Table of contents 1. Introduction 2. Macro environmental analysis (PESTLE- political, economic, social, technology, legal, ecological) 3. Customer analysis 4. Market description 5. SWOT analysis (Strengths, weaknesses, opportunity, threats) 6. Conclusion and Recommendations 7. References P. 1 D002 T2242531 Introduction H&M (Hennes & Mauritz) is a global fashion brand and retail clothing company founded in Sweden, 1947 by Erling Persson.
H & M founder Erling Persson because of a U. S. tour, inspired him to open a low price, high-class women's fashion clothing store ideas. (“H;M offers fashion and quality at the best price”, 2011) The first Hennes opened in Vasteras, which is the predecessor of H;M. In 60s, he expanded Hennes in most parts of Sweden, developed new markets in neighboring Norway and Denmark in 1964 and 1967. In order to expand the market share and product lines in Stockholm, Persson acquired a company called Mauritz Widforss, firearms and hunting supply stores to get the men`s clothing usiness for Hennes. After that, Persson renamed as Hennes ; Mauritz and still in use. Until the 21st century, H;M began to expand business in Asia. It has over 2,300 stores in 41 countries and as of 2011 employed around 87,000 people for now. H;M designer collaborations with plenty of famous designers and celebrities, such as Karl Lagerfeld, Roberto Cavalli, Stella McCartney, Comme des Garcons, Viktor ; Rolf, Madonna, Lanvin and Sonia Rykiel. (“H;M-Wikipedia”, 2011) The report is to analyze about the H;M Company (Hennes; Mauritz).
This includes the Marco environmental analysis (PESTLE- political, economic, social, technology, legal, ecological), customer analysis, market description, SWOT analysis (Strengths, weaknesses, opportunity, threats), after that, the conclusion, recommendations and references will be provided. P. 2 D002 T2242531 Environmental Analysis (PESTLE) PESTLE means political, economic, social, technological, legal and environmental. Political: EU and national laws; codes and practice (David Jobber, 2007, p. 3) H;M Company is following the enactment of Swedish and the actions of Swedish companies, as H;M is a Swedish brand and company. Nevertheless, if there is an H;M store located in Cambodia therefore that H;M store has to follow the Cambodia government legislation. (“Worldnews. com”. 2011) For instance, there has an article posted on hm. com about Royal Government of Cambodia is considering amendment to article 67 and 73 of Cambodia enactment. This affects H;M as it injures their short-term contracts.
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If there are changes in laws, H;M has to change the purposes or operations to fit the requirements. Economic: economic growth; unemployment; interest and exchange rate; global economic trends (David Jobber, 2007, p. 43) H;M Company has over 87,000 employees in about 41 countries for now, they target growth around 10-15 percent new stores per year. (“H;M offers fashion and quality at the best price”, 2011) It shows H;M create a large number of Employment opportunities for the sociaty, conducive to economic growth.
Social: changes in world population, age distribution and household structure; attitude and lifestyle changes; subcultures within and across national boundaries; consumerism (David Jobber, 2007, p. 43) H;M makes sure all products can meet customer`s anticipation. All products have to go through over 100 quality controllers, to inspect if the quality of the product can meet the quality and safety standard. That guarantees that H;M customers can use H;M products safely.
H;M Company supports UNICEF in Uzbekistan to show their social responsibility and tries to prevent child work in cotton factory of Uzbekistan. These projects raise the awareness of the right of the child and give safeguard. H;M is going to donate US$ 150,000 to UNICEF’s work in Uzbekistan. (“IPS ipsnews. net”, 2011) P. 3 D002 T2242531 Technological: new product and process technologies; new materials (David Jobber, 2007, p. 43)
H;M has two types of technology that will affect the business that are media technology and printing machines. In the operation of making clothes some of certain colors and designs need some unusual or more high-class machine to finish therefore H;M can keep the product in a quality. (“Adpunch. org”, 2010) The evolution of media technology will help H;M become popular through the Internet and advertise. The website and media have to be updated to become more eye-catching and disseminate their news events, it can extend the exposure of H;M to the ommunity. Legal: EU and national laws; codes of practice (David Jobber, 2007, p. 43) H;M Company cares about the protection of child; however so far this year, the collective fainting incident at the plant collapsed the number of employees has more than one thousand five hundred people. The labor department of Cambodia said the reason of this trend is including the use of pesticides, dust, heat, perssure and carry the goods to move goods consuming high physical work, hundreds of workers gathered in the small and closed environment.
They believe that part of the plant is really have problem, such as in poorly ventilated conditions using specific chemical agents. Community Legal Education Centre claimed that the lack of further work in Cambodia environmental monitoring system. H;M said the company deeply concerned about the incident and seeking to investigate. (“International Labour Organization”, 1996-2011) Environmental: global warming; pollution; energy and other scarce resources; environmentally friendly ingredients and components; recycling and non-wasteful packaging (David Jobber, 2007, p. 3) H;M is always caring about the environment, particularly the development of organic cotton. Plenty of people try to invent cotton against nature, for example, produce cotton with chemicals. In order to protect the environment and gain the good image for H;M Company. H;M Company has to follow roles that can protect the environment. (“H;M offers fashion and quality at the best price”, 2011) P. 4 D002 T2242531 Customer analysis
H ; M is "fast, aggressive, accurate" as the main feature of the rapid rise of fast fashion, driven by global fashion trends. (“H;M offers fashion and quality at the best price”, 2011) They also describe its mission as "Fashion and quality at the best price. " H;M is used in “small, a variety” of product strategy, it breaks the traditional limit apparel industry, in the same season will continue to introduce new models for consumers to choose. H;M`s business scope has men`s, women`s, women`s underwear, children`s clothing and accessories.
General characteristics of H;M`s clothes are rich in color choice, style wild simple, dynamic and fashionable, casual, comfortable, affordable, not expensive, therefore the products of H;M are suitable for the students, young office ladies, travellers. (“Just-style”, 2011) They have set the target consumers group of young people, who aged around 15-30, this type of fashion buyer groups with a high degree of sensitivity and have some spending power, but do not have the ability to possess the regular consumption of high-class brand`s product. (“Inspiring customer experience”, 2010)
For instance, there is a young woman, who may just graduated or still studying in university or high school. She cannot afford to buy high-class brand clothes, she might consider to buy H;M clothes, because H;M`s clothes are design by large number of famous designers and celebrities. This shows H;M attracts plenty of young girls who have high degree of sensitivity. P. 5 D002 T2242531 Market description Sweden`s H;M Company, full name Hennes ; Mamitz, by founder Erling Persson founded in Sweden in 1947, the clothing retail chain.
Currently in Europe and North America 29 countries and regions have their retail stores. Annual sales of goods more than 5. 5 million, has become one of the Europe`s largest clothing retail chain. The major rival of H;M is ZARA. Spanish fashion brand ZARA is well known in Spain ranked first, third softball apparel retailer Inditex company`s brand, the company has nearly 2,000 stores worldwide, ZARA is one of nine brands if Inditex, the most famous flagship brand, is considered to be Europe`s most research value of the brand. Tony Hines and Margaret Bruce (2007)
The success of both companies benefited from the use of unique marketing strategy. Two companies have taken on in the price of low-coast strategy. ZARA is target the consumer group has high income and high-educated young people, mainly 25-35 year-old customer layers, H;M has set the target consumer group of young people 15-30 years old. Two companies frequently updated fashion cheap products just to meet the needs of this population. H;M take the price lower than ZARA layer of strategy. According to statistics, H;M fashion price is lower than ZARA about 30% to 50%.
Tim Jackson and David Shaw (2009) In price discounts, H;M is using the less discount strategy, because all products of H;M are “small amount and variety”, for example, consumers who buy the first time, there is a risk of no longer buy, therefore they are often unable to wait until the end of the quarter or the end of the year discount. It is kind of psychological advantage of consumers. Almost all of the goods sold in a short time, leave only a small amount of undesired products at discount end of the quarter or the end of the year.
H;M estimated 2005 pre-tax profit of 1. 4 billion, on sales of 6. 3 billion. (David Jobber, 2007,p. 35) P. 6 D002 T2242531 SWOT analysis SWOT means strengths, weaknesses, opportunities and threats. (David Jobber, 2007,p. 46) Strengths The main reason why H;M has become popular is low price. H;M provides good quality clothing, department store price that is extremely unusual in many of today’s retailers.
Another advantage of the H;M is the product delivery time, only less than 13 weeks, a project from the design to retail store, that is quite impressive for a international, low price retailer. (“Jing`s Marketing Blog”, 2011) In addition, they use guest designer bands and shop to keep the line fresh and special, at an affordable price, ability to reach a large target market to satisfy different fashion tastes, having a well-known brand name. Weaknesses Customers may think clothes to be low quality because of the low price, that is a type of psychological of some customers and the quality of service also is a problem for H;M.
A large retail store, if there are only a few numbers of staff, they are unable to take care of all the customers. On the other hand, because the company buys a large number of means, there is no one can promise all the items will be sold out. That means their low price may have to be lower and lower to attract consumers to buy their products or means that H;M Company may have to pay additional storage space for these unsold items. (“H;M-Facebook”, 2011) Opportunities There will be a good opportunity launch some clothes are for elderly people. They can develop a new line for elderly people.
I think it would be a good opportunity for H;M, because elderly people also want to wear fashion clothes with a nice, low price, I also think this opportunity can let H;M become more popular, also make more people aware of this brand H;M. Threat There is more and more new retailers appear in the market, such as ZARA, Forever 21, River island. These retailers undoubtedly formed a kind of competition, each firm also has their own marketing program, own characteristics, and the main threat is they are also using the same marketing strategy as H;M “good quality at a low price”.
H;M has to create some new strategy to strong stay competitive. Tim Jackson and David Shaw (2009) P. 7 D002 T2242531 Conclusion and Recommendation The biggest threat for H;M is other retailers from other countries, they are also have plenty of capital and technology to against H;M, therefore H;M should have some innovation actions and strategies to increase the competitive in the fashion market to maintain and attract more customers.
First, rely on H;M`s standardized management capabilities to continuously improve their management level and the quality of products. Second, full play to their favorable factors and development, and vigorously promote the clothing company with foreign strategic cooperation. Third, appropriate under the circumstances of the adjustment value, adjusted by way of sale. References David Jobber (2007) Principles and Practice of marketing 5th Edition Fast fashion. (2011). Retrieved 21 October 2011 from the Wikipedia website: http://en. wikipedia. rg/wiki/Fast_fashion H;M Discussions (2011). Retrieved 1 January 2009 from the Facebook website: http://www. facebook. com/board. php? uid=21415640912 H;M readies itself for sourcing challenge (2010) Retrieved 12 June 2010 from the just-style. com website: http://www. just-style. com/analysis/hm-readies-itself-for-sourcing-challenge_id108103. aspx H;M experiments with technology driven campaign (2007) Retrieved 30 August 2007 from the Adpunch. org website: http://www. adpunch. org/entry/hm-experiments-with-technology-driven-campaign/ P. D002 T2242531 H;M-Cotton from Uzbekistan (2011) Retrieved 25 April 2009 from the H;M website: http://about. hm. com/gb/corporateresponsibility/supplychainworkingconditions/supplychainmonitoring/cottonfromuzbekistan__monitoringarticle5. nhtml H;M offers fashion and quality at the best price (2011) Retrieved 25 August 2011 from the H;M official website: http://www. hm. com/gb/ H;M in Cambodia (2004) Retrieved 17 May 2004 from the International Labor Organization website: http://www. lo. org/global/about-the-ilo/press-and-media-centre/videos/video-news-releases/WCMS_074487/lang--en/index. htm Hennes&Mauritz (H&M), AN HRM CASE STUDY (2009) Retrieved 12 September 2009 from the ideas and thoughts website: http://ideasthoughts. erruppackal. com/2009/09/hennes-mauritz-hm-an-hrm-case-study/ Hundreds of workers collapse at Cambodian H&M clothing factory (2011) Retrieved 29 August 2011 from the Worldnews. com website: http://article. wn. com/view/2011/08/29/Hundreds_of_workers_collapse_at_Cambodian_H_M_clothing_facto/
Social Media strategies of H;M (2011) Retrieved 15 May 2011 from the Inspiring Customer Experience website: http://patperdue. com/social-media-strategies-of-hm-zara-and-esprit-analysis/ Tony Hines and Margaret Bruce (2007) Fashion marketing second edition Tim Jackson and David Shaw (2009) mastering fashion marketing UZBEKISTAN: Forced child labor kills (2011) Retrieved 19 October 2011 from the IPS ipsnews. net website: http://www. ipsnews. net/news. asp? idnews=105514 4P analysis of H;M (2010) Retrieved 24 October 2010 from the Jing`s Marketing Blog website: http://blogs. ubc. ca/jingwei/2010/10/24/4p-analysis-of-hm/ P. 9
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