Good for the Gander
If $1000 sounds like a lot to pay for a jacket, think about another number: $1.82 billion. That was the market value of Canada Goose, producer of those pricey jackets, when its IPO hit the market in March of 2017. This was the highest valuation of any luxury retailer in the world. Not bad for a company that started in a small warehouse in Toronto in 1957. Entrepreneur and immigrant Sam Tick opened that warehouse more than 60 years ago, selling woollen vests and snowmobile suits. But there was not the same sticker shock back then when the company was known as Metro Sportswear, compared to the luxury prices being charged by its current offspring: Canada Goose.
As Sam and his son‐in‐law began developing innovative ways to create outerwear that would withstand the harshest of elements, the reputation of Metro Sportswear grew. The branding changed from Snow Goose to Canada Goose. But much of the growth in the reputation of Canada Goose comes from partnerships with customers such as climbers and field researchers and film crews working in extreme environments.
Along the way, the Canada Goose name developed a reputation for quality and innovation. The firm continues to seek new means to deliver quality, with a focus on “Made in Canada.” In the last decade, Canada Goose began to grow exponentially, with two new manufacturing facilities opened in 2017, expansion of both the factory and office spaces in its global headquarters in Toronto, and flagship retail stores in Toronto; Calgary; New York City; Chicago; Boston; London, U.K.; and Tokyo.
With the very successful IPO in 2017, Canada Goose seems to have created a permit for printing money. Despite uncertain economic times, those interested in buying a Canada Goose product don’t seem to be fazed by the price of the product. This willingness to buy despite the high prices has remarkably impacted Canada Goose’s bottom line: profits increased from $5 million to $200 million once the company expanded its manufacturing and retail operations.
There is a lot of competition for high‐quality outerwear, including from The North Face and Patagonia. Those brands are well established in the market, so it was a calculated risk for Canada Goose to go head to head with those brands and charge a premium price on top of the existing high prices charged by highend competitors.
But Canada Goose first had to leave Canada to get people to pay a steep price for its products. In the early 2000s, Sam Tick’s grandson Dani Reiss took the reins of the company and began selling Canada Goose products in Europe. And it was the cachet of “Made in Canada” that had Europeans willing to pay more for a Canada Goose jacket. Reiss noted, “For them a Canada
Goose jacket made in Canada was like a watch made in Switzerland…. Rolex is not going to move their production to China.” Made in Canada became a marketable, bankable factor.
But moving to China is precisely what many clothing and outerwear manufacturers did. And Canada Goose took advantage of this by positioning themselves as the only truly Canadian alterative. Reiss believed that people would be willing to pay for an authentic, expertly crafted product.
Today, Canada Goose is at an important crossroads. Its growing popularity means that the early adopters are now starting feel as though the brand no longer belongs to them. But there is a huge market out there waiting to be targeted. One way to test a brand’s presence in the market is to create brand extensions. 2 Canada Goose recently started making knitwear, mostly sweaters. The worldwide sweater sales market is growing at around 3 percent, while the outwear market has stagnated recently at below 1 percent.
You are asked to assess the knitwear (sweater) market for Canada Goose to determine if it’s a viable market. This means you will have to search Canada Goose’s offerings, along with those of competitors. Do a pricing analysis based on other marketing factors like economic and competitor forces. A brand extension is always a risk, so the information you gather will be important for Canada Goose to proceed in this market. You will need to use your marketing skill set to make sure that this goose is not cooked.
Question
There are five Cs that a company takes into consideration when it decides to fix (or change) a price In the case of Canada Goose introducing a new line of knitwear, discuss how each of those factors would have an influence on the company’s decision.
Canada Goose, a renowned luxury outerwear brand, is contemplating a strategic brand extension into the knitwear market. This expansion decision requires a comprehensive assessment of the five critical pricing factors known as the “Five Cs” – Company, Customers, Competitors, Collaborators, and Context. Each of these factors plays a pivotal role in shaping Canada Goose’s pricing strategy for its new line of knitwear.
The Company factor involves internal considerations that impact pricing decisions. For Canada Goose, this entails evaluating their brand identity, positioning, and production costs. As a luxury brand synonymous with quality and “Made in Canada” craftsmanship, Canada Goose must ensure that the pricing of its knitwear aligns with its premium image. Additionally, the company’s expertise in creating high-performance outerwear should translate into the knitwear’s functional benefits. Pricing must reflect the value derived from the brand’s reputation and craftsmanship while covering the costs associated with design, materials, and production.
Understanding customer preferences and willingness to pay is crucial in pricing decisions. Canada Goose has a loyal customer base accustomed to premium pricing for exceptional quality. However, transitioning from outerwear to knitwear necessitates gauging how these customers perceive this extension. Customer segmentation, which identifies distinct groups based on lifestyle, demographics, and psychographics, will help tailor pricing strategies to target different segments effectively. Additionally, conducting market research to assess customers’ perception of knitwear as an extension of the Canada Goose brand is essential.
Analyzing the competitive landscape is integral to setting a competitive price. The luxury outerwear market has established players like The North Face and Patagonia. Canada Goose’s knitwear must stand out amidst these brands while justifying its premium. A competitive analysis should consider the price points of competitors’ knitwear offerings, their brand positioning, and the value they deliver. Canada Goose’s price differentiation should be justified through its superior craftsmanship and alignment with its luxury image.
Collaborations and partnerships can influence pricing strategies. Canada Goose has built partnerships with climbers, researchers, and film crews. These collaborations emphasize the brand’s functionality and performance. For the knitwear line, potential collaborations with renowned designers or artists could elevate the brand’s appeal and justify premium pricing. Collaborators should align with Canada Goose’s values and resonate with the targeted customer segments.
External factors like economic conditions and market trends impact pricing. As the worldwide sweater sales market grows at around 3 percent and the outerwear market stagnates at below 1 percent, Canada Goose’s pricing should reflect these trends. Economic indicators such as disposable income and consumer confidence play a role in determining customers’ willingness to invest in luxury knitwear. Additionally, geopolitical factors affecting trade and sourcing should be considered to mitigate potential disruptions.
In conclusion, Canada Goose’s expansion into the knitwear market demands a meticulous assessment of the Five Cs – Company, Customers, Competitors, Collaborators, and Context. Each factor intricately contributes to the formulation of a pricing strategy that reflects the brand’s luxury image, customer preferences, competitive landscape, collaborations, and market trends. By strategically analyzing these factors, Canada Goose can navigate the challenges of introducing a new line of knitwear and ensure its continued success in the fashion industry. This comprehensive approach will safeguard the brand’s reputation while capitalizing on the new market opportunity, ensuring that this goose remains far from being cooked.
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