Dale of Norway Case-Marketing Management
EXAMINATION QUESTION PAPER - Term paper
Marketing Management
Department of Marketing
Start date: 29.08.2017 Time 09.00
Finish date: 15.12.2017 Time 12.00
Weight: 100 % of
Total no. of pages: 6 incl. front page
No. of attachments files to
question paper: 0
To be answered: In groups of 1 - 3 students.
Answer paper size: max 10 pages excl. attachments
Max no. of answer paper
attachment files:
0
Allowed answer paper file
types:
The exam paper must also include a table of contents, a summary at the beginning and a
bibliography/reference list at the conclusion of the paper. These pages are counted
separately from the main paper.
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The term paper involves writing a marketing plan for Dale of Norway and providing a scientific
justification for this.
Dale of Norway
Students are encouraged to obtain secondary information that is relevant to this assignment. It is not
allowed to contact representatives of Dale of Norway or any of the companies mentioned in the case
text - this is considered as cheating.
Marketing Plan
A marketing plan is a document to be delivered to the company’s management team and Board as one
of the several documents that form the basis for strategic and tactical decisions for their business. The
marketing plan should be concise, precise, factual, thoughtful, specific, verifiable, binding, and realistic.
It is important that the document demonstrates your ability to argue for solutions, including the ability
to communicate the limitations and conditions the solution is based upon. Please use the following
outline as a guide for your work:
• Executive Summary
• Situation Analysis o Internal
o External (market description and analyses of customers, competitors, intermediaries,
and suppliers)
• Strategic Analyses (e.g., SWOT analysis)
• Marketing Objectives
• Marketing Strategy (including Marketing Tactics)
• Financials
• Controls
Academic Rationale
Students should also write a document that explains the scientific reasoning behind the proposed
decisions in the marketing plan. This document should demonstrate the students’ ability to structure,
formulate and define problems to be solved. It also displays their capability to apply theory to structure
the problem, identify relevant information needs, identify appropriate solutions, and evaluate alternative
solutions. The extent to which students have been able to collect, organize, and use (the provided and
additional) information will be emphasized. Particular attention goes out to how students use the
Internet, but other sources such as interviews and literature research will also be used to evaluate one’s
abilities to utilize information.
Dale of Norway1
Case Marketing Management
Hilde Midthjell is very pleased with the developments in Dale of Norway. She became one of the owners
of the company in 2009 when the company needed new equity funds and her competence in branding.
The company had been through large economic difficulties: in the period 2002-2009, the company lost
31 MNOK. In 2011, she bought up 80 percent of the shares and joined the company as chairman of the
board. In 2013, she bought the rest of the shares and took over the daily leadership of the company. The
turnover grew from 77 MNOK in 2012 to 115 MNOK in 2016 and profits went from a small loss to a
profit of 23 MNOK. In doing so, she has proven that it is possible to make a profit out of the production
of textile products in Norway. The figures include exports to Europe and the USA.
1 This case has been developed by Fred Selnes, Professor of Marketing at Handelshøyskolen BI.
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Even though the results are positive, Hilde thinks that there still is a huge development potential for the
brand Dale of Norway. The challenge in Norway is that their new products in sports and fashion are
only available in a few shops where Norwegians buy such type of clothes.
Dale of Norway sells the traditional part of their collection through gift and tourist shops. Most of the
Norwegian clothing and sports stores are part of chains with a centralized control over procurement and
a strong focus on price. There is little place for brands like Dale of Norway that position themselves
around quality and its Norwegian origin, and consequently maintains a higher price compared to other
similar products. Due to the limited availability and distribution of their products, investments in
brandbuilding advertising are more demanding for Dale of Norway. The investments are very large
compared to the sales you can achieve because it is difficult for consumers to find Dale of Norway’s
products. Abroad, Dale or Norway sells mostly in high-end sports and fashion stores.
Hilde Midthjell hopes that BI students can help her developing a good marketing plan for Dale of
Norway in the Norwegian market, which currently accounts for approximately 50 percent of the
company’s sales revenues and maintains a 20% profit margin.
The history of Dale of Norway
The company started in 1817 when Peter Jebsen built the Dale factories in the village of Vaksdal, a few
miles west of Bergen. The waterfalls were an important source for the energy demanding production of
yarns and textiles. It was a lot of wear and tear, and an important story is about Bertha Kristine Vaksdal
(1881-1947) who worked as a weaver in the factory for 48 years. She started to work when she was
only ten years old and she was a hard worker all her life. Besides long working days in the factory and
the care for 11 children, she and her husband were active in the local community at Dale, where they
contributed with songs and music. In 1946, she received a King's Medal of Merit for long and faithful
service. This story was the inspiration for the “Stina” cardigan, referring to Kristina’s nickname. The
business flourished and in the sixties the company employed ca. 1300 people. The production has
continuously been modernized, including automated knitting machines that came in 1967. Before that,
cardigans were hand-knitted. The company has always been innovative and, in 2000, they developed
the world's first woolen sweaters that were windproof and water repellent.
Norway is world famous for its knitted sweaters and Dale has been central in developing several designs
based on traditional Norwegian patterns. In 1956, Dale became an official sponsor of the Norwegian
Ski Federation and it was given the task of making sweaters for the Norwegian Olympic team for the
winter games in Cortina in 1956. After that, Dale of Norway has developed a new sweater for
Norwegian winter athletes for every Olympic and World Cup. The Olympics in Lillehammer in 1994
became a huge success for Dale of Norway as an international brand. Since then, Dale’s cardigans have
been one of the premier souvenirs for tourists coming to Norway. Cooperation with the Norwegian Ski
Federation and both the Norwegian and International Olympic Committee (IOC) has meant a lot.
After a few good years after the Olympics in Lillehammer, a difficult period started in 2000, when the
company developed a substantial deficit. However, some believed in the business, and in 2007 the
ownership structure was changed and Christian Bjelland, Ole-Bjørn Gjerde, Tor Andersen and
Nistadgruppen contributed with NOK 20 million in new equity funds and subordinated loan capital.
Various structural changes were made and the factory premises were sold out and rented back, and Dale
Garn was taken out as a separate company in order to better manage the value creation. Dale Garn was
sold to Nistad Group in 2009, and Hilde Midthjell then took over the Nistad Group's stake in Dale of
Norway. The Nistad Group later sold Dale Garn to the House of Yarn in Bryne. In 2011, Christian
Bjelland sold his stake of 33% to Hilde Midthjell. She took office as chairman of the board, and the
board appointed a new CEO. In 2013, she bought the shares of Ole-Bjørn Gjerde and Tor Andersen,
and she also took over the day-to-day management. She also starts working on the value creation process
so that the company can start earning money again.
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From 2013 until today, the company has undergone a significant conversion process. 70% of the
collection is brand new, with modern designs in sports and fashion in lightweight wool. This has resulted
in increased growth. New important people have been appointed, and the company has invested in
several new knitting machines and new computer systems. In addition, there has been an increased
focus on cost control and profitability.
The market
The fashion industry (clothing and shoes) accounts for more than 10 percent of the Norwegian retail
industry. The clothing and footwear industry employs more than 39,000 people and operates for almost
50 billion a year. Most of the sales take place through the chains Varner Group, H&M, Voice, KappAhl,
Lindex, Gina Tricot, Brandstad and Eurosko2. The sports industry has a turnover in textiles of about 5
billion, which is about 40% of their total turnover3.
E-commerce is growing rapidly and in 2016, a turnover of NOK 7.1 billion was realized online in
Norway4. Both young and older customers shop more and more online, especially during Christmas.
About a third of the online shopping is in fashion, sports and leisure products. Cardigans are a popular
souvenir for foreign tourists who visit Norway. Annually, there are about five million tourists coming
to Norway. In recent years, there has been a strong growth in tourists from Asia and especially from
China. Most tourists come by plane and ferry from the European mainland, but there are also around
700,000 who come by cruise ship. There are no exact statistics about how much tourists spend on
souvenirs, but the tourist industry estimates that tourists use on average 200 NOK when they visit. In
total this amounts to a market of 1 billion NOK. De largest tourist shops can be found in Bergen:
Audhild Viken, Bryggen Husflid og Schjøtt at Bryggen.
Marketing
The brand Dale of Norway is associated with the category knitwear (sweaters and jackets with
accessories), and symbolizes genuine Norwegian design and Norwegian crafts traditions (authentic Norwegian heritage). The brand is associated with 100% natural wool, world leading and innovative
knitting qualities, and ethical and sustainable production. The prices are in the upper layer and the symbols used for labeling are marked by exclusive quality similar to what you look for in exclusive
fashion. Outside Norway, products are distributed in so-called «high-end» stores.
Dale divides their products into four categories: Fashion (Style), Sport / Outdoor (Active), Tradition
(Heritage) and Accessories (Hats, Scarves, etc.). There is a very large variety in the collection. In
fashion, the clothes are both elegant and more casual, and in sports they have clothes that suit both
active sports and leisure activities. Sports products account for about 40% of the sales in 2016, while
fashion and tradition account for 20% and 30% respectively. In recent years, the fashion, sports, and
accessories categories have grown by about 20%, while growth in the traditional segment is below 5%.
The products from Dale of Norway are of very high quality. The company wants customers to
experience their products as durable and easy to use. They have a very good knowledge of how different
types of wool create the right user experience. For example, Norwegian wool is very suitable for making
garments used in cold and humid weather. Merino wool is thinner and better suited for thinner garments,
and for garments one should wear directly on the body. In many of the garments, different wool types
are combined to provide optimal results. Dale of Norway has very talented designers that contribute to
the modernization of the collection. An example of this is the Christiania model, which in a few years
has become a sales success 5 . Another example is Weatherproof collection consisting of woolen
2 https://www.virke.no/tjenester/rapporter-analyse/rapporter/kleskjedene-2016/.
3 https://brage.bibsys.no/xmlui/bitstream/handle/11250/169041/Kolden%20og%20Kristianslund.pdf?sequence=1.
4 https://www.virke.no/bransjer/bransjeartikler/vi-handler-stadig-mer-pa-nett/. 5 http://no.daleofnorway.com/dame/elegance/christiania-jakke/.
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garments that are windproof, water and dirt repellent and that breathe at the same time. This is a
technique developed by Dale.
Sales in Norway were 61 MNOK in 2016, which represented 35.5 MNOK in retail shops, 18.2 MNOK
in own stores, 1.3 MNOK through the online store and 6.0 MNOK directly to corporate customers. In total, there are about 250 outlets in Norway. An overview of these can be found at
http://no.daleofnorway.com/store-locator.
In their own stores and on the web, the entire collection is sold, and sales are distributed approximately
50/50 between Norwegians and tourists. In retailer stores, the majority of the sales is to tourists (tradition
& accessories), and an estimated 15% fashion and 35% sport (to Norwegians).
The prices charged to the consumers is determined by the dealers (stores). It is common for dealers to
calculate a gross margin of 50% (excluding VAT). This is also the calculation Dale uses in their own
channels (so the price to the consumer is the same).
Each year, the work on the new collection starts with a brainstorming session in which trends are identified based on inputs from designers, agents and sellers. The respective product groups process
these inputs and reconcile their financial goals with the company’s management. The designers
concretize the collection with sample products that are discussed and further developed in various
internal forums. The collection is presented in a new catalog.
The sales work starts with the presentation of the new collection at an international seminar for sales agents, distributors and Dale’s own sales force. A catalog and sample products of the new collection are
produced. Sellers and international agents visit wholesalers and stores to present and sell the collection. Based on customer feedback, a sales forecast is prepared so that raw materials can be ordered and
production can be planned. Dale can produce relatively fast and deliver more of the products that sell
well. An important work in customer service is to receive regular and additional orders from the dealers.
Dale has sponsorship agreements with the Norwegian Ski Federation (Cross Country and Alpine), the
Canadian national team in ski cross and it has negotiated an agreement with the International Olympic Committee (IOC) for several Olympic Games. The deal has to be negotiated for each new Olympic
Games, and they are now working on a new agreement for China in 2022. The cooperation with the Ski Federation has a long tradition and has helped many people to know the brand Dale of Norway.
In 2017, the development of a new web page is prioritized. Management knows that this is an important channel which will become even more important in the coming years. At the moment, they are
somewhat uncertain about how this should be built up so that you both build the brand and sell more
products.
Organization
Production takes place in Dale and is led by a team of highly skilled designers and knitting
technicians/product developers with profound knowledge of wool, yarn, textiles and modern knitting
technologies. Sustainable production and choice of raw materials has long been central to Dale.
The company employs 58 people, 54 in Dale and 4 at the sales office in Vermont, USA.
Organizational chart Norway:
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In addition, four employees work in the US.
Financials
In 2016, the operational revenues passed 115 MNOK and the annual profit was more than 23 MNOK.
INCOME STATEMENT 2016 2015 2014 2013 2012
Operating income 115 450 558 104 330 928 94 505 812 84 097 000 77 282 000
Operating profit 23 283 624 17 788 123 5 954 742 400 000 148 000
Profit before taxes 20 692 945 10 626 064 1 361 520 -5 359 000 -3 161 000
Profit 19 821 462 7 105 902 648 132 -4 235 000 -2 204 000
BALANCE STATEMENT
Fixed assets 23 699 965 23 869 856 28 726 000 28 730 000 25 637 000
Current assets 95 355 489 80 774 989 73 740 000 64 326 000 52 448 000
Equity 53 372 096 33 666 475 21 439 000 19 070 000 8 879 000
Debt 65 683 358 70 978 370 81 026 919 73 988 000 69 206 000
Of the operating costs, product costs account for 41%, labor costs 34% and depreciation 2%. Other
operating expenses (23%) include costs for advertising, agents and sales expenses. In 2016, the Group
invested close to 8 MNOK in advertising, one quarter of which was used for the Norwegian market. In Norway, they have advertised in the Scandinavian Traveler, A-magasinet, Dagbladets Lørdagsmagasin,
D2 and DN (big campaign), Morgenbladet (as part of a package with D2 and DN), and women's magazines like KK, Tara, Henne and Elle. Otherwise, some special magazines for tourists like Great
Hotels, Fjord Norway and Norwegian Worldwide. The production of the catalog with the annual collection costs almost 400 000 kroner. The travel expenses of the sellers amounted to NOK 1.2 million
in 2016.
Hilde Midthjell
CEO
Kari-Anne Gabrielsen Finance (4)
Kjell Østensen Sales and
exports (15)
Roar Mittet Logistics (11)
Lorents Tvedt Design &
production (25)
Astrid Lundvang
Marketing (2)