Get Homework/Assignment Done

Homeworkping.com

Homework Help

https://www.homeworkping.com/

Research Paper help

https://www.homeworkping.com/

Online Tutoring

https://www.homeworkping.com/

click here for freelancing tutoring sites

Marketing ManagementHennes & Mauritz AB

2

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

3

6. Conclusion 15

References 16

4

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.

5

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.

6

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.

7

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

8

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

9

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.

10

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)

11

(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)

12

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.

13

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.

14

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

15

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.

16

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.