Global and Crosscultural Marketing Analysis of H&M in Portugal

This report provides a comprehensive analysis of Hennes & Mauritz (H&M)'s global and cross-cultural marketing strategies, focusing on the Portuguese market. The report begins with an introduction to the importance of global marketing and an overview of H&M as a company. It includes a situational analysis, examining the political, economic, social, and technological factors (PEST) influencing H&M's operations. The report also delves into a company analysis, evaluating factors impacting H&M's performance, and a marketing environment analysis utilizing Porter's Five Forces model to assess market competitiveness. Furthermore, the report justifies the choice of the Portuguese market, analyzes brand positioning, and explores various market entry strategies, as well as standardisation and adaptation strategies for the company. The report concludes with a summary of findings and recommendations.

Global and Cross-
cultural Marketing

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Situational Analysis.........................................................................................................................1
Company analysis.......................................................................................................................2
Justification of the market choice and target segment or global segment and briefly why?.......5
Brand positioning........................................................................................................................6
Market entry strategies................................................................................................................7
Standardisation and adaptation strategy in relation to the following decisions: ........................8
CONCLUSION..............................................................................................................................12
REFERENCES .............................................................................................................................13

INTRODUCTION
Marketing is one of the crucial part of organisation as it helps in performing business
activities in effective manner. It is very important for company to analyses global or cross
culture marketing as it will help in determining strategies for organisation. It has been analysed
that there are different types of culture and it is essential for organisation to analyse the culture
of the country in which organisation to marketing its products and services (Aksoy and et. al.,
2013). Global and cross cultural will lead to have major impact on business activities. Chosen
company for this report is Hennes & Mauritz AB. This is one of the leading Swedish company
that is performing its business function in different part of the world. H&M organisation is
dealing in retail sector and it is developed by Eriling Persson. This company was established in
1947 and its headquarter is located in Stockholm, Sweden. This report includes analysis of
situational or company in order to perform better. It includes marketing analysis or
competitiveness of market environment. It consist of brand positioning as well as value
proposition. Different strategies has been analysed that will help company to enter into new
market. Apart from this standardisation and adaption strategy in order to perform business
activities in effective manner.
MAIN BODY
Situational Analysis
There are situation in which company is performing its business activities. It is very
important for H&M company to analyse the situation through which it is performing its
business activities. Situational analysis includes identification or evaluation of business
environment in which respective is conducting its activities. Situational analysis will help in
determining different factors that will lead to have impact over business environment. The
purpose of analysing situation is to develop better strategies for the growth of organisation.
Company analysis
There are various factors that are related to organisation as well as impact over its
performance (Barakat and et. al., 2015). It is essential for H&M company to analyse these
factors of company before developing marketing strategies. This will help in creating and
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developing strategies which will help in gaining competitive advantage over other rival
companies.
Marketing environment analysis
Marketing environmental analysis is considered as a strategic analysis tool. It is the
procedures that is helpful in identifying those internal as well as external factors of
environment that impact the abilities of firms to perform appropriately. So, for the performing
this analysis the H&M used PEST tool. This is regarded as the tools that is utilised for analysis as
well as monitoring the macro environmental factors which may has profound affects upon
firm's performance. So, the PEST analysis of respective organisation are discussed below: Political factors: This is regarded as the factors which includes political instability tax
policy, labour law, trade restrictions and others (Carpenter and et. al., 2013). As H&M is
an international brand who are operating a various stores across the world so it is
important for them to monitor the enhancing political risk. they have franchised outlets
into several markets as well as countries which are maximising the political instability
involving Portugal, Turkey and other. Moreover, because of regulatory reasons, H&M
have to collaborate with franchising partners for operating its brands in Saudi Arabia,
Indonesia, Jordan and others. In addition to all this, the Portugal is open minded country
and its do not make any restrictions to foreigners so this will be beneficial for respective
organisation in enhancing profitability. Economical factors: These factors are those which pertains countries economy. Such as
changes into foreign exchange rate, interest rate and others. These aspects have affects
upon aggregated demand, investment. Within Portugal, an economic crisis situation is
unfavourable which reduces the people confidence into markets, inequality of income
and wealth distribution within country. Moreover, there is enhancement into VAT. So,
all these impact the respective organisation as due to maximisation into VAT the buying
power of customers get reduced respective country people started saving. Social factors: These are regarded as the factors that focused upon the belief, attitudes,
behaviours, tastes and others of society (Christiansen, Yildiz and Yildiz, 2014). The
customers preferences are considered as the main aspects which impact retail sector.
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Within country such as Portugal there is phenomena of fashion so this will have an
positive affects upon respective organisation as they deal into fashion clothing and their
people are very much like to buy that. Also, in respective country more old people are
living there so for enhancing their sales and profitability H&M have to retail their
products accordingly.
 Technological factors: These are considered as a factors which pertains to innovation
into technology which may impact the industry practices as well as market in favourable
or unfavourable way. It includes technology incentives, innovational level, automation
and others. Within the country like Portugal are adopting the advanced technology
constantly. So, H&M utilised the third party logistics provides so that they have a strong
reputation for technological enhancement as well as may have extended network of
supply chain technology for tracking overall logistic operations. By this they can able to
provide services effectively. Also, they formulated its mobile applications so that the
consumers may buy its products from anywhere.
Market competitiveness
A competitive market is when there are so many producers competing with one another
to provide goods and services to consumers (De Mooij, 2015). In respective report H&M which
is well known name in the clothing fashion retailer aimed to expand in market of Portugal. So it
is very much essential to collect necessary knowledge and information before expansion
regarding competitiveness of market by using Porter's five force model that are as follows:
Porter's five force model: Threat of new entrant: New entrants in the industry enhance the level of competition as
already existing players try to defend their share of market against them. In context of
H&M which aimed to enlarge business opportunities in the market of Portugal where
the online share of revenue reached at the 20% in year 2018. There are high threat of
new entrants as so many fashion retailers provide their services such as Nude, Zara and
Primark that are leading in apparel and footwear in 2018 (Apparel and Footwear in
Portugal, 2020). As existing new entrants continue to offer the catwalk inspired designs
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at a very affordable price. So it can said that threat of new entrants is very much high for
H&M. Bargaining power of suppliers: Bargaining power of suppliers can directly impact on the
cost of production by moderating the prices of raw material or intermediate goods. In
context of H&M which aimed to expand in market of Portugal which is known around
the whole world for apparel sourcing and manufacturing of clothing for all size (Clothing
Manufacturers in Portugal, 2020). Due to the great geographical position and easy for
shipments in comparison to Europe there are various options to get raw material and
sources. So it can be stated that there are low level bargaining power of suppliers for
fashion retail industries. Bargaining power of buyers: Bargaining power of buyers refers to the pressure can put
by consumers on the businesses to get the higher quality products, better consumer
services at lower prices (De Mooij, 2018). Due to the great place of manufacturers of
apparel there are lots of options available in front of consumers. They can get one of
most designer clothes as lots of factories operated here from centuries. Respective
factors lower down the cost of clothes and accessories which enhance the bargaining
power of buyers. So H&M by providing one of best products at affordable rate can
enhance their market share. Threat of substitute products or services: Fortunately for those that dealing in the
fashion retailing industry, there is little or not substitution of clothes with is really just
competition. The first factor which determine the threat of substitution is consumer
switching cost, in context of Portugal market there are lot of options available in front of
consumer and negligible switching cost of products for them. In context of H&M which
is the luxury brand that occurs a special place for people faces moderate level of threat
of substitution.
 Rivalry among existing firms: The fashion retail industry is retaining the remarkable and
intensive level of competition in market. There are large no. of branded stores provided
their products and services such as Fashion clinic, Chic CORACAO, KOLOVRAT79 and
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many more. In context of H&M rivalry among existing firm is higher in comparison to
other market.
Justification of the market choice and target segment or global segment and briefly why?
As for business expansion, the H&M choose the Portugal market as their culture and
religion is open minded. Moreover, respective country do not has any restrictions to foreigners.
So, due to this more number of foreigners and tourists can visit their which will outcomes into
enhancing respective organisation profitability and productivity (Gollnhofer and Turkina, 2015).
In addition to this, it has an liberal economy and its government imposed tax such as IRC, IVA
and IRS. Therefore, this is helpful for H&M to expand their business in respective country in
future.
Brand positioning
Brand positioning is considered as the positioning strategy of brand with an intent to
develop a innovative impression into consumers mind as well as at market area. So, it always
have to be specific, clear and distinctive in nature from rest of market competitors (Goodrich
and De Mooij, 2014). Therefore, as H&M want to expand their business in Portugal so they
have to adopt some effective brand positioning strategies that are discussed below: Positioning by products attributes and benefits: This is considered as an effective brand
positioning strategy as in this product is associated with an attributes, its characteristics
and others. Some times goods may be positioned in respect of two or more attributes
coincidently. So, H&M can position their brand into some others country through adding
few innovative attributes into their products.
 Positioning by price or quality: In this the marketers utilises price or quality features for
positioning its brands. So, way to utilise price or quality characteristics for positioning is
to concentrate upon quality or value provided through brand at competitive price.
So, among the above mentioned strategies positioning through price or quality is effective
for H&M as in Portugal due to VAT the buying power of its people reduces so if the price of its
product is lower so they can able to enhance profitability and productivity.
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Value proposition
Value propositioning is considered as an organisational value which promises to deliver
to clients. Moreover, it is represented as a business or marketing strategy which firm utilises for
summarising that why customers have to purchase or use services. So, for expanding their
business into Portugal country its value proposition for their customers is trending clothes at
reasonable price.
Market entry strategies
There are several ways though which respective company can perform business
activities into new market area (HsuChang and Lin, 2013). It is essential for H&M company to
identify analyse various market entry strategies for expanding business activities in Portugal
area. This will help in taking better and effective decision for growth and development of
organisation. Market entry strategies will lead to identify possible ways through which H&M
company can sales its product and services in new market area. Each and every methods
though which can be used by H&M company have some drawback as well as advantages which
will have impact over performance of organisation. Different market entry methods are
mention below in detail.
Possible market entry methods
- Direct export – This refers to the way in which company can export its products and
services to new and different market. This is one of the cost effective method for
organisation as it help in enhance sales of product into new market area. Beneficial of
direct exporting method for H&M company includes high chances of greater profits and
it lead to reduces or eliminate intermediators. Direct exporting involve huge expenses or
additional time to reach customers which will lead to have negative impact over
organisation. H&M company will required lots of efforts in order to develop strong
relationship with customers.
- Licensing - In this method respective company needs to grant permission for operating
its business activities into new market area (Li, 2014). This method is considered as less
risky as though this H&M company will able to perform business function into Portugal
market area. Licensing is considered as an agreement which provide right to
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organisation for selling and promoting products and services. It is advantage includes
that it will be great opportunity for respective business to operate its functions into
new business environment with freedom. Drawback of licensing is that it lead to
develop more dependence on the licensor as well as offer limited time to company.
- Joint Venture – This refer to the method of expanding business activities. Joint venture
can be describe as an agreement between two or more company which agrees to
perform business activities at international level. There are various advantages that
could be achieve by respective company by performing business activities though joint
venture. Through this method respective company will be able to gain expertise advice
as well as better resources to perform business activities. The major drawback of joint
venture is the clash of cultures within the working environment. There is huge
imbalance between the countries.
Thus, H&M company should use licensing method while performing business activities
at international level. Licensing is considered as the most effective and efficient method
through which respective company can conduct different activities at international level.
Licensing methods will lead to create opportunity for organisation which will help in gaining
passive income. This is one of the least risky method as well as help in creating new business
opportunities. Though licensing method risk for both the countries are risk. This method of
entering into new market area will lead to increase
Standardisation and adaptation strategy in relation to the following decisions:
The respective organisation also have to set certain standardisation as well as adapting
strategy regarding the following decisions (McDaniel and Gates, 2013). So, some strategy are
discussed below:
 Product/Service strategy (customer value): This is considered as a strategy which offers
the appropriate clients product as well as services to targeted audiences. This involves
new product, design of package, brand names and others. For business expansion, there
are various product or service strategy such as product quality, promotion, product
differentiation and many more. Among all, the H&M used the product quality strategy
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as quality is something which provide a goods or services value to their consumers. This
aids them to in facilitating effective quality products at affordable rates.
 Marketing communication strategy (customer communication): This is regarded as the
strategy which is utilised through firms or a person for reaching its targeted market by
several kinds of communication. This involves its messages regarding what they said,
medium in this firm decides where it has to be said as well as target to whom that
message is reaching (Porcu, 2015). As there are various kinds of marketing strategy
communication such as online media, sales promotion, public relation and others. So,
among all these the respective organisation utilised the online media. It can be
performed through buying eye catching advertisements as well as placed it upon
promising areas like online magazines and newspapers. This aids them to grab the
attention of various customers, they generally put ads with an impressive message upon
social media like Facebook or few personal blogs. So that the message which they want
to communicate to audiences are communicated effectively and efficiently.
 Pricing strategy (customer cost): This is considered as the methods that entities utilises
to price its product or services. About whole firms, either large or small, base its product
price upon manufacturing and also on labour and advertisement expenditures
thereafter add specific percentage so that they gain profitability (Sultana and et. al.,
2013). There are various pricing strategies like price skimming, penetration pricing,
product life cycle pricing and others. Among all these H&M utilises the competitive
based pricing. Generally, in this organisation has to low their price for meeting the
competitors prices. This may be used when there is little distinguish among products
within sector. So, this will assists them to grab the attention of more client and enhance
profitability.
 Distribution strategy (customer convenience): This is considered as a strategy or plan
which is helpful in making products available to targeted clients by their supply chain.
Mainly, there are three major distribution strategy that are exclusive, intensive and
selective. So, among these respective organisation utilises selective distribution
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strategy. In this they can select various channels and partners for the convenience of
clients.
 People, process and physical evidence from the consumer perspective, if needed: At
current scenario,, there are various customers who only have faith upon the physical
products. Also, the targeted people for this business expansion will be Portugal and for
its process initially they open some outlets if they were successful then proceed to
more.
Other strategic marketing decisions
It is essential for H&M organisation to take better and effective decision which will lead
to organisational growth. Strategic marketing decision will help respective company to achieve
desired goals. In order to take strategic decision for marketing activities respective company
needs to analyse Ansoff matrix. This matrix will help in taking better decision for organisation.
This includes four different strategies such as market penetration, product development,
market development and diversification. Market penetration: This strategies include offering current product and services to
current market area. In this strategies H&M company needs to increase sales of existing
product and services in order to achievement desired goals and objective. This
marketing strategies will be effective as well as least risky for respective company as
though this organisation will be able to develop better relationship with customers.
There are various ways though which respective company can penetrate its product and
services. For this respective company have to offer various discounts and other offering
to customers. This will help in attracting more and more customers towards
organisation. Product development: Product development strategies refer to all those strategies
through which respective company can offer its new product and services to customers.
In this strategies H&M company needs to focus on development or creation of
completely new and innovative products which will help in meeting with customer
needs and requirement. For this H&M company have to conduct an effective market
research that will lead to gain competitive advantage over other rival organisation. This
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