The Companys Marketing Mix Factors

You are required to select either a private or public limited company operating in any business sector. In your capacity as a new marketing manager, address the following issues.

My chosen company for this task is H&M group, a public limited company registered in Sweden.

History – From a single womenswear store in 1947 to a global company offering fashion for the whole family and their home, under brand names H&M, COS, Monki, Weekday and Cheap Monday.

Values – H&Ms driven by seven important values. Keep it simple, straight forward and open minded, constant improvement, entrepreneurial spirit, cost conscious, team work, and belief in people.

Products – H&M products range between clothing and accessories. Profits are about SEK 18.68billion

Market share – Profit after first nine months increased by 11% and amounted to SEK 15,649 m (14,140). Net profit was SEK 11,580 m (10,464), corresponding to SEK 7.00 (6.32) per share.

Number of staff – H&M exists in 43 countries and as of 2011 employed around 94,000 people.

Competitors – H&M’s competitors in clothing include Primark, Next, Dorothy Perkin, Zara, GAP etc.

Source: www.about.hm.com/content/hm/NewsroomSection.html

Task 1A: Discuss its core marketing concepts and various elements of the marketing process.

The Marketing Concept is the management process where organisations are concerned for survival and prosperity. A well known model for marketing planning is the SOSTAC planning framework which provides a structured and effective approach to strategic planning.

The acronym can be broken down to these six crucial business awareness questions; where are we now? – Situation, where do we want to be? – Objectives, how do we get there? – Strategy, how exactly do we get there? – Tactics, what is our plan? – Action, and did we get there? – Control.

Source: ‘T-Shirts and Suits: A Guide to the Business of Creativity’ – 2007 David Parrish

Responsible marketing involves a process Identifying, Anticipating and Satisfying consumer needs.

Identifying – This is finding out the needs of its target customers before providing the service through research. H&M identified that in order to survive and prosper, it will need to meet the needs and wants of its customers. H&M therefore exercises various marketing activities in order to demonstrate to its customers it has the capability to meet their needs and wants and thereby attract them to shop at its stores. Notwithstanding, the challenges it faces from competitors in trying to establish a market presence. There are also changes in the political, economic, social and technological environment which have to be taken into account.

Anticipating – The thinking of future service or needs of target customers. H&M anticipated the future needs of its target customers and has a dynamic design process with a 95-strong design group who are encouraged to draw inspiration not only from fashion shows but also from real life. Its designers also come from a wide range of backgrounds with some from South Africa, Sweden, USA, Netherlands and Britain. H&M further demonstrates its marketing through product orientation in that it also commissions celebrity designers who have designed clothes for celebrities. Where its target market is mainly with the young (15-30 age set), H&M focuses on producing trendy, fashionable quality goods but at low prices.

Satisfaction – The process of making sure customers are happy with the product and service provided, and that their needs and expectations are met. Satisfaction – H&M understand that if customers are happy with their product and service they will surely come back. H&M addresses this point by providing after care; discovering unfulfilled customer needs/wants and providing the goods/service that will bring satisfaction.

Source: Principles of Marketing – 2010 Pearson

Task 1B: Evaluate the benefits and costs of marketing orientation for the chosen company.

Market orientation, unlike past marketing strategies that would concentrate on establishing selling points for existing products, attempts instead to tailor products to meet the demands of customers.

Source: http://www.investopedia.com/terms/m/market-orientation.asp

Benefit of Marketing Orientation – Marketing Orientation focuses more on customers and less on developing convincing sales tactics to encourage desire. The benefit of this approach means less capital is wasted on manufacturing what customer or society does not want or need. In addition, there is less expenditure on ineffective marketing and advertising.

Constant feedback from customers – This will allow organisations to identify their target customers needs and wants and adapt to any changes in tastes and desires or trends. As a result, the organisation would be able to maintain or increase its market share.

Customer satisfaction – If customers are happy with the product or service they receive, they will come back.

Profit – This is the greatest benefit of market orientation. If customer’s needs are being met and they are kept happy, they will continue to return to the company. This would help the company to survive in the long term and continue to make profit.

Cost of Marketing Orientation – The cost of market orientation however lies in the manpower needed to carry out field research, in order to ensure that the finished product satisfies the identified needs and wants of the target market.

Financial expense to consistently carry out market research which would have a negative effect on the profit margin

Consumer wants can change quickly and may be hard to keep up with their desires

It can be hard to achieve product differentiation and stand out from competitors.

Task 2A: Explain how macro and micro environmental factor can influence your marketing decisions.

Micro environmental factors are those things which concern the immediate environment of the company. The macro environmental factors refer to those things outside the company.

In the context of marketing, Microenvironment consists of the factors close to the company that affect its ability to serve its customers – the company, suppliers, marketing intermediaries, customer markets and competitors. SWOT analysis is a tool for auditing an organisation and its environment. It is a significant stage of planning and helps organizations to focus on key issues. Where SWOT is Strength Weaknesses Opportunities and Threats, strengths and weaknesses are internal factors.

Strengths – H&M is known for its trendy style in its fashions and good quality at low prices. It allows customers to be able to enjoy the designs of high end fashion style at a lower price.

Weaknesses – Some people may perceive that because of the consistent low prices of H&M goods, there isn’t quality in the goods but is only stylish. Some people do feel however that due to the dynamic changes in fashion, there’s nothing wrong with buying something that is stylish but doesn’t last so long as you would want to keep up with the new trends.

The Macro environmental factors are those things with which H&M does not have a direct influence over. The PESTLE analysis is used to analyse the macro environment. PESTLE stands for Political Economy Socio-cultural Technological Legal and Ecological. These things can naturally have an impact on the marketing decision that H&M makes.

Economic factors – During the recent recession for example, a lot of sales and bargain marketing has been exercised in order to draw more customers in.

Technological factors – Advancement in administration technique, Research & Development technology or improvements in production processes for example, could have a positive impact on many areas or aspects of the H&M organization, including the range and levels of efficient production, quality of work, costs of materials, or even outsourcing decisions.

Source: http://www.marketingminefield.co.uk/pestle-analysis

Task 2B: Explain how you would segment consumer markets and organisational markets for any two products sold by your company and select a target market. Justify your selection with reasons.

Consumer segmentation is a method often used to study and target demographics such as age, income, or marital status in order to identify groups with similar behaviour that will assist in customizing the message or offer for each segment. One of the more obvious benefits of segmentation and focused selling is the resulting improvement in the understanding of consumers. Segmentation allows marketers to understand changes in consumer preferences and patterns of behaviour and develop products and services in response to fulfil the need of consumers at that particular stage. Importantly, segmentation can enable marketers to communicate effectively with a target market by better identifying criteria that are most relevant in each targeted categories.

Source: http://www.emmgroup.net/cs1-what-consumer-segmentation-guide

H&M mainly sells clothing and accessory items which are differentiated through different styles and prices. This allows H&M to appeal to a broader range of customers. Two particular products that can be segmented for the purpose of targeting are Denim and Footwear. I would segment these two products by appealing to specific gender and age groups commonly associated with said products. I would also exercise segmentation towards those of different incomes. It is clear that customers want quality and value for money which can be offered at both a high and lower price range.

In my opinion, H&M’s target market is the segment of those who are of a young age (teenage – early 20’s). This is so because of its style of fashion and the brands which it sells. The image also in which it offers its customers is that which is most appealing to the young. It is also evident from the low prices of its goods and the style that it is also targeting those who are interested in the high end fashion of clothing but want it at a lower price.

Organisational segmentation is also similar to consumer segmentation in that similar principles can be applied although certain characteristics are unique to organisations. Organizational markets can be segmented by employing their unique purchasing behaviours or product consumption patterns. This can be applied to H&M also where with its clothing range, it can be segmented by the number of stock it has. Its international presence is also another way it can be segmented as a MNC.

Task 2C: Explain how buyer behaviour can affect marketing of the two products mentioned above.

Consumer buying behaviour can be defined as the decision process that consumers go through in making their purchase decisions. Such factors affecting consumer buying are as follows;

Personal factors: age, gender, income, lifestyle and occupation.

Social factors: family, peers, social status and role.

Cultural factors: religious ethics, language and believes.

Psychological factors: motivation, perceptions and learning.

Source: http://www.managementstudyguide.com/consumer-buying-behaviour.html

H&M sell clothes and accessories which are differentiated through different styles, design and price.

Personal factors can affect H&M because the company targets youngsters as their strongest costumers. Age and low income of these costumers could lower their profits.

Also psychological factors could affect H&M due to the fact that they mainly target young people at low prices. People of high taste and high profile could have a different perception of being smart and are unlikely to buy from H&M, for its more ‘street’ appeal.

Task 2D: Select one of the two chosen products mentioned in sub-question ‘b’ above and explain how its positioning will influence the company’s marketing mix factors.

Marketing mix is defined as a business tool essential in determining what a business product offers. Factors include product, price, place, promotion, people, process and physical evidences. My chosen company H&M sells clothing and of the two products mentioned above, footwear brand positioning could affect the company’s marketing mix under factors of demand, competitors and technology.

The business may change where its footwear collection are marketed and sold, according to changes in technology i.e. internet sales. Repositioning sales and promotion of footwear in response to the actions of competitors is another influence on H&M’s marketing mix. The changing needs of H&M’s primary footwear market, identified as working and middle class young and adult females would also have an effect. Seasonal trends for example, like sandals and flip-flops during summer months.

Positioning is defined as the act of designing the company’s style or image to occupy a distinctive place in the target market’s mind. It is the final part in the STP process; segment, target, position. Footwear from H&M stores, most commonly stylized tall heels, are largely positioned for females within the working and middle class, and strategically marketed to be trendy, affordable and sexy.

Simplified, product positioning is the consumers’ understanding and perception of a product and its specific value or benefits. Consumers typically form their understanding of a product over a period of time using information from a variety of sources including media reviews and word of mouth.

In this way, marketing mix factors become affected. The actual design and features of the footwear product particularly when consumers use it, has a major impact on the perception of the footwear range and its benefits, advantages and value. Which brings us to price; the overall price points of the product will be a signal for judgment of quality, and a high frequency of sales promotions risk suggesting lower quality. Media reports and product reviews seen as credible physical evidence, or the word-of-mouth of people will have a powerful influence on consumer perception and opinion.

Source: http://www.segmentationstudyguide.com/all-about-positioning

Task 3: Explain how the extended marketing mix elements are used by H&M to achieve its objective.

Marketing mix is a business tool used in determining what a business product offers, and was extended from four key factors to seven to address the different natures of services; Product, Price, Place, Promotion, People, Process and Physical Evidence. H&M succeeds at its marketing objectives by first understanding the fashion needs of its target market and designing its products to fit those identified needs. They deal very cleverly when it comes to pricing, the value of a product is the perception held by the market and not what it costs to make or develop, therefore with extensive customer and competitor insight, H&M can set a reasonably low and affordable price point while securing profit through lower development costs. Demand and popularity booms as a result, as clothing and fashion accessories sell at such low prices, increasing sales figures.

H&M understands the importance of distribution and promotion, always trying to gain the attention of customers through celebrity-cast television, web and magazine advertising, search engine marketing, sales management, discounts, limited offers and PR events. H&M have conveniently opened stores in key locations, shopping centres, town centres, city centres, tourist locations and other popular social gathering points all over the country to make their stores highly visible and products accessible to the market at the right place and at the right time. H&M have even gone so far as to own no fixed outlets, choosing instead to rent premises, allowing greater flexibility to move, relocate and “follow the trend” where it goes. This also opens the business up for quick responses to any change in the demographics of product demand.

Another important marketing mix element that H&M pays close attention to is people. To most customers, there is little difference between a service or product and the person providing it, standing in front of them; therefore the company recruits and trains staff that are both motivated and positive to uphold the good reputation of the company brand with excellent customer service.

Quality control and a reliable production process are ensured and closely monitored at H&M, to keep customer trust and loyalty. The company provides a morally-aware and environment conscious range of products, a select collection of organic cotton clothing and eco-aware fabrics.

Last of the extended marketing mix factors used at H&M is physical evidence. This is mainly in the area of internet sales, telemarketing and home delivery services. H&M understands customer cautiousness when purchasing from websites, as one cannot really experience something that is intangible before it is delivered, let alone the concerns of account security with online disclosure of personal and financial details. Such a service requires a degree of mutual trust and the company does well the gain this by exhibiting physical evidence of their secure, safe and well-protected online services with displays of website security stamps and official licensing logos but also by guaranteeing the costumer safe and uninterrupted delivery of their purchased goods.

Task 4A: Select any two products from your chosen company for two different segments of the market and explain how marketing mix varies to different market segments.

The marketing mix is the combination of product, price, place and promotion (4Ps) for any business venture. I will be considering H&M denim jeans wear and footwear to see how the marketing mix varies for the segments of age and income.

Source: http://www.mindtools.com/pages/article/newSTR_94.htm

Price – H&M can use prices as a signal to send out information to customers in different segments. For example, for those with higher budgets and taste, H&M can offer goods that have a high end fashion and have a reasonable price. For those with lower budgets, H&M can offer stylish goods but at a lower price. There are different pricing strategies that can be employed such as discrimination pricing.

Product – H&M understands that trends in fashion is dynamic and changes constantly. It will therefore need to ensure that in its design and production of goods, it keeps up with the current trend and remains popular with its customers. It can do this by talking with its customers, fashion conferences and attending fashion shows.

Place – H&M understands that location is an important factor and not necessarily physical location. In an age where technology is growing, there are an ever increasing number of young people who use the internet for various reasons including socialising, and shopping. H&M understands that in order to keep up it will need to have an online presence and continue to maintain and update its website. Additionally, with social networking sites growing, H&M will also need to have a presence in such places in order to maintain a strong established brand image in the environment of it its young target market.

Promotion – The purpose of segmentation is to target the segmented market with current offers and new deals. This is an essential department as it allows H&M to pass on information to its customers about current deals which applies to them or will interest them.

Task 4B: Explain how marketing activities differ between consumer and organisational markets.

Consumer markets sell products and services aimed for personal or family use. For example;

Consumption e.g. food and drinks

Household goods e.g. entertainment systems

Services e.g. hairdressing, dentists

Whereas marketing activities in organisational markets involves the sale of goods or services between businesses, including;

Finished goods e.g. furniture, computer equipment

Raw materials e.g. timber, gas, steel, coal

Selling services e.g. security, waste disposal, legal services

Table below details marketing activities that differ between consumer and organisational markets.

B2C (Business to Customer)

B2B (Business to Business)

Buys in small quantities

Buys in large quantities

Spends less money

Spends huge amounts of capital

Buys frequently

Buys much less frequently

One person purchase decision

Many people involved in purchase decisions

Product prices are fixed

Prices are negotiable

Product choices are standard

Products can be customised

Source: http://www.tutor2u.net/business/marketing/market_types.asp

Task 4C: Discuss the factors that differentiate international marketing from domestic marketing.

Domestic marketing is a term for selling within one’s own country whereas global marketing involves selling worldwide. Factors that differentiate international marketing from domestic include;

Size – The size and reach of international marketing is understandably large, often using franchising (as H&M have done in Asia, Middle East and North Africa) as well as foreign investments. In contrast, domestic marketing remains in limited territory.

Benefits – International business marketing benefits both the nation and firm. In comparison, domestic businesses have lesser benefits. Unlike global marketing, domestic marketing has little to do with foreign currency, and is conducted locally. Profits from domestic marketing are expectedly less compared to profits of firms dealing and marketing globally.

Market Fluctuations – Firms marketing their products internationally can withstand sudden market fluctuations and resulting losses as their operations are better spread. Firms marketing their business locally inevitably have to simply deal with market fluctuations, sudden and extreme weather for example, resulting in low profits.

Operations – Businesses entering into international marketing would eventually have to decide on expanding operations either by exporting/importing products and materials, considering licensing or franchising, joint ventures or even setting up self owned subsidiaries abroad. Domestic marketing would also bring opportunities for the aforementioned expansions of operation but on a more local and smaller scale. Establishing a market internationally often involve many tedious formalities but for a local establishment, the process is always considerably easier a task.

Technology – Internationally recognised brands provide greater opportunities for accessing and exchanging latest technologies across the globe which in turn could improve the mode and quality of production beyond that of a domestically marketed business, with very little global connections.

# http://dilipchandra12.hubpages.com/hub/Major-Difference-between-Domestic-and-International-Business