Industry AnalysisAnalysis of industry and Gold Toe statistics of men's hosiery provide a solid perspective when searching for possible and logical solutions for Gold Toe's distribution and positioning problems. Industry unit sales were increasing at an increasing rate between 1975 and 1978, but began decreasing thereafter in 1979 and 1980. In contrast to this shrinking, Gold Toe's unit sales were increasing but at a decreasing rat. The recent disparity between the industry and Gold Toe, but it also points out the fact that both are in a decline. It is logical to expect this decreasing growth rate in Gold Toe's unit sales will eventually have a negative impact on the company in subsequent years.
Additionally, the intense competition between producers like Kayser-Roth, Burlington, etc. who target high-end users coupled with significant changes in the hosiery industry (high growth in athletic the socks segment, high brand awareness of manufacturers, and intense advertisement campaigns) will significantly affect Great American Knitting Mill's (GAKM) Gold Toe brand market share.
Although Gold Toe's unit sales growth is flattening, its dollar sales are increasing. The probable reason for this increase is Gold Toe's pricing strategy; they increased prices in preceding years in order to provide increasing revenues. In 1980, Gold Toe increased per unit price by 16%. If demand for Gold Toe's men's hosiery does not grow at the same rate as their price, Gold Toe will likely see the negative impacts of this pricing strategy such as decreases in market share and profits and loss of brand loyalty and reputation. Gold Toe has loyal customers and successful positioning in industry; as a result its market share is still increasing in contrast to the shrinking in the industry unit sales.
The decision to change Gold Toe's distribution and positioning strategy should be investigated because of...