You are required to fulfill the following four tasks in essay format. The questions in these tasks are all based on the scenario above. Each answer must address the question, and provide an analysis supported by relevant marketing theories and concepts. Total word limit is 3,500 words; your assignment should be at least 3,000 words in length.
Task 1:
a. Examine a few definitions (at least two) of marketing and explain the marketing process with example drawn from H&M.
b. Discuss the different kinds of marketing orientations and recommend the most suitable marketing orientation for H&M.
Task 2:
a. Analyse the macro and micro environmental factors that influence the marketing decisions of H&M.
b. Identify a new product for H&M and examine the concept of segmentation and recommend segmentation criteria and targeting strategy to be used for the newly developed product.
c. Identify factors that will influence buyer behavior and propose a new positioning strategy for your organisation and its newly developed product.
Task 3:
a. Using H&M as your chosen company, explain how the new product was developed to achieve sustainable competitive advantage.
b. Evaluate a range of distribution methods that H&M can use for the newly developed product to provide convenience to a target group of customers.
c. Discuss and critically evaluate the various pricing methods used by businesses and recommend pricing strategy that H&M can use for the newly developed product.
d. Explain the concept of integrated marketing communication and discuss the elements of promotional mix including extended the extended marketing mix as relevant to H&M’s newly developed product
Task 4:
a. Evaluate the marketing mix variables for two segments of the consumer market and discuss how different it would be for business- to-business services (B2B).
b. Assuming that H&M decides to enter the international market with the newly developed product, examine and discuss the differences between domestic marketing and international marketing.
Learning outcomes:
1) Understand the concept and process of marketing
1.1 explain the various elements of the marketing process
1.2 evaluate the benefits and costs of a marketing orientation for a selected organisation
- Make effective judgments analyzing marketing process in your organisation with another similar oraganisation
- An effective approach to study and research has been applied using appropriate examples while evaluating marketing orientation of organisation.
2) Be able to use the concepts of segmentation, targeting and positioning.
2.1 show macro and micro environmental factors which?influence marketing decisions
2.2 propose segmentation criteria to be used for products in different markets
2.3 choose a targeting strategy for a selected product/service
2.4 demonstrate how buyer behavior affects marketing activities in different buying situations
2.5 propose new positioning for a selected product/service
- Relevant theories and techniques have been applied when analyzing macro and micro environment.
- Complex information/data has been synthesized and processed when examining segmentation and recommended segmentation criteria.
- Throughout the course work the student supported the report using a range of sources of information that has been used.
3) Understand the individual elements of the extended marketing mix
3.1 explain how products are developed to sustain competitive advantage
3.2 explain how distribution is arranged to provide customer convenience
3.3 explain how prices are set to reflect an organisation’s objectives and market conditions
3.4 illustrate how promotional activity is integrated to achieve marketing objectives
3.5 analyse the additional elements of the extended marketing mix
- In the report, an appropriate structure and approach has been used.
- A coherent, logical development of principles/concepts for the intended ?audience is evident throughout the report.
4) Be able to use the marketing mix in different contexts
4.1 plan marketing mixes for two different segments in consumer markets (B2C).
4.2 illustrate differences in marketing products and services to businesses rather than consumers
4.3 show how and why international marketing differs from domestic marketing.
Your chosen Organization will be subjected to 4 tasks covering all the prerequisite Learning Outcomes. The submission should be written in a business report format and ALL tasks appropriately labeled (NOT one long essay)
Task 1 Questions on the concepts and process of marketing
Task 2 Question on the concepts of segmentation, targeting and positioning
Task 3 Question on the individual elements of extended marketing mix
Task 4 Question on the application of the marketing mix in different contexts
- The work you submit must be in your own words. If you use a quote or a illustration from somewhere you must give the source.
- Include a bibliography at the end of your document. You must give all your sources of information.
- Make sure your work is clearly presented and that you use correct grammar.
- Wherever possible use a word processor and its “spell-checker”.
Introduction and background notes (Scenario):
H&M GETS HOTTER: FASHION AT ITS FASTEST
Stefan Persson, chairman of Swedish retailer Hennes and Mauritz (H&M) vividly remembers his company’s first attempt at international expansion. It was 1976; the year H&M opened its London store in Oxford Circus. “I stood outside trying to lure customers by handing out Abba albums’ he recalls with a wry laugh. Persson, the 29, son of the company’s founder, waited for the crowds. I still have most of those albums,’ he says. But Stefan is not crying that unsold vinyl. In a slowing global economy with lacklustre consumer spending and retailers across Europe struggling to make a profit, H&M’s pre- tax profit hit £1.7 billion in 2008, a 10% increase on the previous year, on sales of £7.4 billion. At current sales levels, the chain is the largest apparel retailer in Europe. This is not just a store chain; it is a money-making machine.
Marketing at H&M:
If you stop by its Fifth Avenue location in New York or check out the membership at the corner of Hamngatan in Stockholm, it’s easy to see what’s powering H&M’s success. The prices are as low as the fashion is trendy, turning each location into a temple of ‘cheap chic’. At the Manhattan flagship store mirrored disco balls hang from the ceiling, and banks of television broadcast videos of body-pierced, belly baring pop princesses of the moment. On a cool afternoon in October, teenage girls in flared jeans and two-toned hair mill around the ground floor, hoisting piles of velour hoodies, Indian-print blouses and patch work denim skirts – each £16 or under. The average price of an H&M item is £10. This is not GAP’S brand of classic casuals or the more grown-up Euro chic of Zara. It’s exuberant, it’s over-the-top and it’s working. ‘Everything is really nice – and cheap,’ says Sabrina Farhi, 22, as she clutches a suede trench coat she has been eyeing for weeks. The H&M approach also appeals to Erin Yuill, a 20year old part-timer employee from New Jersey, who explains, ‘things go out of style fast. Sometimes, I will wear a dress or top a few times and that’s it. But I’m still in school and I don’t have a lot of money. For me this is heaven.
H&M is also shrewdly tailoring its strategy to the US market. I Europe, H&M is more like a department store – selling a range of merchandise from edgy street fashion to casual basics for the whole family. Its US stores are geared to younger, more fashion-conscious females. H&M’s menswear line, a stronger seller in Europe hasn’t proved popular with the less-fashion conscious American male. So a number of US outlets have either cut back the selection or eliminated the line. And while the pricing is cheap, the branding isn’t. H&M spends a hefty 4% of revenues on marketing.
Behind this stylish image is a company so buttoned-down and frugal that you can’t imagine its executive tuning into a soft-rock station, let alone getting inside a teenager’s head. Stefan Persson, whose late father founded the company, looks and talks more like a financier than a merchant prince. H&M is run on a shoestring’ says Nathan Cockrell, a retail analyst at Credit Suisse First Boston in London. They buy as cheaply as possible and keep overheads low.
H&M is pursuing a strategy that has undone a number of its rivals. Benetton tried to become the world’s fashion retailer but retreated after a disastrous experience in the USA in the 1980s. Gap, once the hottest chain in the States, has lately been struggling on its relatively slow reaction time to changing fashion trends and its failure to attract young shoppers and has never taken off abroad. Body Shop and Sephora had similar misadventures.
Nevertheless, Persson and his crew are undaunted. When I joined the company in 1972, H&M was all about price, he says. Then we added quality fashion to the equation but everyone said you could never combine fashion quality and price successfully. But we were passionate that we could. Persson is just as passionate that he can apply the H&M formula internationally.
What that formula exactly? Treat fashion as if it were perishable product: keep it fresh and keep it moving. That means spotting the trends even before the trendies do, turning the ideas into affordable clothes and making the clothes fly off the shelves.
Although H& M sells a range of clothing for women, men and children, its cheap-chic formula goes down particularly well with the 15 to 30 set. Lusting after what Dolce and Gabbana corduroy trench coat but unwilling to spend £600 plus? At £32, H&M’s version is too good to miss. It’s more Lycra than luxe and won’t last forever. But if you are trying to keep current, one season is sufficient. At least half my wardrobe comes from H&M says Emma Mackie, a 19 year old student from London. It’s really good value for money. H&M high-fashion, low-price concept distinguishes it from Gap Inc, with its all-basics-at- all price points and chains such as Club Monaco and Bebe whose fashions are of the moment but expensive. It offers alternatives for consumers who may be bored with chinos and cargo pants but not able to or willing to trade up for more fashion. H&M seized on the fact that what’s in fashion today will not be tomorrow. Shoppers at the flagship store agreed particularly the young ones that the retailer caters to.
In 2004, H&M commissioned Karl Lagerfeld, Chanel’s designer to create the limited- edition Lagerfeld range, which included a £70 sequined jacket and cocktail dresses for under £55. The range, which was offered in the USA and 20 European countries sold out within two hours in some stores. This was followed in 2005 by the Stella McCartney collection. McCartney, the British designer whose clothes normally retail for hundreds and sometimes thousands of Pounds, designed 40 pieces for H&M, including camisoles, skinny jeans and tailored waistcoats. The average price was £40 per item around 15 times cheaper than her own prices The limited edition was a resounding success, with customers queuing from as early as 6.30am to get first pick of the clothes.
Since then, many other top names have lined up to work with H&M, including Robert Cavalli, Kylie Minogue and Madonna. I 2009, Matthew Williamson, who has designed dresses for Sienna Miller, Keira Knightley and Penelope Cruz, reworked his most popular designs – kaftan dresses, beaded cardigans and print frocks – for the retailing giant. His designs sold out within hours of hitting the stores.
Design at H&M:
H&M’s design process is as dynamic as its clothes. The 95-strong design group is encouraged to draw inspiration not from fashion shows but from real life. We travel a lot says designer Ann Sophie Johansson, whose trip to Marrakesh inspired host of creations worthy of bazaars. You need to get out, look at people, new places. See colours. Smell smells. When at home, Johansson admits to following people off the subway in Stockholm to ask where they picked up a particular top or unusual scarf.
The team includes designers from Sweden, the Netherlands, Britain, South Africa and the USA. The average age of designers is 30. Johansson is part of the design group for 15 to 25 years old and one style they designed for the autumn was Bohemian: long, crinkled cotton skirts with matching blouses and sequined sweaters for a bit of night- time glamour. The goal is to keep young shoppers coming into H&M stores on a regular basis even if they are spending less than £16 a time. If they get hooked, they will stay loyal later on when they become more affluent.
Not all designs are brand new: many are based on proven sellers such as washed denim and casual skirts, with a slight twist to freshen them up. The trick is striking the right balance between cutting-edge designs and commercially viable clothes. To deliver 500 new designs for the stores for a typical season, designers may do twice as many finished sketches. H&M also has merchandise managers in each country, who talk with customers about the clothes and accessories on offer. When they travel, buyers and designers spend time with store managers to find out why certain items in each country have or have not worked. In Stockholm, they stay close to the customers by working regularly in H&M’s stores.
You work as a Marketing Executive for H&M and you have been asked to coordinate with the different departments in your organisation in developing and marketing a new product. As part of this, you are required to produce a written report based on the four tasks below.