Stormy Kromer.

Brunswick, Gary J. ; Zinser, Brian A.

CASE DESCRIPTION

This case primarily focuses on the rescue of a brand which has been around for nearly a century, and how strategic marketing can be effectively used to rebuild and reinvigorate a relatively old brand and product. Secondary issues include brand positioning and brand equity issues, channel conflict, and e-commerce. This case has a difficulty level of 2-3, and would be appropriate for sophomore--to--junior level students. The case is designed to be taught in 2-3 class hours and is expected to require 3-5 hours of outside preparation by students. It might be helpful for students to further examine other "nostalgic" brands for the purposes of comparison.

CASE SYNOPSIS

This case centers around an entrepreneur (Bob Jacquart) who unexpectedly finds out that a product his family has worn for generations (the "Stormy Kromer" cap) has fallen upon hard times and is nearly being discontinued. After making some inquiries, Bob purchases the rights to produce the product / brand, and begins to realize the power held by the brand itself. Sales for the Stormy Kromer hat increase dramatically over a short period of time, and Bob is challenged to find ways to successfully grow the brand equity associated with the Stormy Kromer name through suitable additions to the product line, expansion and diversification of the channel strategy (including e-commerce: go to StormyKromer.com) and possible international expansion.

INSTRUCTORS' NOTES

Recommendations for Teaching Approaches

This case is designed for use in several different courses including Marketing Strategy, Consumer Behavior, and finally E-commerce and Marketing. Students should be drawn to the company's Website immediately upon reading the case (www.stormykromer.com), and probably have never heard of the hat nor the company, especially if from a warmer climate. The company in question here is a small one, and therefore students should be able to imagine what it would be like to purchase an old brand and bring it back to life.

The case can be assigned as either an individual or group assignment; the questions provided at the end of the formal case allow for some flexibility in assigning some or all of these questions / issues to students. It might also be helpful to have students prepare for the case by thinking about the role of "stories" or "nostalgia" as they relate to brands and brand equity. Perhaps have students prepare a list of 3-4 other products where "stories" or "nostalgia" are an important part of the product.

Teaching Objectives

There are a number of teaching objectives linked to this case, including the following:

1. To expose students to the challenges and opportunities of rescuing a brand.

2. To provide students with the opportunity to understand the intricacies of blending traditional and Web-based distribution strategies.

3. To challenge student to think about the components of branding, including "nostalgia"-based branding, and how to extend brand equity.

4. To give students the opportunity to explore foreign market entry options.

POSSIBLE CASE TEACHING QUESTIONS

1. Should the Stormy Kromer brand name be extended to related products or lines, such as clothing (i.e., coats, jeans)? If so, how would these products be priced? Promoted? Distributed? A brimless version of the Stormy Kromer had recently been introduced, with some success, but who was buying this version of the Stormy Kromer and why?

A discussion of this question can be centered on asking students to evaluate three requirements for successfully broadening the product mix: 1.) How consistent is or are the related products or lines, (including pricing, promotional and distribution aspects) with the Stormy Kromer hat? 2.) Does Jacquart Fabrics have the necessary resources to adequately introduce and sustain the new products or lines? And, 3.) Is there a viable market niche for the new offerings?

The brimless version of the Stormy Kromer can be a good basis for discussion. Most students will agree that the modified Stormy could be considered "consistent" with the original hat. However, the brimless version tends to appeal to a whole different market niche than the "hunt and fish" crowd. Initial sales indicate the hat is selling to women and to younger individuals who could be classified as being more active outdoor oriented (snowboarders, Nordic and Alpine skiers, winter hikers and campers, etc.).

If the hat is appealing to a different segment, a different or modified promotional and distribution strategy is needed to be successful. The introduction of the brimless version as well as the Lil' Kromer (see question 6) could be discussed in the context of being a market development strategy versus developing related products such as a premium made and priced wool coat targeted to the "hunt and fish" segment. Based on Jacquart's limited resources (stated in the case), either strategic direction taken will require a substantial commitment of financial and human resources.

2. How should the brand name and brand image of the Stormy Kromer be managed over the next 5 years? The brand seems to be off to a "good start", but Bob continually worries about the future of the brand. How would, or should, the promotional strategy for the Stormy Kromer brand change or evolve over time? Who buys the Stormy Kromer cap, and why? How, or might the customer, or target market for the Stormy Kromer change over time? How should the brand be positioned in the future?

An initial thread of discussion might include the concept of brand equity, and what are some examples of products that could be related to the Stormy Kromer brand. For example, Bob has considered adding an entire line of outdoor-related clothing under the Stormy Kromer brand, and is currently testing this idea by launching shirts ($30-50 price range) and outdoor coats ($350-500 price range). One key question here, though, relates to the ability of the brand name to carry a broader range of products; has enough time and investment been made such that the brand name has the "legs" to carry a broader array of products.

As an example, class discussion might relate to other outdoors-related brands, such as Cabela's, Gander Mountain, Bass Pro Shop, Coleman, Columbia, Woolrich, Filson, Pendleton, and Carhartt, and how these brands have grown and evolved over time. For example, students can profile the evolution of the Columbia brand vs. the Coleman brand over the past 10-20 years, focusing on product, distribution, pricing and promotional strategies; what lessons might Stormy Kromer take from the experience of some of these successful (and not so successful) brands?

3. Should the Stormy Kromer brand be launched in the international market? Bob has wondered about potential markets, such as Canada, and parts of Northern Europe and Scandinavia (i.e., Finland, Sweden, and Norway). What would it take to achieve a successful launch in one or more foreign markets? What business model should be used?

Given that the Stormy Kromer brand is culturally-bounded and Bob's company is relatively small, it would seem to be difficult to extend the brand too far outside of the U.S. In developing this case, a group of students in Finland, for example, conducted some research in Scandinavia in order to assess the hat market; their findings indicated that most people in Finland, Sweden and Norway did not understand nor appreciate the "history" behind the Stormy Kromer, and preferred winter hats that were either more functional (using more modern materials such as Gore-Tex) or more stylish in a contemporary sense (vs. an "old fashioned" looking hat such as the Stormy Kromer). Perhaps the Canadian market would be a good "test" for Bob's international market ambitions, given it's proximity to the U.S. and cultural similarities (somewhat so); simple exporting would seem to be the most appropriate business model. Country--of--origin effects might also be an interesting discussion thread for students to consider also; where, how and why are these effects significant, and how does country-of-origin relate to the Stormy Kromer product?

4. What about competition? Bob worried about foreign competitors marketing cheaper versions of the Stormy Kromer cap in the U.S.; would these competitors enhance their marketing efforts once word leaked out about the success of the Stormy Kromer? Would other competitors, such as Columbia, Carhartt, Filson, Woolrich, and Pendleton launch similar products?

Some level of direct competition already exists, primarily from other North American (Canadian) and Asian producers; however these firms have not developed any significant level of brand equity associated with their versions of the winter Kromer cap. Will the promotional investments made in creating and perpetuating the Stormy Kromer legend (and brand) be enough to convince consumers to pay a premium for the "real" version of the winter Kromer cap? To date, the evidence seems to suggest "yes". Is the market for the "Stormy Kromer" large enough to attract significant competitors such as Columbia, Carhartt, Filson, etc.? At this point in time, probably not, given that some of these competitors are over 100x the size (in terms of sales) of Stormy Kromer; for example, if unit sales (to resellers) of Stormy Kromer are 200,000 per year, at $15 per unit this only equates to $ 3 million annually in sales, which is a relatively small amount. It would seem that Stormy Kromer's sales would have to climb substantially before competitors would see significant market potential.

5. How (if at all) should the distribution strategy for Stormy Kromer be changed? Should the company hire more of their own sales representatives? Should more of an emphasis be placed on the Web-based sales (see www.stormykromer.com)? Should company-owned "Stormy Kromer" retail stores be opened in selected locations in the Midwest, West and Northeastern U.S.? Should more of a merchandising presence be established with "big name" retailers? Might any channel conflict result from changes in distribution?

An appropriate way to begin discussion is to ask students to list some of the pros and cons of the current distribution strategy which uses a dual channel of distribution: an independent agent/retailer channel and a non-traditional direct channel (www.stormykromer.com). A discussion on what is the appropriate level of distribution intensity might also be addressed. Initially the hat was selectively distributed through independent specialty retail stores. Is the placement of the hat in a "big name" store like Cabela's compatible with the brand strategy? Could Walmart or some other mass market general box retailer be next?

There are several ways the discussion could go on whether the company should hire more of their own sales representatives. Based on the company's relatively inexperience in sales, limited resources and the geographical breadth of the hat's distribution, the distribution strategy that the Jacquart team has chosen, independent sales representatives in assigned geographic territories makes sense. However, a brief analysis of existing retail outlets (dealer locater at www.stormykromer.com) versus the potential market will show that retail outlet penetration is low outside of the Midwest, particularly in the Northeast and Pacific Northwest. This analysis can be performed a number of ways. The easiest is to have students do a retail outlet per capita analysis by colder climate "hunt and fish" state. The authors have had students who have done a retail outlet per deer hunting and/or fishing licenses by state.

Channel conflict cannot be ignored when addressing whether additional emphasis should be placed on Web-based sales, opening company-owned retail stores or seeking more of a merchandising presence with "big name" retailers. At present, channel conflict doesn't appear to be an issue with Stormy's network of retail outlets despite the fact that 28 percent of 2004 sales were through the company's Website. You might ask students to offer an explanation for the lack of conflict. Possible reasons include the hat's low penetration of retail outlets in certain areas of the United States, lack of an international presence, consistent pricing and discounting (only allowed at certain times of the year) with retail outlets plus direct buyers pay shipping and handling fees. Since the hat is often a sought product, retailers also benefit from prospective buyers using the www.stormykromer.com Website's dealer locater feature.

From the firm's perspective, Web-based sales are preferable since they eliminate the independent sales rep's commission and the retailer's markup, dramatically increasing Jacquart's unit contribution. You might ask students to compute how much more the unit contribution is for a Web-based sale (a minimum of $ 29.99-$ 15.00= $ 14.99 plus the rep's commission, assuming shipping and handling fees cover the marginal costs for Jacquart to receive the order and drop ship to customer.)

Based on the narrow breadth of the product line and seasonality of sales, opening "company-owned" retail stores is probably not a good idea at this time. Perhaps a strategy of establishing a merchandising presence with a "big name" retailer like Cabela's, Gander Mountain or even a regional department store like Marshall Fields with a boutique or "store within a store" concept is a possibility. Students might bring up the idea of selling the hats at kiosks located in regional shopping malls during the peak selling season. (Jacquart experimented with a kiosk in Duluth, MN the last quarter of 2004 and experience problems with finding good sales associates as well as having adequate controls in place to prevent inventory shrinkage.)

6. Jacquart's first attempt to expand the product line was the introduction of the "Lil' Kromer." It was recalled for some safety concerns, which have since been corrected and the hat was recently re-introduced to the product line. How should the children's market be approached? How lucrative would the children's market be to Stormy Kromer?

At least two logical approaches to the children's market are plausible. The most obvious is to do what the company is currently doing, marketing the Lil' Kromer along side the adult version of the hat. The children's version of the hat is often purchased through existing retail outlets or on-line by a "hunt and fish" customer as a gift for a child or grandchild. This approach has the advantage of piggybacking on the promotional and distribution strategies of the original Kromer.

An additional strategy would be to broaden the children's target market segment beyond children or grandchildren of the "hunt and fish" crowd. Some students have raised the idea of packaging or bundling the "Lil Kromer" with a copy of the "Mr. Puffer Bill" book (currently out of print) and distributing the gift pack through high-end specialty toy and children's apparel retailers and cataloguers. This would most likely require a different promotional and distribution strategy. It could lead to additional opportunities to expand the product line into children's toys, literature and other media (i.e., Thomas the Tank, American Girl) which good be quite lucrative.

Gary J. Brunswick, Northern Michigan University Brian A. Zinser, M.M., Lake Superior State University