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.
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.
END ALYSSA
START TRENT
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
END TRENT
KINNING
**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