1-What is your evaluation of the women’s apparel industry and Harrington’s market position? How has the average price of women’s apparel changed? What is your analysis of Harrington’s financial performance? -The women’s apparel industry market is mature (avg. growth from 2006 to 2007 was only 4. 2%) – Economic downturn beginning in the early 2000s significantly impacted the industry. -Imports dominated the U. S. omen’s apparel market, accounting for 82% of total industry sales in 2005 (resulting from the elimination of global import quotas on textiles from China in 2004) -Due to the relative ease of outsourcing production, barriers to entry in this industry were rather low. -Consumers became very price-sensitive, and over half of all apparel purchased was sold “on sale”. This trend toward less expensive, casual clothing and the rising supply of low-cost, imported apparel intensified price pressure. – 2-How well does active-wear fit with consumer needs?
What purchase criteria are important for buyers of active-wear? What, if any, evidence is there to support the hypothesis that active-wear will be attractive to an upscale target demographic? -Very well, Subset of loyal customers no longer desired the tailored, professional look. Now interested in something fresh and comfortable that fits their active lifestyles -The aging baby boomer population wants clothing that does not make them feel old -Important purchase criteria: 10% of customers purchasing apparel in the $100-$200 price range would buy if it consisted of superior styling, fabric, and fit. Reports from department stores showed the stylish active-wear inventory sold extremely quickly (almost twice the rate of current Harrington Collection apparel). Markdowns for the new stylish active wear were not as extreme as other product lines. 3-How does active-wear fit with the Vigor division (e. g. , target customer, advertising and sales strategy, production capabilities)? What possible impact could this new product line have on Vigor brand name? -Myers felt active-wear would be a perfect addition to the Vigor division -“Vigor has the strength to branch out and support a more causal , less-expensive line.
Fewer than 2% of respondents in the customer research survey felt that a less-expensive active-wear line would cheapen the brand”. –Myers -Production capabilities: Both Huey and Allen felt the company could not outsource production -“Kathleen DuBroff has made it clear that in-house production is one of our competitive advantages. Quality and agility are Harrington’s mainstays. Outsourcing does not provide for adequate control over quality or turnaround times. If shoddy, outdated pieces with a Vigor label make it to the public, then it will irreparably harm all Harrington divisions”. Allen -Best solution is to manufacture the pants, hoodies, and tee-shirts in Mexico -Advertising: Launch costs, which included a national advertising and public relations campaign, were estimated at $2 million. New fixtures for company-owned stores carrying the active-wear line would run $50,000 per store. 4-What are the potential retail trade and competitor reactions? Are there any potential channel conflict issues? -Imitation of hot new designs -Shor 5-What is the financial impact of the proposed Vigor active-wear program for the manufacturing group?
Using Exhibit 9 in the case as a guide, what are the start-up, ongoing fixed, and variable costs for this new product line? What unit sales target will have to be captured to break even? Is this attainable? What is the profit potential if demand is equal to current Vigor market share of 7% in the segment in which it competes? * Case analyses are due at the beginning of class on the indicated dates; any late submissions will result in 50% reduction of the group grade. Any non-typed assignment will be penalized by 30% reduction of your group grade.