GREAT AMERICAN KNITTING MILLS

At the time of this case, in mid1981, 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 distributed by 57 of the top 100 department stores in the United States in the nation's largest cities, and by 127 other department stores serving small cities in the country. The Gold Toe brand was the only men's socks brand in the country to which an exclusive distribution policy was applied.

Branding was a major problem for most manufacturers of men's socks in the United States. The Gold Toe brand, however, had relatively high brand recognition among consumers. Within the past two years (since mid1979), however, some manufacturers had begun marketing men's socks under designer labels, and these designer labels were beginning to develop some degree of brand recognition among consumers. The sales force for Gold Toe brand socks had reported that several of their major department store a