What are the major competitive advantages that Hilfiger has?
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 plaids for Japan, and sleeker designs for Chile. nationally and internationally. Soon, New York surveys revealed 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
