Marketing strategy analysis-H&M - 4Ps, PESTLES PDF

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Summary

This assignment is designed to assess learning outcomes:
MLO1: Analyse the nature of the retail and services sector and its role in society, the retail and services environment and their implications for retail strategy;
MLO2: Critically evaluate the interrelationship between the social...

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MARKETING STRATEGY ANALYSIS H&M Writer’s name: Hoang Thi Anh

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Executive summary

A well-defined and linked marketing strategy is critical for company management because it aids the firm in gaining a competitive advantage in the market as well as assisting the brand and the overall company in achieving an outstanding feat in the target market and industry. Furthermore, marketing strategy aids a business in making the best use of its resources in order to deliver a sales message to its target market. Therefore, this research will discuss the PESTEL, 4Ps, and Porter's five forces analysis which are important parts of a marketing strategy.

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TABLE OF CONTENT 1. Introduction……………………………………………………………………...4 2. PESTEL Analysis…………………………………………………………..……4 2.1.

Political……………………………………………………………………4

2.2.

Economic………………………………………………………………...4

2.3.

Social……………………………………………………………………...5

2.4.

Technology………………………………………………………………5

2.5.

Environment…………………………………………………………….5

2.6.

Legal……………………………………………………………………..6

3. 4Ps Analysis………………………………………………………………….…6 4. Porter’s five force……………………………………………………………….7 5. Recommendations……………………………………………………………...8 6. Reference…………………………………………………………………….......9

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1. Introduction During the Industrial Revolution, the concepts of marketing as we know them now first emerged. This period lasted from the late 18th century to the early 19th century (James Hardy, 2016). It was a period of tremendous societal transformation spurred on by scientific and technological advancements. To meet the demands of an expanding consumer market, mass production spawned a slew of new sectors. The transportation infrastructure, as well as the mass media, took hold. It necessitated that manufacturers devise new techniques to develop things that buyers desired, as well as a more sophisticated strategy to telling them about these commodities. H&M - a Swedish fashion retailing giant known for its commodity fashion deals has taken advantage of marketing well to make their products get closer to the hands of customers. With the drastically marketing strategy, in 2021, there are over 5000 stores worldwide in 74 markets and 53 online markets (Statista, 2021). To get a deeper understanding of what factors impact H&M retailing and its marketing strategy, this research will solve these problems. 2. PESTEL Analysis 2.1. Political H&M is a global brand that operates in many different countries. In some countries H&M gained brand awareness easily and become successful; however, in some countries such as Lebanon, Turkey or Egypt, etc. where has unstable political environment or has some sets of rules for international business to adhere such as trade regulations or customer protection policies or minimum wage for employees (MBA Skool Team, 2019). As a result, in those countries, it can be a challenge for H&M to be successful in comparison to other countries. 2.2. Economic According to Statista, the H&M Group's global net sales in the fiscal year 2020 were at 20.2 billion US dollars which were reduced by 15.42%. The company's net income was 0.344 billion US dollars, down 75.12 percent from the previous year. Obviously, this downturn in financial performance is due to the Covid-19 Pandemic. Before Covid -19 hit the economy, buying power of customers is high when the economic boom helps citizens have more disposal income so that they spend more on every aspect including premium clothes and beauty products. Then, the Covid-19 occurred, many countries have a lockdown, many stores have to close to follow social

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distancing, air ban. Consequently, the unemployment rate is higher. In the US 2020, this rate is 8.31% which is much higher than in 2019 (3.67%) (Statista, 2020) so that it lowers buying power of people. 2.3 Social The social environment is considered the important factor in assisting to create marketing strategy as well as the success of the business. This factor is defined as lifestyle, economic status, religion, and community. Social factors are related to buying habits, knowing that customers now are busy with work-life, H&M provides both online and offline purchases to serve customers’ demands at any time. Moreover, it can be easily seen that people are currently more conscious of sustainability and a friendly economy. Therefore, building a friendly image is important to retain customers and H&M performs well in Corporate social responsibility activities, especially, their sustainability report placed them as the first runner-up for the best report award in 2018 (Abdul Monin, 2018). H&M is also known for offering fair compensation to all of its employees at all levels. They are also wellknown for their attempts to promote gender equality by employing a large number of women. In fact, because they aim to provide women opportunities, and now they have more women working in high positions than men. 2.4. Technology In the technological age, many individuals prefer to shop using mobile applications or the internet rather than going to storefronts. Many companies, like H&M, have created an e-commerce platform and connected their online store with various local distributors and shipping facilities in order to stay up with technological improvements and changing behavior to make products available to customers in order to be convenient for them. Especially, this ongoing pandemic has favored pushing the culture of online purchasing. Furthermore, many businesses prefer to use technology and the internet to promote and advertise their brand and products because businesses can reach out to a large number of potential consumers through this platform. 2.5. Environment The textile business is one of the world's most polluting industries. Textile mills pollute one-fifth of the world's industrial water and employ 20,000 chemicals to create clothing, many of which are carcinogenic (NRDC, 2019). As a result, H&M is aiming to increase the use of recyclable materials and sustainable energy in its operations. Moreover, the fashion business is strongly reliant on meteorological conditions in the

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nations where its items are sold. This is why, in order to reduce waste and costs, H&M delivers relevant merchandise to the many regions where they have stores. 2.6. Legal H&M is required to follow the laws of the nations in which it operates as well as international law. They are not allowed to hire the underage, and the suppliers with whom they engage are similarly law-abiding, ensuring safe working conditions for their employees all around the world. Furthermore, intellectual property rights are a concern when infringing on intellectual property rights is not dealt with appropriately in some nations, putting a company's products and designs at risk. 3. 4Ps Analysis 3.1. Product Regarding the product, H&M first introduced clothes, and then it has expanded its fashion products by offering a wide range of products: bags, accessories, shoes, and beauty products for men, women, and kids. The brand's focus has been on quality as well as the current fashion, all at accessible rates, allowing them to launch new product lines on a regular basis. Fast-fashion items account for at least 25% of the company's stock, and the younger generation of teenagers consider them to be both fairly priced and stylish, and chic (Marketing Mix, 2019). This model is considered a key to the success of H&M compared to Zara or Forever21 (Pete Rathburn, 2021) 3.2. Price In respect of price, H&M uses a low pricing strategy that offers customers a high product quality with a premium price that increases the sale of the company. In comparison to big competitors such as GAP and Zara, H&M products are comparatively less expensive. This is due to H&M's cheaper manufacturing and transportation costs by making purchases at the lowest possible prices to keep overheads down and locating manufacturing in countries with low labor costs. Hence, the cost price is lower and then H&M is able to frequently offer a discounted prices to attract customers. Besides providing affordable fashion products with famous H&M and Cheap Monday brands, it also sells higher quality fashion for higher-end consumers. 3.3. Place In terms of place which is about the strategy where H&M should sell a product and how to deliver the product to the market, H&M mostly locates its stores in city centers, shopping centers, or shopping malls where they can reach a large number

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of customers. Since its establishment, it has expanded a lot when H&M is currently the world's second-largest clothing store, with a network spanning 74 territories with more than 5000 stores worldwide and a presence in 53 online markets and has nearly 800 factories located in Asia and Europe (Statista, 2021). Having a large number of factories worldwide also helps H&M reduce the time to transport products to the outlets then it can quickly update the fashion trends for customers’ needs. Customers find H&M retail stores to be particularly convenient because they can shop for a variety of products in one location. The company has grown at a far faster rate in locations that are both easily accessible and fairly priced. 3.4. Promotion When having good fashions items, the next step is to promote them to the users and H&M uses a multi-channel promotional strategy to have the best results. In the era of technology and social media, H&M takes advantage of having a huge number of people using social media today to advertise its unique products and campaigns on social media platforms such as Facebook, Instagram, Youtube which have millions of followers. Moreover, it also has TV advertisements and H&M's advertising is creative and focuses on the brand's latest inventive ideas. Each brand is in charge of its own marketing strategy. To raise awareness, the commercials are aired at regular intervals and on networks that are mostly watched by young people. Promo codes and discounts, which are available during the end-of-season sale, are essential for encouraging purchases. Discounts are available both online and in outlets. To raise brand awareness, H&M also become a sponsorship in some programs such as H&M We Love Horses, Save and protect children with UNICEF. Furthermore, H&M also invites many famous models and celebrities to present in its fashion show such as Edie Campbell, Gigi Hadid, and Kendal Jenner. 4. Porter’s five forces Fashion is considered highly competitive when it has many strong rivals such as Zara, GAP, or many small local fashion stores. However, the fear of new entrants is a weak factor when achieving economies of scale, as H&M has done, is difficult, and no small business can work as swiftly or as competitively. Furthermore, client loyalty is low because fashion is readily replaced by others, therefore H&M has a cost advantage over rivals in order to continue in the sector for a long time. Moreover, there is a strong threat of substitutes for active companies when substitutes are readily available for clients to switch. In this fashion industry, the bargaining power of

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suppliers is low while the bargaining power of buyers is high because H&M has to compete to attract the consumers and be more dependent on the customers to have great sales revenue.

5. Recommendations To gain success in the retailing sector, a business has to define a set of marketing objectives based on the company's objectives. These goals and strategies must be practical and measurable and be revised after implementing the strategies to have proper adjustments. Having clear goals will motivate people in business to achieve the goals. Moreover, doing market research is an important part of marketing strategy that helps the business fully understand the market about growth, social trends, and demographics, and then the business can form a close relationship with local marketing teams. Knowing that H&M has many threatening rivals so that H&M should always keep an eye on its competitors' growth and plans, and strive to adapt its strategy as needed. Another key for marketing strategies is communication. H&M should improve relationships with customers as well as the employees who directly implement new campaigns and discuss to come up with new strategies. Overall, H&M is doing well, so that it should keep forward to make more outstanding performance in the future.

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References Hardy, J., 2016. The History Of Marketing: From Trade to Tech. [online] History Cooperative. Available at: [Accessed 17 September 2021]. Statista. 2020. Number of stores worldwide of the H&M Group by country 2020 | Statista. [online] Available at: [Accessed 17 September 2021].

Kohan, S., 2018. Why Zara Wins, H&M Loses in Fast Fashion . [online] The Robin Report. Available at: [Accessed 17 September 2021]. M., Steve., 2019. Importance of a Marketing Strategy in an Organization. [online] Small

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September 2021]. Rathburn, P., 2021. H&M: The Secret to Its Success. [online] Investopedia. Available at:

[Accessed 17 September 2021]. Momin, A., 2021. H&M PESTLE Analysis 2021: Success is a Few Tweaks Away. [online] PESTLE Analysis. Available at: [Accessed 17 September 2021]. Team, M., 2019. H&M PESTLE Analysis | MBA Skool . [online] MBA Skool. Available at:

[Accessed 17 September 2021]. Statista. 2021. United States - unemployment rate 2020 | Statista . [online] Available at:

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