Describe about the Business Level Strategy for Business Concepts?
H&M Hennes & Mauritz is a Swedish multinational design team renowned for its fast fashion clothing for women, men, teenagers and children. They have exclusive collection for everything, from quintessential basics to party collections at the best prices. The huge collection involves everything in style and functional sportswear, ranging to every occasion. The company has 59 stores worldwide and an online shopping facility in over 21 countries. The sustainability business concept lies in having fashion and quality at the best price. They offer inspiring fashion at unbeatable values. H&M does not own factories but buy products from independent suppliers. The number of stores grows by 10 to 15 per cent every year and have several expansion units that include Monki, COS, Cheap Monday, Weekday, H&M Home and Other Stories. The Corporate Governance is based on the principle of explain or comply. The company strives to be sustainable in the market by recycling waste, water efficient systems and other initiatives. The company has a wide range of fashionable products including clothing; accessories like belts, hats, footwear, jewellery; lingerie; cosmetics; home décor items like curtains, towels, bed linen and sportswear. The company has collaborations with different international and stylish designers from Karl Lagerfeld to Beyonce (About.hm.com, 2015).
Fig.1 Marketing Process
Situation Analysis- A SWOT analysis has been conducted for an overall situation analysis for H&M. It is one of the largest global retailers in the fashion industry. They buy large volumes so as to provide affordable prices to the consumers. Their expansion in the online market created a huge opportunity in emerging economies. They have lower sales in home-ware.
Marketing Strategy- The marketing strategy followed by H&M is a concept of responsible marketing. A process of identification, anticipation and satisfaction of consumer needs is followed (Sustainability.hm.com, 2015).
Marketing Mix decisions
Product- H&M has a wide range of fashionable products including clothing; accessories like belts, hats, footwear, jewellery; lingerie; cosmetics; home décor items like curtains, towels, bed linen and sportswear. The concept followed by them is every day low price product.
Price- The prices offered by H&M with a high quality of product is affordable and cheap. The company follows a cost-based orientation. They make bulk purchases so that the cost is cut down for the company as well as the consumers.
Place- H&M has stores located in famous shopping street or in a renowned departmental store. They have online portal where consumers can purchase through the internet. The company provides shipping all over the world which makes it convenient and accessible for the people.
Promotion- The promotional initiatives taken by the company is in the direct market through magazine, blogs and advertising through famous world celebrities. The company also uses print and video advertisements along with online marketing to promote their website (Moradi, Aghaie and Hosseini, 2013).
Implementation & Control
H&M controls different departments by applying different cultures in the organization. The company pays fair and reasonable wage to employees. The staffs are trained under different divisions at IT, HR and organizational development. The company selects and recruits employees and aims at managing diversity.
Application of Marketing Mix within Marketing Process- The marketing mix concept was appropriately allocated through customer orientation, profitability and integrated marketing efforts. The changing needs of the people are met with a combination of product and price. The long-term and short-term strategies boost revenue (Roman, 2011).
Marketing orientation is different from marketing strategies in a way by concentrating on establishment of selling points for existing products than to tailor products.
Benefits of marketing orientation
The marketing orientation focuses or satisfying customer’s desires. H&M identified growth and opportunity sector by market segmentation strategies. The products that are currently in demand, a research design may be developed to identify and develop it. A competitive edge is known by applying principles of business for new product. Long-term goals and objectives are focused upon, thereby developing loyal relationships. The expenditure on ineffective marketing and advertising is less (Ragatz, Handfield and Petersen, 2002).
Costs of Marketing Orientation
The main cost lies in the manpower to conduct market research. The employees may be required to conduct a field research to identify needs and wants of targeted market. The financial expense to carry out the research affects the profit margin negatively. The costs to differentiate products from one another as a competitive advantage are also a part of marketing orientation.
Contemporary changes within micro and macro environment
Micro-environment factors consist of company, competitors, marketing intermediaries and suppliers measured by SWOT analysis (Pahl, 2015).
Strength- H&M is trendy and fashionable at low prices with the best quality. The customers can enjoy a wide range of products and designs at a lower price.
Weakness- The consistent low prices of goods create ambiguity in customer’s minds. Many people have a perception that it is difficult to keep changing fashion with fast changing trends.
Opportunity- The collaborations with famous designers is a big opportunity. This helps in building brand image and attracts attention of new customers.
Threat- The competitors like Zara, Topshop, Forever 21 are huge players. One missed trend can cost a lot to the company.
The macro-environmental factors do not have a direct influence, but has an impact on marketing decision. It is measured through PESTLE Analysis.
Political Factors- Since the raw materials are outsourced from some countries, it implies with custom duties that affects marketing.
Economic Factors- A lot of sales and bargain marketing efforts helped in drawing more customers. The recession period and shortage of labor affects market.
Social Factors- H&M strives to be responsible socially and addresses green issues affecting marketing.
Technological Factors- Advancement in techniques of efficient production, costs of materials, quality of work and outsourcing decisions that can have improvements in production process affects marketing.
Legal Forces- H&M complies with the code of conduct, Swedish legislation and Labor Act. These laws and regulations affect marketing decisions.
Environmental Factors- H&M intends to save the environment by creating a greener environment with the help of waste reduction, using renewable resources and saving energy.
Segmentation or segregation of the market for H&M’s products can be done on the basis of-
Geographic Segmentation- Cultures across the world are different. The company must strive to adapt to different culture and fashion trends. H&M can mix cultures of different countries and create fashion trends.
Demographic Segmentation- Products must be designed in a way that covers all age groups and income groups. The products must be segmented for children, men and women differently. The prices must be divided in a way that suits all income groups from mediocre to rich class.
Psychographic Segmentation- The lifestyle, social class and personality variables must be considered under this parameter. The habits, self-concept and loyalty of customers must be taken into consideration.
Behavioral Segmentation- The attitude and response of customer towards same kind of clothes or a single chain is not appreciated. Multi-branded approach must be followed. The products must give a positive and unique experience to customers (Wedel and Kamakura, 2000).
Product Chosen
As a marketing manager for H&M, I choose to boost sales of Footwear.
Purpose of Plan
H&M has focused mainly on clothing in recent years. There is a need to establish and boost sales of footwear. H&M is not a destination of footwear shopping yet.
Product Description
The footwear range for H&M is stylish, sexy, affordable and trendy. There are a range of products available from stylish high heels to a regularly working middle class person.
Situational Analysis
A SWOT analysis is conducted to determine the current situation of H&M footwear. The range of footwear in H&M is vibrant and colorful. There are stylish and trendy collections, while subtle and fancy collections for all age groups and occasions.
Marketing Strategies
Undifferentiated or Mass marketing- Online marketing and creating editorial content can be used to raise awareness. This marketing technique helps in lowering the costs.
Differentiated or segmentation marketing- Different segments like income groups, age groups and people with same behavior and lifestyle must be focused upon. The products may be marketed accordingly.
Concentrated or niche marketing- An own PR team can be run who understands the depth of the products. A small group may be targeted to elaborate the excellence of the product.
Micromarketing- Initiatives for individual marketing can be derived by letting customers build their own products. Internet can act as a catalyst for this marketing strategy .
The two buying situations where buyer’s behavior affects organizations marketing activities are:
Business to Consumer (B2C)
The factors that stimulate the purchase of a particular product are culture, social influence, marketing mix and reference groups. The process is based upon psychological factors, perceptions and attitudes towards the product and physiological factors. The response to the product reveals attitudes and belief as well as buying practice and behaviors for the product. The need of the product is determined by Maslow’s hierarchy of needs by need recognition and evaluation of alternatives that leads to a buying decision (Strydom, 2004).
Business to Business (B2B)
The micro-environmental forces such as SWOT and macro-environmental forces such as PESTLE are used to determine to buying behavior of customers. This model helps in understanding how buyers respond to various marketing stimuli. The expected response is different that includes a choice in buying of product, services or quantity (Macintosh, 2007).
H&M is one of the leading retailers in the world that must plan to expand its e-commerce strength.
The current online presence is in 10 European countries. New websites must be launched in 8-10 more European countries rolling in Italy, China and Spain.
A robust website should be developed so as to connect with web and mobile assets with the store.
The product offering must be made broader with a large number of brands online with inclusion of body care and hair products along with apparel and accessories.
Unique features must be added. Smartphones will be able to scan an item in store and order online with a desired color or size.
Improvements on navigation should be made with extended product selection and higher quality images .
Competitive Advantage for Apparel
Brand & Trust- The apparel industry for H&M has strong brand awareness among people. They emphasize on responsible marketing and use natural resources responsibly. They conduct an ethical practice that has built loyalty and trust among customers (Azevedo, 2013).
Human Capital- H&M has collaborations with a large number of designers. They delegate responsibilities of different departments by segmenting the apparels for children, men and women. There is high level of identification of corporate culture.
Financial and other assets- The brand holds a high value with thousands of stores across the country and world. The company employs 132,000 employees that contribute in making H&M the second top retailer in the world.
The products for H&M are directly distributed to the clients in the market place. The joint venture strategies are utilized for distribution of apparels, cosmetics and clothes. The entry into Milan Fashion scene helped in finding market for low end retailers. (Finne and Sivonen, 2009) Outlets were opened at Gremacy, SoHo, Manhattan, West Nyack and few other areas. The brand further expanded in Chicago and other suburbs. These areas cover a lot of people because of which the distribution to customers becomes easier. H&M also has an e-commerce reach where people can order and shop while relaxing at home. The products details and price are mentioned with images that give customers a unique experience.
Right Place
Right Time
Right Quantity
Right Price
Right Product
H&M follows a strategy where it can match the market conditions. It provides fewer prices to the customers while having competition with other brands at the same time. Pricing is used as a signal to customers in different marketing segments. The higher class people having a quality lifestyle, higher budget and taste have different prices. For people with lower budgets, stylish goods are offered but at a lower price. Discrimination pricing is followed by the company (Arslan and Kachani, 2010).
As a marketing and communication manager, several promotional techniques may be implemented. On social media, blogs may be created writing about the products and service quality by the company. Outdoor advertising and direct market magazine can be used to promote products. The company can use video advertisements and print advertisements. E-marketing can be used to attain business objectives by keeping in touch with customers, vendors, stockholders, employees etc (Peng and Wang, 2006).
People- People like to change themselves with trends and fashion. They love to shop for themselves and others. Majority of people shopping are women. This has a major impact on H&M as it is fashion and Textile Company. There are over 132,000 employees, 180 designers and various celebrity guest designers. The employees are provided with training that helps in serving the customers better (Pahl and Mohring, 2008).
Physical Evidence- H&M magazine is physical evidence that provides details of products with its images and price. The interior décor and furniture also acts as physical evidence that gives a positive feeling to the customers about the standard of the brand. The online website of H&M also acts as physical evidence that boosts customers in shopping online with convenience.
Process- With the onset of globalization, H&M subcontracted its business to various outsources. The suppliers are mainly located in Europe and Asia. The communication and IT department for the company is also set in many countries. Marketing is affected by inbound logistics, outbound logistics and supply chain process.
Marketing Mix for Two different segments
Demographic Segmentation
Product- The products are manufactured on the basis of country’s ethnicity, their income groups, age dominance and gender dominance.
Price- The price must follow a discriminated strategy by charging less from people who cannot afford high budget products. People with high income are sold higher budget products (Kim et al., 2011).
Place- The reach to customers in this segment can be focused by approaching on website. The stores may be opened in central areas as well as suburbs.
Promotion- Mass marketing strategy can be followed to approach the whole demographic segment (Hennigs et al., 2013).
Psychographic Segmentation
Product- The products may be designed on the basis of attitudes, perceptions and behaviour of people.
Price- Price differentiation strategy may be followed to have a competitive advantage over other brands like Zara.
Place- The stores must be opened at places providing convenience to the customers. Online shopping experience must be enhanced (Lee, 2011).
Promotion- Promotional techniques may be followed with niche marketing so that particular group of people with similar behaviours or attitudes can be addressed.
Marketing tactics to business
The marketing tactics for business depends upon external environment of the business. The business models depend on the political and economic environment accompanied by technological and legal environment. The environmental forces are put into action so as to have effective marketing (Jakada and Kuka, 2014).
Marketing tactics to consumers
The marketing tactics to consumers involves different segments of men, women and children. The products marketed are enormous in nature with respect to style, colours and price. H&M follows responsible marketing when it comes to consumers. The marketing methods are influenced by culture, social norms, attitudes and beliefs. The marketing tactics depends on internal environment of the business (Odekerken-Schröder, De Wulf and Schumacher, 2003).
There is a difference in marketing the products of H&M domestically and internationally. The global strategies focus on competition with other multinationals or other global firms. Marketing mix is adapted with the different markets in different countries. While entering a new market, demographic factors, economic growth and risks are taken into account. The company has a clear vision and strategy to succeed in the international market. The company expands internationally slowly by adapting to the cultures of country. Different products and prices are set depending on the country. The marketing effect on countries is variable. Promotional techniques are used in a way that has the maximum impact on people’s mind (Mo, 2015).
H&M is the second largest fashion retailer in the world offering quality products at affordable prices. Various marketing mix is applied to develop products and services successful all over the world. The promotional strategies by collaborations with famous designers make the company achieve higher standards of business. The wide range of products available such as clothing, footwear, accessories, home ware and lingerie gives H&M to expand its business further. Products are available at low prices without compromising on the quality. Marketing tactics applied for consumers is different that of business models. The marketing method in domestic country is different with that of international countries. Micro-environment and macro-environmental analysis clearly states that the business has strengths of high quality with vibrant range of products. The customers are loyal towards the company. H&M offers competitive advantages in comparison with other brands. There is a scope for expansion and development of E-commerce. The distribution strategy may be further improved. The website can be further developed and expanded in countries to provide ease to customers in the world.
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