Cappuccino Warsweek 5

Prof Chris BirchBusiness and Enterprise Education

birch.westminster@gmail.com

Questions

1. What is their product – what are they selling?2. Where are they located – why?3. How do they price products?4. What is the importance of their staff?5. What is the physical environment like?6. How do they promote / incentivise?7. What are the visible business processes?8. Describe the competitive environment

• H&M – a short summary of the case study: Have you done a similar analysis re Coffee retail outlets?

Founded in 1976 – now has 1800 stores in 35 countries – still growing and a specific international strategy is in-place for the USA, where there are more small stores and less department stores.

Operates in the retail fashion and accessory sector, selling chic and stylish clothes - It’s main market is 15-30 year old women, but it also has a menswear department, though this is relatively small.

H&M’s main competitors are GAP and Zara – Gap is bigger, but not as commercially successful. They are often trading in the same shopping precincts which means the quest is to achieve bigger market share that competitors. To achieve this, they need a clear, consistent and visionary marketing plan in order that they are well positioned and differentiated, with ready made USPs.

Their competitive advantage comes from a number of factors – Their products are low cost, high value. They are well designed and readily available – They use big name designers to develop special interest lines to attract attention and get people into stores. Designs are modern, distinctive and well researched. They fully understand their market segments and have built up a relationship of mutual trust.

The low price, high value proposition is achieved through excellent cost control and supply chain management. They are able to get new products to market much quicker than their competitors, making them agile and responsive. They have positioned their fashions as perishable goods, meaning that they are not intended to last for long. They are priced to encourage impulse buys when people go into stores, and their brand has become one that represents chic and peer acceptability by those who wear them. It is important that their supply chains are ethically acceptable as their customers are interested and aware, and would not support exploitation.

In summary, H&M know their customers – they have a marketing mix that fits their chosen market segment. They continuously innovate through design and materials to keep products edgy, and price to meet the expectations and spending power of their customers. They always aim to delight, and they are totally market-oriented.

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