H&M is a Swedish multinational company involved into the fast fashion products for the men, women and children. H&M at present is operating in more than 54 countries with its specialized stores and employs more than 116,000 people worldwide. First store for H&M was opened in year 1947 in high street of Vasteras, Sweden. This company is considered as the second largest retailer in the fashion segment after the Inditex (parent company of Zara). H&M has its direct competitor with the global brands such as Zara and GAP Inc. H&M is dealing in fashion clothes and accessories for the diverse consumer segment. Company has earned revenue of SEK 150.09 billion in Year 2013 and net income of the company is SEK 17.13 billion for the year 2013. H&M has several subsidiaries such as Cheap Monday, Monki, Weekday and COS etc.
Task 1 (LO 1)
Examine a few definitions (at least two) of marketing and explain the marketing process with example drawn from H&M.
According to Kotler & Armstrong (2001) marketing can be considered as the framework (as shown in figure 1) in which end users are served by the organization in face of competitors. Company and competitors prevailing in the market would send their message and product/services to the market directly or through intermediaries involved. Various players involved in the marketing activities would be affected by series of elements named demographic variables, economic variables, social/cultural and technological variables. Each party in the system would add value while going to the next level. Hence success of an organization not only depends upon its own action but also on the coordination which is achieved through external environmental forces as well. For example, taking example from H&M it can be revealed that company has remained successful in order to maintain low prices and trendy fashion for the consumers and its suppliers are having equally important role in reducing the cost for H&M and providing goods as per the changing trend. So there is proper coordination between various stakeholders of the organization.
Managerial definition of marketing was described in 60s as “the art of selling products” and this definition of marketing has been revised by AMA (American marketing association) as the marketing is process which would include planning & execution of conception, prices, promotion and distribution of goods, ideas and services in order to satisfy individual needs and objectives for the organization (Bennett, 1995). There is little difference on the AMA website for the marketing definition and this website define marketing as the organizational function and set of processes for creation, communication and delivery of value to consumers and managing customer relationship efforts for developing effective marketing communication so that organizational stakeholders can be benefited. For example, In case of H&M Company develops its various functions such as low cost, latest design, sales through physical stores and developing brand reputation so that consumer needs can be satisfied and organizational objectives can be met.
Discuss the different kinds of marketing orientations and recommend the most suitable marketing orientation for H&M.
Market orientation can be considered as the culture of an organization which is committed to develop the continuous creation of the superior customer value. It has been observed that business organizations generally report very low success rate in order to develop such a business culture. There can be three alternate available to the business organizations to adopt the marketing orientation and these are given as under:
- Sales orientation: Many business organizations consider their problem for selling more of the products or services which are already available with them. These business organizations are expected to make most of their selling, promotion and distribution skills. These businesses would be similar to the marketing orientation business in general.
- Product orientation: Product orientation of a business organization would establish that business organizations are obsessed with their own products. Product of the organization would be highly updated and technologically advance (Dev and Don, 2005). These businesses may face issues at the times of dynamic change in technology or consumer taste.
- Production orientation: Production orientation business is not similar to the product orientation and the focus of business organization here is on producing as many goods as they can. Business organizations under this orientation would aim at producing in large quantities and tend to leverage on economies of scale so as to maximize its benefits. In production concept need of consumers would be secondary and primary aspect in the business would be developing higher number of units though production system. This orientation would be helpful in business organizations wherein business potential is very high in future and there is large scope for implementing economies of scale.
Assessing the potential marketing orientation for H&M it can be said that in modern marketing world it is important that business organizations makes use of the mixed marketing orientation i.e. sales orientation, product orientation and production orientation etc. Hence H&M would adopt the marketing orientation wherein company would sell in order to generate high revenue while at the same time product orientation would be developed so as to develop clothes as per latest design and increasing sales would demand for the high production which would be developed by H&M by focusing on the economies of scale.
Consumer needs are satisfied by the H&M in order to attract the consumers towards offering made by the company. Consumers are at the heart of H&M marketing activities and company is deploying diverse range of activities so that loyal consumer base is developed by the company.
Task 3 (LO 3)
Using H&M as your chosen company, explain how the new product was developed to achieve sustainable competitive advantage.
The newly developed product for H&M is the fashion clothing for the men’s segment which is low at price and not high on trend as well. Development of the present product line for the men segments in US has been done keeping in mind the consumer requirements and marketing research pertaining to particular markets. US markets for men clothing are considered as the non trendy as male consumers in US are not looking for latest fashion clothes as compared with the female consumers in the US markets. The development of the products offered by H&M in US markets have been done by keeping in mind the local demand of consumers and new product line is such that it would suit the requirement of US male consumers (Adcock and Halborg, 2001).
Further present product line is such that it meets the consumer requirement for low price being average or low priced on the newly launched products as well. In house fashion designer team for H&M also helps them in development of competitive advantage as organization would be able to develop faster products in response with the consumers of the organization. This would reduce time to market for the products/services of the organization so that competitive advantage can be created.
New prospect development can be defined as the process of exploring set of consumer base for the new product or into the new market for the organization. H&M has developed several new products such as shoes, jewellery, make up and accessories etc. New prospect development of these products would include idea generation, idea screening, business analysis, product development, test marketing and commercialization. New product ideas would be generated through different sources, unsound concepts would be eliminated from available ideas, business analysis would be done in order to estimate profitability of the ideas, test marketing would be done in order to test the variability in marketing plan and final stage would be to commercialize the idea.
Evaluate a range of distribution methods that H&M can use for the newly developed product to provide convenience to a target group of customers.
The newly designed clothing range for H&M would target the male consumers in US and it is important for H&M to design the distribution channel in such a way that consumer convenience can be offered through distribution channel developed by the organization. It has been proposed that in addition to the departmental stores of H&M in US there would be two additional distribution methods which would be adopted and these would be online stores and exclusive retail stores of H&M dealing in clothing products only. Online store developed by H&M would be helpful in order to reduce the operational expense for the organization so that H&M can offer its products at cheaper price which is the main USP of the organization. Further small exclusive store opened by H&M would be helpful in order to provide customer convenience as there would be high number of store opened in local areas wherein consumers can try these products and buy as per the availability of the products. Hence online store at one side would be beneficial for the organization in order to reduce operational cost while exclusive stores would allow consumers to have greater access to the clothes in their nearby regions.
Discuss and critically evaluate the various pricing methods used by businesses and recommend pricing strategy that H&M can use for the newly developed product.
There can be mainly five pricing strategies which are adopted by business organizations in order to appropriately define their price for maximization business profits and customer value delivery system. These five pricing strategies are premium pricing, penetration pricing, economy pricing, price skimming and psychological pricing. Premium pricing strategy would charge much higher price as compared to the competitors and this pricing strategy can be used when there is something about the product/service delivered by the business organization. Penetration pricing is the strategy in which low prices are offered to the consumers at initial stage in order to enter into market and attract consumer attention but once consumer base is developed then pricing of the products/services would be enhanced (Goldstein and Lee, 2005). In economy pricing business organizations keep basic prices and nothing fancy e.g. Walmart & Aldi. Price skimming is being used by the businesses having competitive advantage and these business organizations enter with high price and reduces prices as competition starts building in the market. Psychological pricing is established in consumer price so as to develop perception of lower price e.g. price of $99 would develop in consumer mind for lower pricing as compared to the $100. For newly developed product line of H&M it is important that company develops penetrative pricing strategy. There is low penetration for the H&M in men segment due to which prices should be kept low at initial phase while prices can be enhanced after development of suitable customer base.
Importance of pricing can be highlighted in terms of generating income from the products, denoting high quality for the high price, competitive advantage can be developed through low pricing strategy. It is important to offer equivalent value for the price offered by the H&M.
Explain the concept of integrated marketing communication and discuss the elements of promotional mix including extended the extended marketing mix as relevant to H&M’s newly developed product
Integrated marketing communication can be defined as the application for traditional and nontraditional marketing channels in order to develop communication with the consumers. Usage of different marketing channels would reinforce of usage for each other. Figure 2 below depicts the integrated marketing communication strategy used for the business organization which makes use of the traditional marketing tools, promotions and social media/web etc.
As shown in the figure 2 above that mixture of traditional media tools such as TV, Radio and print, promotions such as consumer offer, discounts and usage of social media would form the complete promotional strategy for the organization.
Promotion mix for any organization has been given above wherein advertising; direct marketing, publicity and sales promotions have been used (Harrell, 2008). Advertising is the paid presentation of the product or ideas, sales promotions are media or non media communication used to increase demand, direct marketing would allow businesses to directly communicate with consumers and publicity is the process of marketing products or services through indirect ways. For newly developed product of H&M it is advisable to make use of the integrated marketing communication by involving traditional media, online marketing, promotions, celebrity endorsement and consumer promotions can be offered.
Personal selling can be one of the options for marketing wherein sales personnel would adopt various stages for the personal selling such as prospecting & qualifying, pre approach, approach, presentation & demonstration, overcoming objectives, closing and follow up & maintenance. This marketing option would be adopted by H&M in order to tie up with the big corporate and B2B customers. Prospects would be explored from the particular organizations and would be qualified basis the requirement of H&M. Pre-approach would include preparation from sales personnel in order to provide complete information on the clothing for H&M. Presentation and demonstration would be made in order to brief about the special discount offered to the consumers from particular corporate. Objectives would be framed in terms of sales target and call would be closed by getting the order from B2B customers.
Task 4 (LO 4)
Evaluate the marketing mix variables for two segments of the consumer market and discuss how different it would be for business-to- business services (B2B).
There are mainly two segments which can be considered for the products of H&M and these are teenage boys and teenage girls. Profile for the two segments would include teenage girls and boys looking for trendy clothes so as to match their present age lifestyle. Further these consumers would be into age range of 15 years to 30 years and with high income range. These consumers would also be having graduate and post graduate educational background (Nagle and Holden, 2012). Marketing mix for the two segments would different significantly and can be given as under:
|Marketing mix||Teenage boys||Teenage girls|
|Product||Design, color and trendy||Trendy, design, colors and availability|
|Price||Affordable||Medium to premium priced|
|Place||Online as well as within the store||Online as well as within the store|
|Promotion||Promotion through magazines oriented to men and online advertisement||Female magazine and online advertisement|
Table 1: Showing the marketing mix for two segments
Similarly for the two segments i.e. business to consumer market and business to business market there would be different marketing mix which can be given as under:
|Product||Higher no of products would be available in B2C segment||Bulk purchase would take place with limited products|
|Price||Prices would be fixed and would include sufficient margin over cost||Price would be negotiable in B2B product segment|
|Place||Indirect distribution would be done through retailers||Personal selling tool would be used|
|Promotion||Mass media channels||Industry magazines|
Table 2: Showing marketing mix for B2B and B2C markets
Assuming that H&M decides to enter the international market with the newly developed product, examine and discuss the differences between domestic marketing and international marketing
Unit 4 Marketing Principles H&M Assignment, is aimed at to increase its number of stores by 10-15 percent per annum. It has planned to open new stores in China and US (Philip & Gary, 2011). There are a number of opportunities present for H&M to grow its business in the domestic market as well as in global market. There are a numbers of factors which an organization needs to be considered before entering into an international market. These factors includes differences in buyer’s behavior, purchasing power, economic growth, political risks, culture of the society, technological advancement, level of competition, governing law, rules and regulations etc (Gregson, 2008). Buyer’s behavior may be different in two different countries. So, it should be analyzed first before entering into a new international market (Kent, 2013). Moreover, it should also be checked whether the people of the proposed country has much purchasing power to buy and accept the concerned new product line. The political environment, the government, rules and regulations must be aware of while entering in to international marketing as these laws may be different from that of domestic country’s rules and regulations. The level of competition in the international market and domestic market is different. It is quite difficult to establish a market place in the foreign market where the local sellers have already covered the major market area. Thus, competition risk is there in international market and its possible effect should be pre analyzed. Furthermore, technological advancement, demographic culture may be different in domestic and international market and needs to be considered by H&M.
In domestic marketing products of the company would be sold within one political country while products of the company are sold overseas. There can be several reasons for entering into the international markets and these can be growing the market share, generating higher profits, creating presence in overseas market and creating brand awareness.
Bennett, P.D. (Ed.) (1995). AMA Dictionary of marketing terms (2nd ed.) Chicago: The American Marketing Association
Kotler, P. and Armstrong, G. (2001). Principles of marketing (9th ed.) Upper saddle River, N.J.: Prentice Hall, pp 11
Harrell, G.D. (2008). Marketing: Connecting with Customers. Chicago Education Press.p. 286. ISBN 9780979830402.
Goldstein, D.; Lee, Y. (2005). “The rise of right-time marketing”. The Journal of Database Marketing & Customer Strategy Management 12 (3): 212–225.doi:10.1057/palgrave.dbm.3240258.