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Harrington Case: Active Wear Strategy Analysis

Harrington, a clothing company, is considering expanding into the active wear segment to reverse recent financial losses. There are challenges with brand image dilution and production costs. However, the active wear market is growing rapidly and expected to double by 2009. A new brand launched for active wear could capture market share without damaging Vigor's brand image. Outsourcing production to Mexico balances costs with quality control and quick response times better than China. With strong retailer relationships, specialty stores would be willing to sell the new product line. Financial projections estimate break-even sales of 2.7 million units and a profit of Rs. 7.3 million.

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Prachi Agarwal
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623 views2 pages

Harrington Case: Active Wear Strategy Analysis

Harrington, a clothing company, is considering expanding into the active wear segment to reverse recent financial losses. There are challenges with brand image dilution and production costs. However, the active wear market is growing rapidly and expected to double by 2009. A new brand launched for active wear could capture market share without damaging Vigor's brand image. Outsourcing production to Mexico balances costs with quality control and quick response times better than China. With strong retailer relationships, specialty stores would be willing to sell the new product line. Financial projections estimate break-even sales of 2.7 million units and a profit of Rs. 7.3 million.

Uploaded by

Prachi Agarwal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Harrington Case

GROUP L

Problem Statement: Owing to the lacklustre financial performance from last three years Company has
to check the overall feasibility to extend the product line towards Active wear segment of the apparel
industry to reverse the negative trends.
Challenges to enter in Active wear segment:
1. Brand Image Dilution
a. Entering in to casual, low priced, fashionable products will not match the already
existing image of elegant and high end sophisticated brand and may led to its dilution.
2. In-house v/s outsource production:-
a. Imports account for 82% of the total industry sales
b. Up to 50% cost reduction by producing in low cost countries
c. However in future, due to rising oil/transportation cost, wages and weakness of the U.S.
dollar the cost advantage may reduce.
d. High quality control check and quick response to bring products to the retail shelf (which
also gives the company a competitive edge) will not be possible by out sourcing it to
China.
Why Active wear?
External factors:
1. Changing trends towards lower segment
a. Price sensitive consumers
b. Half of apparels purchased was sold
c. Discretionary spending diversion from fashion to technology, home and leisure activities
d.
2. Market Potential
a. 7.5 million active wear sold in 2007 which is expected to double by 2009
b. 95% of purchasers were satisfied with the products durability, feel, fit, and look which
answers any question which challenged product life cycle.
c. Twice the inventory turnover rate of current collection of Harrington.
d. 10% of customers purchasing in the price range of 100-200 $ will prefer active wear with
better fabric, styling and fit which is a good number and can be addresses with
proposed extension

Internal Factors
1. High brand loyalty owing to good quality, Superior sales assistance and designer styles could be
utilised to drive sales of the proposed product line extension.
2. Huge application of information technology to track inventory and sales information which
resulted in increased productivity, improved response to the market demand, better consumer
behaviour analysis could be continued in the new Active wear segment.

Harrington Case
GROUP L

Final Recommendations:
1. Although only 2% of research respondents felt that the product line extension would cheapen the
brand but still company should launch a new brand under Active wear segment as it doesnt match
with Vigors current positioning and will lead to the loss of current 7% market share of Vigor due to
its focus on career wear.
2. Production can be done on rented capacity in Mexico as its marginally costlier than China and also
serves the company requirement of quick response to changing demand as Mexico is near to U.S.
retail outlets.
3. Company has good relation with its channel partners because they provide them strategic supports
and incentives so speciality stores and department stores would not be sceptical to push the
proposed product category.
4. The break even sales units will be 2692555 and can be achieved with profit margin of INR 7300600

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