Great American Knitting Mills: Gold Toe Socks

Great American Knitting Mills: Gold Toe Socks

Introduction, Case Analysis & Core Problem:

Great American Knitting Mills is a producer of men's dress and socks. Since from 1930s, the sock's brand, Gold Toe, is originated and nearly 90% of its market mix is in dress and casual use (table 1). The 1981 revenue was close to $20 Million. Now Gold Toe is facing the problem of the market sales shift to fast growth products - Athletic Socks. Great American is in need to consider the change of its current marketing strategy in order to enhance Gold Toe's competitiveness in the market and substantial growth of sales revenue.

In order to determine its new marketing strategy, we have conducted a comprehensive review of its current situation in 4 major aspects – Distribution, Promotion, Production and New Product Line.

Distribution Strategy:

It is observed that the sales performances of Gold Toe in those smaller cities are better than those with population more than or equal to 5m. The Weight Average Gold Toe Sales per thousand of population of those small cities ranged from 102 to 167 whereas for those cities' population equals or over 5m, the Weighted Averages equals to 89.78 only. The difference is around 13% to 86% (table 2). One of the major reasons is because of the exclusive sales partnership of Gold Toe with the department stores in each city (i.e. maintained to have 1 account in one city). For those small cities, one department store may have dominated the market. The product is well-exposed to majority of the population. However, for those large cities with population more than 5m, one department store may cover only vey limited geographical areas and rest of the population is fully ignored. It is obviously that these cities are underpenetrated. From the previous experiences in Boston and Miami, the coexistence of two accounts was absolutely feasible and no negative impact was observed. It is recommended to have wider distribution of those big cities through adding more department stores. The geographical expansion shall be on those areas of the cities where the existing account does not have coverage. The suggested cities will be Washington, New York, Chicago and Los Angeles. This approach shall increase the exposure of the product to the customers without harming the relationship with existing account.

Advertising Strategy:

The current advertising strategy of Great American named cooperative-advertising. It is to finance generously 50% cost of any cooperative advertising program, which featured its brand, through the department stores. However, it is not a cost-effective approach. Refer the example of Bamberger's Christmas catalog, the advertisement is not solely focused on Gold Toe. It also promotes other products, like shirt and ties. In other