SLANKETS COMPANY BACKGROUND In 1997 Gary Clegg found the idea to make sleeved blanket that he called the

slanket. Gary and his older brother Jeff talked about their ideas of sleeved blanket among friends and family in 2002. Then Jeff and Gary decided to try to turn the Slanket into a small business in 2004, using $ 20,000 from their savings. They completed the slanket first production, filled their products to the warehouse, and switched on their website on January 20, 2006. The next day they found the Slanket.com site flooded with orders. After received filling orders through the website Digg.com, Gary contacted Daily Candy, an email newsletter and insider guide, and persuaded them to make Slanket the featured product. In March 2007 Gary and Jeff Clegg attended the annual International Home and House wares exposition held at Mccormick Place in Chicago, and then they showed slanket product to Matt Genandt, product manager for Sky Mall, an in-flight catalog that reached over 650 million travellers each year. At the same time the Cleggs made an agreement with the television shopping channel QVC, a television station widely available to cable television subscribers. By November 2008, the Slanket revenues had reached $ 5 million, and the last month of the busy holiday season would probably bring revenues to $ 7 million for the calendar year. Gary also had built a supply chain that sourced product in China. His goal for 2009 had been to inrease awareness of the Slanket brand, so that it could support off-shoot products and line extensions, and to that end he was working assiduously to get print and television coverage, discovering along the way that he had a talent for media relations. II. CONDITION OF THE COMPANY The organizational structure of The Slanket is considered very lean. With Jeff who is responsible for the administration and logistic with five of his staff in Denver, Colorado. And Gary supervised the design partner in Portland, supported QVC sales & promoted company to media groups on New York. A company in North Carolina was Slankets partner in operations, contracting with manufactures in China to produce the product. A third party firm in California handled fulfillment

and warehousing. Gary Clegg insisted, was going to be different kind of business. He declared the products website: Besides creating a product to make people comfortable and warm, our life goals are not to accumulate mansions, SUVs, expensive watches and closets just for shoes. What we want in life is to spread our sleeves and let them flap in the wind, giving back in the process. Part of giving back took the form of donations to causes and charities ranging from the Africa

management for IT H20 clean water initiative, the Natural Resources Defense Council, and the Breast Cancer Research Foundation. In mid 2008 All Star Marking Group of Hawthorne launched the Snuggie, a lower priced version of the Slanket made of an inferior, thinner blanketing fabric. Snuggie is a product competitor of Slanket and the commercial started to air in U.S television in October 2008 with a budgeting marketing of over $10 million. In just about 2 months, Snuggie has sold for over 4 million pieces. Snuggie was not only doing marketing through website but also through DRTV. By the end of November 2008, dozens of Snuggie video parody is aired in Youtube and other media. After that Snuggie begins to get more famous and gain lots of fans. Slanket forecast $ 7 million revenue in the third year, while Snuggie gets between $ 50 million and $ 100 million in its first season. Although from Slankets revenue is lower that Snuggie, but Slanket have better quality than Snuggie. It is proved from the customers satisfaction rating that gives Snuggie only 1 to 2 stars on amazon.com where Slanket gets the 5 star rating on QVC website. Gary and Jeff considered their marketing plan, whether they could do to emulate Snuggies success, or in some other way capitalize on it. Gary vehemently declined to adopt infomercial selling, instead Gary wanted to explore the internet as a marketing medium. Data from internet traffic measurement firm

Compete.com showed that Snuggies 219,000 unique visitors per month far exceeded traffic to Slanket.com. Jeff Clegg spent about $ 2,000/month to generate online transactions. By comparison, Snuggie probably spent about $ 110,000 in November to generate web traffic. Clegg preferred forms of marketing that did not require up-front investment, such as the arrangement with QVC and Skymall in which revenue was shared whenever the retailer made a sale, rather than marketing expenditures. Clegg major online initiative was an exclusive deal with Direct Agents, a New York affiliate partner, who specialized in generating traffic and charged him only when a visitor made a purchase. The partner tapped into the wealth of fan-generated traffic for the sleeved blanket category on the Internet. III. STATEMENT OF PROBLEMS The notion of a first mover advantage that the pioneer in a product category was assured of a head start on those who come later was belied by the Slankets experience. Although Slanket was the better product, Slanket was forecast to do revenues of $ 7 million in its third year, while Snuggie would probably sell between $ 50 million and $ 100 million in its first season. How can Slanket compete with Snuggie to dominate the sleeved blanket market share? IV. RECOMMENDATION SLANKET vs SNUGGIE Analysis 4P3C Analysis Price Product Company (Slanket) Retail Price : $32 - 38 Better Quality : Washing machine washable 100% two-sided brushed polyester Anti-pilling treatment Weight : 240gr Website, online Word of Mouth, PR

 Thank you note Charity some of the profit QVC Slanket.com Skymall Competitor (Snuggie) Retail Price : $19.99 for two Fairr Quality : 100% two-sided brushed polyester No Anti-pilling treatment Weight :180, 200gr Customer Cheap price with good quality Will recommend better quality product Pro-contra between user and non-user User want innovation of design o Driven by online promotion such as through blog, you tube, community online Easy to find and transaction of purchasing Promotion Place Slanket can compete with other major competitors such as Snuggie by : Utilize more active marketing and advertizing approach using internet marketing, social network, etc to grab more market. Utilize the online transaction, and cooperate with reliable packet delivery service to maintain customer satisfaction. Better inventory management to mitigate demands. Build an integrated system to manage the transaction flow, start from supply raw material, production, order up to delivery. Lower the price of Slanket, if we refer to exhibit 2, QVC can agree to buy the product at US$

18,5 and resell at US$ 32, meaning that the company already have a margin at selling cost UUS$ 18.5. In order to compete with other competitors, Slanket may need to lower their price at a comparable level with major competitors US$ 19.99.

TV advertisement DRTV Aamazon Slanket need product differentiation, continuous innovation in design and functionality. Active campaign about product differentiation through media, etc. Create web base an interactive communication (e.g. create fan page), so the company can see the feedback and needs from the market.