INTRODUCTION
With Tommy Hilfiger's plans of expansion or settling grounds in the European Market, how much effort and hoe long will it take for the company to succeed and maintain its brand impact and residency to the new market?
This would help see through the possible causes nor barriers in marketing Tommy Hilfiger in the European Market and would help analyze the possible and alternative solutions to get over with such conflicts.
COMPANY HISTORY / BACKGROUND
Some history and background on Tommy Hilfiger & the Company………..
Hilfiger was born in Elmira, NewYork. He began his fashion career in 1969 with $150.00 and 20 pairs of bell-bottom jeans. He soon opened his own store. A self-taught designer, he specialized in creating clothes that people wanted but could not find. Hilfiger introduced his first signature in 1984. It was launched with a powerful campaign that eventually established Hilfiger as the New Leader in Men's Fashion.
Hilfiger and his partners, Silas Chou, Lawrence Stroll and Joel Horowitz, took the company public in 1992.
Since going public in 1992, Hilfiger have been one of the stand-out stocks in the fashion industry, climbing from $7.50 to a height of $11.00 . Since then, the stock price has dropped. But in this fickle fashion industry where trends go out of style as quickly as they develop - Hilfiger's success is attributed to its diversification beyond men's clothes into women's and children clothes, home furnishings, fragrances, eyewear, athletic shoes and retail stores.
Hilfiger's points of challenge is the figuring out of a way to re-invent one's self and continue to be fresh to the consumer , thus, updating one's products, stores and personnel.
Applying Innovative and Holistic Thinking would mean marketing in non-traditional ways that go beyond print and television ads. And this is where Chris Nakatani – Hilfiger's VP of Licensing comes in. His job is to make sure the distribution is right, the marketing is right and the entire formula is put together.
For instance, Hilfiger started sponsoring rock tours such as those of Lenny Kravitz, the Rolling Stones and Brittany Spears. And also created partnerships with other companies such as Jockey, to generate new lines of products that utilize Hilfiger's designs while capitalizing on the partner's quality track record in a particular line – in Jockey's case- men's underwear.
But not only does Nakatani work with the designers to develop these installations, but then he coordinates the massive production of installing Hilfiger's vision in hundreds of retail stores. It's a Herculean task that requires 70 field coordinators across the country.
(Nakatani 1999) The key to marketing the company is the in-store presentation of Hilfiger's products in major department stores. It is here that contact of the consumer is made and Hilfiger conveys the head-to-toe outfitting the company is selling. The development of these often elaborate productions, the fixtures and imagery of which take their inspiration from Hilfiger's clothing designs.
With Hilfiger's putting efforts in creating clothes that people want but could not find and its combination of the new and old fashion trends in his complete lifestyle collections for men, women and children a re what keeps its customer's loyalty. As they attend or fill in their needs and wants in their style of clothing.
Hilfiger caters to the young heart, but anybody can wear Hilfiger's clothes since it is a lifestyle brand. " A lifestyle of a particular person or group of people is the living conditions, behavior and habits that are typical of them or are chosen by them". This means that for every lifestyle there is a clothing line available- sportswear, casual and business.
As another survival / achievement in Hilfiger's part, because of their success in America in 1985, they decided to further extend their market to Europe. They let the whole American Concept integrate into the European Market but unfortunately did not work out quite well. People in Europe have got other desires and tastes for fashion than Americans which Hilfiger maybe didn't expect and which they should have had intensive research on. And this which contributed to some problems in the start-up in Europe. All over Europe, everybody knew Tommy Hilfiger just by name. So, there has to be some resolving and some other marketing applications or ways.
On the later part, Hilfiger finally came over with the matters and to cite an example is its well-planned market access in Switzerland, Europe in 1997.
The most common method of market entry in Switzerland is through the appointment of a local company as an agent. Most of these companies have been in the business for a long time and have gained the necessary knowledge and experience needed to counsel
foreign suppliers on developing a market for their new products. The agents distribute either through their own shops or through department stores, boutiques, special clothing stores and the like. In addition to the agencies that exclusively represent one or a number of suppliers, there are the independent agents who sell their own, individual collections to the retailer.
And this was the kind of market access Hilfiger went through. Hilfiger, which , since August 1997 , is represented by the Swiss agent Madison Clothing' in Zurich. From a dozen other competitors, this company was chosen to represent Tommy Hilfiger.
The selection was based on Madison Clothing's thorough knowledge of marketing strategies for sportswear in Switzerland that has been developed over the last few years. The European head office of Tommy Hilfiger was established in Amsterdam and all other European countries were supplied from this central office. Each individual country will have an agent representing the brand instead of an importer. In view of the major success this brand has in the U.S., the Swiss agent established it as a lifestyle-brand in Switzerland, using carefully selected retailers (five high-priced shops in various parts of Switzerland) who displayed the brand in special Hilfiger-Shops. For the time being only men's sportswear articles and the Hilfiger perfume (through a joint venture with Estee Lauder) were sold in Switzerland. Other Hilfiger lines such as Jeans (the
demand for which is immense already) and women's sportswear were made available in autumn 1998, as the company wants to brought its products into line with European taste, design and quality standards. This measure and the rationed supply of products were supposed to prevent a quick overkill' of the brand.
SOME ASPECTS / BARRIERS, HILFIGER SHOULD TAKE INTO CONSIDERATION AND PUT INTO ANALYSIS AND ACTION IN MARKETING AND MAINTAINING ITS BRAND
MARKET ACCESS
For an American company interested in entering the Europe market, finding and selecting the right person or firm for representation is important and sometimes difficult. Favorable terms may be required to obtain good representation for a new product or an
unknown firm. Market entry programs available through the Commercial Services in Bern, Zurich and Geneva offer an excellent way for American firms to penetrate the Swiss apparel market. The Gold Key Service, which entails a modest fee, provides scheduled appointments with pre-selected potential agents or distributors. The Gold Key client will be accompanied to all meetings by a Commercial Service trade specialist.
Some of prominent U.S. brands have to cope with grey market imports of their products in parts of Europe. This phenomenon can be put down to the indisputable good and trendy image a number of U.S. labels enjoyed in this country. Not just the considerably lower prices of apparel imported via grey market channels but also the fact that some of the major distributors and discounters have conducted special sales-weeks offering items purchased through grey market suppliers (very often basic jeans wear), offend the official agents of these brands.
Aside from The Appointment of A Local Company, Shop-in-Shop Concept….
Franchising - has also been successfully applied in the distribution and retail business for clothing. All in all, some 200 franchisors in various industry sectors are currently operating in the Europe market, around 20 percent of which are American origin. Esprit, for example, operates 29 Esprit-Stores in Europe, which are partially managed by franchisees. This way of distribution is an almost guaranteed mediator of the philosophy and image the franchisor intends to communicate to the end-user. However, franchise experts advise new-to-market franchisors and masters to adapt the franchise package or business format and message to the cultural traits and customs of
specific countries. This advice particularly applies to small, multilingual countries , where franchise packages can be tested in different cultural environments (French in Geneva or Lausanne; German in Zurich, Basel or Bern; Italian in Lugano). The practical knowledge garnered can then be applied to the larger neighboring countries.
COMPETITIVE SITUATION
Domestic production, hampered by high labor costs and the tendency to concentrate on high-end niche products, accounts for only about 10 percent of apparel sales in Some parts of Europe. The number of companies and employees in this industry sector has declined by more than half within the last 10 years and imported apparel now covers some 90% of the market. Apparel Industry has been in the throes of a painful resizing process, which can be put down to a number of factors: worldwide overcapacity, growing competition from low wage economies and the discrimination in respect to passive value-added trade. Competiton with other Brands coming from other countries likewise. In the case of Calvin Klein, despite its competitors from its same industry and country origin, has been succesful or is succesful in its expansion in ternationally, because, Calvin Klein marketing-wise produces variety of categories which relates to every range of income. From the customers with expensive clothing budgets who buy the collection clothing down to the college student who buys CK Jeans & Sportwear. And it can apply its design philosphy to Generation X and think about young people and more sophisticated people who want luxury clothes. Its design philosophy can transcend different groups.
BRITISH TASTES
Europeans still enjoy a very high standard of living, the recent recession has had an impact on the consumer's buying habits. Lower disposable incomes and a persistent lack of consumer confidence resulting from job insecurity and uncertain future prospects have led to an all-over cut back in consumption, squeezing prices and depressing the sales and earnings expectations of retailers.
The European consumer is generally very well informed about the latest trends in fashion and can be considered to be both sophisticated and brand conscious. This particularly holds true for people with higher incomes and a higher standard of living. It is no surprise that well-known, high-end clothing brands are looked upon as status symbols.
Decisive and dynamic - this is an apt description of the European woman of today. She is generally sure of her taste and prefers basic garments which can be easily mixed and combined. She sometimes indulges in impulsive buying but generally prefers to invest in high quality basics. The working woman prefers simple and elegant attire of high quality and comfort. The formal office outfit for working women usually consists of a costume or suit with matching blouse or shirt. A silk scarf is often used to complement these elegant outfits.
The modern European man has changed his attitude regarding fashion considerably over the past few years. According to retail trade sources, the male customer has "grown up" and knows exactly what he is looking for nowadays: fashionable and comfortable clothing of good quality. The level of sophistication in men's attire is increasing. Well known brand names are quite popular, especially among brand-conscious, affluent young customers. The typical formal office (banks, insurance and other service industries) outfit for men consists of a suit, sometimes with a vest, a long sleeve shirt and matching tie.
Buyers aged 25-50 can be considered the most important consumer group for apparel in parts of Europe, as they have the most money to spend. Quality, functionality, price and design, in this order, are the most important buying factors.
TRENDS IN THE EUROPEAN MARKET
American apparel, sportswear in particular, has a very good, trendy image in parts of Europe . The demand for leisure and Casual wear has increased continuously over the last few years. U.S. suppliers, who really never gained a very strong position in the European market for classic dress- and streetwear lines, have been able to increase sales of sports and leisurewear in Europe. The breakthrough in sales of U.S. products in this sector has been spurred by new and trendy outfits that originated from various U.S. sports activities, for example in-line skating, snowboarding, street ball and the like.
Reliable trade sources suggest that casual clothing in the mid-price range represents the most attractive market niche for American companies, as the competition with European brands is not too tight. This particularly holds true for the leisure and sportswear segment. In addition to that, the high-end designer lines (e.g. Donna Karan) can also be quite successful in Switzerland with its high standard of living and sophisticated customers.
* ECOLOGICAL PRODUCT BRAND - ECOLABEL - This is the European ecological label indicating a product with low environmental impact for its whole life cycle (from its birth to its death) and is valid in all EU countries. CENTRO SERVIZI CALZA offers its support to all companies interested for organisation and assistance up to granting of the brand. The laboratory at CENTRO SERVIZI CALZA is authorised to make the ecological tests and controls necessary for the issue of the ECOLABEL tag.
An important new trend, not to be underestimated, is the increasing demand for natural fabrics. Labels indicating environmentally friendly fabrics and apparel will become
Increasingly important and a key purchasing criterion in the future. Today ecologically friendly clothes already have a big competitive advantage in the Swiss apparel market. Most of the big clothing distributors have by now introduced special natural' lines of apparel, which are reported to be very popular with consumers. So far, the Swiss textile industry has not yet established a uniform standard for ecologically friendly clothing
items. The "Oeko Tex Standard 100" however, is being used by the majority of companies. The standard was set by the "International Community for Research and Testing in the field of Textile Ecology and Organization for Consumer and Environmentally Friendly Textiles e.V." and consists of the following fundamental
guidelines:
- Requirements apply to the end product only
- Exclusion of certain dyes, which can cause cancer or allergic reactions
- No flame protection or biocide equipping allowed
- Limitation of harmful substances in the end product (pesticides, formaldehyde, heavy metals)
- Differentiated limitations according to textile types and target groups
The guidelines for the award of the "Oeko Tex Standard 100" label were developed by the above-mentioned organization, also responsible for granting their label. The designation is restricted to one year, after which the product will need to undergo new testing.
CHARACTERISTICS OF THE EUROPEAN MARKET
Market experience and tailor-made product lines - these are the key to staying ahead of international competition. In this industry, competition is marked by concepts such as extreme globalization, concentration and a global surplus
Trade fairs offer opportunities to identify trends and to mount an appropriate response. This is also where you meet European representing distribution channels such as specialist retailers, chain stores, manufacturer's sales outlets, department stores, self-service discounters, mail order firms as well as retail cooperatives. The importance of each channel varies within Europe. In Germany, for example, the premier distribution channel for footwear is the specialist retail store. Experts believe that distribution is set to become more automated with greater use of integrated inventory management systems, electronic cash and database marketing.
Retail is experiencing a revival with customer satisfaction and loyalty becoming the prime marketing objectives. Companies are trying to improve their service vis-Ã -vis the customer, adapting them to current and future consumer expectations. This comprises all areas such as collection decisions, marketing, logistics, inventory management, company philosophy, corporate culture, selling methods and all services.
The European market in particular is extremely competitive. There is only one chance to make a good first impression as a supplier. Newcomers to the European market should not expect a resounding success in their first attempt at penetrating the said market. Persistence is necessary to make suppliers visible in the European market.
The European Union(EU), currently comprising 15 member states, with more to follow suit, plays a proactive role in facilitating the manufacture and trade of PPE. EU was formerly known as the European Community, and had, in 1998, a population of 375 million. Of these, 153 million was the estimated active labour force. The EU's average per capita GDP in 1998 amounted to US$ 20,650. EU is a major market for domestic and foreign producers. It also encourages the developing countries aspiring to supply to the EU market.
| 15 member states of the EU |
| Austria | | |
| Belgium | Greece | Portugal |
| Denmark | Ireland | Spain |
| Finland | | Sweden |
| | Luxembourg | |
Economic Spotlight
On January 1, 1999, the Euro was introduced as the unifying legal currency of the 11 EU member states - Austria, Belgium, Finland, France, Germany, Italy, Ireland, Luxembourg, Holland, Spain, and Portugal. Their currencies are under the subdivisions of the Euro and will continue to circulate as legal tender till 2002. Circulation of Euro coins and banknotes will gradually replace the individual national currency notes and coins, which must be withdrawn by July 1, 2000. At present, banking is possible both in Euro and in the individual national currencies.
| A look at some key European Economies |
| Economy | Marketing Potentials | | | Possesses the world's third most powerful economy.
Industry generates one-third of GDP and includes the world's largest producers of iron, steel, coal, cement, machinery, chemicals,automobiles, machine tools, electronics, food and beverages etc.
There has been a slight dip in the market for Workwear (stabilisation expected in the coming years) whereas the market for other PPE has been comparatively higher (mainly in terms of value). | | | Economy wise, ranks fourth in Western Europe.
The UK is the leading producer of EU in the corporate wear. Demand for PPE grew in the year 1998 while the total demand for workwear is expected to decrease in the coming years.
Leading producer of corporate wear in EU.
Industry covers production machinery, electric power equipment, automation equipment, shipbuilding, aircraft, motor vehicles, chemicals etc. | | | The French market is very difficult to penetrate. Despite the increase in demand for specialised protective wear, bulk of the special fabrics and garments, are supplied by French companies.
One of the four West European trillion-dollar economies.
Industry generates one-quarter of its GDP and covers machinery, steel, automobiles, chemicals,electronics,aircraft, food-processing etc. | | | Petroleum refining, chemicals, microelectronics, metalworking etc. fall under the range of industrial activities.
1998 and 1999 were favorable years for strong economic growth. The demand for PPE is expected to undergo a steady rise in the forthcoming years.
Demand for workwear is expected to stabilise while the demand for uniforms will further fall. | | | Economically, not far behind the UK and France with approximately the same total and per capita output.
Italy plays a major role in global footwear and clothing despite the high cost of labour. Factors contributing to the Italian success are price, fashion, and creativity linked to wearing apparel, technological innovation and product quality.
Industrial activities range from tourism, iron and steel, machinery, chemicals, automobiles, textiles, clothing, footwear to food-processing and chemicals.
Industry generates one-third of its GDP.
Nearly 85% of Italian footwear production is exported. |
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MARKETING STRATEGY
A Marketing Strategy is the logic behind achieving objectives for a brand. There should have been or should be a principal objective for Tommy Hilfiger. Like for example: "To be among the top known brands in Europe in 2003".
SOME THEORIES ADAPTABLE TO A MARKETING SYSTEM
Marketing Mix (4P's)
The marketing mix is one of the major concepts ideas of the modern marketing. It is a set of controllable tactical marketing tools that the firm blends to produce the response it wants in the target market. The marketing mix consists of everything gather into four groups of variables known as the four P's. Product, Price, Place, Promotion
| Marketing Mix Product Promotion Price Place |
Variety Advertising List prices Channels
Quality Promotions Discounts Coverage
Design Personal selling Allowances Assortments
Features Publicity Payment period Locations
Brand names Credit terms Inventory
Packaging Transport
Services
Warranties
- Product: means the totality of goods and services that the company the target market.
- Promotion means the activities that communicate the qualities of the product and persuade target consumers to buy it.
- Price is what the customers have to pay to get hold of the product.
- Place includes company activities that make the product available to the target the consumers
We must keep in mind that the four P's only reflects the seller's view to influence the buyers. We must also need to look at the consumer point of view. Every marketing mix must also have a customer benefit.
One marketing expert suggests that companies should view the four P's combined with the customer's four C's (123)
| Four Ps Four Cs |
| Product Customer needs and wants |
| Price Cost to the customer |
| Place Convenience |
| Promotion Communication |
It impossible to be a successful company if you are not able to meet the customer's needs economically and conveniently. With communication, the Ps and Cs are all interdependent to each other for example if the product is not what a costumer needs how will it be possible to sell your product? There is another limitation on this theory of the 4Ps. This marketing mix is important for every company
As for Tommy Hilfiger's Case:
Tommy Hilfiger's Marketing Mix (Product) Product is defined as anything offered to a market that might satisfy a need or a want. Tommy Hilfiger consists of a totality of its attributes - everything from the taste of the clothes, through the designs and lifestyle matching. It was found that in the start of expansion in Europe, there was a need for further reseach & development to meet nor suit the real tastes of Europeans in Fashion & Clothing. And there was a need to relaunch itself.
Tommy Hilfiger's Marketing Mix ( Price)
'Price' is what consumers pay to acquire a product. The main factor that would determine the price of Tommy in Europe was the price of the main competing brands, as well as Hilfiger''s own cost base. This strategy made the new product attractive to consumers, as well as ensuring an adequate return on production and distribution costs. There should be an aim of Penetration Pricing to win as many customers as possible before the competition has time to react.
Tommy Hilfiger's Marketing Mix ( Place)
'Place' is defined as the way in which a company makes a product or service available to consumers. This includes all aspects of distribution as well as the manner in which items are displayed in shops
Tommy Hilfiger's Marketing Mix ( Promotion)
Among the most innovative aspects of the marketing mix created for the relaunch of Tommy Hilfiger was that of promotion. Promotion includes all activities that communicate information about a product and its latest designs or styles / innovations and merits to a target audience, that would persuade them to buy. The most important consideration for Tommy Hilfiger Brand in this regard was to create an integrated communications strategy across different mediums that would direct a standard message at the target market from across a range of media for the products of the brand to be known and not just the name itself .
SWOT analysis
A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis.
The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection. The following diagram shows how a SWOT analysis fits into an environmental scan:
In the case of the Tommy Hilfiger company it interesting to produce a swot matrix
The Boston Consulting Group product portfolio matrix.
In order to construct a Boston Matrix we first need to know what a business portofolio is and the way to get all the aspctes to construct such a matrix.If we talk about a company its business portofolio than we refer to the collection of businesses and products that structure the company. I f we are going to analyze the current business portfolio in order to evaluate and identify the various business of the company. We will see that some divisions are more profitable than the others. The company is going to put more resources in its more profitable businesses or divisions and phase down or drop its weaker ones.
In order to produce this matrix the company needs to identify their core divisions. These are called the strategic business units or SBU. A SBU is a unit of the company that has a separate mission and objectives, and which can be planned independently from other company businesses. This can be a a company division, a product line within a division or a single product or brand.(2) the next step will be the allocation of resources for every SBU's. The purpose of strategic planning is to find out in which way the company use their strengths to take advantage of the attractive opportunities in the environment.
One of the best known portfolio planning is the one from the Boston consulting Group. And is called the BCG Growth-Share Matrix.
BCG Growth-Share Matrix
