded shirts of big companies. Trade margins of 45%
are assumed

Promotion:
1. Branded cardboard display of the Guardian shirts will feature activity based imagery. It is
one means of attracting the customers to buy the product for those who are serious about
buying and also the customers who dont intend to buy the product and make them
vulnerable to buy the product. The company is planning to arrange 10,000 displays
costing $100 per display in the next 2 years.
2. The brand is launched with the claim long lasting protection backed up by a one year
money-back guarantee. This activity would create trust in the market for the product.
3. They are aiming to promote the product to the target market with the use of social media
such as print and television advertisements. The advertising cost is 1.2 million which
would garner a 25% unaided awareness of the guardian product among 100 million men
(target market) in 2 years.
4. 5% off-invoice trade promotion allowance to retailers is recommended to setup the
displays.
5. Advertising allowance of 10% is proposed by the company and expected that 20%
retailers placing the order would quality for it.
6. Miller insisted to hire 3 sales representatives for looking over 3 geographical locations.
Place:
1. They want to position the product alongside the already existing big brands like James
Brands and Flower Knit.
2. The product was planned to be distributed through major sporting good and apparel shops
like Bass Pro Shops, L.L Bean, Orvis and REI (new exclusive outlet for Classic), general
merchandise chains and discount chains.
3. Among the 10,000 displays planned by Classic, 50% (5000) would be in discount stores,
25% (2500) in general merchandise stores and 25% (2500) in sporting goods and apparel
stores.

Evaluation of Licensing Agreement

1. From Jan 2008 Classic knitwear will pay a royalty to Guardian of 5% of net sales of
Guardian shirts Instead of net sales, they should have negotiated for net profit.
2. Classic Guardian shirts are required to meet a series of steadily rising annual net sales
targets over the first four years of the agreement. The sales target for year four must also
be met in each subsequent year Demand is unpredictable, so clearly Guardian has the
upper hand ( they may tie up with some competitor by breaking the agreement based on
this clause)
3. Guardian trade mark may be displayed on Classics private label shirts, as long as the
apparel meets established quality standards. EPA regulation may change in the license
period.
4. All advertising and promotional materials require written approval from Guardian prior
to publication or use Likely to create bottlenecks in the marketing program
5. Guardian may terminate this agreement during 2007 if in Guardians sole judgment sales
of Guardian shirts are adversely affecting sales of Guardians existing insect repellent
products Marketing investment will not be recoverable; thus Classic knitwear is at the
mercy of Guardian.

Licence Fees
Salary of new Sales
Executives

100,000

(85000*3)
Display boards (1,000,000
for two years) (10000*100)

255,000

255,000

Contribution per
unit:
Manufacturer's Selling
Price
Less: 5% off invoice
trade
Less: 2% advertising
allowance
Less: 5% of royalty as
licence fees

500,000

500,000

Net Selling price

16.62

15.73

Marketing Investments
(3,000,000 for two years)

1,500,000

1,500,000

Cost of goods sold

10.82

10.82

Total

2,355,00
0

2,255,00
0

Contribution per
unit

5.80

4.91

406,097

459,679

Particulars

2007

2008

Fixed Costs
-

17.87

17.87

0.89

0.89

0.36

0.36
0.89

Break even volume

= Fixed Costs / Contribution
Total for two years

865,776

Particulars
Target customer base
Awareness set in two years (12.5%)
Customers with confirmed interest (based on
consumer.com market research data) = 18.5% of
12.5 million
Definitely would buy (38%)
Based on previous experience, actual buyers are
60%

2007 and
2008
100 million
12.5 million
2,312,500
878,750
527,250

The breakeven sales will not be achieved in the worst case scenario (definitely buy 38%). And
the gross margin at this level will be 18.09%.

In case of the best case scenario (44%+38%) breakeven sales will be achieved, but the gross
margin will be 18.20% only which is less than the companys target of 20%.