AMB211 Brand Management

Student name: Aliina Neep Student ID: n9637150 April 15th, 2016 Nicolas Pontes

Assessment 1 Brand positioning Analysis H&M

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Background H&M, Hennes & Mauritz, was founded in 1947 by Erling Persson (H&M history). Over the years the brand has grown immensely, now having more than 3,900 stores in 61 different countries worldwide, and increasing this amount of stores with 15% every year (H&M sales markets). H&M has 9 stores across Australia and doesn’t have an online shop for Australia (H&M, n.d.). H&M’s product portfolio consists of womenswear, menswear, childrenswear, shoes, cosmetics, accessories and home furnishing. H&M is known for their affortable and on their website they say H&M focuses on ‘fashion and quality for the best price’ (H&M responsible marketing). H&M has a high focus on sustainability, using organic cotton and re-using garments for recycling etc.) for their annual Conscious Collections. Also, H&M offers a higher quality, more expensive and more fashionable collection with H&M Studio. The brand also tries to make luxury more affortable through collaborations with high-end designers. These collaborations started in 2004 and were done with houses such as Karl Lagerfeld, Lanvin, Marni, Alexander Wang and most recently with Balmain (Leach, 2015). The collaborations have been highly successful in terms of publicity.

Frame of reference While H&M has stores in 61 different countries worldwide, this assessment will focus on the Australian frame of reference for the brand.

Target market H&M’s target market is very broad because of their large product portfolio. Their primary target audience is woman between 20 and 27, who are on the market for trendy fashion for a low price. This audience is mainly what all their advertising is focussed on. The target market lives in urban areas, in cities such as Sydney, Melbourne, Brisbane and Perth. The total amount of women living in and around these 4 cities (so ‘greater Brisbane’ etc.), with ages 20-29, is averagely 907.433 women (ABS, 2010). These women are up-to-date, fashionable and trendy consumers. They see shopping as a social activity that provides pleasure in their daily life. These women prefer to shop at affortable retailers for their trendy items, but are willing to spend more on high quality basic items. According to Barnes and Lea-Greenwood (2010), fast fashion is designed to target young consumers who want trendy, short-cycle and inexpensive clothing. It is assumed that trendy and cheap fast fashion retailers are targeted towards college and recently graduated student, because of their limited financial recourses. Also, wearing fashionable and socially visible clothing plays a big part in their social life.

Roy Morgan Research (date) shows 10,5 million Australians buy at least one item of clothing within a four week period. H&M is the leading brand, with 143.000 Australians shopping at the retailer within a four week period. H&M customers spend an average of $51 per sale. The motivations for women to buy clothes at H&M are most likely to be the price level or a certain trend or item there are after. This specific item might be for an event or social happening. Also, they could be inspired by a celebrity’s or blogger’s outfit and be after an equivalent garment. According to Barnes and Lea-Greenwood (2010), because of easy availability of media, celebrity looks and catwalk styles, consumers are increasingly interested in fashion, desire newness and variety, and thus shop frequently. According to Chau (2012), fast fashion creates a wasteful culture, because consumers will only wear garments while trendy, thus buy cheaper and less quality garments, they tend to discard clothes quicker and more often. Of all online purchases made by Australians, 12% is clothing. Online shopping is more popular in remote area’s (70%) as opposed to major cities (60%). The major reason for online shopping is convenience (67%) and lower prices (43%). Females are more likely to buy online because of convenience (71%). Of all online fashion purchases, 80% of Australians uses a laptop (see image 1 in Appendix 1). While many retailers might find fewer customers in store, many are instead visiting their webshops. 47% of Australians say they will research products online before buying from a store (AMCA, 2011).

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Competitors As stated before, Roy Morgan data (n.d) shows H&M is the leading brand regarding the amount of Australians that shop at the retailer within a four week period. Second is Forever New (108.000 Australians) and third is Zara (106.000 Australians) (See Appendix 1 image 2).

Zara is one of H&M’s biggest competitors in the fashion industry. Zara built its strategy around consumer trends and the quickly changing tastes of customers, and developed a highly responsive supply chain that enables delivery as soon as trends emerge. It takes the company 10-15 days to go from design to sales. Zara comes up with 36.000 new designs every year and delivers new products 2-6 times a week to its 1900+ stores around the world (Bagaria, 2014). Forever new is an Australian clothing brand, founded in 2006 and has 250 stores in 10 countries globally (Forevernew, n.d.). Forever New is known for their feminine clothing, and also offers formal and bridesmaid’s dresses, which is something H&M doesn’t. Because of this, they attract a more mature target market. Their price point is slightly higher compared to H&M, having customers spend an average of $88 per purchase. Forever21 and Topshop aim for a younger target market. While they both offer basic and classic garments, they focus more on edgy and playful designs. Forever21 is known as a very cheap fast fashion retailer, as opposed to Topshop, that is known to be fairly expensive. Consumers won’t buy their basic items at Topshop, because they can get it cheaper elsewhere. The more trendy garments definitely have a ‘Topshop feel’ to it. Aside for the regular collection of Topshop, the brand also offers a Topshop Unique collection (Topshop, n.d.), which is known for its higher price level and can be compared to the H&M Studio collection. Another big competitor, while it doesn’t own physical stores, is the British webshop ASOS. The webshop says it focuses on ‘the twenty-something fashion-lover; an avid consumer and communicator who is inspired by friends, celebrities and the media”. Also, ASOS says they “sell up to the minute fashion at a price our customers can afford, including ASOS own-label as well as an edit of the very best brands” (Asos, n.d.). ASOS is known for their huge range of trendy clothing.

To conclude the above, H&M’s average supply chain means it can’t compete as fast fashion like Zara, so it tries to do so on price instead. Their positioning is mainly focussed on price; ‘fashion and quality at the best price’. Roy Morgan data (2015) shows that H&M is on average 60% cheaper than Zara, but is still more expensive than budget competitors like Forever21. Customers spend an average of $51 at H&M, as opposed to an average of $93 at Zara. A table of how the competitors are positioned based on how ‘trendy’ they are and their price level as opposed each other, is shown on the right.

As stated by Keller in the Harvard Business Review (2002) the frame of reference can be influenced by the products stage in the life cycle. With products in later stages, growth opportunities (and threats) may emerge outside the product category. The brand has to analyse other ‘sources’ of clothing their customers might navigate to, such as eBay. The company even expanded with its professional selling service ‘eBay Valet’, where select, pre-approved eBay sellers are able to sell high-end clothing (Perez, 2015).

Points of parity As stated in Keller’s Harvard Business Review article (2002), the product’s life cycle has an effect on the points of parity of a brand. The article states that established brands need to reassess points of parity from time to time, because attributes that were once differentiators can become minimum requirements. The points of parity; the

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points that all consumers want H&M to have, or other competitors require H&M to offer so it doesn’t become a disadvantage (Pontes, 2016), are;

• As stated before, of all online purchases, 12% are clothing. Online purchases are mainly done because of convenience and a lower price. When talking convenience, all retailers, except for Zara and H&M, have online shops and ship to Australia. Instead of having to go into the city, consumers can shop these brands at home. H&M has webshops for 31 different counties (HM, n.d.), but not in Australia.

• H&M, same as the other competitors, offers a wide range of clothing. Of any trendy garment, multiple varieties (different colours etc.) can be found. This is one of H&M’s strengths, because when consumers go in with a special garment in mind, she can generally find 3 or 4 varieties. Also, H&M offers accessories, shoes and bags. All retailers are aiming for a consumer to be able to shop a complete look.

• An H&M store can be found in all the big shopping streets in all the big cities in Australia (Brisbane, Melbourne, Sydney, Perth). This goes for all the competitors too, except for Zara who only has stores in Brisbane and Sydney. A consumer can rely on any big shopping street to have the full range of competing retailers.

• The collections of H&M and it’s competitors changed over the years and don’t rely on the seasons SS/AW anymore. They all offer additional collections, based on trends, styles or collaborations. Especially Zara is known to offer new styles every week. While H&M isn’t as quick as Zara, the brand does launch a new (part of a) collection averagely every month, varying from new deliveries, collaborations, Conscious or Studio collection.

Points of difference As stated in Keller’s article for Harvard Business Review (2002), points of difference are strong, favourable and unique associations that distinguish a brand from others in the same frame of reference. From the 3 different types of brand differences that are stated in Keller’s article (2002), the POD’s below are based on brand imagery (predicting who uses the brand and when) and consumer insight associations.

• A major point of difference that H&M offers is customer products that have been marketed as designer collaborations with well-known names in the fashion industry. By doing these collaborations the company offers customers additional collections that are different in look and style from the mainstream, but trendy, designs of the company. H&M says that ‘high-fashion design doesn’t have to be a matter of price’ (H&M, n.d.). Because they’ve already done so many (at least 44 (H&M, n.d.), the real H&M brand ‘fans’ are now almost ‘used’ to the concept and are always anticipating it’s next collaboration. None of the competitors do collaborations, except for Topshop (averagely once a year), whose collaborations aren’t nearly as popular as the ones H&M does. The target audience doesn’t want to pay a lot of money for trendy items, but they are willing to spend a little more on good quality basics. H&M, with their collaborations, offers consumers good quality, unique, high-end trendy fashion for an ‘H&M price level’. Because H&M teams up with different designers and fashion houses every time, this trend is able to survive in the long term.

• When talking about the 4 P’s, H&M has a different approach to price strategy. As opposed to Zara and the other competitors, H&M has a different way of discounting. Whereas the other retailers have big sales in June and December, H&M has discounts year around but are less apparent in stores and online than the June and December sales. Online (for the countries that have a H&M webshop and shipping) an average of 23,9% of their offering is discounted, and 10% is discounted with 50% or more. H&M consumers are more likely to find out promotions year-around then at any other competitor or retailer (Smith, 2015).

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Recommendations

• H&M should launch an online webshop in Australia. H&M is already the market leader in Australia, with 143.000 Australians shopping at the retailer at least once every four weeks. In the target audience analysis it’s stated that online shopping is hugely popular and 47% of Australians say they research products online before buying in store. Launching a webshop in Australia would not only make the brand more popular, but it could also reach fashion lovers that don’t live close to the city, but still value trendy clothing for a great price. Eventually this POD would turn into a POP, but there are many ways to create POD’s regarding the webshop. For example, H&M introduced a loyalty program in Europe called H&M Club, in which customers are able to save points based on the amount they spend, and get access to special events, discounts or even a tour at H&M HQ with these points (Glamour, 2015).

• While this recommendation is not based on a POP or POD, this is based on an insight from the target audience analysis. It states that fast fashion retailers create a ‘wasteful culture’, because consumers will only wear garments while trendy, and thus buy cheaper and less quality garments which they discard quicker. Based on this insight, H&M could create a campaign, in which they show how to combine these trendy items with new styles, after the actual trend has passed. When done the right way, it creates more (online) brand awareness and likability. It is also the perfect opportunity to collaborate with their Conscious Actions campaign, in which they persuade consumers to bring their old used clothing to H&M for recycling purposes, instead of having it end up in landfill (H&M, n.d.).

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References ABS. (2011). Census data on Greater Sydney. Retrieved from

http://www.censusdata.abs.gov.au/census_services/getproduct/census/2011/quickstat/1GSYD?opendocument&navpos=220

Asos. (n.d.). How we do it. Retrieved from http://www.asosplc.com/how-we-do-it.aspx

AMCA. (2011). Report 1 – E-commerce marketplace in Australia: online shopping. Retrieved from http://www.acma.gov.au/webwr/_assets/main/lib410148/CR_comp_report1-E-commerce_Marketplace_in_Australia.pdf

Bagaria, A. (February 10th, 2014). Uniqlo vs. Zara vs. H&M vs. the world of fashion retailing. Retrieved from http://retail.economictimes.indiatimes.com/re-tales/uniqlo-vs-zara-vs-h-m-vs-the-world-of-fashion-retailing/91

Barnes, L. and Lea-Greenwood, G. (2010). Fast fashion in the retail store environment. International Journal of Retail & Distribution Management, Vol. 38 No. 10, pp. 762 - 772 .

Chau, L. ( 2012 ). The wasteful culture of Forever 21, H&M, and fast fashion. Retrieved from www.usnews.com/opinion/blogs/economic-intelligence/2012/09/21/the-wasteful-culture-of-forever-21-hm-and-fast-fashion

Forever New. (n.d.). Company. Retrieved from http://www.forevernew.com.au/company

Glamour. (March 23rd, 2015). Punten sparen met de H&M Club. Retrieved from http://www.glamour.nl/fashion/nieuws/artikel/punten-sparen-bij-de-h-m-club-2451

Hyun-Mee, J. (2014). Fast-fashion consumers' post-purchase behaviors. Retrieved from http://search.proquest.com.ezp01.library.qut.edu.au/docview/1651184278?pq-origsite=summon

H&M. (n.d.) About H&M. Retrieved from http://about.hm.com/en/About/facts-about-hm/about-hm/hm-group.html

H&M. (n.d.). Collaborations. Retrieved from http://about.hm.com/en/About/facts-about-hm/fashion-for-all/collections/collaborations.html

H&M. (n.d.). H&M Worldwide. Retrieved from http://about.hm.com/en/About/facts-about-hm/fashion-for-all/sales-markets.html

H&M. (n.d.). Reduce waste: reduce, reuse, recycle. Retrieved from http://about.hm.com/en/About/sustainability/commitments/reduce-waste.html

H&M. (n.d.). Store Locator. Retrieved from http://www.hm.com/au/store-locator#store=AU0008

Keller, K. (2002). AMB211 Brand Management: Assessment 1 [Task information, Harvard Business Review article]. Retrieved from https://blackboard.qut.edu.au/webapps/blackboard/content/listContent.jsp?course_id=_123260_1&content_id=_6168759_1

Leach, A. (2015). A Brief History of H&M’s Biggest Collaborations. Retrieved from http://www.highsnobiety.com/2015/11/04/h-m-collaborations/

Perez, S. (4th June, 2015). eBay Valet launches a clothing resale service focused on high-end brands. Retrieved from http://techcrunch.com/2015/06/04/ebay-valet-launches-a-clothing-resale-service-focused-on-high-end-brands/

Pontes, N. (2016). AMB211 Brand Management: Assessment 1 [Explaining the Frame of Reference, POPs, and PODs]. Retrieved from https://blackboard.qut.edu.au/webapps/blackboard/content/listContent.jsp?course_id=_123260_1&content_id=_6168759_1

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Roy Morgan. (July 15th, 2015). Australia’s fashion retail scene offers the best of both worlds. Retrieved from http://www.roymorgan.com/findings/6338-australias-fashion-scene-offers-best-of-both-worlds-201507150029

Roy Morgan. (November 14th, 2015). State of the Nation: Australian Retail. Retrieved from http://www.roymorgan.com/findings/6562-state-of-the-nation-australian-retail-201511230537

Silva-Jelly, N. (December 21st, 2013). H&M, Uniqlo and M&S compete for a place on Australia's high streets. Retrieved from http://www.theguardian.com/fashion/2013/dec/21/hm-uniqlo-and-ms-compete-for-a-place-on-australias-high-streets

Smith, K. (March 31st, 2015). 5 things making Zara and H&M successful. Retrieved from: https://edited.com/blog/2015/03/5-things-making-zara-and-hm-successful/

Appendix 1

Image 1: Devices used by Australian consumers for online shopping

Image 2: The amount of customers who bought something within four weeks at named brands.