Questions for Harrington Case
How well 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 the Vigor brand name?
Harrington Collection's manufacturer and retailer of high-end women's apparel. The Vigor division of Harrington Collection's is aimed to appeal to younger fashion conscious customers. The division sells career wear, dreis a learge sses, skirts, blouses, pants and coats. The ideal customers targeted by the Vigor division are "trend setters", women aged 25-50 who are affluent, college-educated, and proffessionals seeking fashionable yet comfortable work clothing. The retail price ranges for the division are between $150-$500 and are classified as the "better" range of products. Vigor's current market share is 7%. Active-wear appears to fit very well with the Vigor division and their target customers. The increasing trend in women wearing active-wear not only for the gym but also for fashion purposes is growing as can be observed by competitor divisions offering the product line. Reports found that the active-wear lines had a turnover rate of almost twice the rate of current Harrington Collection apparel. As "trend setters" current Vigor customers would be attracted to the new product line, and a survey of Harrington customers confirmed this with 10% of existing customers willing to buy active-wear sets if they were available. Harrington Collection's requires the release of a new active-wear collection in order to remain competitive in the marketplace, and by releasing a higher quality active-wear line synonomous to the Vigor brand image, can fill this potential market space. Vigor's current advertising and sales strategy focuses on fashion and comfort. This image would fit very well with a new active-wear line as the products are aimed at women who desire quality sports wear, looking for apparel that was stylish and up-to-date with growing social trends. Vigor styles have always been less traditional than the other Harrington brands, and management firmly believes that the Vigor division has the ability to branch out and support a slightly cheaper, more casual product line. Studies conducted by Harrington Collection's found evidence to support that much of its current customer base were looking for something fresh and comfortable, that would fit with their active lifestyles. A new advertising strategy could easily incorporate a new branch off into active sports wear, for the professional career woman who requires apparel for the active parts of life. In addition the propsed sales strategy is to offer active-wear pieces below current Vigor price points (between $40 and $100), was supported by surveys conducted to be receptive to current customers without cheapening the brand name. Senior management at Harrington Collection's believed that the production of the new product offerings should not be outsourced in order to preserve current competitive advantages of strict quality control and turnaround times. However there are significant cost advantages observed with outsourcing manufacturing: low labour costs, and reduced capital spending on manufacturing factories. In order to bridge the advantages of both inhouse manufacturing and outsourcing, management decided that the optimal strategy was to rent production plants in Mexico to produce the active-wear line. This would enable substantial reductions in production costs (although still slightly higher then China), and still maintain fast turnaround times due to the close proximity to U.S retail outlets. These fast turnaround times are necessary to addressing the short life cycles of women's apparel and the demand for new designs to be introduced swiftly. According to customer research surveys, less than 2% of respondents felt that a less-expensive active-wear line would cheapen the brand. The product line itself fits very well...
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