Kwality And Protekt Case Summary

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Kwality and Protekt
Andrew Strauss, Chief Marketing Officer at Kwality Knitwear, Inc. (Kwality), explained in September 2006 why his company had decided to explore the introduction of a branded line of insect repellent clothing. “We’ve got to improve gross margins,” he said, “and this looks like the most expedient way to do it.” Kwality’s problem with gross margins was that its private label or unbranded knitwear had no branded recognition among retail customers, which sharply limited the opportunity to differentiate its products. The company’s executives believed this led to substantially lower gross margins than those enjoyed by leading branded product manufacturers—currently 18% versus 30% to 40%. Kwality had recently succeeded in shrinking
…show more content…
Kwality Knitwear receives exclusive licensing rights to utilize the Protekt trademark and EPA rating on and in connection with insect repellent apparel sold in the United States and Canada, as long as the clothing meets established quality standards.
Kwality Knitwear pledges to “use its best efforts” in marketing Protekt shirts. January–December
2007 is designated as a test period during which Protekt’s licensing fee will be $100,000. From
January 2008, Kwality Knitwear will pay a royalty to Protekt of 5% of net sales of Protekt shirts.a
Kwality’s Protekt 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. The Protekt trademark may be displayed on Kwality’s private-label shirts, as long as the apparel meets established quality standards.
All advertising and promotional materials for Protekt shirts require written approval

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