MARKETING: TOMMY HILFIGER
Category : Marketing
International Marketing of Tommy Hilfiger: A Case of Cultural Penetration
Today’s market is characterised by highly competitive organisations which are all vying for consumer’s loyalty. Firms are faced with the challenge to maintain their own competitive edge to be able to survive and be successful. Strategies are carefully planned and executed to gain the ultimate goal of all: company growth. However, external factors are not the only elements which influence growth. There are also internal factors, components working within the organisation which shape the direction of the company.
Despite the economic and technological conditions that make it possible now to promote products and services in a larger consumer market, there are other factors that still need to be considered for a business organisation reach out easier to their target market. Looking into the characteristics and thought processes of the people still holds as the most significant factor to be looked into by the individuals in the field of sales and marketing. The large scope of market can pose a hindrance to a successful marketing strategy in terms of over generalised definition of the target or niche market.
The value and importance of customers is not something that should be set aside by companies. Marketing plans and strategies would be incomplete without paying much consideration to the customers. Customers will and should always be a part of the agenda in any marketing plan of any company. Because of the implications for profitability and growth, customer retention is potentially one of the most powerful weapons that companies can employ in their fight to gain a strategic advantage and survive in today's ever increasing competitive environment ( 1999).
Consumers and Culture
Consumers can either be subjective or objective, testing the persuasiveness of brand names. Retail stores selling the products also play an important role in swaying the decisions of consumers. The whole package or visual appeal of the retail outlet can determine sales, or the service of the sales ladies or the clerks. Furthermore, consumers may choose particular products/brands not only because these products provide the functional or performance benefits expected, but also because products can be used to express consumers’ personality, social status or affiliation (symbolic purposes) or to fulfill their internal psychological needs, such as the need for change or newness (emotional purposes) ( 2002). These are just some of the factors that affect consumer behaviour. They have been the subject of consumer research for years, for instance, linking them with customer service and customer satisfaction, or the efficacy and persuasiveness of advertisement, etc.
Culture influences behaviour through its manifestations: values, heroes, rituals, and symbols (, 2001). The combination of both etic and emic perspective on the manifestations, can basically reveal culture’s strong relation with customer behaviour. The etic philosophy is based on the definition of culture as “the collective programming of the mind which distinguishes the members of one group or category of people from another’’ ( 1997). On the other hand, the emic philosophy stresses upon understanding issues from the perspective of the subjects being studied (, 2001). As cited from (1988), this philosophy determines the coordinates of social action and productive activity, specifying the behaviours and objects that issue from both.
Values are basically the basis of one’s attitude or restriction in attitude. Some examples of values include freedom, pleasure, inner harmony, and happiness. Heroes, on the other hand, refer to icons in the society that may have an impact on people of different levels. Examples of heroes are sports figure or pop culture figures. (2001) stated that heroes may influence consumer behaviour through their association with certain products and brands. The same goes with rituals, or symbolic activities commonly performed over and over, such as bathing, tooth brushing, attending to mass, to school, etc. Their involvement on the consumption of consumer products makes them important for consumer behaviour. Finally, symbols are equally important because different cultures have different symbols that they favor i.e. language, logos, signs, etc (, 2001).
Companies now face the challenge of making its target consumers respond accordingly to their marketing efforts. Those who understand its consumers’ responses will have a great competitive advantage. The starting point towards this is through the stimulus-response model of buyer behaviour which involves examining the marketing and other stimuli in the consumer’s black box that translates into buyer responses (, 2001). Marketing stimuli often consist of the four Ps of marketing: product, price, place and promotion while the other stimuli may include economic, technological, political and cultural factors which exist in the marketing environment. All marketing communications should be directed to a particular target. This aspect suggests that in implementing marketing communication, the company should clearly identify the targeted constituents and stakeholders, or to whom the marketing communication strategy should be directed (, 2002). The purpose of this aspect is for the company to create or apply communication instruments that will encourage the market to purchase or patronise the product.
Market Penetration Strategy of Tommy Hilfiger
Since the market is in the international orientation, the advertisers should keep in mind the differences that are distinct between and among the target market from different cultural backgrounds which may significantly affect the effectivity of the campaign. The fact is, there may be ideas that will not be applicable across the diverse target market population. Studies on the relationship of consumer behaviour and their personal values and cultural orientation as well as their beliefs on certain principles, the dispositions they hold and side they take on political, gender and social problems and issues should be duly accorded.
Most successful international brands can clearly define their target consumer without a reference to nationality or ethnic background. Tommy Hilfiger is targeting a consumer that is international in nature and is cosmopolitan to an extent. It does not necessarily mean that they attract only the younger crowd. Many retail brands like Brooks Brother and Austin Reed attract consumer from an elder age group across countries for their classic and sophisticated fashion items. Tommy Hilfiger is engaged in principally one industry segment, the design, importation and distribution of men’s sports wear and children’s wear (2003). Accordingly, no information is being furnished herein or in the accompanying financial statements relating to industry segments of the company.
Tommy Hilfiger, through its subsidiaries, designs, sources and markets designer men’s sports wear and boys wear, including woven shirts, knit shirts, pants, swimwear, sweaters, outerwear and athletic wear. These offerings are complemented by collections of men’s tailored clothing, dress shirts, denim products, neckwear, socks, underwear, belts, small leather goods, sleepwear, robes, golf wear, foot wear, sunglasses, prescription eyewear, women’s casual wear and men’s and women’s fragrances, among others, bearing the Tommy Hilfiger ® trademark, which are produced and sold pursuant to certain licensing arrangements. Tommy Hilfiger is the company’s principal designer and provides leadership and direction for all aspects of the design process. The company’s sports wear is designed to combine classic American styling with unique details and fit to give time honored basics a fresh and updated look for customers who desire high quality, designer clothes at competitive prices ( 2003).
In addition to continuing to expand the in-store shop program, the company plans to grow by broadening its range of product offerings, both in-house and through licensing arrangements, and by expanding its channels of distribution. Through the expansion of its product lines, the company believes it will serve a wider variety of customer needs. The company has introduced new products, a women’s fragrance pursuant to its license with Aramis, Inc., a division of Estee Lauder Companies, prescription eyewear with Liberty Optical, footwear with the Stride Rite Corporation and women’s casual wear marketed under a license with Pepe Jeans London Corporation (, 2003).
Wholesale distribution is centralized in a 360,000 square foot New Jersey facility to which all products are shipped. The facility is operated and principally staffed by an independent contractor who charges the company on the basis of the number of items processed, subject to a minimum annual fee. The company has the right, at any time during the contract period, to terminate the distribution agreement by making a specified payment. In addition, the company leases a 200,000 square foot facility in New Jersey for retail distribution. The company believes that these distribution facilities are adequate for the company’s current level of sales, and provide the company with enough space and flexibility to support the continued growth of the company’s business (, 2003).
In July 1991, the company was granted an exclusive license to sell the company’s products in Canada. The term of the agreement is 10 years and is renewable at the option of the licensee subject to specified volume limitations and other conditions. In addition, the company has granted an exclusive distributorship to an unaffiliated Panamanian company to distribute the company’s products in Central America, Venezuela, Columbia, Chile, Ecuador and most of the nations of the Caribbean basin, and even to India. In May 1995, the company was again granted the license to distribute its products in Mexico for 3 years term and is renewable at the option of the licensee. On February 1, 1997, the company entered into an agreement with Pepe Jeans London Corporation to distribute the company’s men and boy’s sport wears (excluding jeans wear and jeans related apparel) throughout the European Market (2003).
All pricing decisions are made at the Company's corporate headquarters. The Company's pricing strategy is designed to provide superior quality and value appeal by offering competitive prices on fashion from better national brands. The Company has effectively been able to generate sales from promotions with special pricing of limited duration. The Company's management information systems provide timely sales and gross margin reports that identify sales and gross margins by item and by store and provide management with the information and flexibility to adjust prices and inventory levels as necessary. Tommy Hilfiger products are available in the range of $40-$500 globally. Tommy Hilfiger products are mainly sold in the US market through leading retail chains such as Macy’s. Tommy Hilfiger has a huge 20,000-sq ft retail space in some Macy’s chains in the US (Bryant, 2003).
Most fashion pundits will agree that the secret to developing an upscale brand begins with creating a luxury-priced collection that sets the pricing, segmenting and targeting of the lower-priced labels below it. Many argue that by developing a mid-range street wear collection first, Tommy created a consumer perception of the brand as a more expensive street wear collection, but not necessarily a designer label. Tommy’s strategy may have worked better by creating a black label luxury collection first, getting it into high-end retail stores, generating a strong designer positioning and creating a certain luxury feel. Once established, the company would have been well positioned to develop lower-tiered labels targeted to other audiences and retail stores. This was further compounded by Tommy’s struggle with global trademark infringement and counterfeiting issues. These problems gave Hilfiger that “sold everywhere to everyone” mindset that tends to erode a brand over time (Associated Press, 2003).
Despite the economic and technological conditions that make it possible now to promote products and services in a larger consumer market, there are other factors that still need to be considered for a business organization reach out easier to their target market. Looking into the characteristics and thought processes of the people still holds as the most significant factor to be looked into by the individuals in the field of sales and marketing. The large scope of market can pose a hindrance to a successful marketing strategy in terms of over generalized definition of the target or niche market.
The long history and practice of people across different countries and cultural identities could be very overwhelming in the challenge that it presents to business and advertising individuals who have ambitions to take the extra mile of gaining a share of consumers and clients from varying localities abroad. Today the array of possibilities in applying the marketing strategy of international advertising is unimaginable. Instead of taking the technological barriers as hindrance and drawbacks in the international business operations because of the technological divide that cuts across the people from different social status, looking for avenues of more strategic and effective campaigns and treating such drawbacks as opportunities nay result to favourable outcomes.
Hence, knowing the product and its demands in the market as well as the people who will likely avail and take advantage of the offer will open the possibilities for a campaign that will be most ideal in the international selling. The manufacturers and the advertisers should be conscious enough to know the characteristics of their product and its demand in other countries. It is not always the case that a product or service will be used by people from another country just like its success in it country of origin. There are products and services that are only utilized in a particular location because of the unique lifestyle of the people. The character of the product, if properly studied, could be made and taken as an advantage rather than a drawback in gaining a larger number of target market. The advertisers especially the people in the creative department should answer to such demands in the advertising industry.
Thus, it is always important to know the characteristics and nature of the products and services offered by any advertising campaign because this will guarantee the success of the marketing strategy. But knowing the product alone can be detrimental any marketing plan if the advertisers and the manufacturers themselves have no idea of the new target market they are trying to penetrate. The fact that there are really products and services that cannot be applied or utilized in a particular country should be a constant thought and reminder to the advertisers and business organization with plans of gaining entrance and share of clients and consumers in other countries. The services and products should be correctly classified as to whether they will be sellable in the new market.
The lifestyle and daily routines of the people in the new target market should be likewise considered to ensure that the products and services offered will be able to enter the new market in a different locality. Conducting researches and market studies on the purchasing power and the consumer behavior of these people will benefit the business organization to conceptualize, transmit and channel the correct advertising message to the target. Hopefully this will eventually attract the interest of the target audience and gain their loyalty to the product or service being made available to them.
The products or services should always be in synch with the tastes, lifestyle, economic status and purchasing power of the prospect foreign target market. If the contrary is the case, it may also worthy to consider the time frame in which the marketing strategy and advertising plan will be duly employed and utilized in a foreign locality with different cultural orientation. Time is also the factor to be considered in conceptualizing and contextualizing a product or service innovation as well as its launching or introduction in the market.
Mutual recognition of rules between and among the advertisers, the business organization and the policy-makers of the prospect country should be at all times observed in order to avoid legal confrontations and eventual failure of the marketing strategy. Gaining the trust of the local government and reviewing the economic policies and legal matters that govern the country in which the product or service will be made available will be a strong ground from which the advertisers can make as a take off point in pursuing the any further business venture.
The broadcasting networks especially that of the television and the radio media forms should be examined in great detail to make the local entrance of the products and services possible. The print medium should also be taken into consideration especially its distribution in a particular locality or country.
Even though the concept of the strategy is a standardized international level advertising campaign, the people who will be responsible in executing the said project should be sensitive enough to investigate on the local environment. The same advertising campaign does not necessarily mean that the strategy, plans and approached that will be utilized is similar. Too much generalization about a locality and the people who will be the target of the campaign may post danger on the success of the project. It is important to get close to the audience by knowing their culture.