harrington collection


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  • The manufacturing group is dedicated to designing, producing, and marketing upscale women’s apparel. The retail group focused on retail based operations for company owned stores.
  • Haute couture = tens of thousands of dollars; ex includes Chanel, Dior*Designer = more than $1,000; ex Gucci*Bridge = near, but less than, $1,000; ex Tahari*Better = $500; ex Liz ClaiborneModerate = $100; ex Gap and Nine WestBudget = $50; Old Navy
  • Harrington Limited: Designer Collection- dresses, skirts, blouses, pants, suits, and coats Target Customer- avg household income $200,000+; college educated professional seeking conservative designer clothingSopra: Target Customer- avg household income $150,000+; college educated professional seeking status brandsChristina Cole: Career wear- dresses, skirts, blouses, pants, suits, and coats Target Customer- avg household income $100,000+; college educated professional seeking stylish refined clothing for workVigor: Career wear- dresses, skirts, blouses, pants and coats Target Customer- avg household income of $75,000+; college educated professional seeking fashionable yet comfortable clothing for work
  • **QUALITATIVE analysis especially for margins because higher prices always lead to higher marginsLower prices are in a larger market for more purchase possibilities, however more promotion will be required because more stores will be required, can tarnish brand image with lower prices
  • ERINObjective- Increase Margins, which I will further explain in pricing strategy, Break Even, which Aaron explained in the evaluation of alternatives Tremendous growth in the active-wear segmentStrategy- Differentiation from higher end designer activewear, and from lower end budget activewear short-lived fashion product life styles TM: keep target market the same as our original line of clothing
  • Product Differentiation- appeal to the same market, but a more relaxed side than the traditional dress clothes offered by HarringtonTactics- Offer a line of hoodies, t-shirts, and pants in a variety of colors that is consistent with our current customers’ style
  • Objective – “Better” product category could give us an 18% margin, compared to the (13%?) margin with the “moderate” pricingStrategy- Skimming to maintain sophisticated, high class status
  • Objective – Strategy – Push, retailers will have to be enticed to carry the new product line before we can market to consumersTactics: fashion shows to attract retail outlets, as well as consistent training for personal selling staff in company owned stores
  • Strategy – Direct to company owned stores and e-comm site Indirect to department stores and specialty stores where our other product is offered
  • PP – Online surveys, give email in online survey to do a follow up surveyM – make sure margins are consistent with the 18% for the “better” product segment
  • Awareness – Implement – low awareness=increased training for personal selling high awareness=if enough people know about the product line, focus money on expanding product lineRetail – If sales are low, keep active-wear line in the company owned stores until awareness and sales increase
  • harrington collection

    1. 1. +HarringtonCollection Case Analysis Trent Halverson, Aaron Kinning, Erin Moller, Alyssa Nelson
    2. 2. + Internal Analysis  Overall Objective: To provide preeminent brands for women desiring elegant, high-end fashions.  Overall Strategy: Differentiation
    3. 3. + Internal Analysis  Target Market: Affluent, fashionable, college- educated, professional women ages 25-60.  Each division focused more narrowly on a specific TM.  Positioning: Lifestyle branding strategy, wearing the label is a sign of status
    4. 4. + Product  Objective: To provide the highest quality clothing that offers a lifestyle of prestige and status  Strategy: Product Differentiation  Tactics: All 4 divisions include: Harrington Limited, Sopra, Christina Cole, and Vigor. No private label brands.
    5. 5. + Price  Objective: To increase market share and profit margins  Strategy: Skimming  Tactics: Offer premium prices to support status of brand.  Harrington Limited: $500-$1,000  Sopra: $400-$800  Christina Cole: $300-$700  Vigor: $150-500
    6. 6. + Promotion  Objective: To provide convenience to retailers, and help them obtain and sell the brand  Strategy: Push  Tactics: Retail sales force well trained; Offer channel partners more support and incentives than most manufacturers; Offer retailers valuable inventory and sales advice.
    7. 7. + Channel  Objective: Toprovide convenience to both retailers and final consumers by offering the Harrington collection at only the best retailers or directly through e-commerce  Strategy: Dual channel strategy  Tactics: Company owned retail stores (20% sales); upscale department stores (60% sales) and specialty stores (40% sales); e-commerce
    8. 8. + Performance Sales  $2,433,900,000 in retail sales  Total revenue: $1,344 million  Manufacturing Group: $538 million  Retail Group: $806 million  Total Profit before tax: $118 million
    9. 9. + Performance  Market Share:  2007 women’s apparel industry = $133 billion in retail sales  Harrington Collection held approximately 1.83% share of total women’s apparel market in 2007  Trends (CAGR):  Average Growth Rate in U.S. retail sales of women’s apparel 2002-2007: 4.66% (ex 1, p 240)
    10. 10. + External Analysis  Political/Legal/Regulatory: Textile import quotas from China eliminated in 2004.  Economic: The economic downturn that began in the early 2000s significantly impacted the industry for U.S. women’s apparel. Consumers had become very price sensitive- half of all apparel purchases were sold ―on sale.‖
    11. 11. + External Analysis  Technological: E-commerce.  Social/Cultural: Women were buying more casual clothing. More dollars were being spent on technology products, home design, and leisure- activities. Fast changing fashion product life cycles—consumers’ tastes constantly changing.
    12. 12. + Competitive Analysis – Porter’s Five Forces Macro (5 forces)  Threat of New Entrants: High- Due to the ease of outsourcing production, low barriers to entry  Bargaining Power of Buyers: Moderate- Manufacturers integrating forward with company- owned stores; but department store mergers gave more bargaining power to suppliers
    13. 13. + Porter’s Five Forces (cont.)  Bargaining Power of Suppliers: Moderate- willing and cheap labor overseas. More retail outlets integrating backwards (providing margins of about 10-20% higher).  Threatof Substitutes: High- easy to imitate designs at lower costs  Intensityof Rivalry: High- many brands competing for shelf space and market share. The industry was moderately concentrated.
    14. 14. + Competitive Analysis Micro  Leading brands: Jones Apparel Group, Liz Claiborne due to their diverse portfolios  Both outsource production of apparel overseas  Both involved in design, marketing, wholesaling, and retailing of women’s apparel  Jones: 396 specialty retail stores  Brands include: Jones New York, Nine West, Anne Klein, Gloria Vanderbilt, Kasper, Bandolino, Evan- Picone, Energie, EnzoAngiolini  Claiborne: 338 retail stores around the globe (201 in US)  Brands include: Liz Claiborne, Mexx, Juicy Couture, Lucky Brand Jeans, Ellen Tracy
    15. 15. + Market Segments Women’s apparel products could be divided into six general categories based on quality and price: 1) Haute couture 2) Designer 3) Bridge 4) Better 5) Moderate 6) Budget
    16. 16. + Market AnalysisDivision Product Product Retail Target Competitio Market Line Classificati Price Custome n Share Focus on Range rHarringto Designer Designer $500- Sophistic Donna 20%n Limited collection 1000+ ated Karan, St. Elegance John ; women 35-60Sopra Evening Bridge $400-800 Status Diane von 5% Wear, Seeker; Furstenber Dresses women g, Kay and suits 35-60 Unger New YorkChristina Career Bridge $300-700 Office Tahari, 8%Cole wear Chic; Dana women Buckman 30-55Vigor Career Better $150-500 Trend Theory, 7% Wear Setter; BCBG Max women Azria 25-50
    17. 17. + Market Analysis Channel Retail Sales Percent of Women’s Apparel Retail Sales 3% Other 8% 11% Discount or Mass 19% Merchandisers Specialty Stores Department Stores 59% Warehouse Clubs and Supercenters
    18. 18. + Case Brief Problem: How should Harrington Collection put forth their new active wear line?
    19. 19. + Alternatives • Option A: ―Better‖ pricing with same channels • Option B: ―Moderate‖ pricing and expand channels
    20. 20. + Criteria  Maintain sophisticated, high-class status  Increase margins  Break even in first year
    21. 21. + What is a unit?  Since active wear is sold as separates, the ratio of hoodies to tee-shirts to pants was not equal.  Therefore one ―unit‖ = ½ hoodie + 1.5 tee-shirts + 1 pant
    22. 22. + Evaluation of Alternatives Option A ―Better‖ Pricing, same channels  Break Even = 269,255 units ($25,579,186.45)  Profit Margin = 18%  Brand image = High quality, fashionable merchandise with status branding ($220/unit)  Assumptions  Higher prices consistent with desired brand image  Smaller Market Size  15,000,000 X .4 X .07= 420,000 units  Less distribution outlets (less promotion costs)
    23. 23. + Evaluation of Alternatives Option B ―Moderate‖ Pricing, more channels  Break Even = 390,069 units ($31,205,504.04)  Profit Margin = 15%  Brand image = Prestigious brand image at risk with lower prices ($187/unit)  Assumptions  Larger market size  15,000,000 units sold X .6 X .07= 630,000 units  Higher fixed costs  More competitive market  Might not receive 7% market share
    24. 24. Option A Option BContributionWholesale price "Unit" $ 95.00 ($220 Retail) $ 80.00 ($187 Retail)Less total Variable cost per "unit" $ 46.57 $ 46.57Contribution per "unit" $ 48.43 $ 33.43Breakeven:Fixed annual costs $ 13,040,000.00 $ 13,040,000.00÷Contribution per "unit" $ 48.43 $ 33.43Breakeven "Units" 269255 390069X Wholesale price per "unit" $ 95.00 $ 80.00Total Breakeven Dollar Sales $ 25,579,186.45 $ 31,205,504.04Profit Margin:Revenue $ 39,900,000.00 $ 50,400,000.00Less fixed annual costs $ 13,040,000.00 $ 13,040,000.00Less total variable costs $ 19,765,200.00 $ 29,647,800.00Profit before tax $ 7,094,800.00 $ 7,712,200.00Profit margin before tax 18% 15%
    25. 25. + Recommendations  Overall Objective: To introduce a brand new active-wear line in the Vigor division to increase margins and break even in the first year  Overall Strategy: Differentiation  Target Market: Women 25 to 50 seeking fashionable and comfortable active-wear
    26. 26. + Product  Objective: To provide comfortable and fashionable active wear with superior styling, fabric, and fit to consumers  Strategy: Product Differentiation  Tactics: Hoodie, Tee-shirt, and Pants
    27. 27. + Price  Objective: To increase margins to 18% and portray high quality active-wear via prices  Strategy: Price Skimming  Tactics:  Hoodie = $100 retail  Tee-Shirt = $40 retail  Pants = $80 retail
    28. 28. + Promotion  Objective: To increase awareness of the new product line with both retailers and final consumers  Strategy: Push  Tactics: Personal selling, fashion shows
    29. 29. + Channel  Objective: To introduce the new active-wear line in Vigor’s current retail outlets  Strategy: Direct and Indirect  Tactics: Department Stores, Specialty Stores, Company Owned Stores, E-commerce site
    30. 30. + Evaluation and Control  Product Perceptions:  Measure: With each receipt of an active-wear purchase the consumer will be asked to fill out a survey about the product. Six months later they will receive a follow-up survey of performance  Implement: Based on the results adjust accordingly for next product offering  Margins:  Measure: Overall profit margins for the first year  Implement: If margins are not at 18%, look to decrease production costs and increase sales training. If margins are above, consider expansion of line into new colors and styles and increase promotional efforts
    31. 31. + Evaluation and Control  Awareness:  Measure: Survey TM consumers about product knowledge  Implement: If awareness is low, consider placing more emphasis on promotions and personal selling. If awareness is high, continue promotional efforts and consider cutting back  Retail outlets:  Measure: Measure sales in each outlet.  Implement: When sales are high with a certain retailer, consider expanding into similar stores and vice versa.
    32. 32. + THANK YOU