Calvin Klein's Scandalous Advertising - Morality vs Money

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Case Details:

Case Code : MKTG084
Case Length : 13 Pages
Period : 1974-2003
Pub Date : 2004
Teaching Note : Not Available
Organization : Calvin Klein
Industry : Fashion
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts Contd...

A Few Arguments

In a Newsweek article, it was mentioned that despite winning laurels from the US fashion industry, Calvin Klein as a fashion house could never become a global fashion power like Armani. Fashion collections accounted for a meager part of the company's business, which was primarily driven by fragrance, underwear and jeans sales.

And to drive the sales of these products (where differentiation was a misnomer), he had to rely on marketing gimmicks over and over.

A fashion industry source said that through his advertisements, Klein was just 'trying as best as he could to sustain some interest in his clothing line.'

Klein accepted that the entire idea behind his campaigns was to make the products look sexy.

Talking of his underwear advertisements, he said, "When I advertise it, for sure I am going to show it to its greatest advantage...

Calvin Klien Circa 2003 - Old Dog, Old Tricks

In the early 21^st century, Calvin Klein got embroiled in a dispute with its licensing partner Warnaco (which marketed its jeans and underwear since 1994). After a bitter battle that went to the courts and was covered extensively by the media, the two companies settled amicably.

In August 2002, Calvin Klein entered into an agreement with the US-based clothing and footwear major Phillips-Van Heusen (PVH ) to let the latter manufacture and market dress shirts under its label. The following month, Calvin Klein launched a new fragrance for men named Crave.

In 2002, the company earned $1.2 billion in non-couture (non-fashion) sales. In December 2002, Klein sold Calvin Klein to PVH for $700 million, while retaining the marketing and design controls.

According to reports, Klein expected the PVH deal to help it launch new and better products (focusing on sportswear and accessories) and globalize its operations...

Exhibits

Exhibit I: A Few Controversial Calvin Klein Advertisements