H&M Marketing Strategy - Report Example

The following are important information linked up with Hennes and Mauritz (H&M) that could address some relevant issues intended for a marketing report. H&M Market Orientation To understand to what extent is H&M market oriented is an important marketing action. There are evidences that have corresponding supporting details which boil down to the fact that the firm tries to provide high value for its customers, at all times, since at the inception of the onset of its high market recognition. These even could show us one probable reason why H&M strongly stands in the market while its tough competitors are shortly disappearing and are not able to remain firm in the competition. These competitors as potential key players that fail to consider that the market has a strong control prior to the firms’ vibrant market dominance like H&M experiences to the full at present. Prices are low for H&M product offerings. This adds to a high value for their customers, as the firm’s product offerings are cheaper, but the actual brand is not. This even gives more satisfaction to the target market and users of the products. With this relevant move, we have the idea that H&M has the determination to excel in its industry. It strongly attaches its strategic actions with the prevailing market needs in order not to lose its share, but to guarantee its competitive advantage to the full. There are essential reasons that pave the way for the achievement of H&M and its competitive advantage. The first significant reason why H&M is able to provide lower prices for its offerings is evident on how it works everything in its value chain. In as much as possible, the firm continues to buy cheaply and keeps overheads low. This is the reason why its prices are also low. The firm has the opportunity not to add higher cost for its product offerings even if it would combine both price and quality instead. The good thing about H&M and its market approach is that they one could see them not only at the local setting, but also at the international context. This creates market dominance on the part of H&M, which is another indication of its strong market orientation not only in the local setting but also in its international scope of coverage. The market’s relevant perspective especially in depressing and tough economic times is to go for product offerings that could help provide potential savings. Failure to address this could lead to lose of opportunity for the firm. This happens to the fashion industry, by which the ultimate proof is the slow disappearance of greatest trendsetters. Some of them vanished because of their failure to attract potential customers to patronise their product offerings in the midst of challenging financial times. Combining the basic formula of price and quality is proven convenient in this event as proven in the case of H&M. The high fashion, low-price concept of H&M is a remarkable move in its industry because customers for fashion in the first place are looking forward to a good value for money. This is another important point that H&M has eventually reached in the midst of its competitive strategy both in the local and international marketplace. On the other hand, there is another important point by which one could say H&M together with its market orientation is at the highest level. The firm considers fashion as a perishable product, keeping it fresh and moving. By this approach, H&M has a remarkable action of considering fashion as a primary commodity while it has to remain up-to-date in order to guarantee high market acceptance. This eventually happens in the case of H&M as evident in its marketing strategy indicating that it has potential market orientation as shown in its ability to understand the needs of target market and ensure consistent market share in the local and international level. Considering the above points, one could eventually consider that H&M has strong market orientation, as it understands the right moves in order to provide high value for the customers and their money. The case of H&M particularly its market dominance is a potential proof that having strong market orientation could be much better than focusing on ensuring high profitability alone. In fact, fashion brands like Benetton, Body Shop, Gap and Sephora, all suffered from their inability to grasp the actual market for fashion trend as influenced by the time and other relevant factors. Each of these individual cases of these firms would provide for us meaningful understanding on what would take firm’s market orientation to a higher level, just what H&M presents and possesses for us to understand the dynamic market for fashion. In totality, with strong market orientation, a firm would be able to understand which segment requires higher attention and full focus just to satisfy existing needs or wants of the customers (McCabe, 2009; Lamb et al., 2008). For this reason, H&M is able to provide general offerings for all probable segments in the fashion industry. H&M adopts some remarkable bases for their segmentation, as presented in the next section. However, there are also associated benefits and risks with the practice of segmentation as discussed. Bases for segmentation that H&M adopts There are several bases used for segmentation and these include geographic, demographic, product usage, and product benefit (Stevens, 2012). At some point, one would be able to identify that H&M may have combined all of these in order to guarantee effective or successful market segmentation for its product offerings. Based on its history, H&M started out selling only women’s clothing, but it expanded its target market in the international setting (H&M, 2013).The presence of its expansion into Asia, Europe, Middle East and North Africa, North America and South America is a remarkable indication that it adopts demographic consideration as a significant basis for its segmentation. The mentioned regions have varying target customers, those that have remarkable differences when it comes to fashion preferences. H&M also uses demographic segmentation as it continues to consider the income level of its target customers. The firm also focuses on providing quality offerings, it appeals to customers that are looking forward to new fashion trends. In addition, H&M provides varying product offerings for different ages, particularly on young people, not only for women, but also for men. All of these are considerations of demographic information as important bases for marketing segmentation. As a result, H&M is able to address the different needs of various segments. Product usage is another basis for segmentation based on the case of H&M. The thought that the firm considers fashion as a perishable product is a relevant justification that it promotes its segmentation strategy based on the product usage. H&M acknowledges the fact that fashion could have dynamic changes from time to time so it needs to consider up to what extent a certain design for instance would serve its maximum usage or function with time. This is the reason why from time to time H&M adopts prevailing fashion trends and styles just to be able to provide usage for the created fashion for its target customers that are looking forward to potential use of fashion. Finally, H&M is not only known for providing cheaper, but also high quality product offerings. Providing quality high product offerings creates potential benefit to the target market. In addition, creating high relatively cheaper product offerings also provides another potential benefit. These two generally provide high value for customers and their money. In other words, another remarkable consideration of H&M and as it basis for segmentation is the benefit. Benefits and risks linked up with the practice of segmentation The good thing about what H&M does with segmentation is to ensure relevant market share. It provides the firm the opportunity to consider serving a vast array of potential customers based on age, gender, income, and many other demographic considerations. This means that with segmentation, there are opportunities that will lead to increase market share and potential customers that are able to consider the firm’s product offerings. The above benefit is internal, but the external advantage that segmentation of H&M provides is the actual opportunity to serve various needs in different segments. This is in fact, the reason why H&M fashion trend has become general in its sense, because it does not only provide offerings for women, but including men and almost across all ages of potential buyers. This is the reason why H&M still stands especially during economic difficulties; it has various opportunities of serving a vast stretch of potential customers or market segments. However, the way H&M initiated its segmentation strategy could also pose potential risks. There is a need for H&M to ensure high level of focus. If it would fail to consider this, the firm would have potential risk of losing its balance and control. The presence of focus would ensure that H&M would not be able to lose its direction. With many things to consider, higher focus is necessary in order to ensure that everything is under control. With less amount of focus especially in the case of H&M that is in its prevailing state of considering varied bases for its segmentation strategy, overlooking some essential things would be a remarkable disadvantage. There is a need to think always in a big scale especially if there are varied target customers like in the case of H&M. This would mean not only treating fashion as a perishable product at all times, but also as something that would require fresh innovations across different segments. The marketing benefits of commissioning Lagerfeld, McCartney and Williamson Commissioning Karl Lagerfeld, Stella McCartney and Matthew Williamson to design limited-edition clothing ranges provided the opportunity for H&M to become more popular in its designs and quality for its product offerings. These three renowned designers have become popular in the fashion industry and their tie up with H&M is advantageous on the part of the firm for the following important reasons. These designers have already established their names or reputations, which allow the target customers of specific segments to appreciate whatever products or styles they might come up with in a specific given time. For this reason, commissioning these designers to work with H&M is advantage to the company because it would give additional important appeal to its product offerings. In the end, H&M and its design or styles of fashion would become highly influential as renowned designers work with the firm’s product designs. This would allow customers who are after of these designers’ work to come to H&M just to look for the opportunity to address their needs or demands for fashion. This could potentially add to the firms’ target customers and potential sales. Increasing the revenue of H&M could be the bottom line of this commissioning strategy. After all, in marketing, adding substantial promotion to a product brand or offerings could increase potential sales (Larson, 2009; Mullin et al., 2007). The employment of renowned designers is like a way of H&M’s style of promoting its brand across customers who are attached to the new or latest fashion trends and styles. In addition, commissioning the three designers is a way of the firm to increase its credential when it comes to setting fashion styles. For one particular reason, the three designers, known in their industry and allowing them to appear at H&M and its line of products is a remarkable advantage on the part of the firm because this would try to create a positive response on the part of the target segments. It would increase the level of reputation that H&M is receiving in its industry. Just like how a certain brand creates its enduring image because of endorsements from by some renowned celebrity endorsers, the same principle could apply when H&M has employed the three designers, and allowed them to create designs and included them in its actual product offerings. In other words, commissioning the three designers would be a good opportunity for an excellent branding strategy. Branding is a marketing advantage especially in its development because many intrinsic values are attributed to it that would matter most to the target market (Elliott and Percy, 2007; Kotler et al., 2010). Creating a brand is just a simple way of making it possible for H&M to employ aggressive promotion for its offerings and ensure market acceptance. After all, customers could place their trust in a product with associated brand (Kumar, 2008). Renowned brands have proven to gain substantial market response. The three designers as commissioned by H&M showed the point on how the firm’s revenue might surge into an upward spiral. In fact, all of their created designs, sold outright, without taking it longer for H&M to dispose. Marketing challenges that H&M is facing in the future In the presence of tough competition, H&M eventually would have to face various challenges. The following are challenges that are likely to face H&M in the future. As stated earlier, H&M would have to require high level of focus in order for it to serve various segments for its product offerings. There are now many existing specialty stores for fashion designs particularly for clothing operating in the local setting. These are remarkable market entrants. According to Porter’s idea of five forces model in an industry, these entrants would pave the way for creating innovation and a strong market segment, allowing them to give more focus and high level of sensitivity to the needs of the chosen groups of potential customers. After all, new entrants would have to create a certain force in order for them to generate successful market entry (Porter, 1980). As H&M works in the international context, this could pose relevant challenge on its part as it would be difficult for it to address small detail in the local context, as it tries to cover fashion in general. In addition, fashion trends could become unpredictable at some point. This would mean relevant challenges for H&M to be able to upgrade the level of its market orientation from time to time. Aggressive marketing efforts are necessary on the part of H&M. This means market research that is more dynamic and high sensitivity to the prevailing needs of the target market. These are indeed remarkable challenges, but being able to address each of them would also provide the firm the opportunity to obtain an upward spiral performance. Conclusion H&M depicts the general idea how important it is to make sure of providing high value for customers and giving them and at the same time, the opportunity to enjoy a high value for their money. However, it is impossible for a firm to address this without a high level of understanding the market. Market orientation is necessary especially in a dynamic market for fashion. The relevance of market orientation especially in the fashion industry as stated in the discussion would pave the way of creating a competitive advantage. The ultimate reason for this development lies at the heart of being able to address some challenges on the part of the firm that is trying to create potential market share. References Elliott, R. H., and Percy, L. (2007) Strategic brand management. Oxford: Oxford University Press. 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(2012) Market opportunity analysis: Text and cases. Binghamton: Routledge. Read More