H&M Case Study

H&M CASE STUDY LECTURER: JOSE SCHEUER PREPARED BY: ZUBAIR FARHAT
Q1. To what extent is H&M marketing orientated? What evidence is there in the case to support your view? Market orientation is when a company organizes its activities, products and services around the wants and needs of its customers. In the case of H&M it can be seen that the organization follows the market orientation philosophy as it focuses on the needs and wants of the customers before making its products. The company recognizes the ongoing slump in the world economy and sees the fact that it is hard for consumers to buy expensive fashion clothing so it comes up with the idea of trendy and fashionable clothes but within the reach of the common man. From the case study there is evidence of the company following and believing in market orientation school of thought. For example, H&M has its strong footholds in both Europe and the US but the way they market and sell their products in these two regions is very different. In Europe H&M is seen as more of a department store however in the US the company targets the young and more fashion conscious females. In other case H&M keeps the customers and there wants in mind when designing or launching a new product line, as seen from the case study, Ann-Sofie Johansson a designer for H&M admits that finding the needs of the customers is very important, she says and admits that she used to follow people off the subway and questioned them about their fashion needs.
Q2. Into which cell of the efficiency-effectiveness matrix does H&M fall? Justify your answer. Efficiency means doing the thing right and Effectiveness means doing the right thing. In regards to the matrix H&M is both efficient and effective. Efficiency is achieved when a company produces its goods economically, by keeping overheads and costs to the minimum, H&M does the same, it outsources its production to low cost countries like China, Bangladesh etc thus saving up on cheap labor. A company is effective in markets when its strategy is successful within the consumers. H&M successfully achieves this as not only H&M customers buy their products but they
also become loyal customers to the brand as it is of an affordable price as well as in line with fashion, H&M recognizes that there products do not last long but it does not affect them or their customer as both of them know that the customer will buy a particular coat or jacket for only a season. For example in the case study it shows the comparison of prices between Dolce and Gabbana trench coat worth 600 pounds and that of H&Ms 35 pounds trench coat. Q3.What is the basis of the customer value H&M provides for its customers? Customer value is the consumers assessment of the products overall capacity to satisfy his or her needs. In the case of H&M the company does its best to satisfy its customers needs and does well in it. The basic formula of the company is the cheapchic formula in which the customers are provided with cheap yet fashionable products. This formula of the company has been there since the beginning of the company and has been successful since, the foremost reason for this is the cheap price of the product as well as the freshness of the product. The company does not believe in stacking high inventory as it also raises costs as and makes the product obsolete as well.
Q4. What are the marketing benefits to H&M of commissioning Karl Lagerfeld and Stella McCartney to design limited edition clothing ranges? Karl Lagerfeld and Stella McCartney are both famous designers working for high priced and luxury clothing brands like Chanel. Employing both these designers was a very effective strategy implemented by H&M which turned out to be quite efficient as well because even after employing such high priced designers H&M could sell off their new range with nominal prices like 55-70 pounds. The marketing benefits which H&M achieved were that their customers felt that not only H&M provided their customers with cheap fashionable clothes but also cheap designer clothes which is quite rare in the fashion industry. This was proven by the range of Karl Lagerfeld being sold within hours of its launch at the H&M stores.
Q5. What challenges are likely to face H&M in the future? Since the formation of the company it has been experiencing growth in its markets and achieving higher profits in comparison with its competitors, for example in 2005 H&M had a pre-tax profit of 1 Billion pound on sales of 4.5 Billion whereas GAP; a competitor of H&M had profits of 978million pounds on sales of 8.7 Billion. However H&M will have to cautious in regards of the future as the economy is still showing a downward trend
which is directly proportional to the consumers net disposable income, because fashionable and trendy clothes are wants of the consumers not needs. Secondly many other small brands recognize the strategy of H&M and may provide completion to the company in its sector of cheap fashion clothing. So H&M should have a plan to counter these threats which can become a challenge for the company.
Q6. Do you consider the marketing of disposable clothes contrary to societal welfare? Justify your answer? H&M treats fashion as a perishable product; the company keeps its costs low and passes on the low cost to the consumer in the form of cheap yet fashionable clothes. In regards to the question, no, I do not consider marketing of disposable fashion opposite to societal welfare. Cheap and trendy clothes keep the customers satisfied within their disposable income which in itself is for the betterment of society.

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H&M CASE STUDY LECTURER: JOSE SCHEUER PREPARED BY: ZUBAIR FARHAT

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