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Marketing ManagementHennes & Mauritz AB
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Contents
1. Introduction of H&M 3
1.1 History 3
1.2 Mission 3
1.3 Vision 3
1.4 Product Portfolio: Apparels, Accessories 3
1.5 Target Audience 5
2. Market research of H&M - Annual Report of H&M 6
3. SWOT Analysis
Micro-environment 7
3.1 Strengths 8
3.2 Weakness 8
Marco–environment 9
3.3 Opportunities 9
3.4 Threats 9
3.5 Competitors 10
3.6 Marketing Strategy (4P) 10
3.6.1 Product 11
3.6.2 Price 12
3.6.3 Promotion 12
3.6.4 Place 12
4. Target marketing and positioning 13
4.1 Market Segmentation 13
4.2 Target Market Strategies – Differentiated Marketing 13
4.3 Positioning – Branding 14
5. Recommendations 14
5.1 Marketing Objectives 14
5.2 Marketing Mix Strategies 14
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6. Conclusion 15
References 16
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1. Introduction
1.1 History
Hennes & Mauritz AB (H&M) is a multinational company based in Sweden. It was founded
by Erling Persson in 1947 and was initially called Hennes, the Swedish word for “hers” and
sold only women’s clothing. It was remaned to Hennes & Mauritz in 1968 and since then it
has diversified over the years and it includes menswear, children’s wear, footwear,
accessories, cosmetics and home furnishings. In 1950s, H&M began global expansion by
penetrating its neighbouring countries throughout Europe. They opened their first U.S store in
year 2000 at Fifth Avenue in New York. This marks the start of their expansion outside
Europe. In 2007, the entered the Asian market by opening its first store in Hong Kong and
Shanghai.
1.2 Mission
H&M’s mission is to offer customers fashion and quality at the best price. They have
emphasize numerous of times that quality is more than making sure that products meet or
exceed customers’ expectations. They are constantly working to improve their products by
manufacturing under good conditions and with limited impact on the environment. H&M
takes responsibility for how their operations affect people and environment which is the key
for their profit and growth.
1.3 Vision
H&M’s sustainability vision: “H&M’s business operations aim to be run in a way that is
economically, socially and environmentally sustainable. By sustainable, we mean that the
needs of both present and future generations must be fulfilled.” Their current CEO, Karl-
Johan Persson strongly believes that sustainability will more and more become a hygience
factor in their industry.
1.4 Product Portfolio
H&M’s has an extensive product portfolio which includes women’s wear, menswear,
children’s wear, footwear, accessories, cosmetics and home furnishings.
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1.5 Target Audience
The target market for H&M is the people aged between 15 to 40 years of age, who are
interested in fashion, beauty and spending mmoney on trendy clothes. However, they have
market segments for children, cosmetics and home ware assortmennts. But the compaany
recognises that the most profitable and popular segment in its market are the females aged
between 17 and 26.
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2. Market Research
H&M core’s target group is from 18 to 30 years old. They target at ladies, men, teenagers and
parents (consumption power). They expand its activities by geographical regions into Europe,
North America and Asian Markets.
According to the Secondary research based on the 2012 annual report, H&M’s gross profit
amount to USD$109,999 million. In September 2013, H&M Group total sales including VAT
in local currencies increased by 7 percent compared to the same month the previous year.
Sales development per month in percent in local currencies:
Table 1
The table above shows that their sales decreased by 2% compared to last month. Even though
they are making profit in 2012 but for 2013 until September, their sales have been dropping
drastically compared to 2012.
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3. SWOT Analysis
SWOT analysis is an approach to identify the company environmental variables through by
analyzes its internal and external information (Braun, 2008.pg12).
SWOT Analysis
Strength One of the largest global clothing retailer
Offers quality and trendy clothing at affordable price.
Overall delivery time is very low, it takes only 12 weeks for their products to come from the design stage to the retailer phase.
Guest designers coming in for different lines in the store.
Celebrities’ endorsement
Cause-related marketing
Positive brand image
Strong finance support
Environment friendly
Weakness Competitors such as Forever 21, Zara and Topshop
No control over suppliers
Overstocking of basics and later on lead to lowering of the already affordable prices
Messy displays
Opportunity Online shopping is gaining a lot of importance
Social media marketing
Emerging economies will support H & M’s expansion plans
They are well positioned to tap the niche organic apparel market
Threats Economic recession
Increased in labour cost in China, India and Bangladesh
Unemployment will cause consumer discretionary spending
Micro-environment
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3.1 Strengths
H&M is one of the largest global clothing retailers. They have more than 2700 stores in 48
markets. They are also known as fast fashion retailer. They constantly collaborate with
renowned guest designers such as Marni, Karl Lagerfield, Versace, Lanvin, Comme des
Garcons, Jimmy Choo and etc. Most of the designers’ collections became instant hit as they
were highly anticipated and they offers low price for designers’ clothes. This also allows
them to stay at the forefront of fashion. Besides designers’ pieces, they produce large quantity
basics in low cost locations and small volume fashion pieces locally. This enables them to
replenish their store inventories on a daily basis. H&M’s commitment to sustainability
enhances their branding and ensures that the resources are used efficiently in both long and
short term. This is evidenced by their support of the Better Cotton Initiative, ensuring best
practices in cotton supply. From 2010, H&M had switched all the standard carrier bags are
made from recycled material. All these commitments help H&M protect their brand image.
H&M uses models with good image that portray H&M in a way that is distance from drug
and alcohol abuse. H&M also feature models with different looks, styles and cultural
background to advertise their concepts for women, men, teenagers and children. H&M also
engage with celebrities for endorsement. They collaborate with popular celebrities such as
David Beckham, Beyonce, Lana Del Ray etc to promote the brand. Other than models’ and
celebrities’ endorsement, they run cause-related marketing campaigns such as Fashion
Against Aids, aiming to raise awareness of HIV/AIDS among young target group. They have
strong finance background as based on 2012; they have revenue of $16.1 billion.
3.2 Weaknesses
One of their weaknesses is that they do not have their own factory; hence, they manufactured
and purchased the clothes from suppliers which cause the inconsistent in the quality of the
clothing. The inconsistency includes the sizes and material which can cause consumers to
question their quality of their products. Secondly, they often buy the basics in large volumes
to provide low price for their consumers but it could lead to overstocking and could end up in
lowering the price further in order to clear their existing stocks. Thirdly, although being one
of the giants in the fashion industry, H&M also faces strong competitors such as Zara,
Forever 21 and Topshop. These competitors are also offering similar clothing and quality
with competitive prices. Another weakness of H&M is that their store display is quite messy
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and unorganised. It could be due to the high volume of crowd entering the store and they staff
could not organise within short period of time.
3.3 Opportunities
As the technology advance, consumers are getting more and more choices to do their
shopping in different platforms. Now it is the trend to do online shopping where it is just a
click away. H&M is of course offering online shopping from summer 2013. Given that they
are slightly behind comparing to their competitors but at least they have been exploring and
now ready to launch to the world. Besides using laptops or tablets they online shopping is
also mobile-adequate. Distance selling is a vital and growing complement to stores and this
could increase the interest of their target markets as they are mainly consist of younger
crowds. Their website, www.hm.com, is one of the world’s most popular fashion websites
and those people all over the world who loves fashion are able to interact with H&M via
social media platforms such as Facebook, Twitter, Instagram and smartphone applications.
Social media allows H&M to spread the news when the brand expands into new and exciting
markets. Currently the emerging economics will help H&M to expand further. Karl-Johan
Persson had made the promise that there will be more than 3000 stores by end of 2013. H&M
has been constantly promoting their conscious material/fashion. They are one of the world’s
leading users of organic cotton and continue to invest on this fibre. As organic cotton is
grown without the usage of pesticides or synthetic fertilisers and eliminate the use of costly
chemicals for farmers. This is good for their health and reduces the impact on the
environment.
3.4 Threats
Even though the global market is growing but consumer spending in Europe is weak. Due to
the high unemployment rate Europe is facing, consumer are spending their money at
discretion. This could be worse if the actual economic recession takes place. In addition, the
labour cost in China, India and Bangladesh has been increasing; H&M might not be able to
sustain the low price of their clothes for long. They are also exposed to the threat of currency
fluctuations. Their reported incomes are highly susceptible to the fluctuations in the Euro and
US currency.
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3.5 Competitors – Zara, Forever 21 and Topshop
Zara offers fast-fashion and and it is a multinational retailer, under the Inditex Group from
Spain. They are in support of human rights (sweatships, slave labour and etc). It also offers
similar price range to H&M. They offers online platform and smart phone app. Forever 21
also offers fast-fashion clothing, low price and globally located. For Topshop, it is a British
multinational retailer, offers high street fashion clothing, adequate quality and also has a
competitive price range.
3.6 Marketing Mix Strategy
Marketing Strategy is part of the marketing mix which include the four elements, called the
4P’s (Product, Price, Promotion and Place), which H&M will use this method to meet the
target market on customers.
3.6.1 Product
H&M’s vision is fashion and quality at best price. Hence, they are constantly reviewing their
products’ quality and keeping up with the trends. They have an extensive range of products
which includes women’s wears, lingerie, children’s wear, menswear, accessories and home
furnishings (Fig1 – 9)
(fig1 and fig 2).
(Figure 1and Figure 2 - Basics)
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(Figure 3 – Isabel Marant, Figure 4 – Lanvin)
(Figure 5 – Lingerie, Figure 6 – Children’s wear and Figure 7 – Menswear)
(Figure 8 – Accessories and Figure 9 – Home furnishings)
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3.6.2 Price
Their prices are mostly on the low side but the quality is maintained. Most of the basics wear
fall below $10 and most of the tops and dresses falls between the ranges of $25 to $60. Their
prices remain competitive to fend off strong competitors such as Forever 21 which offers
similar price range and target group.
3.6.3 Promotion
In Singapore, when H&M builds new stores, they always have promotions to attract the
crowds. They will be giving free gift cards for first few hundred. In addition, from time to
time they will have sales during mid-season and Christmas’ period. Their staff will be giving
out gift vouchers to consumers randomly.
3.6.4 Place
Currently, H&M has 2776 stores in 48 countries. All are located in the prime and central
area. In U.S, they are located at Fifth Avenue which is well-known for the high-end boutique
stores. In Singapore, they are all strategically located at the central district like Orchard Ion,
Vivocity, Suntec City and etc. They have setup at areas which are prominent and where the
crowds gather.
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4. Target Marketing and Positioning
4.1 Market Segmentation
Segmentation is an approach to analyze the nature of a market to enable a business to better
target it product at the customer with similar needs, requirements. All companies have
outstanding marketing strategies which they segment according to their market. Marketers
use the approach to characteristics of individuals, different groups and locations. H&M focus
on 3 main segments: demographic, geographic, and psychographic segmentation.
Geographic segmentation divides the market into different geographical units such as nation,
regions, states, countries or cities. H&M market their products at prime areas in the
respective countries.
Demographic segmentation divides the market into groups based on variable such as age,
gender, family size and etc. H&M has a branded range of male, female and children clothing,
shoes or other accessories.
Psychographic segmentation divides buyers into different groups based on social class,
lifestyle, or personally traits. H&M has their designers’ collection focused on fashions
enthusiasts to make designer’s clothing more affordable. They also target on young working
adults with the office wear. Basics wear are targeted at youths, middle-aged.
4.2 Target Marketing Strategies
H&M is successful in using differentiated strategy as they will be able to focus on each
individual segment and create their brand name with the help of the promotion. Besides their
own H&M branding and collection, they have 5 other brands under them; Weekday, Cheap
Monday, Monki, COS and & Other Stores. Each of the brands has their own target market.
Adding news brands broadens the customer base and maximise its existing global operations.
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4.3 Positioning
H&M is promoting sustainability clothing. The main objective is to make the clothing
industry more sustainable and create positive change in the communities. They have made
substantial efforts to promote social development and reduce environmental impact. They are
the second largest organic cotton consumers and ensure sustainable development socially,
economically and environmentally.
5. Recommendations
5.1 Marketing Objectives
H&M portrays themselves with models with good image and does not associate with drugs
and alcohol. This is a good initiative and policy as public would like to see their brand as a
positive and environment friendly image. However, they tend to attract “butterflies” type of
customers than “true friends”. This could cause by their collaboration with guest designers
which will cause hype but does not last long. Mostly only those fashion enthusiast would
only support their preferred guest designers but will not support other collections. H&M
should focus more in attracting and build more “true friends” type of consumers because
ultimately they are the most profitable and loyal customers. Besides having celebrities to do
endorsement, they should try getting public to do modelling or promote their basics, office
wear and accessories. This would build a connection with the public and public will feel
closer and associate with the brand.
5.2 Marketing Mix Strategies
It is recommended that H&M to decrease the number of suppliers to maintain or increase the
clothes’ quality and size consistency. Their price is already on the lower cost side; hence,
they should keep their prices competitive in order to stay on the top of consumer’s list. H&M
should create more promotion and publicity to get the public’s engagement. Last yearm they
set up statue of David Beckham and come up with a mobile campaign to get the public to
participate in a scavenger hunt that could let them win H&M’s gift card with a value of
USD$1000. This marketing tactic was a success and it draws more foot traffic in the three
stores based in U.S. H&M will be having more than 3000 stores worldwide by end of 2013.
But they should observe the market and consumers’ behaviour and slow down on their
expansion. Currently the economic in the Europe and America is unstable and if any of the
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major currency should crash and economic is in recession, they will suffer more losses than
profits.
6. Conclusion
In conclusion, H&M’s wants to have a sustainable development and to be seen as a leader in
terms of innovation, sustainability and great fashion. They have the right marketing strategies
and good segmentation of market groups. They have taken into consideration of the cultures,
demographics and geographic of a country or region before penetrating their market. In years
to come, they will overtake their competitors completely and become the leading fashion
brand.
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References
http://about.hm.com/AboutSection/en/About.html
http://about.hm.com/AboutSection/en/About/Sustainability/HMConscious/CEO-
Message.html
http://about.hm.com/content/dam/hm/about/documents/en/Annual%20Report/Annual-Report-
2012_en.pdf
http://www.staffs.ac.uk/schools/business/resits/postgrad/
InternationalSupplyChainMgmtHandMCaseStudy.pdf
http://fashion.allwomenstalk.com/successful-guest-designer-collaborations-for-hm/2/
http://www.mobilemarketer.com/cms/news/social-networks/13604.html
http://fashionmarketingsecrets.com/2013/05/18/why-is-hm-underperforming/
http://www.forbes.com/sites/walterloeb/2013/10/14/zaras-secret-to-success-the-new-science-of-
retailing-a-must-read/
http://www.topshop.com/en/tsuk/category/about-us-80/home?geoip=noredirect
http://www.forever21.com/Company/history.aspx?br=f21
Images:
Courtesy of Google Image and its sources.