Chipman Union

Chipman-Union Inc., a medium size company, manufactures unbranded socks labeling them as private label merchandise. The market of socks in the U.S. is characterized by two branded manufacturers namely Kayser Roth and Burlington Industries, which compete on price. There are several other non branded socks manufacturers. The industry as a whole has limitation of product differentiation. The market was highly fragmented initially with around 457 manufacturers in 1972 which reduced to 319 in 1979. Even Chipman had to close one of its mills due to operational inefficiencies. Market research found that 20% gross margins or higher very difficult to sustain in this market. Moreover, the competition also came from other private label manufacturers which made socks for food and drug stores, other branded manufacturers and retail chains. To get higher gross margin (~45%), CU planned to venture into new business of branded socks. They began to investigate the marketing program for the new product, and recognized that there were not many possible scenarios, and also they would have to solve many problems before launching the product.

They planned to launch a new brand of deodorizing socks. What can actually be the appealing effect of these socks on the consumers in the traditionally competitive socks market is to be determined. There was already a company which manufactured deodorizing socks named Odor-Eaters, and promoted deodorizing as a product characteristic. So, it was important to ask how to make effective price strategy, and attempt to know the unique aspects of competition in the market. Finally, how to make consumers aware of the "brand" was also one of the major areas of concern. For Chipman-Union, Inc. brand awareness is one of the most important objectives they are hoping to achieve. For this, one of the strategies that they plan to follow is to have a tie up with Combe Inc. which hold the name OdorEaters and for which the unaided brand awareness