Should Gold Toe Change Its Distribution Strategy? Why? and If So, How?

Should Gold Toe change its distribution strategy? Why? and if so, how?

MARKET ANALISYS

Historical industry statistics demonstrate us the increasing American demand for men’s hosiery products at the same rate as the population. A very fragmented hosiery industry, with over 200 hundred companies, produced a full range of socks to respond to this demand. In order to serve better their consumers, companies segmented the market by use and preference of the socks. The preference segment was subdivided in dress, casual, athletic, work, and other types.

The highest demand was for dress and casual socks; however, between 1978 and 1980, their sales volume decreased 3 and 4 percent respectively while the athletic sales grew 6 percent. The majority of companies produced private labeled socks for the dress and casual segments and only few manufactured branded products. Once produced the merchandise, companies utilized price and type of outlet to differentiate themselves from the competitors and position their socks in the market.

The Great American Knitting was a subsidiary of Cluett, Peabody & Co. Initially, the firm manufactured the Gold toe branded as well as private label and contract work socks. However, poor financial performance in the private and contract work socks forced executives to abandon them and concentrate in the Gold Toe brand. Casual and dress type were emphasized and delivered to the end customer using the exclusive distribution strategy which was unique in the market. Under this strategy leading department stores in each major city distributed the Gold Toe and the firm offered aggressive promotions in exchange. This partnership was so successful for the Gold Toe socks that other top stores seek to carry it too.

Among the main branded socks competitors for Gold Toe in the department stores were Kaiser-Roth and Burlington. A consumer research study found