Current Marketing Strategy for Phillips Van Heusen - Essay Example

CURRENT MARKETING SITUATION Phillips Van Heusen has established itself as a powerhouse in the world of apparel and clothing, generating sales of around $2.4 billion, and a net profit of $162 million in the FY2010. While its dependence on the U.S. market cannot be denied, it has managed to expand its sales territories to various regions now through very smart moves of multiple distribution channels, licensing arrangements and acquisitions. The sales figure for the company dropped slightly from the previous fiscal year, which must pick up again this year in order to control a potential trend of falling sales revenue. The current marketing strategy that the company is trying to implement is three-pronged: Wider range brand offerings; multiple distribution channels; wider range of price points. To complement this strategy, the company has the following in place. Market Segmentation The company has broken down its markets into high end, middle and low end consumers, which will be discussed in detail in the next section. For each of these, the company has categorized its segments into Wholesale Dress, Wholesale Sports, Retail Apparel, Retail Footwear, Licensing of Calvin Klein and others. According to the company’s Annual Report1 in 2009, sales volumes for these segments show a huge chunk being contributed from the retail apparel and wholesale businesses. Market Description With the existing portfolio of brands, PVH has something to offer to a wider cohort of consumers. These are classified on the basis of their income and preferences of shopping, both of which signify their brand consciousness. High-End Consumers Shops: Couture collections and Specialty These high end consumers spend a lot of money on very high quality clothing, footwear and accessories. The brand name matters a lot to them and they are willing to spend on the exclusivity and image the brand carries. These might include high successful businessmen, industrialists, sports stars and celebrities. For this topmost layer of this consumer segment, PVH One tier below that is the CK Calvin Klein range, which is offered through specialty stores. Top Middle Tier Shops: Select premium department stores. These consumers value good quality but also like practicality to go with it. They are image conscious, but not as much as the high-end consumers. For this client base, PVH has on offer Ferrell Reed and Eagle brands. Lower Middle Shops: Department and Value department These group of people have a decent amount of take-home pay but they are normally employed and have to conscientiously manage their spending. They do, however, appreciate good clothing and style. Brands offered for these customers include Calvin Klein and City of London; Lower-Tier Shops: Outlet and discount These represent the working class of society who prefer practicality and utility over style and brand-name. PVH offers these customers IZOD, Bugatti, Van Heusen, Arrow and Bass. It can be noticed from the spectrum of brands offered by PVH that the company is effectively competing in the mid-range to lower-end consumers, having more varieties of product and thus, higher sales volume. However, the product offerings for the higher end class are relatively scarcer, while the competition still is quite tough. There is potential to expand the product base for higher end products by targeting more aggressively in the high-end consumer market segment where volumes might be low but the profit margins can easily go up to 100%. Benefits of Product That the company is able to target effectively a range of consumers shows that it has identified their needs and is addressing them. The intent of each product is to appease a specific need of the client whether it is physical, aesthetic or mental. It is seen that as we move up the spectrum of market segments, the needs of consumers also shift from the material to those of consciousness. High end – brand name, image, status, quality, tailor-made, exclusivity Top Middle – excellent quality, superior tailoring, well-known brand Lower Middle – quality of fabric, practicality, affordability Lower – wear and tear, colors and size options, ease of availability, cost effective Product Owned PVH has a decent portfolio of brands that it owns. Among these are the Calvin Klein Collection, ck Calvin Klein, Calvin Klein, Van Heusen, IZOD, ARROW, G.H. Bass & Co., Bass and Eagle. The company itself handles all the aspect of the business of these brands, including marketing and selling. Licensed Another type of product offered by the company are the licensed ones, including CHAPS, Sean John, Donald J. Trump Signature Collection, JOE Joseph Abboud, Kenneth Cole New York, Michael Kors, DKNY, Tommy Hilfiger, Nautica, Ted Baker and Timberland. These represent a very successful forte of the company in licensing. Others PVH also manages the sourcing, design and marketing of private label branded dress shirts, neckwear, sportswear, fragrances, footwear etc. These represent a smalled chunk of the overall business of the company. Competitive review Each range of products offered by PVH competes in a different segment. For the high end market, competition for Calvin Klein includes Gucci, Prada, Giorgio Armani, Burberry, Louis Vuitton, YSL, etc. These compete on their collections based on ideas, tailoring, comfort and styles. For the mid range, PVH brands compete with Boss, FCUK, Lacoste and such. These compete in terms of range of products, comfort, affordability and practicality. For the lower tier, all retailers are competition including Next. M&S and H&M. These mostly compete on prices. Channels and logistics As mentioned in the report earlier, each brand has to be marketed through a specifc channel to be impactful enough to service customer needs. For example, the CK collection cannot be made available on the retail circuit; that would be a disaster for the brand. PVH uses three basic channels for reaching its clients which are: wholesale, retail and licensing. PVH has established wholesale contracts with leading specialty and department all over for the purpose of reaching the consumers of specific brands including Van Heusen, IZOD and Calvin Klein. As most of these are middle-tiered, they are effectively sold through the department store channel. The pricing of these is down accordingly. The wholesale business is a key component of the overall sales revenue for the company, which is actually relying on a select number of big department stores for stocking and selling their product. The retail business supports the wholesale side. According to estimates, the company is in touch with over 700 retailers across the U.S. for selling its range of products. Another avenue that the company successfully explored is the licensing business which has allowed a whole new aspect of channel management. The company has more than 100 prolific licensing arrangements with established brands including Valentino, Michael Kors, Jones New York, etc. Apart from these, the company has successfully licensed self-owned brands such as Calvin Klein, which has taken reaching new customers and markets to a whole new level. Read More