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 companies in this market like Chipman-Union manufactured unbranded socks for private label merchandise, because it was extremely hard to get consumers' brand awareness, and to make them recognize the product features. As a result, there were only two companies which manufactured branded socks : Burlington and Interwoven. Compared with those two competitors, Chipman-Union was not known well to consumers. To attract consumers' attention to their products, first of all, physically prominent features of the product should be introduced. For them, it seemed impossible for CU's brand to compete with competitors' established brands without unique product characteristics. For this purpose, deodorizing socks could be a reasonable physical feature for differentiating the product from other competitors' products. In addition to this deodorizing feature, various types of socks should be developed. According to results of mall intercept tests, respondents had a tendency to prefer casual crew type of socks than other types. Accordingly, this casual crew type of socks associated with specific function, such as deodorizing function, would be appealing to consumers. In addition, because CU's deodorizing product was not the first one introduced in the market, brand awareness must be achieved to compete with competitors' brands. Brand Association between "Odor-Eaters" insoles and socks
"Odor-Eaters" was a brand established prior to CU's new product. A licensing agreement with Combe, Inc. provided Chipman-Union with a good opportunity which enabled them to launch their products without large amount of advertising and promotional expenditure. Originally, Combe's "Odor-Eaters" was a brand of deodorizing shoe insoles. From consumers' perspective, both shoe insoles and socks can be used for removing a bad smell. This meant that "Odor-Eaters" socks of Chipman-Union could be supported by brand awareness established by "Odor-Eaters" insoles. 50% or more of people in the U.S. knew the "Odor-Eaters" brand, and CU's executives projected that this would be very helpful for CU's new product. However, there were some problems which CU should solve before launching the product. Although Combe's "Odor-Eaters"...