Harrington Collection Harrington's Interest in

Harrington Collection Harrington's interest in the women's activewear market is driven by three main factors. The first is the market potential of the business. The business is expected to double in the following two years, resulting in significant opportunity for an established fashion name to generate growth quickly. The industry is generally profitable, as production can be offshored more easily due to the nature of the product, being less susceptible to rapid changes in fashion.

The second reason for Harrington's interest in the market is that the company's own financial performance is beginning the falter. Harrington is seeking growth opportunities specifically because its own sales and margins are beginning to shrink. With lackluster sales, Harrington began looking for other opportunities to infuse cash quickly into the business and attract new customers. This dovetails into the third reason, which is that the activewear market has newly become attract to the Harrington target market.

The company had reasonably avoided activewear when it was unfashionable, but in recent years the women's activewear segment has becoming increasingly fashionable, driven by celebrity trends. This has lent the segment an added aspirational component, which fits well with the business strategy of Harrington and is supported by the entry of other high-end clothing retailers into the activewear market as well. Put together, these three reasons make a strong tactical and strategic case for Harrington entering the market. It addresses a number of key concerns.

Financially, activewear has the opportunity to turn around the company's fortunes. Strategically, activewear now fits into the company's strategy and can be a means for Harrington to maintain relevance among the next generation of female shoppers. There are a number of strengths that could help Harrington to move successful into the activewear market. The first it the company's strong brand. The high level of brand recognition associated with Harrington/Vigor can provide the activewear line with immediate credibility with respect to fashion among the company's core consumers.

The brand's strength will therefore provide a baseline level of sales. The second strength that can help Harrington to enter the activewear market is that the company has established distribution channels. Having stores already stocking Vigor will help the company get the products out to the market immediately. Distribution channels do not need to be developed for this new product. The third strength that can help Harrington to enter this market is that it would target the activewear line to the same target market it already has.

The company already understands this market and knows how to reach it. This will help both the designers and the marketers to better reach this market. There are some weaknesses, however, that could have a negative impact on the ability of Harrington to enter the activewear market. The company utilizes in-house designers. While these designers understand their target market, they do not have experience in designing activewear. The company's reputation has been built in part on the high fashionableness of its designs.

If the designers' lack of experience in activewear results in poor designs, the line could fail. Indeed, the designers may resent having to produce activewear when they are accustomed to making a higher-end product. The second weakness is that the company does not have the ability to produce activewear in-house. The company would need to rent additional capacity to produce an activewear line.

In addition, Harrington's North America-based production would likely come at a higher cost than the production of key competitors, many of whom are utilizing Chinese production for their activewear lines. Lastly, while Harrington has established distribution channels, those channels may be entirely unfamiliar with activewear and have difficulty selling it.

Indeed, the small specialty stores that account for 32% of the company's sales and are the company's biggest supporters may be unable due to space constraints and willingness to alter their own stores' brand image to carry the activewear line at all. Activewear does present some significant opportunities, however. The most significant of these is the potential for added revenue.

Activewear is large and growing rapidly, and this growth in revenue could improve Harrington's bottom line significantly if the company can capture a decent share of the activewear market at the high end. Additionally, some of these new sales may come in the form of new customers. By attracting new customers to Harrington, the company may also see spinoff benefits as those customers are exposed to other Harrington lines. Lastly, the company can improve its image.

Although within Harrington the firm believes that it has a strong brand, this brand is supposed to allow it to charge high prices for its goods. Yet, margins are slipping; this could indicate an erosion of brand power at Harrington. Activewear could restore some of this brand power by showing consumers that Harrington was up-to-date with modern fashion sense. There are a number of threats, however, associated with entry into the activewear market.

While the brand could be enhanced, it could also be diluted if a large number of existing Harrington customers do not approve of the activewear trend. Moving into activewear, even if successful, could result in cannibalization of existing sales. For example, marketing money will likely be shuffled from older lines to promote the new activewear line.

Shelf space and inventory space in the distribution channel will also need to be created at the expense of more established lines, meaning that even if activewear is a success, that success could come at the expense of other lines within the company. As well, moving into activewear would introduce new competitors to Harrington, and this could place the company at a strategic disadvantage, attempting to compete against companies Harrington knows little about.

If Harrington does decide to launch into the activewear market, it needs to understand the demographic, psychographic and purchase behavior profile of the activewear consumer. The following table outlines the key characteristics of the potential Harrington activewear customer: Demographics Female 25-60 Professional, good income College-education Predominantly urban, white Psychographics Wants to be viewed as professional, sophisticated (aspirational) Shifting lifestyles towards a more casual approach, brought about by family and established career success Wants to feel young (esp.

The 45-60 baby boomers) Still retains an interest in maintaining status even while dressing down Vigor consumers emphasize the blending of comfort and fashion Purchasing Behavior Brand loyal Do not view the brand as subject to dilution if an activewear line is introduced Not concerned much about quality (easily pleased, even by shoddy products) 10% of customers would pay $100-$200 for better styling, fabric and fit Purchase more frequently (higher turnover) Harrington must also consider the financial implications of its decision.

In this case, it needs to analyze the breakeven point for the project, and determine if capturing that level of sales is feasible. The figures utilized in the breakeven calculation are those specific to the decision to enter the activewear market. Harrington Breakeven Analysis Start Up Costs Pants Plant 1,200,000 Hoodie Plant 2,500,000 Equipment Pants 2,000,000 Equipment Hoodie 2,500,000 Launch- PR, Advertising 2,000,000 Fixtures 6,000,000.