Case Interview Question #00084: Your client Hugo Boss Ltd. (FWB: BOS3) is a German clothing manufacturer and retailer based in Metzingen. The company currently has at least 6,100 points of sale in 110 countries. It owns around 330 retail stores with over 1,000 stores and shops owned by franchisees. Recently Hugo Boss is considering entry into the United States tie market.
In Europe, Hugo Boss has been very successful in the tie business by targeting young males in urban areas with stylish ties that are moderately priced. It is partially owned by a large German department store chain and currently sells 55% of its ties through these stores. You are asked by the CEO of Hugo Boss to prepare a brief overview of the U.S. tie market. You do some research and find interesting data at the United States Tie Manufacturing Association website (See the two tables below).
Table 1. Customer Segmentation of the US Tie Market
|Segment||Segment Characteristics||Percent of US Tie Market|
|Elite Executives||Brand Recognition, Quality Conscious, Price insensitive||11%|
|White Collar Businessmen||Conservative fashions, Moderate to expensive price range||45%|
|Trendies||Impulse buyers, Value style over brand name, Moderate prices||27%|
|School Ties||Younger buyers (age 15 – 24), Less expensive prices, Influenced by family and peers||7%|
|Eccentrics||Retro fashions, Outlandish designs, Price insensitive||10%|
Table 2. Distribution Channels for Customer Segments
|Customer Segment||Department Store||Manufacturer Chain||Independent Shop||Catalogues|
|White Collar Businessmen||44%||17%||31%||8%|
Now the questions are:
1. Should Hugo Boss target the trendy customer segment or not?
2. Would a strong presence in the trendy customer segment allow Hugo Boss to gain more than 5% of the overall United States tie market?