A-Level Case Study On Parker & Pine Case Study For Free Use

Parker & Pine is a new apparel company that is going to launch its very first product - the boxer briefs for the plus-sized men. The company carried out the test launch and received some positive feedback, but now it has to answer two questions in a short period of time: at what price to sell the boxer briefs and what promotional strategy to choose in order to market the products effectively and without the high costs.
The company was founded by Irfan Hajee and Leo Park who had some experience of working for a custom clothing start-up company. Two men researched the apparel market and came to the conclusion that this market was expected to grow in Canada and the USA and the people would spend much more money on clothes by 2025.
However, they also found that some markets are more saturated than the others. For instance, they came to the conclusion that the women’s fashion market was extremely saturated and it would be very difficult to compete against the established companies for the female customers. Therefore, they decided to focus on the men and in particular the niche of the plus-sized men where the competition was not fierce. In 2012, women’s apparel accounted for 55% of total sales in the USA, and men’s apparel accounted for 27%, but that was a very large number, because the total sales generated more than $250 billion in the USA and Canada.
Choosing the niche of the plus-sized men seems to be very reasonable, because most apparel companies avoid designing clothes of large sizes. As the result, the plus-sized men feel dissatisfied with the options that they have. Parker & Pine would like to fill the gap and start selling only one product at first – the boxer briefs in sizes XL, 2XL, 3XL and 4XL – and later extend the product range if the sales are high.
The initial pricing and promotional strategies are very significant for the start-up company Parker & Pine. If the company fails to set up the price that the plus-sized men will be willing to pay and if the target group of the customers is not reached, the owners will not be able to realize their business goals and will probably have to quit the fashion business. Parker and Pine decided to open an online store and they expect that there will be many internet users in the USA and Canada that could become their clients.
Parker and Pine researched the market and the companies that sell clothes for the plus sized men. They saw a very wide price range. For example, Old Navy sells boxer briefs at a price $10-12. On the contrary, Polo by Ralph Lauren and Tommy Hilfiger sell similar products at a price $32-35. There are also some custom tailors that offers customer boxer briefs that cost $110-340. For Parker & Pine, the breakeven price is $25 and the company will not be able to sell the cheaper boxer briefs. Therefore the problem is how high the price should be in order not to lose the customers.
Moreover, Parker and Pine have to decide which promotion tools will be the best. They want to open a website and sell boxer briefs only online. That means that the company will have to invest into the traffic in order to attract the target customers. There are several options: advertising by means of Google Adwords/Facebook ads or banner advertising in the Men’s Fashion Magazine that has 110,000 page views and 45,000 visitors a month. The problem is that Parker & Pine has a very limited budget - $1,500 a month - and because of that the best mix is very difficult to select.
So if Parker and Pine fail to resolve the problems related to pricing and promotion that is needed for their start-up e-commerce business, they will face the low sales, high operating expenses and very poor brand awareness. As the result, they will need to rethink their business strategy and market niche or find the investors that will agree to invest in their venture until the business becomes profitable thanks to the large customer base. The worst implication may be that the company will go bankrupt and the owners will fail to realize their ambitious business goals.