Harrington Collection CaseProblem 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 Dilutiona. 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 salesb. Up to 50% cost reduction by producing in low cost countriesc. 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 segmenta. Price sensitive consumersb. Half of apparels purchased was sold c. Discretionary spending diversion from fashion to technology, home and leisure activitiesd. 2. Market Potential a. 7.5 million active wear sold in 2007 which is expected to double by 2009b. 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 Factors1. 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 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