Great American Knitting Mills

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CASE ANALYSIS: GREAT AMERICAN KNITTING MILLS GOLD TOE SOCKS Summary of the Situation At the time of this case, in mid 1981, the management of Great American Knitting Mills was reviewing the situation related to the company 's distribution policy for its Gold Toe brand men 's socks line. Essentially, the distribution policy for Gold Toe socks provided that the products would be distributed through one leading department store (or department store chain) in each major city of the United States. In exchange for the exclusive distribution arrangement, the department store organization was expected to aggressively promote Gold Toe brand socks. At the time of this case, Gold Toe socks were
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Senior executives at Great American Knitting Mills were concerned that a change in the company 's Gold Toe distribution policy might affect adversely the company 's financial performance. Increased sales resulting from a revised distribution policy might be accompanied by lower margins. Additionally, contemporary management systems within the department store account organizations emphasized bottom line results as opposed to customer service and product quality. As a consequence, department store buyers tended to drop and add product lines in the hope of gaining short term benefits. The relationships established by Great American Knitting Mills with the company 's department store accounts on the basis of the exclusive Gold Toe distribution policy, however, provided Great American Knitting Mills to 'go over the head" of buyers who demanded more than Great American Knitting Mills was prepared to give, and to effectively stifle any attempt to drop or change to any significant extent the Gold Toe distribution and marketing arrangements with the accounts. Great American Knitting Mills had introduced a second line of men 's socks under the Arrow brand to distribute through retail establishments that did not carry the Gold Toe brand. The Arrow brand had not garners success similar to that of the Gold Toe brand; however, common production of the
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