2/28/2005

Sara Lee to Remove Clothes

In the article Sara Lee to Remove Clothes, it is talking about how Sara Lee Company is going to enter into a new market of clothing. Which personally I think is different because when I here the name Sara Lee I automatically relate it to food products, coffee, and cleaners. The company plans that the clothing market is a big industry and they should enter it. I wonder if it will affect how there brand image, and if it will hurt there other products. It also brings up another question are they trying to target too many markets at once will they end up dropping one of the others. Some believe that if any are to go it will be there household cleaning products because there are some big companies to compete against like Proctor and Gamble, and Unilever.

3 comments:

June said...

Perhaps Sara Lee will be able to make it in the clothing and textiles industry. It already has an in with the retail giant Walmart. Sara Lee may not want to sell its clothing at Walmart though.

A company doesn't have to focus all of its efforts on a narrow target market. It is called diversification. As long as the clothing division focuses on a specific target market the company should be able to sustain an increased number of product lines.

The company may have no experience in the clothing industry, but at least they have a killer slogan. "Nobody doesn't like Sara Lee."

Jane said...

Actually, Sara Lee has been in the clothing business a long time, as your link will tell you (i.e. Hanes and Playtex). Your question of whether or not it will lead to them dropping lines is exactly what they are doing. They are dropping their clothing line by selling it as an independent company, asking price of $1.8 billion. As for competing against Proctor & Gamble, it sounds to me like they may be looking to drop some of their products that are not in the top two positions

Dr. Tufte said...

This is fairly standard practice for companies with product lines that are best thought of as mononpolistically competitive. The message of that industrial structure for managers is that (economic) profits cannot be maintained above zero forever. So it pays to both introduce new product lines (which might earn positive profits) or cut old lines (which may not lose you money, but aren't helping the bottom line either).