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H&M: International Marketing Success Story
Transcript of H&M: International Marketing Success Story
What are the characteristics of H&M's global market segments? How does H&M position itself in the minds of target customers around the world?
H&M Hennes & Mauritz AB is a Swedish multinational retail clothing company.
In 1968, Erling Persson bought Mauritz Widforss, a hunting and fishing equipment store where the sales of men's and children's clothing began. The company name changed to Hennes & Mauritz.
1974: H&M is listed on the Stockholm Stock Exchnage
1976: The first store outside of Scandinavia opens in London, in the UK.
1977: Impuls stores, focused on teenagers, are launched.
1990s: Newspaper and magazine advertising is complemented by outdoor advertising featuring famous models. In 1998, online shopping begins.
Founder: Erling Persson
Got the idea following a post WWII Trip to the U.S.
Company was first established in Vasteras, Sweden in 1947 under the name Hennes.
At the time it only sold women's clothing.
Eventually Persson's son, Stefan took over the position as the Managing Director
Currently. Stefan is the Chairman of the Board.
2000s: The first U.S. store opens on 5th avenue in NYC. H&M initiated designer collaborations.
H&M begins to experience a major expansion of online and catalog sales.
The first stores in the Middle East open via franchise.
2007-Present: H&M expands Worldwide.
2,629 stores in 53 countries.
As of 2013, H&M employs around 116,000 people.
Second largest global clothing retailer; falling behind Inditex (Zara parent company) and beating U.S. based GAP (#3).
Current CEO Karl-Johan Persson, grandson of H&M's founder
H&M has six individual brands
COS, Monki, Weekday, Cheap Monday, Other Stories, and H&M
H&M does not own any factories, but instead works with 900 independent suppliers. Mainly in Asia and Europe
The company's growth target is to increase the number of stores 10-15% per year, while also increasing sales. This growth is entirely self financed
Right now, H&M online shopping is only available in the U.S. and several European countries, the company sees potential for online sales in all markets
H&M's business concept is to offer fashion and quality at the best price
Our 7 Commitments
Provide fashion for conscious customers
Choose and reward responsible partners
Be climate smart
Reduce, reuse, recycle
Use natural resources responsibly
How does management at H&M use global branding and global product development to create and offer its fashions? How does the firm use marketing mix elements to market its offerings around the world?
Answer: Global Branding
H&M operates a worldwide marketing strategy, with the concept of having good quality clothes at a low price.
H&M's global market segment includes men and women of all ages who are interested in "fashion and quality at the best price".
H&M emphasizes innovative styling for fashion forward people.
H&M Global Product Development
In house designers
Uniformity throughout global brand
H&M positions itself by emphasizing a uniform global brand so that customers worldwide have similar shopping experiences.
H&M designs its stores in a fun & colorful way to attract their target consumers. They also use print advertisements, social media, and celebrities to attract customers.
Example: Apparel in Tokyo & Europe are the same, yet presentation is different.
H&M Marketing Mix
Advertising with Celebrities and famous models
Use of music in advertising
In terms of marketing program elements, what can management do to ensure that H&M succeeds in these markets?
A key aspect of H&M's strategy is to provide value to customers by maximizing perceived product benefits, minimizing prices, or both. Given this, how can H&M further increase the value of its offerings to customers? That is, what steps can management take to increase the benefits and reduce the prices that its customers encounter when shopping for H&M products?
Adapting to each specific country's market is the solution. Consumers in different countries have different wants and needs. Some marketing elements that management could focus on: income levels, cultural differences, and fashion preferences.
the company HQ emphasizes uniformity, but also local adaptability
Individual Store managers can adapt pricing, advertizing, and product range to suit local conditions
How does H&M strike a balance between standardization and adaptation of its marketing program? What advantages does H&M gain from standardization? From adaptation? What factors drive management to adapt offerings in particular markets?
H&M strikes a balance between standardization and adaptation of its marketing program by using an overall worldwide marketing strategy and tailoring this strategy with local elements. It is careful to upkeep its worldwide brand while also altering to ensure success in the different countries.
About 80% of the products that H&M produces is standardized and the other 20% is left to allow for adaptation of the markets in the areas such as climate or culture.
An advantage of standardization is brand awareness.
H&M has good quality clothing at an affordable price.
Also, by keeping the products standardized, H&M can keep product costs low and marketing efforts can be more streamlined.
An advantage of adaptation is that you can meet the needs of your target market and therefore better compete with competitors.
It also helps for companies to respect the values and customs of the countries.
A factor that drives H&M to adapt their offerings in different markets is the cultural differences among the countries that H&M is in. H&M has guidelines for their advertising and then each country can use these guidelines to develop the ads to tailor it for that market's preferences.
For example, in Saudi Arabia women are expected to the modestly dressed. When marketing to this country, H&M uses models that are well covered from head to toe.
On the contrary, in the United Kingdom where the population is not as modest, the models are seen wearing items that are very form fitting as well as more skin is showing.
H&M also adapts to the trends in the different countries and this also helps to attract more customers.
To increase customer benefits, H&M should offer a rewards program for customers who purchase and recycle their clothes at H&M.
To reduce prices, H&M can minimize their distribution channel and try to find low priced distributors. They can also try to cut the cost of marketing and value-chain activities.
H&M in China
Growth in Asian markets is a great opportunity for H&M.
With an increasing middle class, increasing disposable income and western taste leads to growth.
China will make up 30% of the worlds fashion sales by 2017.
H&M announced that sales in China have been exceptionally strong, and net profit rises 22%.
H&M had 170 stores in China in Aug 2013. They look forward to more expansion in China.
H&M in Russia
"H&M is thrilled to expand into a new fashion oriented market such as Russia, and we are pleased to say we have now arrived in Moscow" says the CEO of H&M. "Russia is an exciting market and we see great potential for expansion. H&M looks forward to bringing style conscious shoppers in Moscow the inspiration to make their own personal fashion statement."
H&M Saudi Arabia
Larger households than Western European households
Very strong shopping mall culture
H&M uses more pictures than text when advertising in this region
In order for H&M to successfully market in the Middle East they stress the importance of marketing more conservative images because of the cultural value differences. The only other adaptation H&M has made here is to their climate. They have seen great success in this country
H&M's target market for this region of the World is families, high fashion for women, men, teens, and children. They also have online store presence here and offer the same low prices as the U.S.
H&M has 51 stores in Russia
H&M is the second largest global fashion brand in the world.
Its global market segment includes women and men who want both fashion and quality at a low price.
H&M uses a uniformed global brand so that customers can expect to have similar experiences at any H&M in the globe.
With the use of celebrities and music,
H&M should consider starting a rewards program for customers to increase customer benefits. They should also consider selecting low cost distributors to reduce prices.
To balance between standardization and adaptation, H&M deploys a worldwide marketing strategy and then make minor changes to this strategy depending on the country. This allows H&M to keep product costs low and create brand loyalty while also appealing to their target market.
Adaptation is a big way to ensure that the marketing strategies used is tailored to each market.