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IBM Group 18

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Tsui Ho Suki

on 9 January 2015

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Transcript of IBM Group 18

H&M(Hennes & Mauritz AB)
How does management at H&M use global branding and global product development to create and offers its fashions?
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?
International Marketing Success Story
How does the firm use the marketing mix elements to market its offerings around the world?
What are the characteristics of H&M's gobal market segments? How does H&M position itself in the minds of target customers around the world?
Increasing, H&M targets emerging marketing like China, Russia ,and Saudi Arabia, which are often characterized by distinctive cultures,lower income , and inexperience with leading-edge fashion.
Thinking in terms of marketing program elements, what can management do to ensure H&M succeeds in these markets?
1.Hire local model or sponsors celebrities to promote theirs products
2.Set up an official account in social media
3.Provide a personal shopper
Global branding
It decided to design

the masstige products.
maintaining efficiency and flexibility
throughout its supply chain,
H&M is able to
respond quickly to changes in fashion trends.
The H&M brand symbolizes
“fashion and quality at the best price”
The business idea is clear: it stands for
simple, stylish fashions offered at popular prices.
How does management at H&M use global branding and global product development to create and offers its fashions?
Executives at H&M attract publicity
using bold and striking advertising.
enlisting high profile designers

celebrities to reinforce the company’s brand and image .

Clothing collections

are designed and manufactured quickly, are affordable
are aimed at mainstream consumers.

They can
let H&M be a pioneer of “fast fashion”.
H&M has ensured that
stores enjoy a steady
flow of customers by:

attractive prices
a broad range of fashionable collections which are renewed frequently

a strong presence in prime shopping locations
H&M’s shop online is
vailable in 13 markets, including the US.

Promotion :
advertising campaigns
show the season’s designs and
the price of the clothes pictured
to the customers of the world.

Marketing Mix
a Swedish multinational retail-clothing company
 ranked the 2nd largest global clothing retailer
116,000 employees
 known for its fast-fashion clothing
The company's founder: Erling Persson
First shop is opened in Sweden called "Hennes", which exclusively sold
women's clothing in 1947
In 1968, he acquired the hunting apparel retailer Mauritz Widforss, which led to the inclusion of a menswear collection in the product range and the name is changedto "Hennes & Mauritz“
 Today there are 3,500 stores in 55 countries

Comprises six independent brands:

Fashion and quality at the best price

in-house design
no middlemen
large purchasing volumes
buying the right products from the right markets
efficient logistics
cost-consciousness in all parts of the organisation

Emphasizes fast turnaround
From design to store shelf in 3 weeks

Ensure the best price by:

Marketing Strategy
Low price
Large range of Crossover

-even luxury brands which lead the fashion
-eg.Marni in 2012
Versace in 2011
Lanvin in 2010

Expansion Strategy
Target: increase the no. of stores by 10-15% per year
Grow with quality, sustainability and high profitability
Grow in new, existing markets and even online

More than 100 in-house designers(guest-designer)
Unique strategies to reach target market
Localization tastes
Provides substantial guidance global strategy , while store managers localize tactics to their market

Marketing point

Prices are usually lower
More than 700 independent suppliers via twenty production office
Careful cost control and management of lead time
Ensure right product get to right store at right time
The ability to take a garment from design to store shelf in three week

Rapid Response Retailing

Q4c: What factors drive management to adapt offerings in particular markets?

Q4b: What advantages does H&M gain from Standardization?from Adaptation?

Target market

How does H&M strike a balance between standardization and adaptation of its marketing program?
Product are 80% the same for all market, 20% adjust by local manager

Case study Summarize
Avoid international price escalation
Try to shorten distribution channel
Try to move production or sourcing to cheaper region
e.g. OPT in 1980s, move factories to eastern Europe

Depreciating home currency-> maintain normal price level, expand product line or add more costly feature
Appreciating home currency-> consider lowering the price, try to reduce production cost by eliminating costly features

Managing Price under varying Currency

Eliminate pirate lawsuit

Collect old, unwanted clothes, and reward customers with discount
The usable clothes will be sell as second hand clothes
The unusable one will be recycle as textile fibres, or are used to manufacture products such as damping and insulating materials for the auto industry

CSR-Environmental protection

Increase cost-> salary for legal team, reparations

Badly influenced brand image-> copy cat
H&M should try to eliminate piracy
Benefit to customers
Increase brand image
Thus increase product value

Results in waste
Environmental unfriendly
Create a recycle program
Fast fashion lifestyle creates a vast amount of unwanted clothes

Hard to make the profits from them
The cost of manufacturing will increase as it only include a small amount of wealthy people.

High-income class
It’s unpredictable for H&M to estimate the numbers of potential consumers from this group.
The potential risk is higher than low-income class.

Middle-income class
Low-income class
The cost of manufacturing will decrease as the numbers of group is large.
H&M can use the market penetration pricing to attract the consumers.
The probability of making the profits is higher than the other two groups.
H&M can set the attractive price to keep and win the loyal customers
Demographic Segmentation: Income
Psychographic Segmentation: Lifestyle
Interests in fashion design of clothes
The consumers will want to know more about H&M as its products really meet their needs.

Cut cost
By reducing lawsuit expense
Can reduce the price of product
Example: Apparel in Tokyo are same as Europe, but presentation is different

The low-income class which interests in fashion design of clothes
H&M // Masstige Products
a broad range of fashionable collections which are renewed frequently with the famous designer in the world.
Brand and product:
Unique superiority
4. Adapt the culture in different countries
Different culture will affect different consumption habit
The advertisements that it produce
are largely identical in all of its markets

Product value increase
feel like they are doing good things to the environment

Benefit to customers
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