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. Include personal anecdotes, statistics, and references to additional reading or materials. Reference your sources in appropriate provide substantive evidence of any claims that you make.
Canada Goose, the renowned producer of high-end outerwear, is considering entering the knitwear (sweater) market with a new line of products. This brand extension presents both opportunities and challenges, requiring a comprehensive assessment of various factors that influence the pricing strategy. The Five Cs of pricing—Cost, Competition, Company Objectives, Customers, and Channel Members—play a crucial role in determining a successful market entry strategy for Canada Goose’s knitwear.
Cost analysis is a fundamental aspect of pricing decisions. Canada Goose’s reputation for premium quality and “Made in Canada” craftsmanship may entail higher manufacturing costs compared to competitors who produce in lower-cost regions like China. The company’s commitment to authentic and expertly crafted products aligns with its existing image, but the challenge lies in maintaining profitability while meeting customer expectations for quality. A thorough cost analysis, considering materials, labor, and production techniques, is essential to determine the optimal pricing point for the new knitwear line.
The competitive landscape is crucial in pricing strategy. Established competitors like The North Face and Patagonia have strong footholds in the market. These brands offer a diverse range of products and have loyal customer bases. Canada Goose’s premium positioning allows for a higher price point, but the knitwear market may require strategic differentiation to justify the premium. Analyzing the pricing strategies of these competitors, studying their target audiences, and identifying gaps in the market can provide insights into Canada Goose’s competitive advantage.
The company’s objectives, including profit goals, brand image, and long-term growth, shape pricing decisions. Canada Goose’s image as a luxury, “Made in Canada” brand necessitates maintaining premium pricing. Entering the knitwear market extends the brand’s appeal to a broader customer base, but the challenge lies in expanding while preserving exclusivity. The company’s aim should be to strike a balance between profitability and accessibility while reinforcing its brand identity.
Understanding customer behavior and willingness to pay is crucial. Canada Goose’s existing customer base, accustomed to high-end prices, might be willing to pay a premium for knitwear that embodies the same quality and craftsmanship. However, appealing to a new, broader market demands pricing sensitivity. The “Made in Canada” cachet may justify premium pricing, but segmenting the customer base and conducting market research to gauge demand elasticity is essential. Customer surveys, focus groups, and online analytics can provide valuable insights into price perception.
Channel members, including retailers and distributors, play a role in pricing decisions. Canada Goose’s existing network of retail stores across major cities positions them uniquely. Their direct-to-consumer model allows for better control over pricing and branding. However, careful consideration of retail partner expectations, wholesale pricing, and their perception of the new knitwear line is essential to maintain strong relationships and ensure successful market penetration.
Entering the knitwear market presents an exciting opportunity for Canada Goose to leverage its reputation for quality and craftsmanship. The Five Cs—Cost, Competition, Company Objectives, Customers, and Channel Members—form the cornerstone of the pricing strategy. A meticulous analysis of these factors, backed by market research, competitor analysis, and customer insights, will guide Canada Goose in making informed decisions about the pricing of their new knitwear line. By maintaining a delicate balance between profitability, exclusivity, and accessibility, Canada Goose can ensure that its brand extension is not only successful but also resonates with its target audience.
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