Harrington Collection is considering expanding into the active wear market by launching a new line under their existing Vigor division. There are several key questions to address regarding market fit, production capabilities, retail and competitor reactions, and financial feasibility. To break even, the new product line would need to capture a sales target of [number] units based on estimated start-up, fixed, and variable costs. If demand equals Vigor's current 7% market share, the potential profit is [dollar amount or percentage]. A decision is needed on positioning, pricing, and distribution channels to leverage Harrington's brand image while attracting new customers.

1. Harrington Collection: Sizing Up the
Active-Wear Market

2. Problems/Issues
 Declining sales and margins in the past three years
 To enter the active wear segment or not?
 Can active wear be folded into the existing vigor
division or to brand it as a new division?
 Can break-even be achieved? Can an attractive
profit margin be captured?
 Where to produce?
 Will the channels support the new product line ?
Agenda
Industry
Analysis
Competitor
Analysis
Case
Analysis
Questions
Harrington
Collection
Co.

3. Industry Analysis - U.S. women’s apparel market
Background
 Mature & highly competitive
 2007 – estimated $ 133 billion retail sales
 Over half of all apparel purchased was sold “on sale”
 Consumer is very price sensitive (Economic downturn in
2000)
 Trend – less expensive & causal clothing
 Intensified price pressure from imports
 Shift in consumer Spending – Technology, Home Design,
Leisure activities
Categories
• Haute couture – custom, made to order apparel
• Designer – Highest quality ready-to-wear apparel, $1000 +
• Bridge – offering between designer & better segments,
$500 - $1000
• Better – brand labels less expensive than bridge in
sportswear, career wear & dresses, $100 - $500
• Moderate – moderate quality sportswear, career wear &
dresses, $50 - $100
• Budget – less expensive causal clothing includes jeans & t-
shirts, less than $50
Challenges
• Short spanned product lifecycle
Apparel differentiation
• Fabrication: fabric choice, finish & pattern
• Silhouette: the outline or shape of the design
• Quality of construction
• Brand
• Price

4. Industry Analysis - U.S. women’s apparel
market
Types of channels
 Specialty stores
 Department stores
 Discount or mass Merchandisers
 Warehouse clubs & supercenters
 Others
59%
19%
11%
8%
3%
Retail Sales of Women Clothing in
US
Specialty Stores
Department Stores
Discount or Mass
Merchandisers
Warehouse clubs or
Supercenters
Others
Value Chain
Production
• Imports Dominated - 82 % in 2005
• Global Import quotas on Textiles from china – eliminated
at the end of 2004
• Cost advantages from outsourcing could reach 50% but
were shrinking

5. Harrington Collection Company
 Harrington Collection was established in 1960 by Ella and
Steven Harrington
 It dealt with manufacture and marketing of designer
women's clothing
 By mid-1980's, Harrington had a chain of company owned
retail stores and sold products in upscale department and
specialty stores
 Harrington Collection targeted affluent, fashionable,
college educated, professional women between 25 to 60
years
• Harrington currently holds 1.83% of total women’s apparel
market in terms of retail dollars in 2007
• This is 2.43 billion dollars (1.83% x 133,000)
• Harrington’s line has done well within their own division in
market share:
• Harrington Limited holds 20% in market share
• Sopra holds 5% in market share
• Christina Cole holds 8% in market share
• Vigor holds 7% in market share

6. 1. Active Wear Market
 Trend towards more contemporary, athletic fashionable active-ware is trendy as more companies
are entering the market
 The active-ware market is separated in three classifications: “budget”, “moderate” and “better”
 Successful active-ware products tend to focus on large scale advertisement and is priced just below
$100
 It is estimated that over 7 and a half million units of active-ware is sold in 2007
 10% of customers purchasing apparel in the $100-200 price range would buy an active-wear set if
one has superior styling fabric, and if fit was available

7. • A large subset of loyal consumers - the 'baby boomer' population wanted fresh and comfortable clothing
-These clothes had to fit their active lifestyles
-These clothes had to make them feel young
• After the 2000’s economic downturn, consumers became very price sensitive
• Quality was secondary, lower prices were the utmost selling point
• Shift had been towards contemporary athletic fashions
• Stylish, sporty, casual attire were the 'in' thing
• Need was for superior styling, comfortable fabrics and perfect fits
• Need was to adapt to changing consumer tastes for new designs and product lines
• The active wear inventory had turnover rates almost twice that of other Harrington Collection apparel
2. How well does active-wear fit with consumer needs and what
purchase criteria is important for buyers?
What, if any, evidence is there to support the hypothesis that active-
wear will be attractive to an upscale target demographic?

8. 3. How well does active-wear fit with the Vigor division (e.g., target
customer, advertising and sales strategy, production capabilities)?
What possible impact could this new product line have on the Vigor
brand name?
 Enter in the active wear segment in Vigor division under better product classification
 Why Vigor Division –
(a) Decreasing revenues, new division will incur significant cost.
(b) Leveraging the existing infrastructure and sales channel, customer base of Vigor division
 Possible impact on Vigor Brand Name –
- Active wear under the Better category in Vigor division will not hamper the brand image
- Company has other divisions already in place catering to high end customers
- Positive feedback by Research and focus group.

9. 4. What are the potential retail trade and competitor
reactions? Are there any potential channel conflict issues?
 Alternatives & Conflict -
a - Better Pricing with same channels
b- Moderate Pricing and expand channels
Considering the overall strategy and brand image of Harrington company should go for option (a)
 Competitor Reactions –
- More push strategy for existing products
- launch of new designs in active wear category
- Change in pricing strategy
- More exclusive tie ups with retail channels

10. 5. What is the financial impact of the proposed Vigor active-
wear program for the manufacturing group? Using Exhibit 9 in
the case as a guide, what are the start-up, ongoing fixed, and
variable costs for this new product line? What unit sales
target will have to be captured to break even? Is this
attainable? What is the profit potential if demand is equal to
current Vigor market share of 7% in the segment in which it
competes?

11. Thank You