Reference no: EM131288438

Helly Hansen: sponsoring fashion clothes in the US market

On a warm autumn day in 1997 Johnny Austad, President of the Norwegian clothing manufacturer Helly Hansen Co. (HH), arrives at the company's US subsidiary. Johnny can still not quite understand the incredible development that HH has seen in the US market. During the last couple of years Helly Hansen USA has had an increase in turnover of 10 per cent per year, but in 1996 turnover doubled, amounting to one-third of HH's worldwide sales.

How it all started Helly Hansen Co. was founded in 1877 by the Norwegian captain Helly Juell Hansen. During the era of the sailing ship he felt the forces of nature when he had to stand at the helm in all kinds of weather. Many hours were spent oiling clothes so they would become waterproof before rough weather set in. However, the clothes became stiff and sticky, so when Hansen finally went ashore he decided to develop better rain clothes for Norwegian sailors. Today HH sells its products in more than 20 countries. Production takes place in the company's own factories in Norway and Portugal, as well as in the Far East and via contract manufacturing. Design of the new collections takes place at the company's headquarters in Norway

From a producer of functionalistic clothes to a supplier of fashion clothes to the US ‘underground' The honourable 100-year-old Norwegian producer of functionalistic clothes for sailors has by chance become the supplier of fashion clothes to black hip-hoppers in New York's underground. The label, which for generations has been connected with wind and waterproof leisure wear, and work clothes for the quality-conscious consumer who likes to be dressed ‘sensibly', has now become a symbol of the avantgarde and the different. The young think the clothes are smart and don't care if they have taped seams or that it might be difficult to breathe through four layers of waterproof coating. In earlier days, the first and last thing that HH thought of when making jackets was functionalism.

The result was a very large collection of jackets with small specialized differences that only real enthusiasts could appreciate. HH's prices, on the other hand, became unreasonably high. By gathering several of the functions in the same jacket HH is able to make allowances for its choosy customers, as well as producing at a price that a larger part of the market is able to pay. Where HH used to direct its collections toward alpine skiers, fishermen, sea sportspeople and snowboarders, it is now beginning to look more at current fashion trends. HH is trying to link its look to street fashion and hopes that in this way its core customers will feel smarter, while new customers will be encouraged to buy because of the look of the clothes.

Before Johnny Austad gets on the plane back to Norway, the US subsidiary receives an enquiry about sponsorship from one of the most well-known rap groups in the United States. The manager of the rap group in question is seeking US$200,000 from HH for Bad Boys to perform in HH clothes at all their concerts in the next six months as well as in their forthcoming music video.

QUESTIONS
As a newly employed marketing assistant in the US HH subsidiary, you are asked to take care of this enquiry. You are specifically asked the following questions.

1. Would you recommend that HH sponsors Bad Boys? Give reasons for your answer.

2. How can an eventual sponsorship be integrated into the total marketing plan for HH clothes in the US market?