For many, the name Calvin Klein (CK) is synonymous with high-fashion clothing and accessories, super models, and fashion shows. It has an image of quality and style. In reality, a significant amount of CK products are sold by discount retailers such as Costco. How can this be? The answer is that 69-year-old designer Calvin Klein licensed Warnaco Group and other manufacturers to produce his products. Under this arrangement, CK receives a royalty based on Warnaco’s sales. As it turns out, Warnaco found that it could be more successful with the brand through a broad strategy involving a number of retailers, including discounters.

Required
What type of strategy (cost leadership or differentiation) is Calvin Klein following at this time? Comment on how effective you think the relationship with Warnaco is likely to be.