The document provides an analysis of the Harrington Collection company, which offers high-end fashion brands for women. It details the company's internal analysis including its target market, product lines, pricing strategy, promotion, and channels. It also analyzes the company's performance, external environment, competitors, and market segments. The case brief poses the problem of how to launch a new active wear line and evaluates two alternatives - offering "Better" pricing through current channels or "Moderate" pricing with expanded channels. It recommends the first option to maintain the brand's sophisticated image while achieving an 18% profit margin and breaking even in the first year.

1. +
Harrington
Collection
Case Analysis
Trent Halverson, Aaron Kinning, Erin Moller,
Alyssa Nelson

2. +
Internal Analysis
 Overall
Objective: To provide preeminent brands
for women desiring elegant, high-end fashions.
 Overall Strategy: Differentiation

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. +
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. +
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. +
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. +
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. +
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. +
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. +
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. +
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. +
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. +
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. +
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. +
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. + Market Analysis
Division Product Product Retail Target Competitio Market
Line Classificati Price Custome n Share
Focus on Range r
Harringto Designer Designer $500- Sophistic Donna 20%
n Limited collection 1000+ ated Karan, St.
Elegance John
; women
35-60
Sopra Evening Bridge $400-800 Status Diane von 5%
Wear, Seeker; Furstenber
Dresses women g, Kay
and suits 35-60 Unger New
York
Christina Career Bridge $300-700 Office Tahari, 8%
Cole wear Chic; Dana
women Buckman
30-55
Vigor Career Better $150-500 Trend Theory, 7%
Wear Setter; BCBG Max
women Azria
25-50

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. +
Case Brief
Problem: How should Harrington Collection
put forth their new active wear line?

19. +
Alternatives
• Option A: ―Better‖ pricing with same channels
• Option B: ―Moderate‖ pricing and expand
channels

20. +
Criteria
 Maintain sophisticated, high-class status
 Increase margins
 Break even in first year

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. +
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. + 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. Option A Option B
Contribution
Wholesale price "Unit" $ 95.00 ($220 Retail)
$ 80.00 ($187 Retail)
Less total Variable cost per "unit" $ 46.57 $ 46.57
Contribution per "unit" $ 48.43 $ 33.43
Breakeven:
Fixed annual costs $ 13,040,000.00 $ 13,040,000.00
÷Contribution per "unit" $ 48.43 $ 33.43
Breakeven "Units" 269255 390069
X Wholesale price per "unit" $ 95.00 $ 80.00
Total Breakeven Dollar Sales $ 25,579,186.45 $ 31,205,504.04
Profit Margin:
Revenue $ 39,900,000.00 $ 50,400,000.00
Less fixed annual costs $ 13,040,000.00 $ 13,040,000.00
Less total variable costs $ 19,765,200.00 $ 29,647,800.00
Profit before tax $ 7,094,800.00 $ 7,712,200.00
Profit margin before tax 18% 15%

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. +
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. +
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. +
Promotion
 Objective: To increase awareness of the new product line
with both retailers and final consumers
 Strategy: Push
 Tactics: Personal selling, fashion shows

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. +
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. +
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. +
THANK YOU