Harrington Collection Case

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

Consumer Behavior | Group C

Harrington Collection Case

the market demand, better consumer behaviour analysis could be continued
in the new Active wear segment.

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

Consumer Behavior | Group C