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H&M is one of the most successful apparel stores. However, to increase revenues and meet the clients’ needs, it is essential to analyze the market and predict future trends. The following paper provides SWOT and BCG analysis of H&M Company, as well as in-depth analysis of its target market, product concept, and marketing mix. The research allows to create a new product concept and outline market opportunities which would help H&M not to lose the leading position in global retailing.
Effective human resource policies and most prominent fashion designers as the members of their staff have helped H&M earn a considerable competitive advantage. Furthermore, a big number of stores allows minimizing the final costs by producing the goods in large quantities. With an outstanding supply chain, the company can provide its clients with the cutting-edge experience and satisfy their needs and desires on time. The fact that H&M holds the largest shares in the American market allows reducing the price even more (Cavallo, Neiman, & Rigobon,2014). Low products price gives the business an additional strength by attracting more clients with the middle income.
The major weakness the company faces is linked to its strength, namely, to the high demand for the products. As the demand for most goods grows, the quality of the commodities might be compromised (Baral, Keenan, Sharma, Stork, & Kasel, 2014).
In a globalized environment, the company has the opportunity to expand its business territories to the European and Asian markets. According to the current reports, H&M has a goal to open 15% more shops every year (Ho, 2014). H&M brand owns a number of other stores, COS and Weekday, for example, which can be opened in other countries as well.
The growing demand for cheap fashionable clothes contributes to intense competition in the market (Owh, Chee, & Loh, (2016). For example, Zara, which is the major competitor of H&M, has more than 840 stores across the world, whereas H&M has a little over 1,000 (Kim, 2014). The threat of new entrants is rather high, which should stimulate the company to use innovations and creativity to prosper on the global arena.
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H&M’s stars are the women’s clothing, which brings almost 55% of total revenues (Viardot, 2015). The economic recession increases the attractiveness of H&M stores as more and more people prefer to purchase goods at a reasonable price. Men’s clothing line is the second product that brings the company profit, which locates it in cash cows section. Shoes and hosiery are the question marks and the company should pay close attention to these segments, as the clients usually prefer to choose something from these items as a gift due to the affordable price. Sportswear at H&M can be located in dog’s section because it constitutes only 1% of the total profit. However, the business should develop and promote this line because a healthy lifestyle is a new trend.
Target Market Segment
H&M’s target market is people who view shopping as pleasure and want to follow fashion trends without spending too much. Although the store provides clothes for both genders, the vast majority of customers are young women. H&M concentrates on the lower middle-class clients, both women and men, and children. Nevertheless, the customer loyalty level is low because the buyers usually shop in different retailers to find the best piece.
Male clothes produced by H&M target those men who are searching for stylish outfit at the most affordable price on the market. The clothing line for women is more developed as H&M focuses on young and single women who want to purchase trending items at the most affordable price. The company’s philosophy aims at delivering “fashion and equality at the best price”, which characterizes the product concept in a most suitable.
H&M is a company that aims to provide the clients with fashionable clothes at a low price. They adopted the fast fashion strategy, which means that the latest fashion from the runway should appear on the mass market as fast as possible. H&M provides the buyers with a wide spectrum of goods, namely footwear, clothing lines for women, men, and children, and accessories. H&M is one of the largest retailers of clothing in the world, which, in addition, actively engages in online sales.
Due to affordable prices, many customers purchase more pieces than planned. Moreover, a wide variety of products for all cultures and preferences contributes to the increase in sales. H&M follows the latest fashion and offers new products at the most competitive price. The company occupied the niche of a fast fashion provider delivering items from the runway to the mass market at a high speed (Mahmood, & Kess, (2015). Besides, H&M provides the buyers with the opportunity to choose goods in different categories including accessories, women’s and men’s business apparel, and even footwear. A fashion industry is characterized by fast-changing nature, and therefore, H&M aims to sell the goods as fast as possible arranging sales and discounts to retail new product lines.
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The price policy stems from the company’s goal, which is to provide the most fashionable clothes at the lowest price. Outsourcing production to the third-world countries helps to achieve this goal. Based on the fact that H&M pieces have short product life-cycle, the company managed to develop effective transportation strategy. For example, basic line pieces are produced in Asia, so transportation to Europe is a time-consuming process. To deliver their fashion items faster, these pieces are produced in Turkey. In addition, the company has rigorous cost control policies and the executives are not provided with the privileges such as having a secretary. The combination of the aforementioned aspects gives the company a competitive advantage making the price for the products lower.
Paying close attention to the target market, H&M developed a multichannel strategy for promotion (Zentes, Morschett, & Schramm-Klein, (2017). H&M uses the Internet as the primary advertising tool. The customers can learn about the lowest price of products on numerous online platforms. The digital marketing techniques of H&M are often more effective than those used by their competitors. For example, ZARA, H&M’s main competitor, uses small font to announce sales, whereas H&M makes it eye-catching. Furthermore, the company invites famous designers and celebrities to collaboration, which makes the goods produced by H&M more attractive to the customers.
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As for the logistics, H&M ensures transparency, plainness, and trustworthiness (Turker, & Altuntas, 2014). The company prefers owning outlets to factories. They aim to establish the lowest price and therefore, the company adopts direct distribution strategy. H&M stores are located in the United States, Europe, and Asia. Launching online sales facilitated the expansion strategy.
New Product Concept
The healthy lifestyle is becoming a new trend, which the company’s management should use to its advantage. H&M can maximize its profits by introducing electronic cigarettes to its product line. Bright or elegant design, catching advertising campaign, and affordable price will contribute to the increase in revenues and sales. In addition, international community understands that nicotine is a threat to human health and stimulates citizens to give up this negative habit by increasing the price on cigarettes and banning smoking in public places (Rockville, 2014).
Although fashion is fast-changing, denim apparel seems not to lose its leading positions among clothing products. Therefore, to increase revenues and compete with the companies that specialize on making denim goods, H&M should focus on expanding the denim apparel line.
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Apart from the clothing line, the production of e-cigarettes can boost sales and engage new target groups. This product can complement the sport wear goods because smoking may become an obstacle for a person who would like to adopt active lifestyle. Therefore, H&M will remain a leader on the market and provide its clients with an opportunity to enhance their quality of life.
Although H&M is successful in fulfilling its objectives, it should consider possible opportunities for further development. While developing a new product, the company’s target market, objectives, values, and strategies were taken into consideration. An effective combination of current trends, fashionable apparel, and affordable prices are the factors that contribute to the prosperity and popularity of H&M.
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