Marketing and Pricing Report

Part 1

Brand identity

H&M brand is well known internationally and a leading fashion retail in the world. It is perceived as a strong brand that delivers a credible, clear, and memorable message. The brand connects its targeted audience at an emotional level. Shaw by summarizing the work of many others claimed that it reinforces the buyer’s loyalty and motivates them (40). This is accomplished through a number of branding elements. The name “H&M” represents Hennes & Mauritz. By using letters rather than full names, it maintains it simple but a bit mysterious. The logo is simple and comprises of two red letters (H and M) with a sign “&” between them. H&M is customer centric and the primary objective always to exceed the expectations. From all round the world and of all ages, customers have different expectation, dreams, and styles, and are aware of their fashion choices; H&M serves as a source of continuous inspiration to them. It is tentative and offers the best combination of quality, fashion, and price.

 

The H&M logo; Source (Smith, 20)

 

 

Market

The target customers of H&M are young adults and youths of both sexes. Customers are segmented according to their locations with different regional preferences. Preferences between markets and regions vary significantly, as customers are segregated into more specific niche groups. There are also variations in perception of the products and people originating from different locations (Smith, 300). For instance, Italians and French are recognized to be more stylish and fashion-forward than the British or Germans.

 

PESTEL

H&M is an international brand thus it is influenced by political factors in different countries. It is important to note that different countries have varying tax policies, labor laws, trade restrictions, and business regulations among many others. The political stability also affects the business operations. According to the research conducted by Kotler, it was revealed that despites the fact that the company has maintained a competitive pricing strategy; it is exposed to economic shocks because of expanding in very many countries (50). Currency rates fluctuations, inflation, and interest rates make it difficult for multinational companies to operate in a stable pricing scheme. Changes in import laws, import duties, and taxes across the world make it hard to source at catalogue price.

H&M targets to serve customers from all income groups. The company offers a   variety of products at friendly prices to suit customers from all incomes groups. The focus is to ensure that consumers are getting value for their money. The brand takes into account the fact that the consumer’s tastes and preference keep on changing (Oeppen and Jamal, 930). In this regards, the company is innovative and keeps on developing new products now and then. Technology has played an important role in helping the company to stay updated. In every season there are new trends come in the fashion industry not forgetting that H&M is in catalogue business thus it needs to stay one season ahead of what stores are offering (Smith, 30). For instance, if it is in winter, summer collection should be in progress.

H&M is a giant retailer thus it is always in spotlight implying that it has to be careful with its actions, especially how they affect the environment. Its factories follow environmental laws (Foxall, 214). The company is keen to ensure that all its suppliers are adhering to national laws in the areas it operates.

Marketing mix

The success of H&M can be associated with its marketing strategy. The marketing mix of the company combines to position its product better in the market. However, it also faces fierce competition from Zara and Uniqlo.

7Ps marketing mix of H&M, Zara, and Uniqlo

Product; H&M  is a trusted apparel with offers a range of products including accessories and clothing like basic jumpers, jersey dresses, vest, pants,  fashion shirts, undergarments, cardigans, jackets, shoes, jewelry, purses, and T-shirts. Zara is referred to as Coca-Cola of fashion. The company is famous for its ability to respond to the changing needs and preferences of the consumers by offering unique products. Uniqlo offer products, services related to fashion and clothing (Ramaseshan and Russel, 1240).

Place; H&M sell its products international and currently, it has outlets in over 55 countries across the world. Its factories are situated in Europe and Asia. At times the company outsources production process. Zara is a vertically integrated retailer implying that it does all the process involved in bringing the products to the market that is designing, manufacturing, and distribution. When it comes to manufacturing and distribution, Uniqlo targets the most convenient for target places for target customers.

Price; H&M apply a median pricing strategy, which suits every sphere of merchandiser and buyer. With this scheme, the sales volume keep on increasing leading to large revenue and hence profitability. Zara’s concept is to offer its products at reasonable prices, and then the consumers will find them affordable. Uniqlo focus on offering its products at competitive prices.

Promotion; H&M carry extensive advertising whereby it pays special attention to qualitative apparel image. It also uses celebrity endorsement, as the brand is associated with celebrities such as David Beck ham and Karl Lagerfeld. Zara has taken a unique marketing strategy “Zero investment in marketing.” The resources that would be used in advertising are utilized in opening new stores. Its marketing strategy is based on affordability, differentiation, experience, and exclusivity. In promoting its products, Uniqlo focuses on billboard advertising, internet marketing, and TV advertisement.

People; as explained by Francis, and Harral (114) all the three companies have employed competent people to execute the business operations thus customers get high-quality products and services.

Process; companies in the fashion industry have clearly defined process to avoid confusion and facilitate smooth functioning.

Physical evidence; all the three companies are international companies with their presence in more than one nation. To increase the accessibility of the products they have opened stores in different locations.

 

H&M SWOT analysis

SWOT analysis outlines both internal and external factors that influence the success of H&M. A major strength of the company is its presence in most regions as currently it has over 2300 stores in over 45 countries, increases accessibility to its products. It offers trendy and quality clothing at affordable prices. The company association with a number of designers and celebrities has played a key role in enhancing the brand awareness. There is no any single business without a weakness. The target customer base of H&M is influenced by changing macroeconomic conditions (Chuwiruch, et al. 85). Further, buying in large volumes can result to overstocking, forcing the firm to lower the already affordable prices. The company has highly invested (in capital and maintenance fee) as each segment has its own machines that are used to produce clothing (Khankaew, 30).

Among the opportunities available to the company are online shopping has gained a lot of significance over the last few years, the emerging economies support the expansion plans of the company and H&M is well positioned to tap the market niche in organic apparel (Gilligan and Wilson, 30). The company position is threatened by high competition with a major competitor being Zara and Uniqlo. The high rate of unemployment in some of its target segments are affecting the consumer spending.

Source; (Hutt and Speh, 247)

Conclusion

From the above analysis, it is clear that H&M stand a good position in the market. It is correct to conclude that the brand has what it needs to take it to the next level. Considering that the customer preference and needs in fashion industry keep on changing, most important thing is to move with these trends.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Part 2

Marketing and pricing strategy of the new product

Club and cocktail dress

In the current fashion market, club and cocktail dresses are in high demand. H&M can satisfy this market niche if it comes up with the right garment. Most of young adults and youth like attending parties and going to clubs. They need to wear something different from what they wear during normal occasions, and they need to show their worth by wearing impressively and looking attractive. By targeting females (specifically aged between 18-35), the likelihood of the company to succeed will be high because their consumption level in clothing and accessories is higher compared to their counterparts (Hutt and Speh, 247). It is important to note that when they are making the decision to attend social places, they do not do it abruptly, but they take their time to plan. They are willing to spend high, starting from clothing, transport, foods, and drinks.

Supply chain

For H&M to succeed in selling the new product (cocktail and club dresses), they should be supplied based on the trends of the consumers. The supply chain should be highly responsive. To facilitate this, factories should be situated near the target markets. After designing, the product should take the minimum possible time to reach the stores. As explained by Francis and Harral stock out in the outlets will give the target customers an opportunity to look for the product in their competitors (20).

The marketing mix

It is important for the company to use the appropriate marketing strategy to position the dresses in the market. This involves paying special attention to  the 7Ps (Chng, et al. 630). H&M should focus on selling dresses of high quality, inspired by the latest fashion in the market for unbeatable prices. The pricing strategy should be based on the needs of the customers that is- high fashion and low price. Having identified and understood the target audience, H&M should use a multi- channel promotion strategy that includes internet promotion, advertising, and sales promotion. Over the past, the realization of the company business ideas has depended on the success of its distribution strategy. The dresses should be sold in friendly and welcoming stores characterized by a large variety of choice. H&M invests a considerable amount of money and time in training the employees to ensure that customers are satisfied with their products and services. The purchase process in the stores is basic.

Retail price

The cost price should range between 20$-35$ depending on factors such that the material used and design. Considering the company offers its products at friendly prices the markup should be 15 percent implying that price exclusive of VAT should be 23$-40.25$. VAT varies across the countries. Thus it is reasonable to assume an average of 16 percent. With this, the retail price will range 26.68$-46.70$.

Conclusion

The success of H&M in introducing the new product successfully highly relies on its marketing strategy. Although there is already a market niche, it is vital for the company management to consider that there are other players in the market (Griffith and Hoppner, 30). The new dress has potential to boost the company revenue and hence profitability. Its association with H&M brand is an already established, its association.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Work cited

Chng, Daniel, et al. “Managers’ Marketing Strategy Decision Making During Performance

Decline And The Moderating Influence Of Incentive Pay.” Journal Of The Academy Of

Marketing Science 43.5 (2015): 629-647. Business Source Complete. Web. 9 Dec. 2016.

Chuwiruch, Nasi, Prathanporn Jhundra-Indra, and Sutana Boonlua. “Marketing Innovation

Strategy And Marketing Performance: A Conceptual Framework.” Allied Academies

International Conference.Academy of Marketing Studies.Proceedings, vol. 20, no. 2,

2015., pp. 82-93http://search.proquest.com/docview/1764885744?accountid=45049.

Francis, Robert, and Paul K. Harral. “Building An Experience.” Fort Worth Business Press

(2016): 20. Regional Business News. Web. 9 Dec. 2016.

Foxall, Gordon. Strategic Marketing Management (RLE Marketing). Vol. 3. Routledge, 2014.

Gilligan, Colin, and R. M. S. Wilson. Strategic Marketing Planning. Amsterdam: Routledge,

  1. eBook Collection (EBSCOhost). Web. 9 Dec. 2016.

Griffith, David A., and Jessica J. Hoppner. “Global Marketing Managers.” International

Marketing Review, vol. 30, no. 1, 2013., pp. 21-

41doi:http://dx.doi.org/10.1108/02651331311298555.

Hutt, Michael D., and Thomas W. Speh. Business marketing management: B2B. Cengage

Learning, 2012.

Khankaew, Chularat, Phaprukbaramee Ussahawanitichakit, and Saranya Raksong. “A

Conceptual Framework Of Alternative Marketing Strategy And Marketing Outcomes.”

Allied Academies International Conference.Academy of Marketing Studies.Proceedings,

vol. 20, no. 2, 2015., pp. 1-

16http://search.proquest.com/docview/1764886371?accountid=45049.

Kotler, Philip. “Marketing Management, millenium edition: Custom Edition for University of

Phoenix.” (2012).

 

Oeppen, Jemma, and Ahmad Jamal. “Collaborating For Success: Managerial Perspectives On

Co-Branding Strategies In The Fashion Industry.” Journal Of Marketing Management

30.9-10 (2014): 925-948. Business Source Complete. Web. 9 Dec. 2016.

Ramaseshan, B., Asmai Ishak, and Russel P. J. Kingshott. “Interactive Effects Of Marketing

Strategy Formulation And Implementation Upon Firm Performance.” Journal Of

Marketing Management 29.11-12 (2013): 1224-1250. Business Source Complete. Web. 9

Dec. 2016.

Shaw, Eric H. “Marketing Strategy.” Journal of Historical Research in Marketing, vol. 4, no. 1,

2012., pp. 30-55doi:http://dx.doi.org/10.1108/17557501211195055.

Smith, Katie. “The 5 Things Making Zara And H&M Successful.” New Zealand Apparel 48.4

(2015): 28. Business Source Complete. Web. 9 Dec. 2016.

Smith, Brian. “Success and Failure in Marketing Strategy Making: Results of an Empirical Study

Across Medical Markets.” International Journal of Medical Marketing, vol. 3, no. 4,

2003., pp. 287-315http://search.proquest.com/docview/232099425?accountid=45049.

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix

Personal statement

The completion of the report has enhanced my skills marketing. After undertaking a market research, I have been able to improve my understanding of the importance of analytical tools such as PESTEL and SWOT model. For instance, along with PESTLE framework helping an individual to understand the underlying factors in the market, it is essential in predicting the macro factors the firm is likely to experience in future. SWOT framework has proved to be a useful tool in outlining the external and internal factors that have an impact on business success using for dimension including strengths, weaknesses, threats, and opportunities.

With reference to H&M brand, I was able to learn the value which brand adds to the company. I believe that an established brand can help the company to sell its new product. A large proportion of customers are loyal to famous brand thus if the company launches new products as long as customers are able to get the value of their money,   they are high chances the product will fetch a high number of customers. In the modern business world, the most important thing is to identify a market niche, then move on to provide solutions in best possible way.

I agree that the 7ps of the marketing mix are essential in placing the product in a strategic position. These include the product, place, price, promotion, physical evidence, people, and processes. This implies that every company should consider these factors, especially when they are planning to introduce a new product in the market.

 

 

 

 

 

 

 

 

 

 

 

 

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