International Marketing Communication Proposal for Launching Tommy Hilfiger Clothing Line in China
Introduction
Today’s market is characterized by highly competitive organizations 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. Today most companies find that it impossible to create any kind of sustainable competitive advantage based on product alone. It is common knowledge that every one of the successful companies sought and found a precise understanding of how it could create a customer-centered competitive advantage.
Hence, this paper aims to present a marketing communications proposal for launching Tommy Hilfiger products in the cities of Shenzhen and Guangzhou in China.
Market Environmental Scanning: China
There were of course foreign companies able to set a stronghold in the Chinese soil, but only those who came utterly prepared, knowledgeable in Chinese society, and committed to do business. After all, China is a large country with its transportation and communication sector still under development. Regions are separated and fragmented, and therefore cannot be considered a unified market. China has done remarkably well since the beginning of the economic reform movement in 1978 (1996). Between 1979 and 1995, China’s GDP grew at an average annual rate of 9.5 percent. China’s exports grew even faster and China now ranks among the world’s top 10 exporting economies. The government, in implementing the Coastal Economic Strategy, established four special economic zones in the coastal provinces of Guangdong and Fujian and 14 other coastal cities were opened in 1984 to attract trade and foreign direct investment. These economic zones and cities enjoyed relatively better tax treatments and preferential resource allocations (1998).
Moreover, China’s entry into the WTO will make China’s door even more open. Both foreign investment and foreign trade are expected to increase (2000). Foreign firms will begin to penetrate China’s financial and telecommunication sectors. Trade will increase in both directions and Chinese tariffs will be lowered and Chinese goods will have better access to world markets open to members of the WTO. Using foreign competition to stimulate the domestic economy is a major objective in seeking to join WTO, as explicitly stated by Premier Zhu Rongji. This illustrates the growing competition of different companies from different business industries which should be taken into account by Procter & Gamble Hong Kong Ltd in its aim to introduce Adidas Shower Gel in the cities of Shenzhen and Guangzhou.
The immediate issues faced by the early investors were cultural differences, trade barriers and government restrictions. Coca cola, Philips, Kentucky Fried Chicken, Nokia, Microsoft, and Johnson and Johnson were some of the companies who succeeded in taming the “dragon”. There is social behavior in China that in itself, is not bad, but it does affect the country’s globalization process. The predominant thought in Chinese Marketing System is that in order to do business successfully in China, the business must be organized, implemented, and operated in China. A business have no hope of much success if operated through long distance management, controlled by overseas main branch, or implemented by a foreign team that excludes participation by the locals. The Chinese are like westerners after all, sincerity and friendship is appreciated. A business in China must show acceptance of the host country. Donation to the government and charities, company leaders’ visits during China’s important days, company participation in China’s activities or drives, these are likely to make a foreign company accepted by the Chinese market.
In this light, looking into the characteristics and thought processes of the Chinese people still holds as the most significant factor to be looked into for the efficient and effective sales and marketing of Tommy Hilfiger products since the large scope of the market can pose a hindrance to a successful marketing strategy in terms of over generalized definition of the target or niche market of the product in the cities of Shenzhen and Guangzhou.
Centralized Market Penetration Strategy of Tommy Hilfiger
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 -0 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).
Communication Constraints Prior to Campaign Development
Competition is an important factor to consider before entering a business. Companies should have successful competitive strategies to be able attract, retain and grow customers. However, before the company can plan and execute these strategies, it should be able to pinpoint its sources of competitive advantage which can be differentiated through products, services, channels, people and image ( 2001). 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 affectivity 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 behavior 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.
Moreover, other elements, such as understanding the right target audience for a product or service, an indeed, researching such an audience in considerable depth, are equally important. Similarly, even if the appropriate channels are known and understood, the content of the messaging and communications developed for those channels, and that audience, or naturally of critical importance. Such channels for example, will include TV advertising, or an outdoor campaign. Advocates of such channels will argue with justification, that media can now be bought to give a highly articulate degree of one to one targeting, but more importantly the inclusion within messaging across these channels of a telephone number, email address, or website, fulfill our requirement to develop one to one dialogue (2003).
When considering channels for any campaign, including new product or service launches, integration across different channels can have a substantial impact upon response, compare to channels working in isolation. The typical example cited is often direct mail followed by telemarketing, where the mail pack serves to put the brand or product in the mind of the recipient, ‘warming them up’ to the telemarketing. There are also natural partners – as digital becomes a more accepted part of the marketing mix, it is unusual to find any communications strategy particularly product launches, which ignore the use of email and websites. As noted in the channel comparisons above, a combination of email and website work can give high impact, high relevance, and high reach, and in my opinion must form a key part of any communication strategy (2000).
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 favorable outcomes.
E-commerce removes the geographical separation between regions, and made dealing with foreign trade a snap. E-commerce is just on its initial phase in China, but it is expected to grow as the Ministry of Information Industry starting to structure the basic framework for e-commerce development, rules and regulations. As such, the arrival of broadband internet means that more and more people will shop online – suggesting there is plenty of room in the market for the convenience store and its competitors. Service differences are likely to smooth out, making it more likely that people will choose on the basis of price and brand loyalty. With this, the management will need to reassess its goals as well as opt to take on a differentiation strategy by promoting unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition.
Furthermore, 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.
Recommendations
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.
Credit:ivythesis.typepad.com
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