H&M Market Planning Analysis

The assignment report concludes that H&M needs to analyze its market and create a marketing plan. The company's success in entering the Algerian market with organic products was due to careful planning, which helped identify the need for such products and ultimately achieved profit maximization. The report highlights the importance of marketing planning in analyzing internal capabilities and external environmental factors that impact business activities.

MARKETING PLANNING
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TABLE OF CONTENTS
Introduction...........................................................................................................................3
Task 1................................................................................................................................... 3
Changing approach to marketing planning (1.4)..........................................................3
Evaluation of H&M’s capability for planning the future marketing activity (1.2)............3
Examination of techniques for organizational auditing (1.3).........................................4
Application of organizational audit techniques (1.4).....................................................5
M1. Audit report to chief executives.............................................................................6
D1. Critical evaluation of capabilities...........................................................................7
Task 2................................................................................................................................... 7
Barriers facing marketing planning managers (2.1).....................................................7
Examining to overcome these barriers (2.2)................................................................8
D2. Critical illustration of the importance of the marketing planning............................9
Task 3................................................................................................................................... 9
Executive Summary.....................................................................................................9
Role of Marketing Plan in Corporate Strategy..............................................................9
Techniques for New Product Development................................................................10
Product Description....................................................................................................10
Pricing Strategy..........................................................................................................11
Distribution strategy....................................................................................................11
Promotion and communication strategy.....................................................................11
Implementation ......................................................................................................... 12
Ethical considerations................................................................................................12
D3 ............................................................................................................................. 12
Conclusion..........................................................................................................................13
References......................................................................................................................... 15
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INTRODUCTION
Marketing planning is an important element of every business plan because it
communicates about the intended business and a way in which that business will be able
to succeed or not. This report is focused on the marketing planning of H&M which is a
fashionable retail store. Discussion has been made on the ability of H&M to do the
marketing audits and to understand the main hurdles of marketing planning. Further, it has
been discussed that H&M is able to formulate the marketing plan for a product or service
and it understands the ethical issues in marketing which can affect the functioning of the
organization.
TASK 1
Changing approach to marketing planning (1.4)
Marketing plan is a business document which is written for the purpose to describe
the current position of market in which the business works along with the marketing
strategy of that business. H&M has also employed the marketing plan and has changed it
according to the changing environment. Traditional marketing planning focuses on certain
factors such as initiatives, costs and funding, return on investment, market conditions,
competitor analysis, etc. but modern marketing planning focuses on these factors along
with the welfare of society while earning profitability. H&M does marketing planning by
analysing its competitor, that is, ZARA (Aljukhadar and Senecal, 2011).
Pricing of H&M is lower than that of ZARA because it wants to provide its product to
all the customers who wish to be fashionable without any hindrance of price. H&M made
its strategy in a modern environment by analysing the customer's need and brought a
concept that it is possible for every customer to find their own dressing style from their
collection. It also offers a wide range of products at lower price but with good quality and
follows the concept of EDLP as well (Brooksbank, 2009). It uses the latest technology for
promoting its goods and also provides the facility of delivering goods worldwide if shopped
through its online website.
Evaluation of H&M’s capability for planning the future marketing activity (1.2)
While planning for the future marketing activity, capability of H&M's should be
evaluated in terms of human resources, financial resource and physical resources. These
resources are required in order to carry out the marketing function in the future. First of all,
the capability of human resources should be evaluated that is employees of the
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organization must be capable enough to carry out the marketing functions. For example,
employees should have the ability to forecast the market and must plan out the
assumptions accordingly (Drejer, 2000). Then, they need to convert those assumptions
into the plan and require implementing it for future expansion. If these skills are not
possessed by the existing force then new workforce should be recruited in order to carry
out the future task.
Secondly, it is to be evaluated that whether company is financially strong or not. To
carry out the future marketing activity, fund is required. It should analyse the financial
resources from where fund can be availed and the source that has least cost involved.
Other physical capabilities such as machineries are technologically upgraded to cope up
with the future market plan. Along with that, a detailed evaluation should be done. In case
if it has become obsolete then new machineries should be installed with the latest
technology (Jones and Hillier, 2008).
Examination of techniques for organizational auditing (1.3)Organizational audit
means scanning the organization's environment both internally as well as externally.
Marketing manager of H&M does the audit of company to know its capabilities in terms of
HR, finance and other physical resources to carry out their marketing functioning in a
dynamic environment. Company's capabilities in accordance with the market opportunities
is being analysed during organizational auditing. Various techniques are used to do the
auditing of firm (Mason, 2007). Internal technique is SWOT analysis which is applied so
that company would come to know about their strengths and weaknesses as well as
opportunities and threats that are prevailing in the market. It is very advantageous for the
organization to do SWOT analysis because it helps in understanding H&M in a better
manner. Also, it addresses the weaknesses so that company can overcome it.
It allows the firm to analyse the opportunities prevailing in the market and to grab
them in an easier manner. It also helps in detecting the threats that can harm the
organization's activity (Proctor and Kitchen, 2008). For external assessment, tool of
PESTLE analysis is used which is the most beneficial technique to analyse the political,
economic, social, technological, ethical and legal environment which affects the
functioning of H&M.
Application of organizational audit techniques (1.4)
Strengths Weaknesses
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 It is one of the largest fashion
retailers worldwide.
 Globally brand awareness.
 Customer relations are excellent.
 Trendy and quality products are
offered at affordable prices.
 Less innovative products.
 Control over product is lacking.
 Buying large volume can lead to over
stocking of the products.
Opportunities Threats
 It can collaborate with the luxurious designers to bring innovation in the product
category.
 Emerging international markets bring a lot of opportunities to expand their share.
 Can go into organic clothing.Strong
competitors such as ZARA also have
the same marketing strategy.
 Rising labour cost.
 Newest business line home ware
failed in the market of Europe which
affected the clothing business as well.
PESTLE Analysis:
Political- Due to foreign exchange fluctuation, H&M has to face losses in delivering
its products to different countries. Company has to follow strict regulations of those
countries where production is done.
Economical- H&M is a globally active company but due to rise in the price of raw
materials, it has to increase the prices of their products which impact their low pricing
strategy. Economic condition of Europe is weak and labour cost is rising which impacts the
business of H&M (Wise and Sirohi, 2005).
Social- Demographic segment is changing, consumer’s lifestyle has changed and
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consumers have become more conscious about the go green concept. All these factors
impact the H&M’s strategy and its functioning.
Technological- Due to development of new recyclable fibre, H&M has to adopt the
policy and need to use this fibre for manufacturing the clothes. This fibre cost more than
the normal fibre which affects the profitability of company. New ways of buying that is
online shopping which affects the business of H&M outlets (Lee and Trim, 2008).
Legal- H&M has to follow the legal rules related to environment and chemical which
is used in clothing that harms the environment.
Environmental- Unexpected climate change, increasing pollution and concern about
global warming impacts the production of clothing which creates pollution and harms the
environment.
M1. Audit report to chief executives
Organizational auditing on H&M has been done by applying two auditing
techniques, that is, SWOT analysis and PESTLE analysis which reflects the way in which
much company is capable of surviving in the dynamic environment. According to the
analysis, it has been inferred that company is able to survive in the dynamic environment
because it is capable of facing intense competition due to maintaining good relations with
customers but if the labour prices would get increased then it may impact their strategy of
low pricing (Dibb and Simkin, 2008). H&M follows all the legal rules and regulations given
my government which will not impact its working but it is technologically less upgraded
which will affect its business activity. It takes care of society and the environment by
following the "go green wear blue" concept. H&M has expanded its business worldwide so
weak economic condition of Europe will not affect its profitability because it may be earned
from other countries (Westwood, 2008).
Two strategies for improvement
Product Development- H&M has the opportunity to expand the business by
developing its product into organic clothing. H&M can do premium pricing for such product
category. Consumer relations are highly maintained so it would not be difficult for company
to attract new customers. People will easily pay high price for the product due to good
brand image (Stevens, 2006).
Social Media Marketing- Marketing department of H&M can bring improvements in
their marketing strategy by doing marketing on social networking websites such as
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Facebook, Twitter, etc. so as to bring awareness of their brand (Beamish and Ashford,
2007).
D1. Critical evaluation of capabilities
According to the above discussion on the capabilities of H&M for future marketing
activities, it has been evaluated that human resources of firm are capable enough to
survive in the dynamic environment but if the new product is developed then personnel
with such skill has to be hired which will add to the cost of production because recruitment
process and training has to be provided to them. Evaluation of physical resources has
been done and it was found that machines are technologically upgraded and for new
products, many new machineries has to be installed which will be good for the long term
profitability but will enhance the cost at introductory stage (McDonald, 2009).
Two new strategies have been recommended in the above question, that is, product
development and social media marketing. In product development, customers’
expectations can be met by developing new product in the existing market. This requires
keen attention on the competitor’s strategy and customers’ needs in both current as well
as in future. This will help in expanding the business with improved performance and
competitive edge can be build up. But there is a greater risk of product failure which will
directly impact the existing product’s sales and on its brand image as well. Company can
do social media marketing by creating a page or blog on the networking websites and can
offer coupons and gifts cards by conducting quiz on these sites (Cravens, 2006) Company
will have cost advantage because most of the sites are free to access and can reach the
target market easily because most of the young people access these sites. But the
personnel have to stay active on these sites because every time company has to post or
repost the product’s information. It is almost impossible to identify the return on investment
on these sites.
TASK 2
Covered in PPT
D2. Critical illustration of the importance of marketing planning
Marketing planning is important for every business organization. In H&M also,
marketing planning is done in order to come up with the latest technology and changing
market trends. Marketing planning helps in identifying the needs and wants of consumers
and demand of products of H&M. It also helps in analysing the competitor’s strategy. It
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helps in identifying the opportunities and threats that are prevailing in the external
environment. But in making the market plan, heavy cost has to be incurred which affects
the profitability of organization. Much time has to be invested and best researchers have to
be appointed in order to conduct the market research. This again adds to the cost of
production. It is not necessary that satisfactory results can be known by investing high cost
and time. Thus, it can be concluded that marketing planning is important for H&M but it
may affect the profitability of company as well.
TASK 3
Marketing Plan of H&M in Algeria
Executive Summary
Marketing plan of H&M for the organic clothing has been made in order to occupy
the market share in country of African continent. In this country, potential of such product is
high because of increasing pollution and diseases. Company tends to achieve the goals of
profit maximisation by keeping the prices of products high.
Role of Marketing Plan in Corporate Strategy
Corporate strategy of H&M is to expand its market share in the emerging markets of
Algeria. Marketing strategy plays a major role in implementing the corporate strategy. If
corporates make the strategy of expansion then marketing department has to make pricing
and promotion strategy in order to capture the market share (Ferrel and Pride, 2011).
H&M's goal is to maximise their overall profits. By preparing this marketing plan, goal of
the organization can be achieved. Through this, H&M will be able to identify the current
market scenario and taste of potential consumer of Algeria which will aid in making the
decision about marketing mix strategy. Company can do heavy promotions for the new
product development by keeping the prices high. Profit of the organization will get
increased eventually. However, through this, goals of company can be achieved.
Techniques for New Product Development
H&M wants to develop a new product of organic clothing in the market of Algeria.
For this purpose, techniques should be applied in order to determine the need and
success of organic clothing. Two of the techniques are as follows:
Learning from failure: H&M had entered into many new markets in the past. It may
have faced many failures during the launch of new products. Company can take the
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learning from past experience while entering into new market (Aljukhadar and Senecal,
2011). It should target and segment the market correctly and must take proper decision
regarding the pricing and promotion strategy. The firm should analyse product's features
before manufacturing it (How to Create a Marketing Plan, 2015).
Test Marketing: Before launching of new product, H&M should not be produced in
bulk. It should target a small group of customers and test their product on them and take
feedbacks accordingly. After analysing the feedbacks, H&M should bring necessary
changes in their product and then introduce the final product in the market (Brooksbank,
2009).
Product Description
H&M is introducing a new range of products in the markets of Algeria which is
organic clothing. These clothes are made from the materials such as cotton, jute and wool
which are grown without usage of any pesticides or insecticides. Production of these
clothes is costly because they are made from the pure material so H&M would keep the
high pricing of such clothes. Benefit of these clothes are more in the country like Algeria
because government and society are more concerned towards the diseases that are
spread in the African continent (Drejer, 2000). They also happen due to chemicals in the
artificial clothes. Organic clothing would help in reducing the risk of diseases by not
harming the environment of country.
Pricing Strategy
Production of organic clothing is costly because the raw material procured costs
high to the organization which leads to increase in the cost of production. Thus, H&M has
to keep the prices of product high because it has to achieve its goal of profit maximisation
also. African people would prefer to buy such clothes as it would reduce the pollution of
country and reduce the risk of diseases because they are made from the pure materials
and no chemical is included in this (Jones and Hillier, 2008). High income group people
can buy such clothes as premium pricing would be charged but the low income group
people cannot afford to buy such clothes. Thus, the target market of H&M would be high
income group people.
Distribution strategy
In order to promote the product at marketplace, different distribution strategies are
available. It assists corporation to increase the number of customers. In this regard, online
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marketing can be used wherein customers can directly contact the firm. However,
company can contact to commercial sites like Amazon, Myntra etc. These prove to be
effective to deliver the product to the end users (Proctor and Kitchen, 2008). Further,
retailers can be selected who provide products and services to ultimate buyers.
Furthermore, distributors should be local so that company can save the cost to a great
extent. This in turn increases the sales turnover of organic clothing and meets the
expectations of customers in an effectual manner.
Promotion and communication strategy
In order to promote the product in new market, it is important for H&M to adopt
effective strategy. Here, internet marketing will be used to target the large market segment.
However, mobile and social media are also used so that all customers would get the
detailed information related to new products and services (Lee and Trim, 2008). The main
motivate behind selection of this strategy is to increase the awareness among customers
in less time. It aids to increase the sales turnover and to recover the cost of production.
Further, products will be introduced with special offer like discount for first 10 customers. It
leads to persuade the buyers and increases the popularity of organic clothes as well (Your
marketing plan, 2015).
Implementation
There are several actions that will be taken to implement the strategy successfully.
Here, key performance indicators are set in accordance with the objectives such as
increased sales turnover, profit maximization and high customer base. Further, marketing
objectives are also considered as it helps the management to analyze variation in the
actual and expected results (Dibb and Simkin, 2008). With this, H&M can bring
modification in the plan so that strategy can be implemented successfully. Furthermore,
Gantt chart will be referred to complete all necessary activities in an effectual manner.
Apart from this, all the activities specified in the project will be checked against standards
so that company can be able to achieve the specified objectives effectively.
Ethical considerations
Ethical issues are the greatest barriers behind the slow growth of firm. Owing to
this, H&M must ensure that it gives due consideration to all important factors which
determine the ethical conduct of business. For example, wrong comparison in
advertisement proves to be ineffective whereby company face issues in its consistent
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growth. Further, while making the marketing plan, right information should be mentioned
and the advertisement should not be unethical which harms the ethnicity and religion of
people (Payne and McDonald, 2012). However, in case of ethical issues, corporation must
communicate with public and rightful actions must be taken at the right time. This in turn
regains the trust of buyers and increases the sales turnover of firm.
Consumer ethics is another imperative aspect wherein customers get detailed
information related to quality of products. It enables them to purchase the right product
which meets their requirement in an effectual manner. However, there must be customer
awareness related to organic clothes so they can ensure about the quality of same. Owing
to this, management of H&M must pay attention to ethical issues and consumer ethics at
the time of creating marketing plan (Cravens, 2006).
D3
Human resources required- In order to implement the strategy, team of at least 10
people will be required. Under this, 3 marketing executives will be involved. Further, 5
employees who are working in the marketing field will be involved. In addition to this, 2
employees from R&D department will also be included so that necessary information will
be collected from the market.
Time line
Activities/
weeks
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Acquiring
information
Setting
objectives
Development
of new product
Setting
appropriate
pricing
strategy
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Selection of
distribution
strategy
Promoting
products
Implementing
strategy
Review
Modification
Execution
CONCLUSION
From the affirmative report, conclusion can be made that it is necessary for H&M to
analyse its market and to do the marketing planning. Marketing planning helped company
to analyse the internal capabilities and impact of outside environment on business
activities. Also, it has been assessed in the report that condition of Europe affects the
functioning of H&M the most. While entering in the new market of Algeria with organic
products, company made the complete market plan in order to analyse the potential of
new product. Thus, it helps in identifying the need of such product in the new market and
through this; company achieved the objective of profit maximisation.
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REFERENCES
Journals
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Books
Beamish, K. and Ashford, R., 2007. Marketing Planning 2007-2008. Routledge.
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Dibb, S. and Simkin, L., 2008. Marketing Planning: A Workbook for Marketing Managers.
Cengage Learning EMEA.
Ferrel, C. O. and Pride, M. W., 2011. Marketing. 16th ed. Cengage Learning.
McDonald, M., 2009. Marketing Plans: How to Prepare Them, how to Use Them. Elsevier.
Payne, A. and McDonald. M., 2012. Marketing Planning for Services. Routledg.
Stevens, E. R., 2006. Marketing Planning Guide. Psychology Press.
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Westwood, J., 2008. The Marketing Plan: A Step-by-step Guide. Kogan Page Publishers.
Online
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<http://www.entrepreneur.com/article/43018>. [Accessed on 6th October 2015]
Your marketing plan. 2015. [Online]. Available through:
<http://www.marketingdonut.co.uk/marketing/marketing-strategy/your-marketing-
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