Question

Good for the Gander

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 high‐end 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
Copyright © 2019 by Nelson Education Ltd.

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. 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.
Copyright © 2019 by Nelson Education Ltd.
Q3. A company like Canada Goose that offers premium producst will have to set its price based on the following external factors, with the exception of one. Which external factor does not apply to this situation?
a) Competition
b) Internal Controls
c) Economic Forces
d) Commodity Prices

Answer 1

Q3. A company like Canada Goose that offers premium products will have to set its price based on the following 3 external factors:

a). Competition - This factor will let the company analyse its position in the market, as how much market share it can grab for the price range he is willing to set for its products.

b). Economic forces - the economic forces of demand and supply will tell the company what price to be fixed in order to maximize its profits.

c). Commodity prices - this factor will tell the company how much price is set for other commodities. Accordingly the company can decide what price consumers will be willing to pay for its products looking at the commodity basket they purchase and its value,

Only the factor of internal sector  will not apply to this situation because internal forces does not influence the price of its products.