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General Retail Business Issues/product manufacture issue

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Question
Hi there

I am in the process of launching a new brand within the watch market in the UK. I have identified a product and agreed terms with manufacturer in China. It is a generic model which they will emboss my brand.  Have identified a route to market but have only today discovered that exactly the same watch is available from a leading brand.  I have contacted the manufacturer and they are quite clear that there is no issue, as they also in the process of manufacturing the same model for another company in France, again, with their own brand.

I have two questions here, 1. Even thought the manufacturer is adamant that there is no legal issue to produce the watch for my brand, might there be? and 2. Serendipitously,  my RRP for the watch will be circa 60% cheaper than that of the watch being sold by the established brand and I am leaning towards believing that this situation might be a positive, as my product is price-pointed to specifically target consumers that very likely couldn't afford the high price for the same watch offered by the known brand. Of course, I understand that people who purchase the watch at the high price are buying the brand, not the watch. For the sake of good record, at RRP my GP is 53% / Mark up 112%

Thank you for your providing your expertise on this matter, I am very interested to hear your thoughts and apologies for being a bit long-winded.
Regards
Stephen

Answer
Stephen,
It is impossible to guess if the other brand will go after you for copyright or brand infringement. However, the chances are very low. I would tend not to trust the manufacturer in this area as they would not be affected by a lawsuit anyway! Your price may be too low, however. Consumers may feel that your watch price is "too good to be true" even though it is actually the same item. You may be better to be at 25% less than the other brand and make a better margin. It is funny how pricing too low can sometimes have the opposite effect of what you intend. And remember, it is easy to go on sale and reduce the price, not so easy to increase it! Good luck!

General Retail Business Issues

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James E. Dion

Expertise

Most questions about trends in specialty retail, how customers are changing both in the US and Europe. Demographics for all countries as they relate to retail trends and issues. Store Operations, Buying and Merchandising.

Experience

Over 40 years in the retail industry, store level, store manager, buyer, merchandise manager, Vice President.

Education/Credentials
BS Psychology, MS Psychology, PhD(abd) Industrial Psychology Illinois Institute of Technology

Past/Present Clients
Microsoft, Harley-Davidson, Ritz-Carlton, Hummer, Williams-Sonoma, Ace Hardware, Coleman Spas, Aldo, Intel, Dell, Safeway, New Balance, IBM, Kodak, Bata International, Nortel Networks, Honey Baked Ham Co., Man Alive, Highsmith
B.S Chicago State University M.S. Chicago State University PhD (abd) Illinois Institute of Technology

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