Case analysis-Harrington Collection Essay

Problem identificationIn 2008, Harrington collecting, a large maker and retailer of U.S. higher(prenominal)-end womens drape, was facing opportunities and challenges whether to effectuate of dynamical- tire out point of intersections to meet the market and customers needs. plainly according to the macro scotch environment, the target market, competitors and its take in financial condition, Harrington needed to express c atomic number 18ful consid eration and then make the best decision for their deliver development. The U.S. womens arrange industry market place trendsFrom the data of U.S. Apparel Market Sale (2002-07), we could find out that, pull down when subjected to the conflict of the economic downturn, the U.S. womens apparel industry remained in a mature and st adapted give in and held by continued exploitation momentum. The Retail Sales increased from $106 billion in 2002, to $133 billion in 2007. The aver bestride annual return ordinate is 4.7%. It showed that the total sales of the womens apparel industry did non regain the macroeconomic strike. Consumers still had a high desire to go shopping. At the resembling time, analyzed the data from U.S. Apparel Market Units, influenced by the economic downturn, consumers were to a greater extent than than interested in slight than $100, low-priced womens apparel. From 2005 to 2007, the growth set of units change in more(prenominal) than $200 is 3.4%, the result growth ordain of between $100-200 is 1.4%, and $50 to 100 crossroad growth rate is 14.3%, while less than $50 low-priced products have the highest growth rate of 16.1%. The low- make up market has a great opportunity for manufacturers.Characteristics and competitionThe value chain of the womens apparel industry is some (1) branding (2) innovation (3) buying (4) production (5) channel merchandise (6) distri thoion and (7) retailing. In the era of apparel products are coitus homogenization, price war seems to become a common method to erode the market handle of each archeozoic(a) between brands. Each brand need to face how toeffectively subdue tolls. Many brands established overseas plants or outsourced to overseas factories. This could reduce their court of production and labor. Through effective monitoring, the overseas factorys products overly have a good quality. This makes the increased competition on the market.Womens apparel retailers included segment stores, mass merchandisers, military strength stores, and warehouse clubs/supercenters. Among them, the specialty stores got the 1st position, 58.6% share of channel, changed 11% from 2005 to 2007. The 2nd place is department store, 19.0%. hole merchandisers got the 3rd position with 11.4%. In the retailing womens apparel for the U.S. market, the virtually important distribution channel is specialty store.Harrington ingatheringCompanys backgroundAs a n primordial 50-year history of the womens apparel brand, Harrington assembly has a clear market positioning. Targeted at the high-end market is the reliable intention of Harrington hookup. The 1980s, the Harrington Collection expanded vitality and Christina Cole brands, the product striving aimed at the younger customer market. Because of their superior quality, knowledgeable sales staff and traffic patterner styles, they have a group of loyal customers.Four product linesHarrington Collection targeted affluent, fashionable, college-educated, professional women from 25 to 60. This come with has four product lines, cover three compartmentalizations (Designer, Bridge, and snap off) of the womens apparel market. They targeted women of different ages, different background, and different family income. The Harrington Limited, as the Designer classification. This product line focuses on the Designer Collection, targets the customer as Sophisticated Elegance. Their age is from 35 to 60, an average household income is more than $200k. The retail price range is $500-$1000+. And it has 20% of Market Share, as the Cash Cow. It shows Harrington Collections market position is a high-end brand. Harrington Limited is the companys most important product, and as a high-end brand, the products could show the strength of Harrington Collection. The Sopra, positions as the Bridge classification. This product line focuses on the eve Wear it targets the consumers of Status Seeker.The retail priceis nearly $400-$800. Most of the customers are 35-60 household income is more than $150k. The market share of Sopra is the last(a) among the four product lines, only if 5%. It is the Dog product, but the Evening Wear means the high-end position of a company, Harrington Collection needs to slip by this product line. The Christina Cole, positions as the Bridge classification. This product line focuses on the high-end flight Wear it targets the customers of Office Chic, with the price from $300-$700. The average information of the customers is 30-55, with more than $100k household income. The market share is 8%. The market positioning of this classifications products are really competitive, so 8% is acceptable. It is the Star. The muscularity, part classifications product line, focuses on the Career Wear. Targeted customers are row Setter. They are from 25 to 50, with more than $75k household income. As the targeted age of the customers is younger than the others product lines, this line is full of fresh and flexible. It is able to adapt to the needs of the market to react and change, the Star.Manufactory dodgingHarrington Collection does not set up overseas factories in Asia or outsourcing, for ii reasons. First, they expected of high-quality womens apparel products, good quality make their products to tie high-end consumers. Second, they hoped to catch up with the fashion, the close plants allow for have a high speed to deliver their product to the retail department, it could be able to benefactor the brand issue seasons trend styles with the fastest speed. This schema improves the cost of product, but it exit attend to enhance the brand image. diligent deliverIn recent years, more and more of the company launched its own expeditious persist products, just like hoodie, pants, and tee-shirt. Consumers buy nimble mounts aimed not just in gym, but worn in e reallyday life. Consumers believe that active wear is very comfortable, very fresh, and very casual. There is too a very important reason, active wear is relatively cheap. In 2007, the moderate and budget classifications got 80% of market share on the apparel market and sold 7.5 million units in that year. exclusively in 2009, many brands started to transform at the level of the better active wear. The average selling price was just below $100.By such changes in the market, wecan see that the consumers demand of high-grade active wear was increased. And consumers are pass oning and able to buy high-end active wear.Active wear of pizzaz D ivisionTo Harrington Collection, in 2007 and 2008, the active wear market was not suitable for them to locate a high-end brand. Their brands, Vigor, the lowest level of the product line, but also achieve the Better classification. At that time, the consumers were more interested in the cheaper products. But the Market trends had a sudden shift in 2009, so Harrington Collection got an excellent opportunity to join into the active wear market. Harrington Collections Vigor brand is the most suitable for the introduction of active wear products. In the minds of consumers, Harrington Collection is a high-end brand, if Vigor was able to launch active wear products, would be favored by the consumers of high-end brands. Vigors styles were much more flexible than the others brands of Harrington Collection. And the core styles of active wear were roughly fresh and lifestyle. As a brand of Harrington Collection, Vigor continued the dodging of their company, provided the high quality and agil ity products to fix the consumers needs, wants, and demands.This would attract the existing customers of Harrington Collection to purchase Vigor active wear products, because they believed that these garments were high quality and fashion. The Vigor team made decision about pricing. That hoodie, tee-shirt, and pants would be $100, $40, and $80, it seemed not a very high price, the working-class even could afford for them. It could patron Vigor to get shares in the market of moderate classification. However, the establishment of a new product line requires the purchase of new equipment, the new plant, fit with the appropriate staff. Harrington Collection needed to build a management team, design team. However, even the prospects of the market were perfect, but it still had a high venture to invest. Because of the market was full of un realties. But as a very smart project, Harrington Collection should carry out investment and development.Potential retail potBecause of the Vigor has laid a foundation, with a number of loyal customers. The active wears released as a new product sold in the presentmarket. Consumers can purchase the Vigor products from company-owned stores, upscale department and sociality stores. Company-owned stores sales and units are about 20% of the other deuce chassiss stores.Company-owned storesAs the retail group of the Harrington Collection, they operated 120 stores, 50 of them were utilize solely to the Vigor division. As the advantages of these stores that belong to the comparable forest fourth-year enterprise distribution strategy can be effective implementation. Harrington Collection can avoid large retailers control, independent development and implementation of the marketing strategy. In these stores, Harrington Collection can be unified planning, unified propaganda, to help establish and enhance brand image. The stores management can be more forecast contact with the market, and is easy to understand the changes in market demand, and at first time to adjust the marketing strategy. But with the high run costs, many involve the management of business, need to invest a agglomerate of manpower, material and financial resources.Upscale department and sociality storesAs another two very important sales channels, they sold 80% of the Harrington Collections products. Both the two storefronts implement the same plan and strategy, with a certain degree of stability and integrity, and at the same time are able to avoid the vicious competition among the channel members. However, in this distribution channel, the prices of the earlier link directly decide the latter part of the cost.Vigors active-wearThe Vigor active-wears pricing relative to other products is relatively low, less than $100. This series is a strong attraction for consumers. In the initial launch, Vigor would be vigorously publicized. With Harrington Collections brand awareness, it was estimated that due to the occurrent market demand is relat ively large, and will soon get a valid response. The pricing strategy of Vigor active-wear is market skimming prices. Although these prices are lower than the other products of Vigor. But the variable costs of these products are only $20.55 (Hoodie), $7.50 (Tee-shirt), and $16.40 (Pants). The pricings are $100.00 (Hoodie), $40.00 (Tee-shirt), and $80 (Pants). Even with other related variable costs, and the contumacious costs aswell as the construction of the plant, the purchase of equipment, and the administrative expenses of the management.The total cost of the product is much lower than the pricing. This pricing strategy can maximize profits of each single product. And it will not chance upon their own brand positioning to consumers buying enthusiasm. These products as same with other products of Vigor, will perform the same sales strategy concurrent promotion. The active-wear will not become a special product, which will affect the attitude of consumers to Vigor, that the acti ve-wear of lower grade, or a decline in sales situations.Vigors competitors reactionBetter levelPositioning Better level the active-wear market is very competitive. Liz Claibornes Juicy Couture was one of the early leaders in this market. The leading companies, such as Jones Apparel radical and Liz Claiborne, both of them had a high share in the womens apparel market. Even more, most of their products positioned in the Better classification. After Harrington Collection released Vigor series active-wear, the two companies will certainly respond. These two competitors in the boilersuit grade lower than Harrington Collection, but because they build factories in the third world, their cost is lower than Harrington Collection, so they can drive down prices, establish a price war in this Better classification.At the same level, the relative homogenizations of active-wear products make it difficult to get a breakthrough in the design. So the price seems to have become a major factor in man y consumers choice. Each company will be fully develop characteristics of their own companys products, in order to attract more loyal customers, and seize the market share of other companies.Other levelsCompetitors with the same grade of the Harrington Collection will seize this opportunity to enter the active-wear market. They will not have a distinct advantage in the price, even in the presence of a disadvantage. But their quality may be higher, more innovative style design fabric selection will be more comfortable. These products will attract high-end consumers details. The low-end brands will not impact on the formation of Vigor. They target different customer groups, both the customers will not beinfluenced by each other. There is no direct competition, but would impact overall active-wear market share. Potential financial impact of Vigor active-wear manufacturing group The establishment and promotion of a new product needs to Harrington Collection invest. As the Vigor active- wear manufacturing group, this part of the investment is very high. The pants equipment be was about $2 million and plant start-up cost estimated at $1.2 million.This programs cost estimated $3 million. The hoodie and tee-shirts equipment costing was about $2.5 million and plant start-up cost estimated at $2.5 million. This programs cost estimated $3.5 million. The expenses of national advertising and public relations campaign were estimated at $2 million. The carrying of active-wear line for every company-owned store was $50000 per store. The total carrying expense was about $2.5 million for 50 company-owned stores. The other data will be calculated in the form at the end of this part. In the end, the profit onwards tax in 2009 was $6,304,590. The profit margin before tax was 15.8%. act decisionA mature company should be good at discovering market opportunities, and seize the opportunity. Every investment has its risks, and identifies real opportunities for each company is very important. As people increasingly focus on applicative demand for clothing, active-wear has good market prospects, and Harrington Collection has an advantage for the development of this product line. Even though the initial investment is huge, but this product is also huge gains. These products sale for a period of time thenthe early investment will be recovered form earnings. Harrington Collection should permit Vigor add this product line.