Nga Pham -1468572

This paper is submitted in fulfillment of the requirement for Marketing,

Principle of Marketing, MKPO 3461.

International Training Program University

Instructor: Lam Nguyen, MBA

December 29, 2016

Make a research at: -

H&M-FINAL MARKETING PLAN

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 TABLE OF CONTENTS

4 COMPANY OVERVIEW

6 MARKET SITUATION

9-10 SWOT ANALYSIS & IMPLICATIONS

11 STATEMENT OF OPPORTUNITY, TARGET DEFINITION

12 POSITIONING STATEMENT

13 MARKETING STRATEGY & MIX

13 PRODUCT

14-16 PRICE & PROMOTION

16-17 PLACE

17 IMPLEMENTATION PLAN IN 2017

18 APPENDIX

EXECUTIVE SUMMARY

As one of the most successful global apparel companies striving towards continued brand

recognition, market share and revenue growth, H&M must strengthen its online presence and

create a virtual marketplace in the U.S. While H&M is a strong and steadily growing company,

the development of online shopping will create greater value within the company, strengthen

customer relationships and capture a larger return. This report will outline the rationale behind

these assumptions, including the companys current situation within the apparel industry and

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current trends within the global economy. It will then outline a detailed marketing strategy and

integrated promotional mix to successfully transform the companys existing production and

distribution model into a multi-channel distribution system of bricks and clicks.

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COMPANY OVERVIEW

H&M Hennes & Mauritz AB

Headquarters: Stockholm, Sweden

Chairman of the Board: Stefan

Persson

CEO: Karl-Johan Persson

H&M History:

In 1947, the first store that would

eventually become H&M opened its

doors in Vasteras, Sweden. Its

founder Erling Person created his

store, Hennes with a product line

solely focused on womens clothing,

soon expanding into a new market, Stockholm, Sweden, with much success in 1952. It was not

until 1968, that Hennes finally became H&M, Hennes & Mauritz, when Persson acquired a

hunting and fishing equipment store called Mauritz Widforss. At this point he expanded the

stores product portfolio, offering mens and childrens clothing in addition to womens. From

1968 to the 1990s, H&M continued its expansion throughout Europe and in 2000 entered the US

market. Today H&M has more than 4,200 stores in 64 market and e-commerce 35 markets.

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Hennes &Mauritz Group owns six independent brands; H&M, COS, Monki, Weekday, Cheap

Monday and & Other Stories, [1] the first of which we will be focusing on.

Mission Statement:

H&M is a design-driven, innovative responsible fashion company. Guided by strong values,

H&M is growing with quality, sustainability and high profitability all over the world. [2] H&M

is guided by the following goals, principles and values that are integrated in each one of their

marketing objectives:

Fashion and Quality at the Best Price. H&Ms business concept is to offer fashion and quality

at the best price.

A Global Trademark. As a global trademark, H&M builds their customer relationship through

the companys flexibility in rapidly changing environments and trends while satisfying their

customers demands.

Design with Sustainability. Working with designers and buyers to create a plethora of styles,

H&M works to develop a more sustainable chain of design, manufacturing, and product handling

for both people and the environment.

Efficiency at Every Step. The best price is achieved by avoiding middlemen, buying the right

product from the right market, efficient distribution and cost-consciousness at every step of the

process.

Focus, Cooperation and Flexibility.

Growth Target. H&Ms aspires to increase the number of stores by 10-15 percent annually

while still increasing sales.

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 Financial Position. A strong financial standing without dependency on loans ensures readiness

and freedom to act when presented with new business opportunities. [2]

Trading Area:

As a well-known international company, H&M has markets in Europe, Asia, North Africa, North

and South America and the Middle East. H&Ms largest market is located in Germany followed

by the United States, currently with 238 stores nation-wide. The United Kingdom and France are

the companys third and fourth largest markets respectively. [2] We identified the U.S. market to

be the most lucrative globally with the highest growth opportunity in the apparel industry. [3]

MARKET SITUATION

Industry Overview

H & M primarily is attacking America continents and Asia continents (i.e: China). This table is

below here and it only predicts in the future from 2016 to 2020. [4]

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Competitive Summary

The major players in Asia continents apparel industry in order of size of sales :

Company Recorded Sales 2015 [5]

H&M Hennes & Mauritz AB $20.2 Billion

Zara $19.7 Billion

The Gap, Inc. $16.4 Billion

Fast Retailing (Uniqlo) $16.6 Billion

Mango $2.1 Billion

SWOT Analysis

Strengths Weaknesses

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 Global Brand awareness Buying large volumes could lead to overstocking
Good social media presence
Good relationship with suppliers: Instead of and later lead to lowering of the already affordable

owning its own factories, H&M purchases its prices.

Also, the changing macro highly affects their target
clothes directly from suppliers and eliminates the
customer base-economic conditions.
middleman entirely. Each country has 20 offices They have put in a lot of capital and maintenance

that supervise these transactions in the sales and fee for all the different types of machines required

distribution ensuring efficiency, volume purchases to produce clothes for each target segment.

and monitoring prices.

Market share: over 55 market 13 online
Wide product range: bedside H&M sell clothes for

ladies, men, divided, kids, sports &denim, they also

sell Textiles and decorative items in home, shoes,

accessories, underwear. Especially, in July 2015,

launch of H&M Beauty began with the new

concept enjoying a very good start.

Opportunities Threats

Changing Seasonal Trends Rising Competition in Apparel Market Competition

Growing Online Retail Sector Competition with Discount Stores: After the
Social Media Prevalence
Movement toward Sustainability: In an industry recession, consumers reduced their spending in

that requires a lot of waste in production and apparel and became more budget conscious causing

distribution, much more companies are going many to turn to mass merchandisers like Wal-Mart,

green to adhere to the eco-friendlier mindset that K-Mart, and Target for their clothing needs
Continuous Fluctuations in Fashion Trends: The
is widespread amongst consumers.
Expand into more markets: When H&M expands, apparel industry is very fluid, wherein changes in

there is an exchange between markets as employees style, season and weather are a constant threat to

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from established markets pass on their experience companies trying keeping up.
Lower Competitor Prices
to colleagues in new countries and act as

ambassadors for H&Ms shared values.

SWOT Implications:

New Design Launches. Because fashion is constantly changing, H&M could revamp its

styles each season. With new apparel that fits the everchanging trends and fads, H&M

can redesign their seasonal lines and give them a new edge, tagline, or marketing

strategy.
Expansion. One of H&Ms goals is to expand by 10 to 15% each year while increasing

sales. In parallel with store expansion, e-commerce is available in more and more

markets globally. In 2016, new markets this year are Puerto Rico, Cyprus, and New

Zealand. In 2017, the potential markets are Colombia, Kazakhstan, Iceland, Georgia, and

Vietnam. So far, this year the H&M brand has extended online shopping to eleven new

markets, which means that customers can shop online at H&M in 35 markets. And in

2017 the rapid roll-out of H&Ms online shop will continue to further markets.
Better Customer Service. If H&M incorporated more comprehensive training programs

for customer service representatives, customers would be more likely to have a better

experience at the store. This could include investing in technology that heightens and

helps each consumer when they enter the store as well as requiring all employees to

complete a training program.

Statement of opportunity:

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This action must help H&M reduce the amount of labor cost when they use the workers in that

country. In addition, they access to more potential customers in each country. Furthermore, H&M

expand to implementing a distribution service via a global online marketplace. After evaluating

my SWOT implications, I see the importance to strengthen their online presence and develop a

virtual marketplace in the United States and outside the United States. This opportunity is a

natural progression of the existing production and distribution model that H&M currently uses.

By introducing an online market, offering their entire product portfolio, they are furthering their

objective to deliver high fashion at an everyday low price and practicality, while encompassing

better customer service.

Target Definition

The target customers of H&M belong to the group of fashionable and trendy consumers who see

shopping as a social activity providing pleasure in their daily life. They acquire the most

fashionable clothes each season and want to follow the trends without investing a lot of money.

In order to fulfill the needs of the customers, H&M launched EDLP (Every Day Low Prices)

products. In addition, they invited the top fashion designers in the industry such as Karl

Legerfeld to be their partners for designing the new collection. As shown in the emotional curve,

there are two pleasure peaks happening in the process which are psychological identification and

product price. Thus, I think H&M is successful in making the combination of the best design

under the name of an inexpensive clothing label. Psychographically, their target customers

are fashionable or hip men and women who care about looking presentable and

dress with the current trends. These men and women are technologically savvy and

are always searching for the hottest looks at the lowest prices. By utilizing

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behavioral segmentation, we focused further on those who use social media and/or

have made purchases online from a fashion-clothing retailer.

Positioning:

Perfect combination of high class brands along with trendy fashion at affordable prices

MARKETING STRATEGY & MIX

Product:

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H&Ms departments are made up of the following products and consists of 3 types of people:

ladies, men, and kids, which follow a traditional retail department distribution [6] broken down

as such:

Ladies: lingerie, maternity wear, nightwear, shirts & blouses, shoes, shorts, skirts, socks

& tights, sportswear, swimwear, tops, trousers, etc.

Men: jeans shirts, shoes, shorts, swimwear, socks, t-shirts & vests, trousers, underwear,

etc.
Kids: newborn 0-9 months, baby girl 4-24 months, baby boy 4-24 months, baby exclusive

0-24 months, girls 1-10 years, boys 1-10 years, girls 8-14+ years and boys 8-14+

years.

Resources: H&M website

Price:

The price strategy of H&M is designed based on their customers needs which is low price and

high fashion. In fact, this is the one of the biggest challenges for H&M. If not making this

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happen, the special feature of H&M cannot be realized. How could they combine fashion and

cheapness? Two steps achieved this objective: first, H&M outsources the production to countries

where the labor cost is much lower. To control transportation cost, outsourcing was arranged per

different product. Those high fashion products which target at the European market were

produced in Turkey, because of the short product life cycle. In addition, basic product is

produced in Asia because they allow longer transportation time and bear lower risk. Second, the

company also conduct strict cost control plan. For example, very few executives have secretaries

or have cellphone privileged (Jobber, 2007). These two steps allow H&M to achieve a low-price

fashion business.

Although H&M's low price is the foundation of success, I would argue that the low price also

give H&M an image of bad quality. This image hinders H&M from keeping their customers.

When a young girl turns to a middle-aged lady or a school girl becomes an office lady, H&M

may not suit them. Thus, H&M face a challenge of constantly attracting new customers. This

challenge may call for more cost in promotion.

Promotion

To develop a promotion strategy, a company should firstly identify and understand target

audience. (Jobber, 2007). H&M's target customers are young women who want more fashion

cloth at low price. Young people have plenty access to information. A multi-channel promotion

strategy including advertising, internet promotion, H&M. adapted sales promotion These multi-

channel strategy increases the exposure of H&M.

Furthermore, H&M's promotion strategy is highly consistent with their whole marketing strategy.

According to Jobber (2007), promotion is one element of marketing mix, so it should comply

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with the whole marketing mix. The product of H&M is low price and high fashion which is

based on their customer needs. The promotional actions of H&M focus on the two features. It is

easy to find the posters of H&M are in fashionable style and always with the price of the clothes.

On H&M's website, price is put at obvious position. Although Zara and Gap, H&M's main

competitors, put the price online, they usually put it small. On the contrary, advertising of H&M

always highlights the low price to build awareness of their low price.

Third, H&M conducts an eye-catching event promotion which is to invite top fashion designer to

design clothing for them, or cooperate with other companies from other fields, for example

computer games or automobile company. H&M has invited Karl Lagerfeld in 2004, Stella

McCartney in 2005, and cooperated with Sims 2 in 2007. During the cooperation, mass

advertisements, abundant propaganda were utilized to generate public awareness. This method

not only improve the product but also enhance the brand image to be more fashion and upper-

class. And this cooperation again echoed the concept of fashion and quality. Cooperation with

other companies from different fields can attract customers form different groups. For example,

the game developed by Sims and H&M spread the reputation of H&M among people who are

game players.

At last, the promotion activities of H&M reveal a high ability of quick response and overall

consideration. Because H&M outsource their production in order to cut cost, they are criticized

for squeezing workers' payment. According to this criticism, H&M takes a series of action to

respond. They appoint watchdog to look after the working condition, and conduct protection for

environment to raise brand image. Those promotion activities are generated through interaction

with customer or the entire society rather than just came up by themselves. So, those approaches

serve for different purposes.

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Place

The features for H&M coordination are simplicity, reliability, and transparency (H&M, 2010).

H&M design clothes and outsource it. Basic goods are made in Asia, while fashionable goods are

made in Turkey. Instead of owning factories, H&M chooses to own outlets. There are over 2000

stores all over the world. Merchandise produced in Asia continent that are transported almost

exclusively by ocean for the sake of low cost. Within Europe, The rail is the commonly used

transport. More than 90 percent of all transports are done via ocean, rail, or road. Air is rarely

used except faster deliveries are needed. The aim of these choices is to reduce cost. The

realization of H&M's business ideas relies on the success of their distribution strategy. As

Larenaudie (2004) asserts lightning turnaround is the reason for the success of H&M.

H&M distribution channel is direct distribution, from producer to customers. By cutting middle

transaction, it reduces cost and assures quick delivery, which echoes the concept of fastness and

economy. Jobber (2007) suggested that channel selection is affected by producer, product, and

competitive factors. H&M choose to sell clothes and cosmetics in around 2,000 stores which

belong to H&M. Store selling, on one hand, assures basic access to customers and helps the

command from headquarters go to outlets efficiently and correctly. Because the inventory for

H&M is refreshed every day (H&M website, 2010), direct command is important for correct

adjustment in more than two thousand stores. On the other hand, controlling so many stores

gives rise to the managerial cost. Besides stores, H&M starts to launch online sale in several

areas. It was suggested that well-known fashion retailers have advantages of their brand to attract

customers (Marciniak and Bruce, 2004). Therefore, it is beneficial to take the initiative to launch

online shop. And This step could satisfy online customers and complement the shortcomings of

store sale.

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IMPLEMENTATION PLAN In 2017

First of all, the retailer is also set to announce a new freestanding chain by years end, with the

first stores opening in 2017. The second main point is that because industry excess,

environmental accountability and humane labor practices are in society, H&M has refocused on

sustainable practices by joining in World Recycle Week soliciting unwanted, used, or damaged

clothes for recycle or refurbishment and incentivizing consumers with coupons for contributing.

Its Conscious collection uses recycled fabrics and more sustainable manufacture. Also, H&M

joined the World Wildlife Fund on World Water Day in a five-year pledge focused on water

stewardship, climate action, and the fashion industrys broader sustainability challenges. Thirdly,

H&M ranked the second-largest global clothing retailer and firmly established in Western

Europe, so H&M plans to open stores in up to five new markets by 2017, aggressively pursuing

legacy brands with a marketing savvy tuned to pop culture and social trends.

APPENDIX

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3 Global Apparel Retail. Global Apparel. N.p., n.d. Web. 15 Mar. 2013

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6 H&M Hennes & Mauritz AB. Reports. N.p., n.d. Web. 15 Apr. 2016

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