Q1. To what extent is H&M market oriented? What evidence is there in the case to support your view?
The H&M Company has recently made a great impact in the retail clothing sector via innovative approaches that have expanded its market prevalence throughout Europe, America and other nations . The company possesses a known reputation in terms of offering consumer satisfactory products (Brassington, 2000).
The company uses integrated marketing as a strategy for their market orientation. The approach involves having a united purpose for working in the firm which is delivering the organization’s objectives. For H&M, its departments work in achieving the company’s goals and objectives thus delivers a unique market identity. The company has sustained this objective despite the numerous market challenges. All the employees working in the firm are driven towards realizing the common goal of H&M through addressing customer needs. Not only does this marketing need a united system, but also its resources have to be in accordance with the company’s goal. It means that all the available resources are designed to aid the manpower to achieve their objectives.
The products that the company deals with are modern in the fashion market. The idea of these fashionable goods is that they are quick money. They are sold easily to the consumers thus creating a sustainable demand in the market. To ensure that there is a characteristic of fashionable products, the firm sends its agents to conduct the study. For instance, H&M sends an agent Anne Sophie Johansson out in the streets to conduct a research on the preferred line of products to attract consumers. It is this action that enables the company to produce clothing that meets the changing needs of the market. The studies are not based internally, but go further to other nations thus gives the company an extended scope of creation.
The fact that they carry out fashion and market research in other countries is a strategy that sells their production across borders. Just recently, the company extended its business to other continents like Asia. Achieving an international market is significant for the firm’s success. The organization has acquired a recognition that attracts the external market; this is both secondary and primary consumer market. Besides having the demand from the nation, the company sells its products to external customers. They form a firm anchorage on the sector as both internal and external interactions facilitate their realization of organizational goals.
The consumers and producers need to have a close relationship. H&M goes further to send emissaries who collect the general opinion on the production trends and suggestions. It is an important act that the consumer feels as a part of the organization’s creation. It is through this initiative that the relevant goods are produced thus reducing losses in production. Some items might become dead in the market thus reducing the potential for business profitability. This concern is extended to other producers of the same line of business. H&M observes other creations in the market in order to establish their unique quality and creations (Palmer, 2000). Production of similar products is fatal to production and they stall the flow.Monitoring the fluctuations in the market for H&M is another market strategy. Through this action the company can prioritize its production in terms of the line of products. For instance, after noticing that there was a reduction in the sales of clothing for men, they removed a line that did not meet market needs. The line was not popular and did not offer perspective production rates in demand. Removing the line gives the firm a reduced strain for the resources available. This pressure release enables the organization achieve more prospects in realizing its objective. In cases of market increase in demand, the company reacts by replenishing these stores. They ensure that there is a constant supply of the needed items thus maximizing on market demand. For example, in Paris the Boulevard Haussmann receives a minimum of three trucks carrying clothing a day; this is due to their high demand (Brealey, 2003).
Market orientation is how well the company or organization is established in meeting the needs that are hidden for better market shares. This method is mainly in form of philosophies or approaches that cater these needs. The company H & M is designed to conquer the contemporary market through the adaptive measures in marketing. The market strategy in this area is oriented onto administering productivity thus profitability of the organization. This orientation is the key aspect to the company’s success in the market sector. Through keen and appropriate measures the administrative body to the firm used several strategies to enable the ethics of marketing be fully realized.
These strategies involve the products diversity. This has to do with the extent and wideness of the products produced in the company. It involves a selection of products that satisfy consumers’ needs in terms of age, quality, gender and fashion. To explain this aspect is that the market is made of various reasons for selection like elegant, exotic or conservative. Consider a number of fifteen year old children looking for clothes that suite their age and environment. These needs vary from their male counterparts and their parents. It is appropriate and advantageous for the market line to be satisfactory to the consumers. H&M Company has achieved this aspect because they are able to produce goods that are specifically designed for the children and adult consumers.
Production of the products for H&M Company is allocated to a group of individuals. This group is required to have members of an average age of thirty. It is vital that the designs be of great quality thus easy marketability. This age accounts for the average creativity for the designers shuts great and new market designs. It maintains the company’s great reputation in offering new varieties in the market.
The price for these company’s products is ten dollars. It is convenient for the consumers to subscribe to a company that offers cheap high quality products. Addressing the ratio of pricing and profits requires great expertise thus the company has a dedicated team of analysts that is purposed to estimate the trends that gives their recommendations to the company (Brealey, 2003). For H &M company, their analyst is Nathan Corkrell who is a retail analyst responsible for H&M cheap line of products especially their clothe line. It is an achievement because many organizations have not sustained due to market pressure. The market comes with a lot of periodical needs that need addressing.
Market experience is vital in the success of organizational objectivity. This is in terms of addressing the contemporary issues in fashion and consumers. An early establishment in the corporate gives an advantage in how business issues are handled. For this company, their establishment in the year 1979 has enabled them have an upper hand. Looking at the statistical analysis of this company, their progressive gain has been exponential since its creation. Asmany companies struggled to realize profit after taxation, H&M company recorded a value of 1.7 billion for pretax in the year 2008. This achievement is surprising considering that its principles are a risk in the market. The next year gave the company an increase of ten percent in their annual sales assessment. This is a European giant in the business market.
Q2. Identify and discuss the bases for segmentation that H&M adopts. Explain the benefits and risks associated with the practice of segmentation.
The practice of segmentation in marketing is vital in business prevalence. Segmentation involves addressing the necessity for customer satisfaction through satisfying their needs and carting for other hidden ones. This strategy involves working in focus of the dedication of resources to vital area of production. For H&M they concentrate their employee and resources in meeting this need by using their resources for one cause. A company selects a particular product so that they can easily create practical strategies and make decisions that aim at maximizing in the area. This is due to the coherence that follows unifying the resources in one direction. The behavioral if its customers are thereby put into a more keen position.
Segmentation is applicable in reducing competition. The approach is through production of goods that are far from those of other organizations through beret quality or pricing (Brassington, 2000). Another way is by achieving a loyalty form the customers so that the introduction of other items in the market does not affect them. The customers remain dedicated to the company’s production thus sustaining their profitability. It is this type of segmentation that helps H&M prevail in spite of the competition in the industry. For this company they have achieved both approaches thus giving them double assurance against competition. They offer unique product lines that pull the customers’ interest thus they still subscribe to H&M. On the other hand they have an amazing pricing for their products that sells their loyalty to the company. In order to reach the reputation of H&M in market, the loyalty of the customers should be challenged. In the current business sector low prices do not appeal to many organizations. They find it hard to maintain market shares with little profits thus H&M exploited this strategy on solid grounds.
Segmentation enables the company select a target audience for their customized services and products. A company streamlines a line of products after identifying that a group of customers are interested in it. The resources are thereby dedicated to moving this line of items to the selected audience in this case the efficiency is increased. H&M (through segmentation) strives to focus on a customer and give them the expected results in terms of basic and secondary needs. A group will need a line of clothing that caters for their age, religion and gender. The result is an increased sales margin and there is little production wastage. For instance, when customers demand a line of clothing for catering, H&M focuses its resources on the production of these products that are more likely to sell better. The company has a line of clothing that is designed for the females aged between fifteen to thirty .
This strategy creates a distinct and unique brand image that features the respective market audience. Being an international company, H&M is expected to offer a wide range of lines that is attributed to groups of consumers. In spite of having the needed goods in all international outlets, they are expected to retain their cheap prices whatsoever. Organizational analysis gives a four per cent dedication to their market. This great contribution is designed to exploit the market needs. These segments form an important practicality in terms of establishing precise and vivid advertising messages and promotion altogether.
Segmentation brings the producers and consumers close in relationship. The organization endeavors to cater for the needs of its customers (Palmer, 2000). This keen dedication forms a closely related interaction between the customers and the company. H&M uses this strategy to win order to supply their customers with the requested line of clothing. The relationship creates loyalty and innate dedication of the customers to the company’s services and products. Opinions about product improvement are collected and assessed in order to acknowledge the needs of the market.
The organization creates virtuous loops between the information in the design process and that which is at hand. This manipulation is helpful in meeting these needs of the customers. This process also addresses the concern of the anticipated trends in the line of clothing hence building a stable foundation in beneficial market deliveries. In this approach the loyal customers are thus catered for. Many organizations fail to sustain their old beneficial demands, but concentrate on meeting new needs thus lose. The dedicated old line of clothing should not be ignored as long as it is still productive in sales. For H&M they retain the old demands and also address the new needs.
Q3. What are the marketing benefits to H&M of commissioning Karl Lagerfeld, Stella McCartney and Matthew Williamson to design limited-edition clothing ranges?
These names are of celebrity figures that are popular among many individuals in the world. This is a strategy by the H&M Company to conquer the market. When a line of clothing is tied to a brand through the celebrities it offers a limited and exclusive product collection. H&M uses this strategy to create a message of elegance and luxury in the collection. The company still retains its cheap prices despite their limited production. It is such a strong message that the consumers acquire an interest in thus acquire the products. When the customers decide to purchase these collections they are satisfied that the low prices do not compromise the quality. For instance, a line of clothing is priced at ten dollars while the brand is unique and trendy; the consumers appreciate production through buying. In this case H&M is able to have an exponential graph in profitability. This collection of limited products creates a dedicated group of buyers who consistently buy from the collection.
The company is able to associate its production prestige to high quality brand designers. Their immediate result of this action is that the designers offer vital knowledge to the company. For instance, they can provide information that is a key in techniques and types of designs. This information is used in making favorable lines of clothing. The company also uses a group of individuals to promote the line through campaigns and buzz, this is vital for sales improved on a dormant product and extended profits on popular items (Brealey, 2003). The perception of buyers is altered when these groups comment on the items as an external influence in motivation. The brand therefore, tends to appeal the customers.
The association that H&M puts on the clothes through these designers is a strategy to attract the mindsset of buyers. The products are in two categories whereby the high quality items are given a fairly higher price, but more affordable than the regular products. The fact that they are considered of high quality the company makes profits in the sales. For instance, H&M leveraged partnership thus charged higher affordable prices for its designer products. Consumers did not respond negatively, but the recorded sales gave increased sales in production.
These benefits are realized by both the company and the consumers; therefore, H&M benefits its customers. In spite of the current economic challenges that face the society, there is mutual benefiting. It is considered advantageous that the company and its customers are satisfied. For instance, in pricing, the clients are catered for as they find affordable prices while the company gets profits in return. H&M managers claim that the organizational approach in marketing has pit fashion at another level because it is achievable. For instance, H&M got involved in the brand called Versace, where they ranged from a price of thirty to four hundred dollars and this is if to compare to the normal pricing of two thousand nine hundred dollars for anitem - in H&M four hundred dollars.
Q4. What marketing challenges are likely to face H&M in the future?
The sales of H&M have dampened as a result of the crisis in European economy. The customers oof the company have reduced on the amount of money for these (clothing) needs. This reduced the rate of buying due to austerity. More so the coming year is not of interesting prospects as they estimated minimal economic gains. This is because the economy would not have recovered yet. This reduced the demand in the market thus reduced production levels.
Another issue is the risk of a price race down by the retailers. H&M Company has opted to cut down on its production. The outlets for this organization show little stocking. The resources in the company are not exploited to create a line that would not sell quickly to the market. This is because when there is a short in the expectations there develops a need for price reduction. H&M counters this market challenge by cutting on production of collections and other products. In this way they avert the loss through a reduction in price margins that would affect loyalty and profitability of the organization to customers (Brealey, 2003).
Demography offers another threat to H&M in terms of market target. This company mainly serves America and Europe; in this case, the young population is the main audience. There is shrinkage in the ratio of youth in both continents. This means that the reduced number of young consumers might alter the company’s production. For instance, Europe offers a larger number of customers, but has a rapidly reducing market force. For Europe, its rapidly reducing youth population is expected to reduce further due to the slow population growth in the nation. Principal sectors like national economy will be affected. The increase in older generation population is threatening H&M’s market of young ladies and men. The consumer market for the youth will tremendously reduce thus affecting production.
The lack of an independent manufacturing ability is a weakness of the company. The firm relies on being supplied by other external organizations (Palmer, 2000). This denies H&M its control over the costs of production. The determination of prices is dependable on the cost of production, as the costs rise the prices will increase too. H&M incurs an expensive cost that would be avoided if the organization had its own manufacturing unit. This would be beneficial to the customers because the prices would be relatively lower. The firm experiences delays in supply that affects the image of the supplied brands.
Offering advertisement on-line is steepened in that competition. The competition is toughened because there have been organizations that are more dominant in the area. They would have an advantage over H&M. An example of such a firm is Laredoute which is found in France that has a stable basis in on-line marketing compared to H&M. These firms attract large demands that are considered cheaper in bulk; the trendy and high quality products are thereby ignored.
The H&M Company has recently made a great impact in the retail clothing sector through innovative approaches that have expanded its market prevalence throughout Europe and other nations like America. The company H&M is designed to conquer the contemporary market through the adaptive measures in marketing. The market strategy in this area is oriented at administering productivity thus profitability of the organization. The consumers and producers need to have a close relationship. H&M goes further to send emissaries who collect the general opinion on the production trends and more suggestions. It is an important act that the consumer feels as a part of the organization’s creations. Monitoring the fluctuations in the market for H&M is another market strategy in orientation. Through this action the company can prioritize on its production in terms of the line of products.
The practice of segmentation in marketing is vital in business prevalence. Segmentation involves addressing the need for customer satisfaction through satisfying their needs and carting for other hidden needs. This strategy involves working in focus of the dedication of resources to vital area of production. A company streamlines a line of products after identifying that a group of customers are interested in it.
When a line of clothing is tied to a brand through the celebrities it offers limited and exclusive product collection. H&M uses this strategy to create a message of elegance and luxury in the collection to make favorable lines of clothing. The company also uses a group of individuals to promote the line through campaigns and buzz, this is vital for sales improvement on a dormant product and extended profits on popular items (Brealey, 2003). In spite of the current economic challenges that face the society, there is mutual benefiting. It is considered advantageous that the company and its customers are satisfied. For instance, in pricing, the customers are catered for as they find affordable prices while the company gets profits in return. The association that H&M puts on the clothes through these designers is a strategy to attract the mindset of buyers.
The sales of H&M have dampened as a result of the crisis in European economy. The customers of the company have reduced on the amount of money for these (clothing) needs. This reduced the rate of buying due to austerity. Demography offers another threat to H&M in terms of market target. This company mainly serves America and Europe; in this case the young population is the main audience. Offering advertisement on-line is is steepened in that competition . The competition is toughened because there have been organizations that are more dominant in the area.