TOMMY HELFIGER

Tommy Hilfiger Case study



What factors have led to higher prices in Europe than in the U.S for Hilfiger merchandise? What problems might Hilfiger encounter by having higher prices in Europe than in the U.S?

The Hilfiger brand was of the opinion of setting higher prices in the European markets because of the preferences and the tastes of the Europeans. They believed that the tastes and preferences are different in both the markets. European people consider French or Italian products over the American products, when it comes to fashion. The consumers at Germany, Europe do not think twice, even if they have to pay fifty dollars extra for a pair of Hilfiger jeans or shirt, provided that it is of a good quality, cotton. Further it was also found that there was no demand for the USA made sweaters in Europe. Even the jeans that were preferred by the Europeans were different. Therefore Hilfiger had to come up with slimmer jeans, fit for the European style.

Therefore any strategy pertaining to pricing should be based on the consumer sensitivity. Europeans demand for a product that is high in quality. Hilfiger, keeping this in mind had to adapt to the European preferences. The company went for producing slimmer jeans and shirts with smaller logos. Hilfiger also went for extending its line of clothing. It created luxury items for its consumers, such as; Cashmere sweaters and leather jackets for the Italian markets. Apart from all this, the cost incurred in transportation has also caused an increase in the Hilfiger's prices in the European markets. With the introduction of a higher quality of product, the company was able to charge a higher price. The new prices for their products appealed to the European consumers, given their standards and the European economic standards. The pricing strategy turned out to be a great success for the company, as the sales in Europe comprise thirty seven percent of the company's sales.

With higher prices being charged to the Europeans, the problem that can be faced by Hilfiger is that of grey market. Hilfiger's lower priced products in the United States of America are sending to the European markets, thus breaking the positioning of the company's brand in the European market.

Hilfiger's CEO would like to harmonize the European and U.S collections by having Hilfiger move more up market in the U.S.A. What problems might the company face in doing this? What might it do to make this strategy successful?

In order to move up the Hilfiger's market in the USA, it is crucial for the brand to specify and identify their new target customers. The company then needs to adopt different marketing and promotional activities, in accordance to the aspects there. Customers of the upscale USA market must be understood, in terms of preferences and tastes in order to come up with a product design which is acceptable and suits well to the consumers there. The elasticity of the demand must also be deeply understood by the Hilfiger's ...