Tommy Hilfiger
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
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