1. Discuss the applicability of each international marketing orientation (as outlined in your text) to Hilfiger's global operations.

trendsetter in jeans, Hilfiger initially encountered some negative reac- as Galeries Lafayette in France and El Corte Ingles in Spain. How- tions to being a U.S. upscale brand. However, Hilfiger has since played ever, Hilfiger found the European market to be one of fragmentation up its Americanism, and the perception that the brand and price are a (sending small amounts to small stores that carry select pieces) as step below the pure luxury brands has successfully helped its Euro- opposed to the U.S. market's concentration (sending a lot to depart- pean sales find a niche. ment stores). European operational costs are about three times those Hilfiger has used celebrity advertising, such as Sheryl Crow, in the United States because of this more fragmented retail and Jewel, Beyonce, Rafael Nadal, and the husband and wife team of wholesale system. the late David Bowie and supermodel Iman. The company has used Hilfiger has inaugurated large flagship stores in prime locations "delebs" (dead celebrities), such as Grace Kelly and James Dean. within large markets, such as in New York City, Paris, and Tokyo. To help advertise its children's clothes, Disney artists have drawn These stores not only make sales, but also demonstrate the variety of Pluto and other Disney characters wearing the line. However, aside Hilfiger merchandise. Non-U.S. stores are decorated to emphasize an from celebrities, Hilfiger learned that the type of models it uses to American image, while simultaneously connecting the United States sell successfully in the United States may not work well in Europe. to the host country, such as including a poster of a U.S. magazine For example, its models for men's underwear in Europe, including with the Eiffel Tower on the cover in the Paris store. By locating in those on point-of-purchase package displays, must be thinner and prestige areas, Hilfiger promotes an aura of having high-end prod- less muscular than those in the United States. Hilfiger also found that ucts, yet its aim is to be a high-margin brand with prices a notch its average European consumer was older than that in the United lower than luxury brands. Nevertheless, this concept did not work States, so it dropped the Tommy Jeans name because it sounded too in London, where Hilfiger closed its Bond Street store a year later. much like a teen product. In effect, Hilfiger over-promoted to retailers and under-promoted to Advertising has been a cornerstone of Hilfiger's success, depend- final consumers. Thus, too much merchandise was in stores, which ing on multimedia campaigns that include indoor and outdoor print forced them to get rid of excess inventory. Further, a cheap lookalike placements, digital and social media promotions, and webisodes. brand called Tommy Sport confused consumers, tarnished Hilfiger's image, and forced the company to buy it out. DISTRIBUTION There is an old adage that clothes make the man. Hilfiger, while Early on, Hilfiger relied mainly on wholesaling to about 1,800 U.S. making and selling clothes, has succeeded in convincing customers department stores, many of which contained stand-alone Hilfiger that its merchandise will help boost (or make) their positions. departments. It has avoided chains considered more low-end, such as JCPenney and Sears, though it does sell its outdated stock to QUESTIONS discount chains T.J. Maxx and Marshalls. However, in 2007, Hilfiger 17-1. The chapter explains five international marketing orientations. gave Macy's exclusive rights to sell its sportswear lines. Although Which one most applies to Tommy Hilfiger? Explain why. Macy's has about 800 stores, the move required Hilfiger to pull sales 17-2. The chapter explains five elements in the marketing mix from other department stores, such as Dillard's. product, price, promotion, brand, and distribution). In Distribution is perhaps the biggest difference Hilfiger found when which of these have Tommy Hilfiger's operating practices entering Europe. Because of the company's U.S. department stores been the most standardized globally? Explain why this has success, it put an early European emphasis on such department stores been possible and desirable.CASE Tommy Hilfiger For it's Tommy this, an' Tommy that -"Tommy" from Department Duties: Barrack Room Ballads (1890), Mark Twain said, "The finest clothing is a person's skin, but, of United States Book Company, New York. course, society demands more than this." Tommy Hilfiger, a no- In response, Hilfiger set up a European design staff that has led table international clothing brand, now owned by Phillips-Van Heu- to more harmonization in its U.S. and European products, a move sen (PVH), exemplifies efforts to respond to these demands. Its more up-market, and a turnaround of its U.S. performance. 2015 retail sales exceeded $8 billion, with over half coming from PRICING abroad. Europe, to which it began its push in 1997, accounts for the largest portion of international sales, and China is the fast- Whereas the early U.S. pricing strategy was to sell a shirt for $79 est-growing area. (The opening photo shows one of its stores in that looks like an $89 shirt, Hilfiger learned that its brand cachet Manchester, England.) As the company moved internationally, it warranted selling a shirt in Europe for $99 that looks like a $150 learned that applying every U.S. marketing strategy abroad did shirt. For instance, in Germany, its largest European market, men not work because country markets are very different. Our discus- don't mind paying $50 more than the highest-priced Hilfiger shirts in sion centers on contrasting Hilfiger's U.S. and foreign (mainly Eu- the United States, but they want them in a higher-quality cotton. In ropean) operations. addition, European department store margins can be 50 percent to 100 percent higher than those in the United States, thus impacting price differences. PRODUCT The Hilfiger brand's early success was largely due to two men: PROMOTION AND BRANDING U.S. designer Tommy Hilfiger and Indian clothing magnate Mohan Hilfiger's promotion and branding have been so intertwined that sep- Murjani. Murjani sought Hilfiger as a designer for a new brand of arating them is almost impossible. At the company's inception, there clothing by offering a line of slightly less preppy and less expen- were two primary needs: to convince stores to stock a new brand sive clothes than those offered by Ralph Lauren to attract a young and to convince customers to want it. Although the first year's (1985) mass-appeal audience. From the start, Hilfiger clothes have been ad budget was US$1.4 million, quite small for an unknown brand casual, of good quality, and distinctive enough in color and shape In a mass consumer market, the ads were aimed strictly at getting (along with their little red, white, and blue logos) that the public Tommy Hilfiger's name known. These ads were in leading magazines can usually distinguish them from those of competitors. Never- and newspapers, along with a billboard in New York's Times Square. theless, this is an industry in which product lines must evolve. They showed no clothes or models. Instead, they included Hilfiger's Maintaining that "Fashion brands have to reinvent themselves, just face, the logo for the clothes, and words describing Hilfiger as being like Madonna does," Hilfiger has gone from preppy to urban and on a par with such well-known designers as Ralph Lauren, Perry back again. Ellis, and Calvin Klein. In addition, Hilfiger has encountered some different national pref- The bizarre ads resulted in free publicity through newspapers erences. To accommodate European tastes, Hilfiger has added wool around the world and quips on popular late-night TV shows. The sweaters, adjusted to the European partiality for slimmer-looking publicity showed an eclectic group of celebrities-Bill Clinton, the jeans and smaller shirt logos, and created a line of added-luxury Prince of Wales, Michael Jackson, Elton John, and Snoop Dogg- items, such as leather jackets and cashmere sweaters for the Ital- wearing Hilfiger clothes. This fed into the image that Hilfiger ian market. It has also developed brighter colors for Italy, tartans and clothes had cachet; thus the company's brand was quickly known nationally and internationally. Soon, New York surveys revealed plaids for Japan, and sleeker designs for Chile. During the late twentieth and early twenty-first century, Hilfiger's that the public thought of Hilfiger as one of the four or five most U.S. sales fell each year, apparently because its product lines had important U.S. designers. And the logo-loving public rushed to buy become faddish (e.g., baggy jeans and large logos on clothing) and the brand, especially young managers who were eager to be seen in upscale sportswear during the newly popular "casual Friday" no longer compatible with its established image. This led to discount- ing, compromising on quality, and a resultant lower brand image. workdays. Despite Hilfiger's early publicity in Europe, its acceptance was Meanwhile, the autonomously operated European division refused to not as quick as it expected. Because Europeans tend to see France go along with the U.S.'s faddish moves, and its sales grew in tandem and Italy as the upscale fashion centers and the United States as a with U.S. decreases