In 1979, Chipman-Union was a medium size company which primarily manufactured unbranded socks sold as private label merchandise. The market of socks in the U.S. was characterized by severe price competition and limitation of product differentiation. There were only two companies which manufactured branded socks, and companies except those two companies had 20% gross margins or below. To get higher gross margin, CU had to venture into new business ? branded socks. They began to investigate the marketing program for the new product, and recognized that there were not only valuable possibilities, but also problems they would have to solve before launching the product.
In this case, first of all, the product will be evaluated focusing on the unique features of the new product introduced. Basically, it can be asked whether or not deodorizing socks appeal to consumers in the traditionally price competitive socks market in the U.S. Second, the market situation will be examined. There was already a company which manufactured deodorizing socks, and promoted deodorizing as a product characteristic. So, it is important to ask how to make effective price strategy, and attempt to know the unique aspects of competition in the market. Finally, as we know, what is the most important question they should ask is how to make consumers aware the "brand." For Chipman-Union, brand awareness is one of the most important objectives they should achieve. To do this, communication strategy should be carefully examined.
Product Evaluation
Limitation of Product Differentiation
According to consumer research conducted by GFM, both consumers and retailers regarded socks as a product category, which was hard for companies to achieve product differentiation. In fact, most c ...