Marketing Planning Process of H&M

Contents Acknowledgements

Introduction

Acknowledgements I would like to Thank Frances Smith and all the ladies at Invest Northern Ireland for all of their help and support throughout the process of this assignment. Their contribution has been truly appreciated.

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In order to understand the Marketing Planning Process it is important to first know what the term, Marketing Planning Process means. Market planning is “the process by which businesses analyse the environment and their capabilities, decide upon courses of marketing action and implement those decisions. (Jobber, 2006) It is also important to acknowledge the different stages and types of the process and which is best for the company. Methodology Information has been gathered from a wide range of sound and non-biased secondary resources.

Statistical information, information on profitability of the company’s marketing environment has been sourced and analysed from sites such as Datamoniter, Mintel Oxygen, key Note and Lexis Nexus. Further Data and information has been sourced from electronic journals such as Emerald, business websites, respected newspapers and The H&M company website, from which this Marketing Planning Process will be based. Business and Marketing theories have been gathered from marketing gurus and scholars such as Jobber, Kotler and Porter.

Primary research will also be gathered in the form of studying the local H&M stores. The Marketing Planning Process. Business Mission Marketing Audit SWOT Analysis Marketing Objectives Strategic Thrust Core Strategy Target Markets Marketing Mix Decisions Organisation and Implementation Control (Jobber, 2006)

1. - The Importance of the Marketing Planning Process.

With business operating in an increasingly competitive environment, “Having a plan gives managers a focal point for decisions and actions. (Jobber, 2006) The planning process gives the company the capability to run successfully and achieve profitable sales, “It makes sense to try to bring some order to this chaos by understanding the commercial environment and bringing some strategic sense to the process of marketing products and services. ” (Tutor2u, 2009)

This is why the marketing planning process is very important to a business; it helps to structure tasks and processes by answering all the relevant questions of such as; where are we now? ,

how did we get there? , and where are we heading?

in order to achieve the desired goal. In order to fulfill these appropriately using a method of SOSTAC will help to give a structured analysis as each element relates to an important stage within the planning process. SOSTAC is an Acronym for the 6 basic elements of the Marketing Plan: Situation Where are we now?

Objectives

• Where do we want to get to?
• Strategy How are we going to get there? – The Big Picture Tactics How are we going to get there?
• The Detail Actions Who is going to do what and when
• Control How can we control, measure and develop the process? .

2- The Advantages of the Marketing Planning Process.

The Marketing Planning Process is a great way “to provide a well defined path from generating a business mission to implementing and controlling the resultant plans. ” (Jobber, 2006) The advantage of a good marketing plan is that is means that the company can have a clear picture of what they have achieved and what they need to achieve in order to determine if a process was successful or if a new addition will be. The planning process means no time is wasted and everyone is on the same path.

3- Strategic Planning

Strategic planning involves managing the direction of the business in order to maintain “a fit between the organisations objectives and resources and the evolving market opportunities. ” (Mc Daniel et al, 2008) this concerns the overall direction of the company and not only the marketing sector in order to ensure the products and services provide by the company are meeting the overall objectives. This can be characterized by the Strategic triangle as shown below: Figure 1- Strategic Triangle. {draw:frame} (New-paradigm, 2000)

4 Conclusion

The marketing planning process puts the company’s marketing strategies into action.

There are many factors concerning the process as noted. These will now be evaluated in order to ensure the most appropriate methods of the process are being use when completing the marketing plan which will be based on the company of H&M. Market Research.

Types of Market Research.

Secondary research is divided between internal and external sources. Internal sources look at records and statistics, such as accounting records, within the whole company while external sources focus on reports and information from outside the company, such as census reports and periodicals.

This gives a good indication of not only how well a product may do within the company but also helps the business to understand the market for this product and give them a competitive edge. Primary information involves getting original data directly about the product and focus groups, and online surveys. This helps to ensure that the information is directly specific to the needs to the business as it is personal to them.

Contribution of Market Research to the Marketing Planning Process.

Conclusion.

It is now evident that market research is imperative to a good marketing plan as it collects the data that businesses need in order to succeed. It is now vital to look at the marketing audit for H&M in order to evaluate the strengths and weakness of the company for a good SWOT analysis.

H&M background.

Hennes & Mauritz is one of the largest fashion retailers to hit the high street with around 18000 stores worldwide, employing around The 73’000 people. H&M was first established in Vasteras, Sweden in 1947 by Erling Person.

The company has grown strong ad now offers a team of 100 in house designers to create their lines of men’s, women’s and children’s clothing and made a turnover of SEK 104,041 million in 2008. They also sell their own brand of footwear, accessories and cosmetics. H&M do not own their own factories however; they do buy goods from over 800 independent suppliers round the world, mostly from Asia and Europe. They are also a worldwide store through their online sales and also offer a catalogue of their ranges. H&M’s concept is to offer ‘fashion and quality at the best price. (H&M, 2009) – See appendix 1 For H&M’s Mission Statement.

Marketing Audit.

The marketing audit considers both internal and external influences within the market when making the decisions arisen. There many marketing tools that a company can use when completing marketing audit such as PESTEL analysis and Porters Five Forces which deal solely on the external environment and SWOT analysis which looks at both the internal and external. (Marketing Teacher,2009) H&M are a company whose success is wide spread because of the company’s abilities to perform full research before they make any key decisions.

H&M believe “A strong brand is increasingly important competitive advantage,” (Hennes & Mauritz, 2009). H&M aim to use their methods of communication in order to build the brand both within a long and short term bases. They hope that this enables each customer to have a full understanding of what H&M stands for and to know their way around their H&M store. However there is no mention of their concept of ‘Fashion and quality at the best price’ anywhere within their marketing campaigns. Figure2- The Marketing Environment

Macro - Environment.

Economic Environment- The economic environment looks at the PESTEL analysis which consists of:

PESTEL Analysis.

“Before H&M decides to move into a new market, an assessment is made of the markets potential. Factors such as demographic structure, purchasing power, economic growth, infrastructure and political risk are analysed. ” (H&M, 2009) Political Companies need to be informed on the political structure of the countries in which they are in distribution with. These include any government policies, taxes, trading tariffs, any war or conflict as well as internal politics of the country.

H&M are concerned with political restrictions and therefore analyse the infrastructure and political risks before expanding. They need to be aware of the countries laws and regulations so as not to break them or discriminate in any way, especially with their marketing tools. Things that may need consider would be the VAT reductions, recycling terms, any new laws brought into power, distribution laws and regulation hours of opening, i. e. within Ireland there is set opening hours on a Sunday from 1-6. Economic Before H&M decide on a move into a market they always do a structured analysis to assess the markets potential.

Many factors must be researched here in order to determine the correct decision. Factors to consider include the economic growth of the city. They must establish the city’s interest rates as high levels may deter the investment because of costs and analyse inflation as it may provoke higher wage demands. They must also establish the need for employment within that area. This is especially important in the middle of a recession where companies need to be smart about their expansion decisions. Managing Director of H&M, Rolf Erikson states; “H&M stands strong and we are focusing on the future.

The economic situation is creating great opportunities that we are going to take, for example in terms of access to new attractive commercial locations and being in a strong position to negotiate. This year we plan to open a net amount of 225 new stores and recruit 6,000 to 7,000 new employees. ”(H&M Profile, 2009) Social The social and demographics of the country of city must be considered before expansion. They must ensure that there is a market for the age that they are targeting and be aware of the attitudes towards fashion and the weather within the demographic area.

Lifestyles must be considered here also, with the recession it may not be wise to sell a lot of summer or swimwear within EU with the euro being so bad and less people being able to afford holidays. Also cultural lifestyles must be analysis. For example H&M would have to be careful about expansion within the Far East and how they would market themselves to suit the cultures, i. e. : in larger Muslim cities it would be unwise to sell miniskirts or ‘belly tops’. They also look at the purchasing power within that particular area to study the buying habits of the customer. Technological

H&M aim to use all form of technological communication in order to keep up to date with their customer and with today’s market. Their website is their main form of communication and they feel it is what strengthens the brand. The website offers a chance to shop online, visit stores, use their virtual changing room to get an idea of how the garment will look and to establish their business concepts. It also provides information aimed at the public, media, potential employees and financial markets and shareholders. They also have their own Face book page allow other customers to view from there.

They tweet on the twitter site also with updates and have their own page on You Tube to upload Fashion TV. These are great methods of communication although they do have to be careful to filter what is being written and placed on these sites as they do target to teenagers and children. They also must ensure that internet pages such as Face book do not cheapen the brand especially as they try to promote themselves as a luxury low cost brand with stores in locations such as 5th Avenue. Environmental Legal Further information on Competitive environment and Marketing Environment is available in Appendix 2

Micro- Environment

Micro Environmental Factors- The micro- environment is the internal factors close to the company that have a direct impact on the organisations strategy. These factors include: Customers H&M believe the satisfaction of their customer is very important. This factor is what provides them with the knowledge to target the appropriate audience which helps to maintain customer loyalty. They believe that this is true of the layout of the store in order to attract their customers. H&M Cleverly devise each store differently, making it unique to suit its surrounds.

They establish this by analysing “the customers on the street, the other stores nearby and the traffic flows and relates this to the circumstances of the premises. ” (H&M,2009). Although this is a clever use of analysis, it is a wonder if they always get it right and if they always cater for the best target audience available and not just the largest. A use of questionnaires, polls and focus groups would be a great way to establish their best target market rather that a factual analysis. Employees “Skilled and committed co-workers are one of the main reasons H&M has been able to grow with good profitability for such a long period of time. (H&M, 2009) H&M always strive to employee local employeeswhenever they expand. They use their experienced co- workers to help train new staff when a store first opens, For example, When they expanded into the Japanese market the new employees spent time in both Norway and Hong Kong and during this stressful time employees from other stores are brought inn to help launch the brand. (H&M, 2009) Today, H&M has around 73,000 employees in 34 countries. Target growth of the company’s 10-15 percent new stores every year. For 2009 this means that between 6,000 and 7,000 new jobs will be created.

Suppliers

H&M always strive to offer the latest, high quality garments at the best price. In order to ensue this is the case they buy in large volumes from only independent suppliers so there are only a small percentage of middle men. They demand efficient distribution and test the quality of the produce at every level to ensure it is at its highest, this is why they ensure their team has an extremely high knowledge of design, fashion and textiles. Shareholders “H&M endeavours to engage in open dialogue with the stock market, the media, customers and other stakeholders. ” (H&M, 2009)

Date- 05/01/2010 Time- 10:43:33 © H & M HENNES & MAURITZ AB 2010 Media Daily Mail, 2009)  The line featured in 1,500 of H&M’s selected stores and of this Rykiel commented, “The Sonia Rykiel for H&M lingerie collection is the ideal way to offer the essence of Rykiel to a great number of women around the world, and a beautiful way to close the year. " (Lexis Nexis, 2009) Competitors The fashion industry is highly competitive. H&M faces stiff competition from speciality retailers, department stores, mall-based retailers and e-retailers. The company faces strong competition in northern Europe.

The following show some companies that are the major competitors of H & M Hennes & Mauritz - Marks and Spencer Group plc Otto (GmbH & Co KG) Gap, Inc. , The Arcadia Group Limited Fast Retailing This can also be described using Porter’s Five Forces as noted with Appendix 4. “The Internal Analysis of strengths and weaknesses focuses on internal factors that give an organization certain advantages and disadvantages in meeting the needs of its target market. ” (Strategic Plan, 2008) In order for H&M to develop an effective internal analysis they will need to include the growth strategies, target groups and the marketing mix.

There are three marketing tools they need to include within the internal analysis in order to best explain this: BCG Analysis ANSOFF Analysis 7 P’s of Marketing Mix BCG Analysis The BCG is a tool which helps the company to rate their products according to the market share and growth rate. The products are then displayed on a two dimensional map showing their position in the market.

These are products that use large amounts of cash to produce but are very popular and therefore generate a large amount in return. H&M’s rising stars are their collaboration collections with Designers’ and Celebrities’ such as Madonna. Dogs- These products have a low market share and low growth rates. These products are usually discontinued after a short period. Beware of these and attempt to minimize the number of dogs within the product range. These products are those H&M develop to aim to be ahead of their competitors but go a little too far and produce a product that isn’t commercially appealing. Que*stion Marks- Products with a low market share but high growth rate. These have potential to turn into rising stars in the future if it is developed correctly. These can also be dangerous for the company as they are in high demand for a short period but generate a low returns due to the low market share. These are H&M’s high fashion, seasonal pieces such as this season’s sequined jackets which were popular during Christmas party season but they are the biggest product to adorn the sale rails. ANSOFF “The ANSOFF Growth matrix is a tool that helps businesses decides their product and market growth strategy. (Tutor2u, 2009) Figure 8- {draw:frame} (Tutor2u, 2009) Market penetration “Market penetration is the name given to a growth strategy where the business focuses on selling existing products into existing markets. ” Market penetration seeks to achieve four main objectives:

• Market penetration aims to maintain or increase of the market share. In order to do this H&M must continue to look at ways to provide competitive pricing strategies in order to have an advantage over their rivalry, especially as one of the main competitors is Primark LTD.

They must provide good advertising to entice their customers. At present they market themselves using their shop window, poster campaigns and the H&M website. They also cleverly market themselves by displaying the prices and any sales promotions on the campaigns however the advertising is usually spread across the whole of Europe and therefore, with their stores basing the stock of each store on their analysis of the cities customer, it is often very difficult for customers to find these items in their store.

• “Knowledge is power. ” (Bacon, F, 1597)

Market Penetration aims to assist the company in attempts to secure power of growth markets. To do this H&M must have a good knowledge of their market and who their competition is within the market.

• H&M use very strong promotional tactics in order to promote the company and product, their main advantage of some of their competitors is the H&M magazine.

H&M magazine is used to give the consumer a good message on how the company sees fashion, offering not only clothing from the company but also inspiration for trends within both fashion and lifestyle. This is published four times per year. Market penetration looks at ways for the company to increase their number of existing customers and maintain customer loyalty. H&M give a lot of information on their website which is good for customers to have knowledge in a brand they are investing in. However, H&M could benefit from offering some version of a loyalty scheme like a store card or by providing student discount to keep them ahead of their competitors. Market development “Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets. (Tutor2u, 2009) There are many possible ways of approaching this strategy, including:

• Expanding into new geographical markets; for example H&M launched themselves into Russia in 2009 and are making plans to enter Israel and South Korea during 2010
• In order for H&M to develop their marketing strategies with their products, they aim to impress their customers with trends straight from the catwalk for a low price. They aim to keep their brand edgy by re-vamping their old red and white image of the website and packaging to a more colourful and fun print.

They also provide special carrier bags when they collaborate with a designer or celebrity.

• H&M demand efficient distribution and test the quality of the produce at every level to ensure it is at its highest, new ways of fast yet cost effective and eco- friendly distribution is something they should always attempt to find.
• When developing the market H&M always look at ways to change their pricing policies to attract new customers and create new market segments. Product development

H&M always strive to develop their products within their existing ranges while staying true to their mission statement, “fashion and quality at the best price. ” (H&M, 2009) They are also expanding existing models in Middle East using a franchise route. This may be a risky move as they will not have full control over the franchised stores Diversification In 2009 H&M launched into a new market by introducing a range of interior textiles for the home under the H&M home concept 2009. This new concept increases the company’s strong brand by offering “additional choice of lifestyle related products to its customers.

In addition, this provides an opportunity for the company to cross sell its merchandise to generate incremental revenue. ” (Lexis- Nexis, 2009)- See appendix 5. 7 P’s of Marketing Mix. The 7 P’s are developed in order to “produce mutually satisfying exchanges within a target market. ” (Mc Daniel et al, 2008) They are very important tools for H&M to use when developing or introducing new products into the market as good knowledge of which P’s are important or may need more attention is vital in order for a product to succeed.

Conclusion

From studying the marketing audit for H&M it is apparent that the company display good methods of conducting the marketing audits. However there are changes that could be made in order to increase the brand name and develop their market growth. A SWOT Analysis will now be conducted in order to determine the best course of action for the company to take in the future.

 SWOT Analysis

“SWOT is an acronym used to describe the particular Strengths, Weaknesses, Opportunities, and Threats that are strategic factors for a specific company. (My Strategic Plan, 2008) The SWOT analysis is a marketing tool used to audit a company and its environment. The SWOT analysis is always at the first stages of the planning process, once the research has been conducted, as it helps the marketers focus on the key issues that need to be addressed. (Marketing Teacher, 2009) See Appendix 6 for a full SWOT analysis conducted on H&M.

Conclusion

In order to maintain success and enhance that success H&M must continue to provide a high level of service to their consumer market.

They need to ensure that high fashion, high quality lines are being produced while remaining to be aware of their internal and external environments. In 2010 H&M need to introduce massive collaborations with themselves and other designers or celebrities as this is what keeps them ahead of the competition as well as a continued loyalty to customers to give them the confidence t shop, and shop at H&M. This can be expanded be expanded by introducing a loyalty system of perhaps a store card where the customer can but now and pay in monthly installments.

H&M must do more research into the products they are producing and the fabrics used, especially in children’s wear, as recalls are not acceptable especially with the economic climate. H&M will continue to expand into new and existing markets and must remember to continue to perform high levels of research and analysis before expanding. They may also need to look at new ways to help make the decision as they cannot afford to get it wrong. The company also needs to keep a firm eye on the competition and consumer buying behavior, enhancing resources in this department to ensure a high level of awareness is maintained.

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