Course: MSc in Advertising and Public Relations Management
Introduction
This report will discuss the marketing theory and practice of the H&M company. H&M is an e-commerce fashion retailer company, offers varieties of fashion clothes, shoes, and accessories in a more conventional way. The first part of the report will discuss the environment and situational analysis. This part will highlight the environmental analysis and situational analysis of the H&M's market. The second part will analyze the growth, segmentation, positioning and recommendation of the company (Trivedi, Trivedi and Goswami, 2018). This part of the report will highlight some growth opportunities for the H&M company, segmentation and positioning concept, and some recommendations for the H&M company. The last part will talk about the overall concept from the report which will be a conclusion part in the report (Zhao and Zhu, 2018).
Table of Contents
- Section A: Environmental and situational analysis
- Introduction
- Environmental analysis
- Situational analysis
- Section B: Growth, Segmentation and Positioning and Recommendations
- Growth Opportunities
- Segmentation and positioning
- Recommendations
- Conclusion
- Reference list
- Appendices
- Appendix 1: PESTLE
- Appendix 2: Porter's five forces
Marketing Theory and Practice - Report on H&M Company
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Section A: Environmental and situational analysis
Environmental analysis
PESTEL analysis
• Political
H&M company is famous for its quality of materials they use in their clothes and other accessories; therefore, the company has spread all round the world as well in Asian countries such as Lebanon, Egypt, Turkey, Bangladesh, Cambodia and so on. However, Asia and Middle East countries created a political insecurity environmentally for the H&M company because of wars and disagreement (Toffoletti and Thorpe, 2018). As a result, squirrels and wars create a negative impact on the H&M company production of their fashion. On the other hand, to create a high quality product, the H&M company takes better care of new trends in the market. Hence, the overall production cost rises due to producing the trending clothes, raw materials cost, labor cost in different countries and many more (Fahy and Jobber, 2019).
• Economic
In 2020, the annual revenue of the H&M company was 20.726 billion dollars. However, the company's revenue has reduced by 15.42% because of many reasons such as the pandemic. As a result, the company net income also got affected by the revenue from 0.334 billion dollars net income to decrease 75.12 percent.
• Socio-cultural
In modern times, every customer has their own fashion choice and their choice changes frequently with their mood (Eliasson, 2018). H&M companies always get ready for this change of people's trend to satisfy the various customers. Therefore, the company opens many options for their customers on social platforms such as facebook, instagram and so on to spread their fashionable clothes. According to many report, it claims that theH&M company permit women empowerment to produce more varies women clothes and other accessories. Also, the company has some rumors that they hire more women compared to the men (Arrigo, 2018).
• Technological
Nowaday, people always depend on a digital platform from ordering food to clothes or some electronics products. Also, through the pandemic situation, the world is totally available on digital platforms; as a result a huge number of people depend on their varieties of digital platform such as smartphone, desktop, laptop and other platforms to meet their requirements (Bojonca, 2019.). Hence, the H&M platform spends their business on e-commerce, and therefore, it permits their customers to order their fashionable clothes through varieties of social media of the H&M company and get updated by the company.
• Legal
H&M is a multinational brand company all around the world. The company is also a franchising partner in a fashion brand with many countries such as UAE, Oman and many more. Therefore, the H&M company operates their fashion brand worldwide. As a result, the IPR (intellectual property rights) of all around the world creates some problems for the company fashion sections (López, et al., 2022).
• Environmental
In the world textile comes in 2nd rank after oil and petroleum. As a result, the textile manufacturing company creates huge amounts of pollutants and waste ages and that creates water and air pollution. However, the H&M company is currently focused on pollution reduction and recycling.
Porte's Five Forces
• New entrants treats
Every organization becomes competitive from the new entrants in the market as well as the H&M company. However, for H&M companies the treats of the new entrants is competitively low because the H&M company is highly acknowledged for their high quality product to their customer and this is 3rd largest market shareholder in the world.
• Substitutes treats
In modern times, clothing trends frequently change with the mood of the customer. However, the H&M company sometimes becomes slow on following the new trends; therefore, the trending substitutes create a moderate threat in the market.
• Bargaining power of customers
Bargaining power of the customer in a retailer market is quite high, hence the H&M company gets highly affected by the customer bargaining power.
• Bargaining power of suppliers
Bargaining power of the supplier is always quite high to affect the H&M company financially.
• Competitive conflict
There are many retailers in the same market as the H&M company. Therefore, the competitive conflict creates a big effect on the H&M company in market situations.
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Situational analysis
SWOT ANALYSIS
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Strengths
• Effective marketing strategy
To spread the H&M brand and market all over the world, the H&M company continuously works on their marketing strategy. The H&M company applies the fast fashion method, to follow the latest fashion trend and design tables.
• Globally present
The H&M company is globally spreading their fashionable product which creates sustainability for the company. H&M companies release their clothes and accessories in 74 markets and 5076 stores across the different continents.
• Strong in digital platforms
Nowadays, people of all ages depend on digital to fulfil their requirements. As a result, the H&m company is creating a strong bond in their various digital platforms to sell their product. And to attract the difference of customers.
• Varieties of product
The H&M company is working on various products to satisfy more customers worldwide. As a result, in 2019 the company will become the 58th most valuable brand in the world.
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Weaknesses
• Highly dependence on outsourcing
The H&M company is highly dependent on their outsourcing. Although the company sells their product in-house, most of the company's production is dependent on 900 Europe and Asia supplies.
• Product controversy
In 2018, the H&M company got affected by a controversy over their product.
• Ordinary fashion
To spread their market globally, the company follows the fast fashion methods; therefore, sometimes their fashion does not meet the customer trends because the company's fashion follows the old fashion trend.
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Opportunities
• Varieties of products
Producing a huge variety of products to satisfy customer needs and requirements is the marketing strategy of the H&M company. Hence, this strategy creates a great opportunity for the company as well as for customers.
• Spread in the e-commerce fully
The H&M company is completed following the e-commerce sectors for their production. According to Recode, nowadays every customer wants to shop for their requirements online; therefore this situation creates a great deal with the H&M company compared with Zara.
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Threats
• High competition
As a retail company, many new and old companies are releasing their business, which creates high competition for the H&M company.
• Increasing the operation cost
The huge cost of labour and raw materials increases the H&M company operation cost and creates some difficulties in the company profile.
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Section B: Growth, Segmentation and Positioning and Recommendations
Growth Opportunities
Opportunity 1: Product diversification
According to Schommeret al. (2021), Diversification is closely associated with the growth of the company as a large number of customers can be attracted through this. The new segmentation of the products that can be launched by the company helps in enhancing the customer base and it also impacts positively the growth of the company. It not only helps in reducing risks but also helps in satisfying the modern demand of the customers. The demand for corporate dresses is increasing and the numbers of the organization are also enhanced rapidly. The idea of creating new segmentation of the product with the personification of the dresses for the dresses is much more productive for the company, H&M (Mäkelä, 2020). It is also necessary for companies to expand their investment in various parts of the world. If one segment of the product loses its demand in the market then product diversification helps in maintaining the profitability of the company so that the company is able to run the business effectively. As an international company, H&M can enhance its business in various parts of the world with the help of product diversification. The companies become aware of their employees and the impact of this is also fallen in creating the demand for H&M.
As H&M is one of the leading fast fashion companies in the world and the ability of the company in producing the low-cost product is high and it also helps in attracting a large customer base (Deepak and Jeyakumar, 2019). The international presence of the company is also effective in increasing the product range. The low pricing strategy is much more effective for the company that helps in create a huge demand for the professional range of the product with customised logos. The brand image and quality of the product of H&M are much effective in attracting large organisations. The low pricing is also able to enhance the profitability as the organisations will purchase in bulk for the employees and the modern technology of the company helps in designing the dresses and the logo of the company attractively helps the other companies to create its unique brand image. The organisation's collaboration also helps the company to attract its customers with the help of providing the best quality dresses. It also helps in increasing the sales of the other products of H&M (Sinha, 2022).
The business model of H&M includes providing value to the customers (Lanzolla and Markides, 2021). It also helps the company to attract all types of customers as well as the present product range of the company is also effective for the company to attract the employees of the office. H&M can also use sustainable raw materials in producing office wears that helps in enhancing the brand image of the company as a thinker of the environment the company can successfully run the business for a long time in the industry with the help of sustainability and a sustainable brand image of the company in the new product segmentation.
Opportunity 2: Growth of E-commerce
In modern times, all ages of people are dependent on a digital market to satisfy their all requirements. Then after the pandemic situation, all the people are totally depend on the e-commerce market from their food to clothes. Therefore, spreading their business in the e-commerce section open many great opportunity for the H&M company. The H&M company always produce a high quality garments and other accessaries in their digital markets (Andreev et al., 2020). Also the company work with huge numbers of varieties to meet their customer satisfactions. In various social media such as facebook, instragram, twitter and many more, the H&M company open their official page to seel their products. Customer see their pages on the social media and order their desire accsssaries from online without any difficulties. Therefore, all those strategies makes the H&M company market so profitable, that the company ranks place 3rd in the shareholder market across the world (SanMiguelet al., 2021). In other case, the H&M company is hugely sprended in 6 differnt continent and open 5076 stores across the world market. Therefore, day by day new customer are get attached into the H&M brand because of their good quality and affordable product price. The H&M company also focus on their price margen of their product, and carete a hugh different on their product quality price compare to the others retailer company.
Zara is also famous by their good quality product onna affordable price, however their business is not totally follow the e-commerce market; as a result Zara company face some challenges in their production compare to the H&M company. The H&M company is total available in the digital market, and attract most numbers of cutomer to their high quality of product all over the world. As a result, in the e-commerce market the H&M company create a very positive income and that also positively affected to their company annual revenue (Billal, Shin and Sim, 2019). In future, the H&M company wanted to spread their business more in the e-commerce section because they thinks that way their business or product will be available to every customer on the world. They also wanted to work on a different category product which is very needy for customer and satisfy their trendy style segment. The customer are massively impressed by the H&M company's clothes and accessories because they are meet the modern and trendy style. Therefore, the growth in e-commerce creating a huge impact of the H&M market profit.
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Segmentation and positioning
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Customers
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Demographics
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• Age group from 25 to 40.
• Low to middle income
• Both male and female.
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Challenges
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These demographic customers face challenges in getting officewear at an affordable range.
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Goals
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The goal behind including this customer is to make office fashion affordable for the low to the medium-income population of the UK.
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Hobbles and interests
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People, who are inclined to fashion and willing to make a statement with officewear will be included in this segment.
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Fears
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People, who are conscious about their appearance and fearful of making a wrong impression due to a gap in fashionability in their office looks.
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Table 2: Consumer persona for H&M's product diversification in e-commerce
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Segment
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• Age group from 25 to 40.
• Low to middle-income
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Targeting
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• Customers using social media will be targeted through marketing.
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Positioning
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• H&M seeks to establish itself as an affordable office-wear brand among UK customers.
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Table 3: STP analysis
In the case of the opportunities H&M have in the UK market, it can either diversify its products or focus on optimising its e-commerce practice. On the other hand, H&M can utilise both of the opportunities by introducing a new segment of products for the new target customersad promoting that in e-commerce. The utilisation of e-commerce can be helpful for H&M in promoting the affordability of its products as e-commerce helps in reducing operational costs for companies (Taher, 2021). On the other hand, the targeted customers are also likely to be the major users of the internet or e-commerce in the UK (Liang, Ghosh and Oyeyemic, 2022). Hence, it can be said that the proper utilisation of the opportunities mentioned above can be helpful for the company to establish itself in the competitive market and successfully acquire the target customer group. On the other hand, marketing s also likely to be one of the major factors for the strategic success of businesses especially while involved with product diversification. Hence, H&M should opt for effective marketing strategies to build its new product segment successfully.
As discussed by Campbell and Farrell (2020), influencer marketing is one of the most efficient and easy a brand can opt for to promote the effectiveness of their business in the competitive market. It helps the brand create awareness among target customers about the new product segment launched along with improving its functionality for customer acquisition. In the case of H&M, as its new product segment targets both males and females, the company must work with both male and female influencers. For females, the company can hire, Charlie Irons, who has 87K followers and Simone Rocha, who has 654K followers. The followers of the company will be helpful to the company to campaign and promote its new product segment of affordable officewear. The company can use it for its own benefits as this broadens the scope for target customer identification, customer acquisition and more, which can help the company properly utilise the opportunities identified from the business environment of the UK (Chopra, Avhad and Jaju, 2021). overall, it can be said that following up an effective digital marketing strategy to deal with the new segment of customers can promote the effectiveness of H&M to promote its growth.
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Recommendations
Recommendation 1: Increasing affordability using e-commerce
The H&M market is famous to their customer to produce high quality product within affordable price but the company need to focus in their influences marketing strategy to reach the company goals and spred their business sicceffullly all around the world (Nalendraet al., 2021). Therefore, they need to focus on their product diversity and growthing their market more in e-commerce section.
Recommendation 2: Product diversification
People always desire for diversity in various brand product, as a result if any company work on their product diversity, they will definitely get success to satisfy the custoker need (Hochuli, Hochuli and Schmid, 2021). However, all the company always all to satisfy their customer no matter what as well as H&M company. also, the
Recommendation 3: Influence marketing
H&M company need to invested their business in fashion influencer people to growth their business. Charlie Irons is a famous fashion influencer, has 87k follower in this account. The H&M company need to connect their connection to the famous influencer Charlie Irons to sprend their business in the influence marketing business (Haenleinet al., 2020). On the other hand, Simone Rocha is also a very famous figure in influence marketing; therefore, to connect with those people creating a huge impact on the H&M market business.
Conclusion
In the business market of the UK, H&M is likey t deal with multiple opportunities as well as setbacks. For instance, rhe political environmnet of the UK and fierce comoetitiveness can be signifucqant challenge for the business to deal in the market. On the other hand, the scope for product diversiification and griwth if e-commerce can be helpful for H&M to overcome the challenges while sustaining its business. To be specific, the company should diversify its product by launching a range of affirdable office wear. Product diversification with a new range of affordable product can be done successfully by using e-comerce, whcih reduced producton cost. On the other hand, using influencer marketing startegies can also be helpful for the company to successfully acquire its target customers.
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