Marketing in a Global Age

.................................................................................1.0 Executive Summary ! 2

.................................................................................2.0 Situational Analysis! 3

.................................................................................2.1 About the Company ! 3

........................................................................................2.2 SWOT Analysis ! 4

................................................................................................2.3 Why India?! 5

..............................................................................................2.4 Competition! 5

...........................................................................................2.5 Mode of Entry ! 6

.................................................................................................3.0 Objectives! 7

..................................................................................................4.0 Strategies! 8

............................................................................................4.1 Segmentation! 8

...................................................................................................4.2 Targeting! 8

................................................................................................4.3 Positioning! 9

..........................................................................................4.4 Ansoff Matrix! 10

.......................................................................................5.0 Implementation! 10

.........................................................................................5.1 Marketing Mix! 10

...................................................................................6.0 Monitor & Control! 13

...............................................................................................7.0 Budgeting! 14

...................................................................................8.0 Contingency Plan! 14

.................................................................................9.0 Recommendations ! 14

............................................................................................10.0 Conclusion! 15

......................................................................................................Appendix:! 17

Irfan Bashir Marketing in a Global Age ID: 3583591

1

1.0$Execu*ve$Summary

This is a Marketing plan of H&M Co. for expanding their operations to India and enter Indian retail market. The plan highlights the key factors and reasons for H&M Co. to enter India.Furthermore,the goals and objectives have been identified and the strategies have been framed and implemented to achieve these targets. Finally, the plan includes the control and monitoring process, followed by recommendations and contingency plan.


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2.0$Situa*onal$Analysis

This section of the plan focusses on the current position and situation of the company to determine if its capable of expanding to another country.

2.1$About$the$Company

H&M is a one of the major international fast fashion retailer,which has more than 2,200 stores in 40 different countries and a turnover of about €11.4 billion. (Mintel 2011)It was established by Hennes in Vasteras in Sweden in the year 1947,selling only women’s clothing. Later on,in 1968 Persson bought the store Mauritz Widforss in Stockholm and since then the company has been involved in selling both men’s and women’s clothing and hence the name was changed to Hennes & Mauritz. It started its expansion around 1980s. (GMID 2011)

Facts about H&M-

• H&M offer clothing,cosmetics,footwear & accessories for both men & women in around 2300 store all over the world.

• It is known for offering fashionable and quality products at best price.• Their collections are designed by around 100 of their in-house designers.• They offer online shopping in Sweden, Denmark,Finland, UK,Germany, Austria &

Netherlands.• It doesn’t have any factories,but it buys from goods from around 700 suppliers based

mostly in Asia and Europe.• It has around 16 production offices all over the world, mostly in Asian and European

countries.• It has about 87,000 employees currently.• Its recent turnover for the year 2010 was about SEK 126,966 million. (H&M Website

2011)(Source: Euromonitor 2011)


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2.2$SWOT$Analysis

Strengths (Internal to the Company)

• Strong brand name and market presence. H&M got substantial level of publicity in 2010 by collaborating with luxury designers like Lanvin,Sonia Rykiel and Versace.• Featuring fashion models in their advertising campaigns.

• Pricing strategy remains the main asset of H&M. Low pricing of H&M has enabled it to grow during the times of global recession.It has kept its prices low despite the increase in the price of cotton. (Annual Report H&M 2010)• Online presence and availability. It offers online shopping to its customers in some countries and plans to expand its online network to other countries as well. (Annual Report H&M 2010)

• Fashion for everyone. H&M has offerings for every age group at the best price and clothing is complemented by wide range of footwear, accessories and cosmetics. (Annual Report H&M 2010)

• Wide range of private labels. It has a wide range of private labels like L.O.G.G, Bib, Mama,Our Perfect, Divided. (Euromonitor 2011)

• Best store locations. H&M believes that the best business location is very crucial for expansion. (H&M Website 2011)

Weakness (Internal to the Company)

• Less focus on quality. Apart from it designer collaborations,H&M focuses more on low pricing at the expense of quality. (Euromonitor 2011)

• Less control on the production factories. H&M exercises very less control over its factories since it relies on outsourcing. (GMID 2011)

• Weak Competitive positioning. H&M faces a problem due to the increasing competitiveness from value retailers and the exclusivity of premium luxury brands. (Datamonitor 2011)

Note: Opportunities & Threats continued in Appendix


4

2.3$Why$India?

According to Euromonitor, H&M should focus on expanding their operations to India and these two countries are expected to be the most rapidly developing and growing in clothing and footwear retailing in Asia Pacific. The predicted CAGRs of India and China is 12% and 9% respectively. India is expected to be one of the fastest growing in absolute value terms with sales rising by US$14 billion over 2010-2015. H&M should make full use of this available opportunity and not allow its rivals to take over. Two of the closest competitors of H&M namely; Zara and Forever 21 launched their stores in India in 2010. Even though traditional dresses are very popular in India,metropolitan cities such as Delhi, Mumbai,Pune, Bangalore are adopting western fashion. Therefore, H&M has a wide opportunity of expanding to India. After China and US, India is predicted to generate the third largest growth in retail value sales in actual terms over the 2011-2016 period(Euromonitor 2011) Moreover, as already explained in opportunities above, H&M has large expansion opportunities.

2.4$Compe33on

H&M has shown a steady growth in its market share and rose from 3rd to 2nd position in the clothing and footwear retail market in 2010. (Euromonitor 2011) Most of its success can be attributed to its high-profile advertising campaigns and recent collaborations with the designers like Lanvin and Versace. It has strengthened its position as one of the world’s most known and affordable brands.


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The figure above from Euromonitor clearly shows that H&M has performed well throughout and does not seem to have been affected drastically by the global recession in 2008 and 2009. In India, H&M will face competition from local as well as international brands like Spykar jeans, Benetton India(0.4% Share),Koutons(0.7%), Lee(0.2%), Pepe Jeans London(0.1%), Levi’s, Zara, John Players, Provogue, Flying Machine etc.

2.5$Mode$of$Entry

Due to its production centres based in India, it will be a wise option for H&M to choose foreign direct investment mode of entry to India. According to FDI rules of India for foreign retailers 2011, only one route is open to foreign retailers who intend to enter India. Under these rules, the foreign investors can operate their retail business under a single brand.FDI into retail business in India is allowed upto a maximum of 51% equity cap on their operations which means that H&M has to partner up with a local company or a business.

Based on the three entry routes open to foreign retailers in India, H&M will expand its operations to India through Route 1 and a report on FDI reforms in india on euromonitor declares Route1 as the easiest route to enter India with “High” chances of being successful, under which it enjoys 51% equity cap and runs as a ‘single brand’ and partners with a local well established retail company known as “Future Group”,which has a revenue of US$1.9 billion and it runs a number of hypermarkets, supermarkets, departmental stores, electronic & appliance retailers.


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Future Group is one of India’s biggest retail company with multiple retail formats. They have around 220 million customers walking into their stores each year and choose products and services supplied by over 30,000 small,medium and large entrepreneurs and manufacturers all over India.They already have retail joint ventures with international brands such as Staples, Clarks, Celio, Daniel Hechter and their licensed brands include Converse, Spadling,Wilson, Callaway golf,Prince and Lee Cooper.

3.0$Objec*ves

• Increase in sales by 2% towards the end of 2013 in India.• Increase the global share of the company by 0.5% by 2013.• Open a store in Mumbai by Mid of 2012 ,followed by two more stores in Delhi and

bangalore.


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4.0$Strategies

4.1$Segmenta3on

(Source: Kotler et al 2009)

• Geographic Segmentation: Considering the geographic segmentation of H&M, it will launch its first store in Mumbai since it is the most populated city of India with a population of over 12,478,447.

• Demographic Segmentation: Age group 25-40 is the wealthiest age group in India due to the reason that this segment has gained higher education enabling them to grab good jobs in cities. (Euromonitor 2011) The prime focus of H&M will be the age group 25-40 and since H&M specializes in youth fashion as well, it will target younger generation of the age group 18-24 as well.

• Psychographic Segmentation: Under this segmentation, lifestyle of the people in metro cities will be considered and since Mumbai is considered to be the fashion capital of India, H&M can utilize this opportunity.

• Behavioural Segmentation: India is a diverse country with people from different cultures and religions living in Mumbai. H&M can cash on the major festivals like Diwali, Eid, Christmas, New Year, Dusshera etc.

(Source: Euromonitor 2011)

4.2$Targe3ng

H&M will target the two age groups in the early years of its launch in India. The two age groups will be 18-24,involving teenagers and college going fashion conscious people and its main target segment would be 25-40, the wealthiest age group,social,outgoing and people with high disposable income.


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4.3$Posi3oning

H&M’s business concept is to offer fashion and quality clothing at the best price. Since many years, it has always presented itself as a fast fashion brand providing quality and fashionable clothing and accessories to its consumers at an affordable price. It will continue doing the same in India and launch itself as a fast fashion brand and try to gain consumer attention and brand image in Indian fashion market.

Positioning Map/Perceptual Map:


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H&M will position itself as a fast fashion brand offering fashion and quality at good price to it consumers. As seen in the map above, H&M will place itself under the existing brands in India, such as Spykar Jeans, Benetton India and Zara.

4.4$Ansoff$Matrix

According to Ansoff, H&M will adopt “Market Development” strategy in India as they are taking their existing products to the new market.

5.0$Implementa*on$

5.1$Marke3ng$Mix


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Product: H&M will offer clothes, footwear, accessories and cosmetics to both men and women in India keeping in mind the fashion trends, consumer taste and spending habits, behaviour of consumers and competitors.

Place: H&M is known for its prime and dynamic location of stores all over the world for instance, its store at Regent Street in London. In partnership with Future Group, which runs several other hypermarkets and shopping malls like Mumbai Central, H&M will launch its stores in Mumbai Central, Phoenix Mills and Inorbit mall,which are known to be the best shopping destinations for people in Mumbai.

Price: H&M is already known for its pricing, offering quality clothing at affordable price. It will keep in mind its target groups and their disposable income and price its products accordingly. Moreover, it should offer seasonal and festive discounts to local communities drawing more consumers towards itself. It should price its products in such a way that:

• the consumers don’t perceive the brand as deceptive.• the cost of production of the products is recovered because if it is not taken care of, they

might lose profit in the market.• they don’t exceed the competitors price for the same products. (CIM 2011)

Promotion:

Sales Promotion

Advertising

Personal Selling

WOM Marketing

Direct & Indirect

Marketing

Events & Experience

PR & Publicity

(Source: CULC 2011)


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H&M has the following options for promotion:

• Advertising – They will release TV advertisements of most viewed channels in India,print media,fashion magazines such as Femina, Vogue India, GQ India, to reach their target segments and make people aware of their launch in the country.

• Public relations & Publicity– This will involve the help of media in creating brand awareness amongst the target consumers. H&M will invite fashion celebrities, models and few socialites to their launch in Mumbai, which will draw more media and press to cover the event.

• Sales Promotion – These include festive and seasonal offers and discounts. E.g: Diwali sale, Christmas and New Year sale.

• Direct Marketing – H&M will set up its own database of their customers from the beginning which would enable them to build good relations with their consumers and help in focussing on their main target group.

• Personal Selling – This involves the face to face conversations between a sales person and a consumer and it requires a special training to be given to the sales force of the company,which H&M needs to take care of.

Physical evidence:

H&M is known for its store layouts and set ups all over the world. It works hard to give all its customers a better shopping experience.They will use the same store layouts as they have been using in other countries. H&M believes that the signs,design and product presentation are all part of the visual merchandising and it sets the right mood for shopping in the store making shopping fun and exciting. (H&M Annual Report 2011) It will set up its stores in Mumbai with same layouts and interiors as other countries.


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People & Process: H&M is one of the largest fashion companies in the world,which provides employment to 87,000. It offers jobs in design, buying, sustainability, marketing,logistics,interiors,human resources,IT and accounting.It uses internal recruitment and job rotation to give its employees a wider experience. They believe that their employees should have the possibility of changing careers without switching to other employers. (H&M Annual Report 2011)

Moreover, H&M should hire and recruit local population an train them to provide better customer services and performance. This way, H&M will benefit itself by getting quality work force who know the trends and attitude of local population and at the same time create employment opportunities in India.

6.0$Monitor$&$Control

H&M’s monitoring and control department will monitor and control the whole marketing process in India. It will keep an eye on the objectives and the strategies which are implemented regularly to know if the company is doing well or going off the track. In case the strategies implemented do not work as per expected, then a contingency plan follows.


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7.0$Budge*ng

H&M will use objective task method of budgeting in India and a proposed budget plan is as follows:

ActivitiesActivities Budget in £

Set Up in IndiaSet Up in India £100 m

Advertising & PromotionsAdvertising & Promotions £40 mTV £3mMagazines £5mHoardings £10mOnline Website £10mPR & Publicity £12m

Events & Fashion ShowsEvents & Fashion Shows £50mStore LayoutsStore Layouts £150mEmployee TrainingEmployee Training £200mControl & MonitoringControl & Monitoring £20m

Contingency PlanContingency Plan £300m

TotalTotal £820m

8.0$Con*ngency$Plan

If the above suggested marketing plan doesn’t work in H&M’s favour then it suggested that:

• They invest more in Public relations and Publicity.• Participate in Fashion weeks such as, Lakme Fashion Weeks, Indian Couture Week etc.• Feature two bollywood celebrities in their advertising hoardings and websites,one for

female and one for male.

9.0$Recommenda*ons

H&M has a well established name all over the world due to its legacy in the fashion market but it needs to consider some of the key areas to sustain and be successful in other countries.

• It should involve itself more in TV advertisements and not just limit itself to hoardings and internet.

• It needs to keep an eye on the performance and strategies of its key competitors in the new market such as Zara, Benetton India, Spykar Jeans etc.

• Focus on providing better online shopping experience and develop a user-friendly website.

• Launch H&M India mobile phone app for iPhones,iPads,Android and Blackberry.


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10.0$Conclusion

To conclude, H&M should conduct a complete research on the consumer trends, demands,lifestyle,disposable income,shopping habits and behaviour before entering India and formulate strategies as per the findings. Since fashion is becoming more and more popular in India, H&M should take advantage of this opportunity to set up its operations in India.


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11.0$References

About H&M [online] available from <http://about.hm.com/gb/abouthm__abouthm.nhtml>2[262December22011]

GMID(Euromonitor)[online]- Clothing & Footwear Specialists in India available from <https://www.portal.euromonitor.com/Portal/Pages/Search/SearchResultsList.aspx> [28 December 2011]

GMID(Euromonitor)[online]- Hennes & Mauritz AB in Retailing(World) available from <https://www.portal.euromonitor.com/Portal/Pages/Search/SearchResultsList.aspx> [28 December 2011]

Datamonitor [online]- Company Analysis of H&M available from <http://www.scribd.com/doc/44904318/h-m-profile> [30 December 2011]

Mintel[online]- Hennes & Mauritz in Clothing available from <http://academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/id=545205/display/id=596388#hit1> [1 January 2012]

Future Group[online] available from <http://www.futuregroup.in/about-us/about-group.html> [2 January 2012]

Inditex Group[online] available from <http://inditex.com/en> [1 January 2012]

Chartered Institute of Marketing [online] available from <http://cim.co.uk/resources/plansandstrategy/home.aspx>2[2 January 2012]


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http://about.hm.com/gb/abouthm__abouthm.nhtml

http://about.hm.com/gb/abouthm__abouthm.nhtml

https://www.portal.euromonitor.com/Portal/Pages/Search/SearchResultsList.aspx




http://www.scribd.com/doc/44904318/h-m-profile




http://academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/id=545205/display/id=596388#hit1






http://www.futuregroup.in/about-us/about-group.html




http://inditex.com/en

http://inditex.com/en

http://cim.co.uk/resources/plansandstrategy/home.aspx




Appendix:

Swot Continued from Section 2.2:

Opportunities (External to the Company)

Developing economies will support H&M’s plans of expansion.! According to a forecast of IMF, Asia(mainly India and China) was expected to grow by 7% in 2010 compared to the growth rate of 0.6% in developed countries. Further Asia is expected to lead the growth rate tables of the world. (Datamonitor 2011)

Wide room for online sales.! According to GMID, online sales of apparels are estimated to grow rapidly in future as customers prefer shopping online to save money and time.

Indian & Chinese markets are expected to have best growth.! A number of fast fashion companies intend to open their stores in India and China as they are expected to be two of the world’s fastest growing fashion markets and economies. (Euromonitor 2011)

Threats (External to the Company)

Expansion by rivals into India. Zara being one of the major rival to H&M has already opened its stores in India, the recent one being their new store opening in Pune City, India in September 2011. (Inditex 2011)Local competition. H&M will have to face stiff competition from the local apparel companies in India like Spykar Jeans, Provogue, Mufti etc.

FDI retail reforms in India.

Poor road infrastructure.


17

Country Analysis:


18

Brand Portfolio:


19

Store Layouts all over the world:


20

Indian Retail Sector:


21

H&M global opportunities:


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Documents

Marketing in a Global Age