Stormy Kromer.

Brunswick, Gary J. ; Zinser, Brian A.

CASE DESCRIPTION

This case primarily focuses on the rescue of a brand which has been around for nearly a century, and how strategic marketing can be effectively used to rebuild and reinvigorate a relatively old brand and product. Secondary issues include brand positioning and brand equity issues, channel conflict, and e-commerce. This case has a difficulty level of 2-3, and would be appropriate for sophomore--to--junior level students. The case is designed to be taught in 2-3 class hours and is expected to require 3-5 hours of outside preparation by students. It might be helpful for students to further examine other "nostalgic" brands for the purposes of comparison.

CASE SYNOPSIS

This case centers around an entrepreneur (Bob Jacquart) who unexpectedly finds out that a product his family has worn for generations (the "Stormy Kromer" cap) has fallen upon hard times and is nearly being discontinued. After making some inquiries, Bob purchases the rights to produce the product / brand, and begins to realize the power held by the brand itself. Sales for the Stormy Kromer hat increase dramatically over a short period of time, and Bob is challenged to find ways to successfully grow the brand equity associated with the Stormy Kromer name through suitable additions to the product line, expansion and diversification of the channel strategy (including e-commerce: go to StormyKromer.com) and possible international expansion.

INTRODUCTION

It was a normal workday in September of 2001 when Bob Jacquart headed to a local Ironwood, Michigan coffee shop, to grab a quick lunch and to catch up on the day's news. As in most small northwoods communities, many of the patrons were local business persons and retirees who gather daily to talk about everything from local politics to the weather. On this particular day, the owner of Hobby Wheel, a general merchandise retail store that carried the Stormy Kromer, announced that the hat's manufacturer, Kromer Cap Company of Milwaukee, Wisconsin, was no longer making the legendary cap. The Stormy Kromer has been part of most northwoods mens' wardrobes for almost a century, and Bob's immediate reaction was "get me the phone number" ...

Later that day, sitting on Bob's desk was a slip of paper from the Hobby Wheel with a phone number on it. So Bob decided to make some inquiries with Richard Grossman, owner of the Kromer Cap Company, to see if he would be interested in selling the rights to produce the Stormy Kromer. As fate would have it, Bob's decision to call was a momentous one.

HISTORY OF THE STORMY KROMER

Nearly 100 years ago, George "Stormy" Kromer invented the now famous hat which is known for its ability to keep one's head warm and stay on one's head in windy conditions. Stormy, a native of Kaukauna, Wisconsin was an avid baseball player and at the age of 17 joined a semiprofessional team in Sterling, Illinois. He probably would have continued to pursue a career in baseball had he not fallen in love and married Ida Homan. At Ida's father's insistence, they established their new home in Wisconsin and in 1897 Stormy went to work for the Chicago and Northwestern Railroad.

There is some confusion has to how the idea for the hat came to George. One version of the legend has it that the idea came to him because his baseball cap would always blow off his head as the stiff wind blew through the cab of the locomotive. Another version is that he got the idea watching the brakeman's hat blow off time and time again. Still, another version is that to prevent headaches from wearing a cap with a stiff visor, Stormy would push the cap back on his head and the wind would catch the visor and blow the cap off. Regardless of how the idea surfaced, Stormy, with the help of Ida, who was an excellent seamstress, invented the Stormy Kromer.

Stormy began to wear his new cap to work on the railroad. Co-workers took notice and before long, Stormy and Ida were in the hat business. When his wife could no longer keep up with the demand, they hired some employees. The business continued to grow. Stormy quit the railroad and in 1918 moved the business to Milwaukee. The hat continued to gain popularity and larger production facilities were acquired in 1930 and again in 1945. In the mid '60s, Stormy's health began to deteriorate and the family sold the business to Richard Grossman. Grossman continues to run the Kromer Cap Co. Today, the firm's main product is cotton visor caps for welders. In 2001, the firm decided to discontinue the production and sale of the original Stormy Kromer wool "blizzard" model hat when sales declined to about 3,800 units a year.

A NEW BEGINNING FOR THE STORMY KROMER

As Jacquart sat and ate his lunch on that day in September of 2001 he did not believe the news he was hearing about the demise of the Stormy, after all he had worn them all of his adult life. Jacquart thought to himself, he could make the caps at Jacquart Fabric Products. The seasonality of hat sales would complement the seasonality of other products the firm sews.

Bob had grown up in Ironwood and after attending a nearby university, in 1971 he came home to join the family's small contract sewing business. In the last thirty-plus years, he has grown the business from a small shop with just one non-family employee into a very successful small business employing more than 160 workers making a variety of products including dog beds and cat scratching posts for a large direct pet supply company, boat covers and truck tarps. The firm has gained national recognition for its ability to rapidly adapt its manufacturing capabilities to changes in product demand and mix.

One thing led to another and Grossman agreed to sell Jacquart the rights and pattern of the patented hat, but not the name. He feared that Jacquart's use of the Kromer brand name would cause confusion in the market and potentially could harm the Kromer name, since the Kromer Cap Company (www.kromercap.com) was still marketing Kromer welding hats.

It took no time for Jacquart to begin analyzing the most efficient way to sew the 13 component parts together to produce the Stormy Kromer cap. To complicate matters, the hat was available in 8 sizes and Jacquart believed he needed to add 3 more. Furthermore, unlike most contract sewers, Jacquart pays its employees by the hour, above the minimum wage. The hat is fairly expensive to make and distribute and Jacquart estimates his fully loaded cost including his profit margin at about US$ 15 per unit. The hat had been retailed at $17.00.

As part of Jacquart's original agreement with Grossman, he was also given the names of the small sporting goods and men's apparel stores across the upper Midwest who had retailed the hat for Grossman. Almost all of the retailers agreed to continue selling Stormies. Although Jacquart had no consumer branding or marketing experience, he was convinced that with his energy and a little strategic market planning, he could grow sales of the hat.

THE STORMY KROMER MERCANTILE IS ESTABLISHED

News broke in the northwoods that Jacquart had acquired the rights to manufacture the Stormy Kromer. During a stop at Jonny's Bar in Mercer, Wisconsin, the owner told Jacquart "It's the finest hat to wear on a Harley in the fall." It didn't take to long before Jacquart dreamed of a co-branding and distribution arrangement with Harley Davidison. For advice on how to approach the licensing giant, he turned to his cousin, Ron Jacquart, a successful attorney in Milwaukee. His advice was to seek the assistance of a professional marketing firm.

Jacquart interviewed a few Milwaukee-based firms his cousin had recommended before settling on Hanson Dodge. Although his original objective in hiring an agency was to gain access to the lucrative Harley Davidson license, he was soon convinced that developing a branding strategy of his own for the return of the Stormy Kromer Cap should be his first priority. The agency' principle's first question to Jacquart was, "How could you successfully market a hat famous enough to have been the subject of "Mr. Puffer Bill," a Little Golden Book published in 1965 without having the rights to use its name?" Again, Jacquart contacted Grossman and came to an agreement on right to use the name "Stormy Kromer."

A "retro nostalgia" marketing communications strategy was initially used, featuring real life Stormy Kromer stories developed to re-establish and expand awareness of brand. In addition to the paid advertising, stories about Jacquart saving the Stormy were pitched to various news organizations in the region. A Milwaukee Journal-Sentinel reporter call to interview Jacquart about saving the Stormy and ended up convincing her editor to drive all the way up to Ironwood and spend three days researching and writing an article which ended up being syndicated throughout the Midwest. Additionally, a Wisconsin television station produced a segment for a statewide magazine news show. Most recently, the Travel Channel show "Made in America", hosted by John Ratzenberger ("Cliff" the postal employee from "Cheers") filmed an episode about the Stormy Kromer.

Over time, with a limited advertising and promotional budget of about $150,000 per year and the publicity the hat received the more hats he sold and the more Kromer stories and photographs he received. Sales in the first year (2002) grew to 14,000 units despite the fact that he had raised the manufacturer's suggested retail price to $29.99; the approximate wholesale price for the Stormy Kromer cap is $15.00, allowing retailers to "keystone" the price. Distribution of the Stormy Kromer cap was limited to the company's own Website (www.stormykromer.com), and small- to-medium sized retailers (mostly independents in the Midwest).

Jacquart was concerned about the ability of the initial branding strategy and advertising campaign to carry the brand to the next level and sought out Madison, Wisconsin- based Campbell-LaCoste, a marketing communications agency which specializes in outdoor products. An updated branding strategy was developed which continued to focus on both the emotional and functional appeal of the hat with the clever use of humor in its execution. Because of limited resources, a decision was also made to primarily target the "hunt and fish" crowd. In the Western states, ranchers are also targeted.

Concurrently with Jacquart's efforts to revitalize the brand and properly position and target the hat, he hired a sales manager to develop an expanded distribution strategy. A decision was made to use independent reps to peddle the hat. The United States was divided up into five geographic territories (east coast, east central, west central, mountain states and west coast) and salespersons that represented complementary lines like Carhartt apparel and Red Wing Shoes were sought. Additionally, Stormy Kromer Mercantile began exhibiting at the Shooting, Outdoor and Hunting (SHOT) and the Outdoor Retailer trade shows. A major boost to sales was the landing of the hunt and fish catalogue and superstore Cabela's account which accounted for about 15% of unit sales in 2004.

SUCCESSFUL COMEBACK OF THE STORMY KROMER ... AND THE FUTURE

The early marketing efforts for the Stormy Kromer began to bear fruit in 2003 and 2004, as sales for the hat increased significantly over that time period:

Year Unit Sales Percent through Website

2002 14000 10%
2003 48000 23
2004 78000 28%

One thing that frustrated Bob is that he had some difficulties in finding out how big the potential market might be. Since sales figures for hats are lumped in with other accessories like belts and wallets (for example, see www.hoovers.com) it was difficult for Bob to have an idea as to the actual size of the hat market. And, even if hat sales were segregated, the Stormy Kromer is such a specialty type hat appealing to a small segment of the total men's hat market that it would still be difficult to estimate market potential.

After a couple of years of successful growth, Bob wondered about the future of the Stormy Kromer brand. What, if anything, should be done over the next five years, in order to ensure a successful future for the brand? During early 2005 Bob was sitting at his desk, contemplating the future or next phase for the Storm Kromer brand. On a legal-sized pad, he made a list of the following notes/questions:

1. Should the Stormy Kromer brand name be extended to related products or lines, such as clothing (i.e., coats, jeans)? If so, how would these products be priced? Promoted? Distributed? A brimless version of the Stormy Kromer had recently been introduced, with some success, but who was buying this version of the Stormy Kromer and why?

2. How should the brand name and brand image of the Stormy Kromer be managed over the next 5 years? The brand seems to be off to a "good start", but Bob continually worries about the future of the brand. How would, or should, the promotional strategy for the Stormy Kromer brand change or evolve over time? Who buys the Stormy Kromer cap, and why? How, or might the customer, or target market for the Stormy Kromer change over time? How should the brand be positioned in the future?

3. Should the Stormy Kromer brand be launched in the international market? Bob has wondered about potential markets, such as Canada, and parts of Northern Europe and Scandinavia (i.e., Finland, Sweden, and Norway). What would it take to achieve a successful launch in one or more foreign markets? What business model should be used?

4. What about competition? Bob worried about foreign competitors marketing cheaper versions of the Stormy Kromer cap in the U.S.; would these competitors enhance their marketing efforts once word leaked out about the success of the Stormy Kromer? Would other competitors, such as Columbia, Carhartt, Filson, Woolrich, and Pendleton launch similar products?

5. How (if at all) should the distribution strategy for Stormy Kromer be changed? Should the company hire more of their own sales representatives? Should more of an emphasis be placed on the Web-based sales (see www.stormykromer.com)? Should company-owned "Stormy Kromer" retail stores be opened in selected locations in the Midwest, West and Northeastern U.S.? Should more of a merchandising presence be established with "big name" retailers? Might any channel conflict result from changes in distribution?

6. Jacquart's first attempt to expand the product line was the introduction of the "Lil' Kromer." It was recalled for some safety concerns, which have since been corrected and the hat was recently re-introduced to the product line. How should the children's market be approached? How lucrative would the children's market be to Stormy Kromer?

Bob had some other notes scribbled on the legal-sized sheet, related to sponsorship of certain outdoor events (such as ski races), maybe sponsoring a "Kromer fest" in the Ironwood area, etc. With so many ideas, Bob wondered about first prioritizing what needed to be done in 2005 (based upon his list of issues and ideas), and then secondly, developing strategy and plans based upon the top 2-3 priority issues. His goal was to have these two items completed by the end of November 2004.

Gary J. Brunswick, Northern Michigan University

Brian A. Zinser, M.M., Lake Superior State University