H&M's Market Entry Strategy in India

The report provides an analysis of H&M's market entry strategy in India, focusing on the macro-environmental factors that have influenced their decision to introduce new products and services, such as handbags and men's purses. It also discusses the company's adoption of franchising as a mode of entry into the Indian market and Porter's generic competitive strategies, specifically cost leadership, which is being used by H&M to gain a competitive advantage in the market.

Strategic Marketing

Contents
INTRODUCTION...........................................................................................................................2
MAIN BODY ..................................................................................................................................2
Micro-environment analysis .......................................................................................................2
Modes of market entry ................................................................................................................5
Concept of market segmentation and targeting ..........................................................................6
Porter's generic strategies to gain competitive advantages ........................................................8
CONCLUSION .............................................................................................................................10
REFERENCES .............................................................................................................................11
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INTRODUCTION
Strategic Marketing utilizes by companies to create plan to better reach and satisfy
customers while raising profits and productiveness. It applies to determine consumer wants and
to make marketing plan to accomplish customer satisfaction, modify execution of organization as
well as raising profitability(Hitt and Duane Ireland, 2017). It also assists business become more
advanced and raise market ascendancy. Strategic marketing plan meet different goals such as
improving execution, creating business plan of actions, modification of operations of companies.
This study is based on H&M(Hennes&Mauritz) that is multinational clothing retail company,
now firm wants to enter India with the new product(handbag and men's purse). This report will
explain micro-environment analysis and state possible opportunities as well as threats within
market. It will assess three modes of market-entry and apply concepts of market segmentation
and targeting to evaluate potential target market. Furthermore, report will apply Porter's generic
strategy, explain gain competitive advantages by adopting one of generic strategies in chosen
market.
MAIN BODY
Micro-environment analysis
H&M is multinational fast fashion clothing retail company in the UK. Company opens
their stores in many countries such as Brazil, China and other nations, now they want enter into
India within new products and services(handbag and men's purse). For entering into new country
within new product, company needs to analysis macro environment factors of chosen nation. In
this analysis, political, legal, economic, technology, social, environmental elements are involved.
Such as following:
Political Factors: The political system is power and various political parties take concern
in active political relation. Policies of authorities, interest of political leaders, governmental
theory of various political parties are included in political environment. Income tax, services tax,
property taxation as well as sales tax paid by people, because taxation method of authority is
well developed in India(Hill, 2017). For improving efficiency and productiveness of government,
authority has followed their privatization policy. Therefore, it is easy to introduce new
products(handbag and men's purse) by paying taxation. For effective taxation system,
government has hold deregulating policy, authority stability and international stability that has
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made economic development in the nation. So that, authority pays attentions on various issues in
the nation.
Economic Factors: The nation's economic condition is the powerful. It involves changes
in taxation, interest rate, inflation, economic development as well as exchange rates. The
authority of India presented industrial reforms in 1991 and there is decreased in industrial
licensing, constitution of FIBP and liberalization of international capital that has made
betterment in the economic growth of India. The nation has promoted foreign investment in
chosen country(Ginter, Duncan and Swayne, 2018). So that, it is easy to introduce new product
and services by H&M in the India. Nation pays attention on education, health care, banking and
financial sector. Therefore, H&M easily acquires bank loans for setting up the business in terms
of introducing new products in India.
Social Factors: The social factors of India consists of different societal trends and
modification such as values, cultures, lifestyle, traditions, demographics features etc. There are
various standards in the society that are flexibility of population, income system, working hours,
behaviour to perform and standard of qualification and ability(PESTLE Analysis, 2018). Nation
needs addressed labour market and societal growth index that are distressing situations.
Government appears fail to control their atrociousness that promote them to grow in various
other regions. These actions have suffered reputation of India. By this way, people are not
invested their money in nation. These types of activities are harmful for H&M to introduce new
product(handbag and men's purse) in the chosen country.
Technological Factors: Chosen nation has created significant encouragement in
technology and it has fixed new smart phone with the latest description. It is centralizing on
product development and now presented new cost cutting procedure. It given 3 G and 4 G
technology to its user and also serves. The advance technology has decreased cost, improve
quality of good and lead to invention in their technology(Byron and Post, 2016). Therefore, it is
easy to H&M for introducing new products and services in the India by adopting new advance
technology. The new operators are introducing their services involving IT evolution, government
technology supporting, fresh material and its procedure, software upgrades and velocity of
practical application movement.
Environmental Factors: There are various environmental factors such as changes in
climate or weather that affects businesses like tourism, farming etc. the global warming is
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leading external factors and it is important issue to develop desire to assist atmosphere. It has
large impact on different industry. The business and urbanization has damaged environment and
most of the untimely deaths are happened in the chosen nation. The air pollution has affected by
water disposal, noise control, environment pressure groups etc. Authority of India is aware of
these pollution difficulties and taking needed steps to power these problems(Gathorne-Hardy,
and et.al., 2016). Therefore, there are many difficulties faced by H&M for introduced their new
products and services in the India.
Legal Factors: There are many legal changes and presented disability discrimination
made by authority of India. It has enhanced minimum wages. These legal modifications affect
costs and demand of company. Government of chosen nation regulate various legislation such as
employment law, well-being and security, trade and product restriction etc. These elements are
impacted on H&M for introduce their new products(Casabayó, Agell and Sánchez-Hernández,
2015).
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Illustration 1: PESTLE Analysis
Source:( PESTLE Analysis, 2018)

With the help of macro environment analysis, company identify their opportunities and
threats for business. Opportunities includes technology, taxation system and banking sources for
enter into India. In order to that, they are faced many threats like legal regulation, environmental
factors. For overcoming threats, company needs to identify factors and getting solution in the
business. Through this analysis, firm easily introduce their products in the chosen nation and
increasing profits. Company needs to follow all legislation regarding consumers, labour etc. for
customer satisfaction.
Modes of market entry
The mode of market entry is that between risk and control. In order to that, low intensity
modes of entry decrease risk. There are many modes of market entry such as merger and
acquisition, franchising, licensing etc. With the help of it, H&M introduce new product(handbag
and men's purse) in the India.
Merger and acquisition: It is one of the mode to entry into market. Organization is able
to purchase out local firm in the international market. By this way, they increase fast entry to
market. It changes firms to take over existing business and movement practical application,
functional procedures as well as controls in place within short time period. With the help of it,
firm select to purchase existing structure, network and resource(Bruwer and Li, 2017). It has
already implanted and change over it into new brand as desired with least time. It is beneficial
that direct owner ship and power over the acquired firm's assets and chances of earning more
revenues.
Franchising: It is important mode of market entry with majority of global fashion
brands. In the way, global retailers absorbs local business partner in the foreign market under
franchise agreement. Franchisee is given with the international brand and marketing formatting
and thoughts for good, brand promotion and sales are guided as per H&M. The success of this
mode is dependent upon success in attractive the right partner who is involved in developing
business and is able to project the brand as coveted and relationship management among two
firms. There is low risk and investment by franchisor interpret market culture, traditions and
environment of host nation(Ang, Benischke and Doh, 2015). With the low cost, franchisee gets
research and development as well as brand name. So that, they have no risk of product failure.
The laws and communication in India that is ongoing relationship among franchisors and
franchisee becomes easy to manage.
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Joint venture: When two or more companies join together to make new business
organization called as join venture. The singularity in joint venture is its shared ownership.
Political, legal, social, technological, economic and political environment promote joint ventures.
This partnership among home and international companies usually results in the creation of third
severally carry off company preventing for sale of the home company's products and services in
the foreign location.
With the help of mode of entry, company easily coming in market with their
product(handbag and men's purse) in the Indian marketplace. Through this, firm research all
information relating competitors, pricing, demand and supply in the marketplace. These modes
of entry help in expanding business, increasing sales, brand name as compared to their
competitors. By franchising, H&M increase their product quality and standards for entering into
the market and expanding their business. This also helps in increasing sales.
Recommendation:
Therefore, H&M should adopt franchising mode for entering into market. There are many
benefits to follow this type of mode of market entry. There is huge market and increasing
demand in all sectors of the economy. It is beneficial in terms of lower capital requirement for
H&M for introduce their product and service(handbag and men's purse). There are many
possibilities' franchisee in chosen nation that have capability to finance firm or to grow the
current business. In order to that, this mode is beneficial of finding it an attractive proposition to
pass on the business to future generation. This assists to build feeling of partnership through
simple language. The present law of contracts and Trade Marks Act gives adequate protection
for foreign franchisors in the events of emergence of any legal problems.
Therefore, franchising mode of market entry is beneficial for H&M in terms of
introducing new product and services in India. Because of, helps in build partnership. This mode
is also advantageous as marketing strategy that are required in order to run the business. This
strategy is also given to business for running and growing quickly. In case of support is needed
in resourcing a good location, franchisors are going to contribute help in that context as well.
Concept of market segmentation and targeting
Marketing segmentation:
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Marketing segmentation is the procedure of separating total assorted market for goods
and services into sub-market or segments each of them being solid in all major aspects is called
as market segmentation. It is based on the fact that market is collected of various purchaser to
same marketing programs. Therefore, all the possibility customers are assembly into sub-groups,
so that every such sub assembly is various from other but all consumers in specific sub collection
have by and large similar features(Bruwer and Li, 2017). Market segmentation is customer
oriented beliefs. It is method of identifying impressively the differences between consumers. It is
well tested system for directing marketing strategy. It allows offering dedicated services and
requiring based system for optimum deployment of funds.
The essential purpose of market segmentation is to determine the various and particular
wants of different kinds of customers so that suitable mix of goods and services may be designed
and offered to satisfy various kinds of consumers. There are different basis such as gender, age
group, income occupation etc. In order to that, there are various types of market segmentation
like psychographic, behavioural, geographic, demographic segmentation.
Demographics: It includes family size, income, race, religion, age, gender as well as
nationally. It is the simple and most broad kind of market segmentation utilized. Therefore,
H&M introduce new product and services (handbag and men’s purse) in the India. For enter new
market, company determine different segmentation for their new products.
Behavioural: This kind of segmentation divides population on the basis of their
behaviour, utilization as well as decision making outlines. Women’s always prefer hand bag, so
that it is very easy to H&M for introduce new products and services in the India(Casabayó, Agell
and Sánchez-Hernández, 2015).
Psychographic: It is one which utilize lifestyle of people their activities, interest and
opinion to determine market segment. Psychographic segmentation is quite same to behavioural
segmentation. It also gets these aspects of consumer purchasing behaviour into accounts.
Geographic: This kind of market segmentation divides people on the basis of
characteristics like location, languages utilized and other such basic components that separate
one geography from other.
Through choose particular segmentation, firm easily target customer and providing their
products and services to customers. With the help of it, they are incresaing customers and
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profiots of business. After chosing segmentation, company preparing plan for targeting audience
in the market.
Market Target:
Market targeting is procedure of choosing target market form the whole market. It
consists of group of purchaser to whom organization wants to satisfy or for whom good is
affected, price is set, efforts on promotion are created and prepared distribution network. It is
segmented utilizing certain bases such as income, place, education, age and life cycle. There are
two steps of procedure of targeting market such as evaluating market segment and selecting in it.
Company make sure that selecting particular segment for deciding target market. Then it is to
determine want and preferences of target market. It is important to identify type of target market
expects from the good. After that, once target market is determined, H&M can certain on various
approaches assists to promote their new product and services (handbag and men’s purse) in the
India. It is the key to attract new firms, enhancing sales and making business success(Casabayó,
Agell and Sánchez-Hernández, 2015).
A target market is unit of consumer for which H&M designs, implements and maintains
marketing mix suitable for wants and preferences of that group. It includes determining and
choosing particular segment for special attention. It is centralized on evaluating obtainable
segment’s attractiveness and choose one or more segment to serve. Organization purpose to
make higher image of their products in the minds of customers. They utilize this strategy to
demand broad audience based on common consumers wants and requirements other than
differentiated and concentrated strategies. Therefore, H&M make sure that selecting appropriate
segmentation for introducing product and services in the India. It helps in targeting audience for
selling of their product. This assists in increasing profits, sales and customer satisfaction. H&M
choose in demographic segment for targeting audience of their new product and services in the
Indian market.
Porter's generic strategies to gain competitive advantages
This strategy is utilized by companies for determining the profitability that is above or
below the industry average. The primary basis of above average profits in long run is sustainable
competitive advantages. There are two primary kinds of competitive advantages company can
possess low cost and differentiation. These types combined with the range of activities for which
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company seeks to accomplish them. There are three generic strategies such as cost leadership,
differentiation and focus.
Cost Leadership: In this type, company sets out to become low costs producers in its
industry. The sources of cost advantage are diverging and depend on the construction of the
business(Ginter, Duncan and Swayne, 2018). They involves search of economies scale,
proprietary technology, preferential access to raw material and other elements. Low cost creators
identify and develop all sources of cost advantage. If H&M accomplish and sustain overall cost
leadership then it will be an average performer in its business. It given command prices at near
average of organization.
Differentiation: Company seeks to be unique in its business along some dimensions that
are broadly valued by purchaser in the differentiation strategy. It chooses one or more attributes
that various purchaser in an industry perceive as essential and uniquely positions itself to meet
those wants(Porter's Generic Competitive Strategies, 2016). This is accurately the opposite from
the cost leadership option. With the help of it, company take over market from quality and
operational stand point instead of simple trying to sell the least expensive on the shelf.
Focus: The generic strategy of focus rests on the selection of narrow competitive range
within the business. The focuser selects a segment or unit of it in the business and tailors its
strategy to provide them to performance of others. There are two deviation includes in this type
such as costs and differentiation focus. First of variant involve company seeks cost advantage in
its target segment. Second of variants includes organization seeks differentiation in its business.
Both are deviations of focus strategy respite on difference between focuser’s target segment and
other section in the business.
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Recommendation:
Therefore, H&M should follow cost leadership generic strategy for introducing their new
product and services (handbag and men’s purse) in the India. The aim of this strategy is to
become lowest costs producers in the business. It is elder method to accomplish this aim is to
create on large scale that allow the business to expand economies of scale. Company utilize this
strategy because it is beneficial to various ways such as in creasing level of productiveness,
capabilities of usage, utilize of bargaining power, lean production techniques, impressive
utilization of technology in production procedure etc. This cost leadership generic strategy helps
to H&M in terms of introducing their new products and services in chosen nation. It is easy to
sale products for lowest price that assists in achieving needs of H&M in the long run. If there is
the largest performer in the marketplace, so that they choose to undercut for time period in order
to run their business. Therefore, H&M should adopt this strategy for gain competitive advantage
in the marketplace. With the help of it, they should gain competitive advantages in retail industry
and also increasing profitability of their business.
CONCLUSION
This report has summarised that different macro environment analysis such as political,
legal, economic, environmental, technology and social factors of India that are helping to H&M
for introducing new products and services(handbag and men’s purse). It can be concluded that
three mode of entry such as merger and acquisition, franchising and joint venture. H&M adopt
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Illustration 2:
Porter's Generic Strategies
Source: (Porter's Generic Competitive Strategies, 2016)

franchising mode of entry of market for establishing their product in chosen country. It can be
discussed that concept of market segmentation and targeting for possible customer. Furthermore,
report has completed that porter’s generic strategy such as focus, costs leadership, differentiation
for gain competitive advantages in the market. H&M follow cost leadership generic strategy for
increasing competition in the chosen marketplace.
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REFERENCES
Books and journals
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market entry mode. Strategic Management Journal, 36(10), pp.1536-1553.
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modelling approach and wine-related lifestyle (WRL) algorithm. European Journal of
Marketin. 51(9/10). pp.1552-1576.
Byron, K. and Post, C., 2016. Women on boards of directors and corporate social performance:
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Casabayó, M., Agell, N. and Sánchez-Hernández, G., 2015. Improved market segmentation by
fuzzifying crisp clusters: A case study of the energy market in Spain. Expert Systems with
Applications, 42(3), pp.1637-1643.
Gathorne-Hardy, and et.al., 2016. System of Rice Intensification provides environmental and
economic gains but at the expense of social sustainability—A multidisciplinary analysis in
India. Agricultural System. 143. pp.159-168.
Ginter, P.M., Duncan, W.J. and Swayne, L.E., 2018. The strategic management of health care
organizations. John Wiley & Sons.
Hill, T., 2017. Manufacturing strategy: the strategic management of the manufacturing function.
Macmillan International Higher Education.
Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic
management research. The Blackwell handbook of entrepreneurship, pp.45-63.
Online
PESTLE Analysis, 2018. [ONLINE]. Available through. :
<https://www.professionalacademy.com/blogs-and-advice/marketing-theories---pestel-analysis>.
Porter's Generic Competitive Strategies, 2016. [ONLINE]. Available through. :
<https://www.ifm.eng.cam.ac.uk/research/dstools/porters-generic-competitive-strategies/>.
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