Chipman-Union Inc. Odor Eaters Socks
Introduction
Chipman-Union was a medium sized company which mainly manufactured unbranded casual and athletic socks which were sold to the trade. It was established in 1972. By early 1980 CU’s two mills were producing 67 styles which were almost all cushioned socks manufactured for the men’s and boys’ casual/athletic market in anklet, midcalf and kneel-high lengths. CU carried a 10% share of the boys’ / men’s’ casual/athletic socks (approximately 3,700,000). The margins for CU were less than 20%. To get higher gross margin, CU had to venture into new business – branded socks. . It was very difficult 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. CU 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
Market Scenario
The market of socks in the U.S. was characterized by severe price competition and limitation of product differentiation. In 1979, 289 million dozen pairs of hosiery were sold in the United States; 37 million of which were in the boys’ / men’s casual/athletic segments (about 55%). 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. Companies other than these two had only 20% gross margins or below.
Customer Behavior
Hosiery has low brand awareness and is not a planned purchase. In 1970s, there was a specific trend that the share of tube socks increased dramatically to over 50%, and consumers became much more interested in specific type of socks for better fit and sports activities. The demand for tube socks has grown dramatically in the last 10 years with
Chipman-Union was a medium sized company which mainly manufactured unbranded casual and athletic socks which were sold to the trade. It was established in 1972. By early 1980 CU’s two mills were producing 67 styles which were almost all cushioned socks manufactured for the men’s and boys’ casual/athletic market in anklet, midcalf and kneel-high lengths. CU carried a 10% share of the boys’ / men’s’ casual/athletic socks (approximately 3,700,000). The margins for CU were less than 20%. To get higher gross margin, CU had to venture into new business – branded socks. . It was very difficult 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. CU 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
Market Scenario
The market of socks in the U.S. was characterized by severe price competition and limitation of product differentiation. In 1979, 289 million dozen pairs of hosiery were sold in the United States; 37 million of which were in the boys’ / men’s casual/athletic segments (about 55%). 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. Companies other than these two had only 20% gross margins or below.
Customer Behavior
Hosiery has low brand awareness and is not a planned purchase. In 1970s, there was a specific trend that the share of tube socks increased dramatically to over 50%, and consumers became much more interested in specific type of socks for better fit and sports activities. The demand for tube socks has grown dramatically in the last 10 years with