Analysis of Consumer Behavior and Decision-Making at H&M

This report provides an in-depth analysis of consumer behavior and the decision-making process within the context of Hennes & Mauritz (H&M), a leading global fast-fashion retailer. It begins with an executive summary outlining the company's market position, target audience, and the core objecti...Read More

Running Head: MANAGEMENT 0
International business and accounting

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Executive Summary
Hennes and Mauritz (H&M) is the global and second largest retailer in the fast-fashion
industry and uphold customer trust since 1947. Since its incorporation, the company has
evolved into international market at a much faster place and mainly with its stores globally in
61 countries. The target market of H&M are middle and working class who perceive
shopping as a social motion that fulfils the desire of their daily life. This report outlines the
consumer decision making process of the company and the impact of various psychological
and situation factors on that process. Furthermore, necessary recommendations are also being
provided at the end through which H&M can effective welcome new customers while
reducing operational cost such as related to store location, product mix, pricing element and
also promotional practices.
Consumer decision making process is explained via 5 stages model include a problem or need
recognition, searching for information, evaluation of alternatives, purchasing and ultimately,
the post-purchasing behaviour. In order to attain a competitive edge in the fashion industry, it
is very important for H&M to understand consumer motivation as per these 5 stages and also
various significant psychological as well as situational factors that directly or indirectly
influence the decision making process.

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Table of Contents
Introduction................................................................................................................................3
The Process of Consumer Decision Making and Psychological Factors...................................4
CDMP Process.......................................................................................................................4
Psychological Factors.............................................................................................................7
Recommendations......................................................................................................................8
References................................................................................................................................10

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Introduction
Hennes & Mauritz (H&M) is a multinational clothing retail firm founded in 1947 and
currently at rank 4 in terms of best performing organisation in Europe as per Gartner Supply
Chain gartner.com. (2018). At present, H&M has expanded its reach in 61 nations with
having of 4968 stores (statista.com, 2018). The business model of organisation is based
grounded on ‘quality and fashion at the best price’. In terms of its human resources, H&M
has employed nearly 1, 23,283 people all over the globe and the company biggest market is
known to be Germany (statista.com, 2018a). In relation with its key products, the H&M
Group includes eight clearly defined brands offering a wealthy of styles and trends in fashion,
beauty, accessories and homewares for both men and women.
For any brand or company, understanding consumer behaviour is very important specifically,
before an introduction of new product or service to the market. Understand various
approaches of consumer behaviour helps the brand in effective marketing of product and
services as with continuous change in technology, living standards and social trends,
consumer attitude towards a product or service also changes. Rani (2014) defined consumer
behaviour as the attitude shown by an individual while purchasing, consuming and ordering a
product or service. The target customer of H&M includes the group of trend and fashionable
consumers who see spending as a social activity deliver pleasure in their daily life and also
the younger people. In relation with common characteristics of the targeted customers, it
includes working class, lower middle class and students, aging between 15 and 40 years,
ambitious with high purchasing power.
The scope of the report
This report aims to explain the importance t consumer behaviour and the process in making
any product successful. The study will be helpful to understand various different stages of
mental behaviour of the consumer when buying or purchasing any product from the brand
H&M and also the reader can get to know about process of consumer behaviour relationship,
stages and situational factors that will impact CDMP and the recommendations that can be
develop by H&M to creates a positive influence on CDMP.

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The Process of Consumer Decision Making and
Psychological Factors
The consumer decision making is a complex process that involves all the phases from
problem recognition to post purchase activities. Every customer has different perceptions,
needs and opinion that make them make different decisions and there is a common consensus
among various researchers that this stage and consumer purchasing theory includes various
stages relying upon different factors, findings and models over past several years Foxall
(2014). Hence, it becomes a common outlook by many individual understanding and
realizing the key issue of the procedures of consumer decision making while utilizing the
theories in practice. Hence, in relation to one of the most common models of consumer
decision making process, Five Stages Models is being suggested by various researchers and
academics help in explaining how the consumer get to a buying decision. Pescher, Reichhart
and Spann (2014) also argued that this model highly precise and rich in association with other
identical frameworks as 5 stages model core focus is on motivational aspects assist user to
acknowledge the reasons behind the purchasing decision easier. When considering a
purchase, these five stages include – need or problem recognition, information explores,
assessment of alternatives, buying and post-purchase behaviour. In relation with H&M, the
target market decision making process is presented below –
CDMP Process

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 Need Recognition – In consumer decision making process, it is the primary phase
where company requires to identify the actual problem or need that is activated via
external (promotion or word-of-mouth) or internal stimuli (perception of individual).
Here, the three diverse sorts of needs include –
 Social need – It relates to the requirement for sense of belonging and
recognition in the social surroundings. Taking of example, as all love to go
with the trend with purchasing of H&M Coachella collection features a line-up
of iconic pieces (businesswire.com, 2016).
 Functional need – It relates to solving the consumption problem by hunt for a
product and an example can be, women found that her suit for marriage event
got stain that cannot be removed and she went to buy a new one from H&M,
she purchased the suit for its functional use.
 Need for Change – The wish that a customer has which may impact a
shopping of fresh attires and accessories as she senses a need to change into
new style while trailing down modern trend.
 Information Search – In this phase, customer search for the information essential to
make a buying decision afterwards identifying a problem or need. Here, the
information can be gathered from inner factors like remembering reminiscences of
previous experiences and also externally via family, friends or peers as word-of-
mouth (Rezaei, 2015). Furthermore, the customer can also find information or date
from social media or internet like H&M latest collection regularly post on Pinterest
Need Recognition
Information Search
Evaluation of Alterntives
Purchase
Post-Purchase Behaviour

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with tagging as – “The latest fall and winter fashion trends from H&M. #HM #fall
#winter”.
 Evaluation of Alternatives – After gathering necessary information about the H&M
collection or products, the customer will now move to assess and relate the options
that best fit for him/her or benefits him. Some of the aspects that will be evaluated
amid the alternate retail provisions are –
 Price - Hennes & Mauritz provides the best value in relation with its rivals of
same product design. Meanwhile, the company prices are an average of 40%
less expensive (Cheng, 2010).
 Product – In relation to H&M product mix, they appeal to mostly young
segment with core range of products under the fashion brand including
clothing and accessories such as purses, vests, undergarments, sleeved jersey
dresses, jeans, T-shirts, basic jumpers, cardigans, pants, fashion shirts, jackets,
jeweller and shoes.
 Service – In relation to its competitors such as Forever 21, the company has
diverse personnel and groups of different race, age and gender, which delivers
a high and effective touch while servicing the customers. In 2018, the
company employed nearly 1, 23, 283 number of employees (statista.com,
2018a).
 Environment – Hennes & Mauritz has spacious and bright stores where
everything is well-organized, similar clothes were paired together and the
stores have big windows as well as fluorescent lights (Tyler, 2018).
 Location – In comparison with its competitors Zara and Forever 21, H&M is
controlling more number of stores, all readily available for customers.
 Purchase decision and store collection – In this phase, customers make their mind to
buy the products from the most favour company out of the alternatives. In this case,
the customer can choose out from the top brands including H&M, Zara, Uniqlo,
Forever 21 and so forth. Although there are various other factors that put significant
to the actual purchase like others attitude, customer observed risks or unexpected
circumstances.
 Observed Risks – The amount of uncertainty or guarantee on the products like
exchange convenience, return procedure or the time risks of the lead time
required to refill or supplied as assured. However, H&M offers its customers

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well products and services with its 30 days interchange or repay policy
(hm.com, 2019).
 Unanticipated Scenario – The decision of buying can be influenced via
unexpected circumstances like job forfeiture or negative buying experience or
rivals sales marketing or campaign.
 Other Attitudes or approaches – The buying decision can be missed with close
opinion form family, friends or peers.
 Post-Purchase Behaviour – In this phase of consumer decision making process,
customer fulfillment or discontent of the shopping experience is considered. Where if
H&M successfully offer the likely product to the consumer, there are more chances of
repeat purchases while developing loyalty towards brand. On the other side, if a
consumer is a discontent, he/she may face post purchase dissonance, showing
variation amid expectation and realism. Taking an example, when a customer
purchases a shirt from H&M, however, he feels he does not like it, or that shirt has a
defect with torn from sleeves, he might do a return or abandon the shirt. Ultimately,
there can be switch in the brand or negative discussion about the discontent to the
public near her/him. In case of H&M, the probabilities of needs satisfaction will be
raised due to its as well as eight defined brands and extensive product mix.
Psychological Factors
 Motivation – It includes those factors that drive customer and provide a cause to
create a purchase. To all consumers, the wish to fulfil a need is the primary source and
there are varied buying patterns as due to differences in the need of the upper class,
middle class and lower (Rani, 2014). H&M is broadly targeting upper and middle
class segment where the middle class the known to be heavy paymasters and
recognised to spend beyond their means. The wish to live an uplifting lifestyle
motivate spending and it is different from the rich segment who mostly committed
with their earning on retirement and investment plans. For this aim, the major focus of
all H&M stores is on the middle segment populace and H&M fulfils with this
occurrence by offering class wears at a reasonable market price.
 Perception: According to Zhang and Benyoucef (2016), perception is the most
significant factor in all consumer behaviour shaped by pricing, quality, advertising,
experience and so forth. The products of H&M are greatly viewed and supposed to

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characteristic great life and better social status. However, the clothes and apparels
sold at H&M will give the same purpose as the inexpensive product sold in another
retail fashion store, here, the consumer may select to purchase the costly product as it
lifts him to a better social position and it is also perceived to be of better quality. From
a long period of time, H&M attempt to uphold this status and goodwill to draw and
appeal a specific segment of fashion customers that show the preferred perception.
 Learning – Past experience matters a lot as consumer purchasing behaviour relies on
it in relation they have learned from the product (Lysonski and Durvasula, 2013). This
is also an intent where individual does not buy an inferior product twice and here
consumer service is also given due important as goodwill of brand where depraved
service probably turns the customer left from the company. H&M offers new shop
experiences and superior services that cause customers to return to the brand both
physical and psychologically and in 2016, H&M got third spots in brand value
ranking by Garner all over the globe.
 Attitudes and Beliefs – Opinions of other individual and experiences results or varied
in attitudes and beliefs (Gross, 2014). Positive assessment occurs when the customer
is fulfilled when company delivered quality product and services. H&M manage to
build the favourable attitude with offering of stead quality apparels and friendly
consumer experience at their stores.
Recommendations
Hennes & Mauritz intent to deliver broad ranging apparels for men and women at reasonable
prices and higher quality. Majorly, H&M targets middle income segment group present all
over the world, however, focusing on fulfilling the need for lower and upper class by building
products at varied price series like the H&M Raffles Place that aims towards working
segment customers. As a part of positioning strategy, H&M will give attention on providing
sports pool of products that will comprise of weather apparel, gym fittings and yoga pants. In
relation to product strategy, H&M can beat consumer experience with offering of safe, tough
and functional apparels that are viable and at reasonable costs. To gain this goal, the

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organisation will improve its laboratory examinations at the level of supplier as well as
autonomous third-parties.
Considering price element, the company can provide great quality fashion outfits and
apparels that signifies value for money and this can be attained via choosing the right
supplier, focusing more on in-house design, purchasing in bulks, synchronising adeptness in
logistics division, exclusion of middlemen and ultimately, focus on reducing cost in
operational practices. In relation with location strategy, H&M is known to serve dynamic and
developing retail marketplace and it signifies that organisation can remain more flexible
when they expand with leasing the stores and places rater them buying. In addition, H&M
stores must be situated in streets and centres where there is larger consumer gathering and
ultimately, accessible to them.
The company is known to be sold fast-fashion items and it is highly affected by periodic
variations in the marketplace. Hence, it is recommended to the company to pursue marketing
and advertising practices in widespread promotional media at the beginning of festival time
mainly near the close of the year. In addition, with the sale of HIV branded clothes and
giving a part of that revenue in charity, H&M can showcase its environmental and social
involvement and therefore, leads to development of greater brand presence. H&M also should
use great personalities and stars for the promotion of their branded apparels and it will raise
company sales as well as constantly reinforce the brand identity. All the above strategic ways
will lead the brand to increase its growth, sale expansion in the next few years and relying on
these will also ensure that H&M will attain maximum growth in brand development and
competitive edge in the fast-fashion retail market.

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References
businesswire.com. (2016) H&M Collaborates with the Coachella Valley Music and Arts
Festival for 2016 [ONLINE] Available from:
https://www.businesswire.com/news/home/20160216006154/en/HM-Collaborates-Coachella-
Valley-Music-Arts-Festival [Accessed 09/01/2020].
Cheng, T. (2010) Innovative Quick Response Programs in Logistics and Supply Chain
Management. Hong Kong: Springer Science & Business Media.
Foxall, G.R. (2014) Consumer Behaviour (RLE Consumer Behaviour): A Practical Guide.
London: Routledge.
gartner.com. (2018) Gartner Announces Rankings of the 2018 Supply Chain Top 15 for
Europe [ONLINE] Available from:
https://www.gartner.com/en/newsroom/press-releases/2018-09-25-gartner-announces-
rankings-of-the-2018-supply-chain-top-15-for-europe [Accessed 09/01/2020].
Gross, R. (2014) A theoretical consumer decision making model: The influence of
interactivity and information overload on consumers intent to purchase online. International
Journal of Business Management & Economic Research, 5(4), pp.64-70.
hm.com. (2019) Returns [ONLINE] Available from: https://www2.hm.com/en_in/customer-
service/returns.html [Accessed 09/01/2020].
Lysonski, S. and Durvasula, S. (2013) Consumer decision making styles in retailing:
evolution of mindsets and psychological impacts. Journal of Consumer Marketing, 30(1),
pp.75-87.
Pescher, C., Reichhart, P. and Spann, M. (2014) Consumer decision-making processes in
mobile viral marketing campaigns. Journal of interactive marketing, 28(1), pp.43-54.
Rani, P. (2014) Factors influencing consumer behaviour. International journal of current
research and academic review, 2(9), pp.52-61.
Rani, P. (2014) Factors influencing consumer behaviour. International journal of current
research and academic review, 2(9), pp.52-61.

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Rezaei, S. (2015) Segmenting consumer decision-making styles (CDMS) toward marketing
practice: A partial least squares (PLS) path modeling approach. Journal of Retailing and
Consumer Services, 22(1), pp.1-15.
statista.com. (2018) Number of stores of the H&M Group worldwide as of 2018, by selected
country* [ONLINE] Available from: https://www.statista.com/statistics/268522/number-of-
stores-worldwide-of-the-hundm-group-by-country/ [Accessed 09/01/2020].
statista.com. (2018a) Average number of employees at H&M worldwide from 2005 to 2018
[ONLINE] Available from: https://www.statista.com/statistics/267375/number-of-hundm-
employees-worldwide/ [Accessed 09/01/2020].
Tyler, J. (2018) We shopped at Old Navy and H&M to see which was a better store for cheap
basics, and there was a clear winner [ONLINE] Available from:
https://www.businessinsider.in/retail/we-shopped-at-old-navy-and-hm-to-see-which-was-a-
better-store-for-cheap-basics-and-there-was-a-clear-winner/articleshow/65030666.cms
[Accessed 09/01/2020].
Zhang, K.Z. and Benyoucef, M. (2016) Consumer behavior in social commerce: A literature
review. Decision Support Systems, 86(1), pp.95-108.