Evaluating Opportunities for Canada Goose: Asmuns Place vs. Levine's

Case Assignment 5 Case: Curled Metal Inc. – Engineered Products Division Q5) What factors are relevant when evaluating the opportunities presented by Asmuns Place and Levine’s Menswear?(For possible factors, please refer Distribution(Place) last lecture slide on Factors affecting channel selection). How important would you rate each of these factors in the context of the decision Reiss is facing and why? High ratings: Brand Positioning – Kotler defines brand positioning as “the act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market” and brand positioning is what Reiss and his executives have been working on painstakingly for a period of time as one of the most important objectives to be achieved; Reiss wants to build a concrete brand image to the customers that it is a fashionable and high-functional jackets and wearables, which are prestigious. The following common characteristics of Asmuns Place and Levine’s Menswear can contribute to the desired brand positioning of Canada Goose:  Price insensitive customer base  Exclusive brand images as prestigious retail outlets  Most importantly, brand images of these two align with the positioning objectives that Canada Goose is pursuing. Level of control/collaboration with channel – According to the given case, there were numerous attempts Canada Goose has taken previously with its distributors, in terms of pricing, and,

moreover, Canada Goose’s marketing team prefers to minimum advertising strategy as keeping low-key company profile can help the company continue its path towards being symbolic to premium brand; furthermore, Canada Goose specifically chooses several ways of promoting its products by selecting where to sponsor. These findings are plausible to interpret that Canada Goose rates the level of control and collaboration with channel very highly. Channel conflict issues – According to the case, two types of channel conflicts – vertical level conflict and horizontal level conflict – are identified:  Vertical level conflict – As identified in the email from Steinhauer, partnering with Asmuns Place and Levine’s Menswear creates a critical problem to localized individual retailers, like Westbrook’s as the individual retailers do not have enough bargaining power. However, if all the individual retailers form a sort of alliance and refuses to buy Canada Goose, it is going to cause a severe issue for the organization.  Horizontal level conflict – This type of conflict is identified in the case, where the director of Purchasing of Asmuns Place called Reiss about an exclusive partnership between Asmuns Place and Canada Goose, implying no partnership with Levine’s Menswear. This is crucial as if Reiss and Canada Goose pursues the exclusive partnership with Asmuns Place, it cannot form any partnership with other retailers. Low Ratings: Economic – The implications for sales and profits are the major reasons why Canada Goose plans to take the opportunities provided by Asmuns Place and Levine’s Menswear; Canada Goose’s objective of organizational expansion is ultimately to achieve increased sales and profits. However, when evaluating the opportunities presented by Asmuns Place and Levine’s

Menswear, the economic factor is rated low as both these opportunities provide same amount of sales (5%) in Canadian market. Consumer – As discussed briefly in the brand positioning, consumer base plays a significant role in evaluating which channel is to be utilized for the distribution of the product. Although, in the past, Canada Goose’s major customer segment was an affluent adult, who were price insensitive, the segment got wider (from 16~64 years old). Asmuns Place and Levine’s Menswear covers the price insensitive consumers but, as of now, since there is a wide customer base (in terms of age) available for Canada Goose, consumer is not the factor to be rated highly.

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Q6) Evaluate the opportunities presented by(a)Asmuns Place and(b)Levine’s Menswear. Please rate the opportunities as (Attractive/Not attractive) on all the factors identified(inQ5) above. Please provide the reasoning for your ratings. Factors Asmuns Place Levine’s Menswear Brand Positioning Attractive Attractive Level of Control Unattractive Attractive Channel Conflict Unattractive Unattractive Economic Attractive Attractive Consumer Attractive Attractive Reasonings for Asmuns Place ratings:  Attractive Brand positioning: Asmuns Place pursues the brand image of premium and prestigious outlet that treats high-end products with trendy fashionable attributes. If Canada Goose can distribute its products to Asmuns Place, it can make the concrete brand image of Canada Goose as premium.  Attractive Economic outcome: At ceteris paribus, just by selling women’s clothing, Canada Goose can be benefited with 5% increased sales within Canada. Moreover, as discussed from the calls with the director of Purchasing of Asmuns Place, if they pursue to sell men’s wear as well, more sales boost can be expected.

 Attractive Consumer segment: Major customers of Asmuns Place are the affluent female, who are price insensitive, that it is feasible to secure the high markup, while maintaining the premium status of the products.  Unattractive Level of control: Asmuns Place demands a lot of different contracts that Reiss is hesitant to agree upon. First, Asmuns Place wants to add Canada Goose products in the promotion flyers, which goes against the marketing strategy of Canada Goose. Second, it wants to form an exclusive partnership that Levine’s Menswear is out of radar for the partnership with Asmuns Place is to happen. Lastly, it orders only specific designs (colors and styles).  Unattractive Channel conflict: As discussed in the level of control above, partnering with Asmuns Place causes both types of channel conflicts – horizontal and vertical – that the deal looks unattractive when it comes to channel conflict. Reasonings for Levine’s Menswear ratings:  Attractive Brand positioning: Similar to Asmuns Place, Levine’s Menswear has the brand image amongst the consumers that it treats only high-end products which are considered premium. This strategy aligns with the brand positioning of Canada Goose that it is rated attractive.  Attractive Economic outcome: At ceteris paribus, just by selling men’s clothing, Canada Goose can be benefited with 5% increased sales within Canada. Moreover, there is a likelihood that Levine’s Menswear stores are expanding, which can further contribute more sales growth.  Attractive Consumer segment: Major customers of Asmuns Place are the affluent male, to whom the cost of product was not an issue.

 Attractive Level of control: If there is any control that Levine’s Menswear is trying to impose is the recommendation of sales representative; however, it is hard to assess it as the control as it is merely a recommendation that Reiss can decide whether to hire the sales representative or not at the end.  Unattractive Channel conflict: It is inevitable to encounter the objections from small shops (original distributors) as partnering with Levine’s Menswear is going to force them out of competition due to less individual bargaining power.

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Q7) How should Reiss respond to (negotiate with) Levine’s and Asmuns Place? Think of both short-term and long-term implications. Negotiating with Levine’s Menswear:  Short-term – In a short term, Reiss should hire the sales representative recommended by Levine’s Menswear to comprehend the partnership with large retail chain. The understanding from the case is that Canada Goose can currently cope with the number of stores that Levine’s has (its production sites did not meet the saturation).  Long-term – In a long term, Reiss should consider expanding the production capacity to cope with the increased demand. Moreover, the experienced sales representative, who by then understands the operations of Canada Goose, can guide how to meet the ideal production level. Negotiating with Asmuns Place:  Short-term – In a short term, as Canada Goose aims to solidify the brand image as premium and fashionable wearable, it should focus on distributing the products requested/ordered by Asmuns Place.  Long-term – Asmuns Place has an intention to expand Canada Goose’s products by adding menswear as well. However, if Asmuns Place demands on the exclusive partnership, Reiss should reconsider the partnership as the exclusive partnership is not the ideal strategy for expanding the coverage of Canada Goose products throughout the Canadian market.

Q8) What is your opinion about the email from Steinhauer (Westbrook’s Downtown)? How should he manage his relationship with Westbrook’s Downtown? Email from Steinhauer basically addresses the concerns and the opinions of the original distributors (small localized shops) about the partnership with large retail chain stores. The following provides the pros and cons for accepting the concerns addressed by Steinhauer: Pros for Canada Goose:  Concrete loyalty from original distributors: If Reiss listens to Steinhauer’s concerns, it is very likely to widespread among other localized original distributors and both parties – Canada Goose and original distributors – can further solidify the loyalty and business relationships and make the loyalty even more concrete.  May accept changes in terms of contracts to compensate: Since the original distributors, like Westbrook’s Downtown, will be aware of the facts that Reiss and Canada Goose gave up on partnering with large retail chains, they may accept the changes in terms of contracts, such as increased selling price from manufacturer. Cons for Canada Goose:  Potential loss of sales: 5% sales from each of Asmuns Place and Levine’s Menswear are lost if the partnership is forfeited. However, it is not guaranteed that this amount of sales can be replaced by the individualized local distributors.  Lost control of distributors and business partners: Under the concept of Porter’s Five Forces, the bargaining power is low for Canada Goose if the original distributors form a sort of alliance. If the distributors realize that their alliance and raising concerns can

affect the business decision of Canada Goose, in favor of them, they will try to stop any future business partnerships if it affects their interest.  Chance of positioning as premium brand may be hindered: By supplying its products to Asmuns Place and Levine’s Menswear, Canada Goose could solidify the brand image of premium and fashionable; however, if the partnership opportunities are gone due to the objections from the original distributors, the objectives of Reiss and his executives of building a premium brand image on Canada Goose need different approaches and may take longer time. How Reiss should manage his relationship with Westbrook’s Downtown: It is debatable, depending on what Reiss prioritizes in his business operation. In the case, it is identified that Reiss prioritizes loyalty over economic benefit. In order to maintain a good relationship with Westbrook’s Downtown, and, furthermore, other original distributors, Reiss should listen to their concerns and seek a way to benefit both parties, while abandoning the opportunities suggested in the case.

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