Introduction

Chipman-Union was established in 1972 by a merger of the Union Manufacturing Company with Charles Chipmans Sons Company, a textile sales organization representing several mills, including Union. Chipman-Unions potential number of SKUs was almost limitless because of variations in style, size, color combination, yarn, and packaging. Chipman-Union,Inc has been primarily dealing with manufacturing private labels for various merchandise sales.It focussed on manufacturing mens and boys casual and athletic socks. These were sold to the retail/ distribution channels unbranded as private label merchandise. It was facing difficulty in competition which was the result of the non-branding. In order to improve its Gross Margins, it introduced the deodorizing socks under the brand name Odor-Eaters. Some of the products it introduced under this category were: Athletic crew sock, casual crew socks, 24inch athletic tube socks and 18-inch athletic tube socks. To overcome this, Chipman-Union also hired a management consultant firm, GFM to advise on the various alternatives and the marketing program.

Hosiery Industry
Some of the major highlights of the industry were: a) 25% of 289 million dozen pairs of US hosiery shipments were men socks. b) Share of tube socks increased substantially from 1% in 1970 to 50% in 1979. c) Major branded manufacturers were: Burlington Industries and Interwoven d) Chipman Union held 10% market share in unit sales e) Over 90% of Chipman Unions production was sold to 33 retail chains as private label merchandise. f) Chipman Union averaged 15% gross margin over the sales in 1979. It expected to increase gross margin to 20% in 1980.

 Objective
The main objective of the company is to evaluate a communication policy and a successful marketing program for their product Odor Eaters. ODOR-EATERS: Initially Chipman Union sold the products unbranded as private label merchandise. It then came up with its product named Odour-Eater. According to focus interviews, the customer had low brand awareness towards Chipman Union. The customer had a willingness to pay for this feature in Odour Eaters. This feature would have a high retention rate and can earn huge margin for the company. Advertising was necessary as the company needed a marketing program and communication policy to communicate the brand value and thereby position itself in the minds of customers .The ads would target the female heads that perform the shopping on behalf of male who were 65 million. Some of the strategies to advertise through promotions were: a) Refund 1$ to customer who mailed the form and proof of purchase of one 3-pair pack of socks. Based on 7% redemption rate, the design, distribution and redemption costs would be 75000$ for 15000 unit displays. b) Distribution of 25- cent coupon through free standing inserts in Sunday newspapers. Based on 2.5% redemption rate, total design, distribution and redemption costs would be $136500. c) A trade promotion deal on opening orders to encourage retailers to establish SKU. It would also pay retail account a percentage of opening order invoice if the evidence establishes that the retailer has advertised the product.

Profits Description
Total Display Units Pair of Socks stocked / Display Unit Inventory Turnover ratio Estimated total sales of Socks As per the Marketing Strategy , Each Unit of sales will have , Per Unit Total Units sold in a year /Display Unit Given , Gross margin/unit (Exhibit 5) Net Profit in sales Total profit in sales in 2 years would be

Values
15000 36 * 12 = 432 2.54 432*2.54=1097.28 3 pairs of Socks 1097.28/3 = 365.76 1.3 $ 15000 * 365.76 * 1.3 = 71,32,320 $ 71,32,320 * 2 = 1,42,64,640 $

 Total fixed cost incurred

Licensing Expenses in 2 Years is calculated to be as follows :1st Year = 60,000 $ 2nd Year= 5% of the total Sales Selling price = 3.3 $ As calculated in Table 1 Row f, Total Sales = 365.76*15000*3.3 = 1,81,05,120 $ nd Licensing Fee for the 2 year would be = .05 * 1,81,05,120 = 9,05,256 Total Licensing Fee = 9,65,256 $

Expenses Label
Cost incurred in setting up display units Advertising expenses Salary for salespeople Marketing expenses Licensing expenses Total

Value
$ 15000*100=$ 1500000 $100,000 $70000*3*2= $420000 $3,500,000 $965,256

$7,385,256

Net Profit
From both the tables, the Net Profit = Total profits-Total expenses = $14264640 - $7,385,256 = $6879384 PROFIT MARGIN = NET INCOME / SALES NET INCOME SALES MARGIN = $6879384 = $36210240 (15000 display units*3.3 price*365.76 sales/units*2yr) = 18.998%

 GFM Marketing Strategy- Analysis

From the analysis of GFM marketing program, we see that: 1. Instead of plastic bags, it is recommended to use pressure-sensitive bands: This is important as it has been shown in the focus group study that the plastic bags give an inferior look to the product. Further as the product is an odor-eater people might want to feel the product before buying it. 2. As females are considered to be the major buyers of the socks for males the advertising strategy is aimed at the female heads of the house. However, the advertising campaigns should be balanced in the sense that it does not alienate the male buyers. 3. The trade margin suggested is 45%. For branded products the margin is usually 50% and for private labels it is 40%. The product is a newly launched one and hence the lower margin might help attract more customers, hence the margin of Odor-Eater at 45% is justifiable as 4. The supplementary marketing scheme of refund could be replaced by a scheme in which the buyer is given a discount for the next purchase. This would help in enticing the buyer to buy the Odor-Eater socks on his subsequent consumptions also. 5. Finally, the off-invoice allowance as an entry strategy is recommended as it helps to gain a foothold in the food and drugstores. Once the presence of the brand is established in these stores then the off-invoice allowances could be gradually reduced.

Conclusion
On the basis of the quantitative analysis, we observe that fixed costs can be recovered within 2 years of product launch. Hence we can conclude that it would be beneficial for Chipman Union Inc to launch Odor-Eaters in the market. Recommendations To concentrate upon this category for some time and then over a period of time consider expansion to new areas through joint ventures, forming strategic alliance. The Expansion should be such that brand name and quality should not be compromised. And use of media (Print Media, local cable networks) & advertisements to spread the awareness among masses about the product. Profit margins being sufficient , Invest in further R&D and technological improvements for launching better products in the market.