1. What factors have led to higher prices in Europe than in the United States for Hilfiger merchandise? What problems might Hilfiger encounter by having higher prices in Europe than in the United States?
The European and American market definitely has a major clash, for it was stated in the case that their demands are opposite from each other. Well, the European market seems to be more demanding in terms of product selection, variety, material and collection. As mentioned, there have been special adjustments made for the European market such as using wool, having jeans made into slimmer shape, and tapping on a more luxurious image — the use of leather and cashmere for some of its product lines. Thus, this created a higher price variant for the European market compared to the United States.
Moreover, in the initial expansion to Europe, Tommy Hilfiger took the sales orientation in their marketing strategy. This then changed as they saw the response of the European market to their products meant for the United States. They took on a marketing orientation of a more customer-oriented marketing strategy and segmented it by country. The changes in design and quality of materials being used, affected the high cost production for the European segment.
Although this caters to the customer needs of the Europeans, this marketing strategy changes the image of the clothing company. As stated at the end part of the case, Tommy Hilfiger CEO has been contemplating on having a harmony in its collections. Hence, this battle between two different markets can distract and vere away Tommy Hilfiger’s brand positioning.
In addition to that, by segmenting by country, it’s difficult to gain popularity in economies due to standardization of the brand. The issues of high prices in Europe, but low prices in America also makes Tommy Hilfiger vulnerable to risk due to the gray market, which also creates a whole different European Tommy Hilfiger from the American Tommy Hilfiger. The result would be a confusion for its consumers specially for travelers, who go back and forth the Europe and the United States. Having inconsistency for
a retail brand is just a big NO.
2. Hilfiger’s CEO would like to harmonize the European and U.S. collections by having Hilfiger move more upmarket in the United States. What problems might the company face in doing this? What might it do to make this strategy successful?
Tommy Hilfiger was created in order to be an alternative to more expensive brands like Ralph Lauren, Calvin Klein and DKNY. It is popular in the U.S. because of their affordable prices for the products produced of high-quality. Moreover, American consumers patronize Tommy Hilfiger for its casual, yet stylish approach, and what makes them satisfied upon purchasing a Tommy Hilfiger Product — it’s pocket-friendly.
Thus, completely changing the face of Tommy Hilfiger in the U.S. to target the upmarket may be a big risk to the company. First, the wholesale distribution in the United States might cut-off their relationship with the company because of price increase, sudden shift, and even customer evaluation. As mentioned in the case, Tommy Hilfiger distributes to more than 1,800 department stores and wholesalers in the U.S., so it would be tough to miss out on most of them. Second, the American culture is very sensitive; once they sense that sudden shift of Tommy Hilfiger’s upscale move, they will take in a bad way. To think there are so many brands showing up a good image in the market now, and the American market can easily shift to other brands that are more affordable, fashion-forward and consistent.
Though, come to think of it, having an imbalance harmony for retail and fashion brands is acceptable. A good example would be Zara and Uniqlo. Zara, as we all know is established in Spain and has been one of the strongest fashion companies in Europe because of its affordability and fashion-forward approach in its product line, though comparing Zara here in Manila, it is priced more than expected. On the other hand, Uniqlo has a different story, their products are priced higher in Tokyo, to think the brand was established there. Comparing Uniqlo here in Manila, it is priced a bit cheaper. Hence, having no harmony for its price is not a big deal, for it taps on respective market demands, for each market has its respective culture, buying power, psychographics and market performance.
3. Make a list of clothing brands whose popularity has or has not sustained their popularity and quality/image over time in the United States. Why have they changed or not? Can Hilfiger find any keys for success from these experiences? *Data came from respective brand official websites and personal experiences of the authors.
Brands with sustained popularity
Why have they not changed?
Lacoste
One strong factor about Lacoste would be brand identity and recall, for it established a strong foundation for its logo, specifically. That green alligator stood very strong throughout the years since it was established in 1933.
Lacoste holds a strong promise for its brand, and it positioned itself to be a sportswear in the first place. Though Lacoste has expanded its distribution channels globally and have ventured into different product lines (footwear, leathergoods, watches, eyewear), it has kept the logo as a sign of sustained popularity.
Speaking of the American market, Lacoste as a brand has been widely accepted as a whole even though the brand was established and founded in Europe. There has been no occurrence regarding a clash between the brand and the American market. A good thing about Lacoste is that there is consistency regarding its promotional ads, price range, and the like. Louis Vuitton
Similar to Lacoste, the most famous luxury brand of all time, Louis Vuitton is a best representation of a brand having sustainable popularity and image since it was established in 1854. The French brand started as an artisan maker for luxury trunks and leather goods back in the 19th Century, then evolved to a multi-billion dollar business today under the luxury group LVMH, Moet Hennessy – Louis Vuitton S.A.
Louis Vuitton has been known for its flower-like monogram prints handpainted and engraved in each fashion masterpiece they make. Despite having so much of variety and brand extensions today, Louis Vuitton remains to be known for its basic monogram. Louis Vuitton ventured into the American market in the early 1900s, and can you imagine having that consistency throughout more than a century being present in the same market?
Yes, that is how excellent Louis Vuitton stands, and relating this with tapping on various markets. A good observation about the brand would be that LV caters its well-known monogram and damier products to all its distribution channels in a fair treatment. Though LV also taps on certain markets with special treatment depending on the demands of culture, style, buying power, etc.
Brands without sustained popularity
Why have they changed?
Topshop/Topman
The most probable reason for changing their marketing in different countries would be because of economic considerations. Several countries that Topshop caters to are of different income levels, different preferences, etc.
In the Philippines we can see this brand as one of the main go to brands of young adults in the A, B & upper C market. But this isn’t the case of Topshop and Topman in other countries. In the UK, where it originated from, Topshop is not such an expensive brand. It’s not known to cater to the upper class. How clothes are presented there, aren’t as highly looked at as they are here. In Hong Kong, on the other hand, Topshop is only sold in high-priced department stores along with some designer clothes. They don’t have their own retail stores, nor is it that popular of a brand in Hong Kong.
The difference in culture and preference probably affected this. In the Philippines, Topshop can be affordable, but still very expensive as compared to local stores. It’s popular and spread out in the country, but the clothes
sold here aren’t exactly what are sold in other countries since we don’t experience all the 4 seasons. In Europe, there are many other stores like Topshop all around. You can find Zara, H&M, Bershka, Pull and Bear, and several stores that cater to exactly the same market, but have clothes sometimes of higher quality but as affordable.
Uniqlo
Surprisingly, Uniqlo in the United States is new. It only has branches on both ends of the country; a few in San Francisco and a few in New York. Though both areas have somewhat a similar form of climate, lifestyle and a set of consumer demographics; Uniqlo presents a difference in terms of collection and price. Speaking of collection, the ones in San Francisco has a huge variety from casual to formal and from outerwear to underwear. New York, on the other hand, seems to have less than what is offered in SF. Speaking of price, the products in SF are priced a little bit cheaper than NY, this can be because of tax, standard of living and external factors with regards to state, lifestyle of the people and the fashion industry difference. Well, speaking of Uniqlo outside of the United States, it also shows an inconsistent approach of choosing which collection fits more in a certain country and pricing can also vary depending on economic standards. As mentioned earlier, Uniqlo is priced a bit higher in Tokyo compared to here in Manila. Moreover, there has also been inconsistency with regards to its collection delivery and status. Take for example, Tokyo and SF have the same collections whereas in Manila and Bangkok, it’s one of half collection late. This could be an internal strategy for the brand, which we won’t need to venture in this case analysis.
4. What strategies would you recommend for clothing companies outside France and Italy to overcome the positive images of “made in France” and “made in Italy”? What might Hilfiger do?
For clothing companies to be able to compete with those that pride themselves with tags that say “made in France” and “made in Italy,” they must market themselves right. Clothes that are made in France or Italy are known to be those of high quality. They have already gotten the interest and loyalty of their target market. If other companies want to help themselves be known in this way, they must be able to standardize their products. Standardizing products will let consumers know what the clothing company is trying to sell, no matter where you can find them.
In the case of Tommy Hilfiger, the company was not able to standardize its products across the U.S. and Europe. This leads them to not give an exact image to all consumers. Consumers won’t be able to say that just because the tag says “Tommy Hilfiger,” it’s of good quality because the quality varies depending on where the products are sold. With this said, Tommy Hilfiger would be able to establish its name like how the “made in France” and “made in Italy” tags are known if they are able to standardize the quality. The company can still maintain the differences in product lines sold since American and European consumers don’t share the same preferences, but the quality could be standardized.
Another way to possibly go about the situation would be that since Tommy Hilfiger is already known worldwide, they could start focusing on product oriented marketing. With good quality, and an already known name, this could possibly let the brand market itself through improved quality of products. This doesn’t mean that they should fully neglect marketing. They should still continue addressing its promotions differently worldwide depending on the consumers. But to change all the products per country could lead to unnecessary costs. If they are able to increase efficiency of production, but use quality that would be well appreciated by the consumers, this could lead to lower costs and higher sales.
