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Bringing A Branded Label (clothing) To The Market

Posted by Anonymous on 5/18/2006 at 5:58 PM ET 250 Points

Hey All,

I have a question that I was hoping someone out there could help me with. If a company decides to bring their product to market, say for an athletic t-shirt (all else being equal with competitors, i.e. quality). Typically what is the price discount that the new entrant should typically charge so they can compete with some of the other well established names? tks! Sources, or supporting data would be great.

Posted by GHill on 5/18/2006 at 6:18 PM Member

Who said you had to discount anything?

Is there a point of differentiation between your product and others? I may be wrong, but as I recall, when Under Armour launched, they were at a higher price (and still are, compared to the old standbys who now also offer high-tech, moisture-wicking apparel).

So if there's something special about your product, push it. If it's an aesthetic matter or you're extending an established brand it may depend on the brand, but you may be able to launch in high-price boutique. If we're really talking about t-shirts, you're in a market that's so incredibly saturated, going for the mass middle will get you killed unless there's something qualitatively superior about it. And even then, there's so much of it the most important thing is to educate on why yours is the best.
Posted by Puru Gupta on 5/19/2006 at 12:34 AM Accepted

Elbert,
If you have decided to discount your products in order to enter the market, there would be a rationale attached to it. Could you share that with us? Which market are you currently operating in?

Primarily, if you are looking at leveraging price to enter the market, there are many more tactical options than discount your products.

In case of discounting in Apparels, there are certain reservations in the market -
(a) Apparels are "perceived" to be of substandard quality, if priced very low - Quality and price run proportionally (as far as the consumer mindset goes)
(b) Raising prices after a discounting season is risky, and could backfire.

Depending upon the market in which you operate, you would be able to determine the price elasticity in the Apparel category. If the category is price-inelastic, price need not be in your consideration set at all. However, If consumers are price sensitive, then you should consider the following entry strategy..

Use tactical measures - Bundling, Promotions, free gifts, schemes, competitions, seasonal offers, etc. such that the discounts are perceived to be short-term.
On a sustainable basis, yes you would have to identify a strong USP - be it connected to your culture, connected to your community, associated with specific demographics...generation/age groups or fashion symbols - it is imperative that you work towards communicating this to the customers right away.
Discounting would just be a small element to boost sales (if at all).

With this basic framework, I would be more comfortable in answering your question. Typically, if you are agressive enough, I would recommend cutting your retailer margins by 50-60% and then tag the products. Further discount would depend upon your supply chain - if you can squeeze more from it, you can reduce the prices further.

A final word of advice - do take the risks attached to discounting in consideration and then move forward.

All the best
Hope this helps!
Regards
Puru
Posted by Frank Hurtte on 5/19/2006 at 10:02 AM Member

I suspect you need to be 20% cheaper to get any attention.

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