Marketing is the soul of any business. The introduction of the product or service is given through marketing to the customer. Without effective marketing strategies the success of the organization is not possible (Lorette, 2015). This marketing principles assignment focuses on understanding the concept of Marketing and STP strategies. For the purpose of research of the assignment the company Hennes and Mauritz (H&M) has been taken. H&M was opened in 1976, and now it is world’s second largest apparel retailer. (Jacob, 2012)
Task 1 (LO 1)
A. Examine a few definitions (at least two) of marketing & explain the marketing process with example drawn from H&M.
The marketing is the process which creates, communicates, delivers and exchanges the offers which the customers value. (American Marketing Association, 2014) The process of marketing is the science as well as art which explores, creates and delivers the value to the customers aimed at satisfying their needs and profit to the organization. (Cohen, 2011)
Marketing process at H&M:
Marketing process is all about understanding the customers’ needs, wants and demands and then provides them the product or services that can satisfy those demands. The marketing process can be understand as:
Fig: process of marketing
- Situational Analysis:Marketing as a comprehensive concept focuses on satisfying the customers’ needs. To fulfill this purpose the firm needs to analyze the situation which is known as Situational Analysis. When the internal and external environment is analyzed it is known as Situational analysis. The analysis of internal environment helps a company to make an assessment about its capabilities to perform certain operations and implement certain strategies. Whereas the analysis of external environment helps to have the assessment about the opportunities which are available to a firm. (Net MBA, 2010). As the situational analysis helped H&M to understand the needs of the non-earners but trend-lovers youth of UK. The various tools for the analysis of the internal as well as external environment are:
- 5C Analysis.
- PEST Analysis.
- SWOT Analysis.
- Marketing Strategy: After the thorough analysis the company gets to know that what the various opportunities which it can avail are along with the threats which can pose a danger to the company. After the identification of the opportunities the firm than makes its Strategy. This strategy is aimed at availing the opportunity to fulfill the unsatisfied needs of customers. The marketing strategy of a firm includes:
- Segmentation: The whole market cannot be tapped as a whole. Thus for the appropriate marketing strategy the firm divides the whole market into different markets. This division is known as segmentation. The segmentation of H&M’s product is based in the age, preferences, lifestyle and income status of people.
- Targeting: Selecting the market to fulfill the needs of that particular segment is known as targeting. H&M has targeted the college/ school going teenagers who want a large quantity of trendy clothes with low price and good quality.
- Positioning: Positioning refers to create the value of the company in customer’s mind. The positioning of H&M’s product is that it provides good quality of products in lower prices i.e. customer benefit positioning.
- Marketing Mix Decision:The Marketing mix decision is the decision regarding the activities that a firm needs to perform to promote its brand. The Marketing decision involves the decision regarding its
- Implementation and Control:When the evaluation of the environment has been done and the decisions regarding the product mix has been taken along with the preparation of marketing strategy, these strategies need to be implemented. But only implementation is not enough, to successfully implement the strategy it is very essential that the firm monitors the whole plan and then make the changes accordingly. (osmawati, 2012)
B. Discuss the different kinds of marketing orientations and recommend the most suitable marketing orientation for H&M.
- The Production Concept: According to the production concept the product is produced on mass level. Because in this concept the marketers believe that the customers like to buy the products which are available in the market. The products are of low cost because of the huge production. Most of time the quality is to be compromised to offer the lower prices to the customers.
- The Product Concept: According to this concept the main focus of the firm is on the quality of the product. It is believed that the customers will buy the product if it is of best quality. But organizations focus on the quality so much that they forget about other alternatives they can focus on. Their focus is to make its existing product best. (kasi, n.d.)
- The Selling Concept: The basis of belief of the selling concept is that the customers will buy the product if the company will tell them about it. In this concept the firm only focuses on selling its product. The Customer Relationship Management is nil in the selling concept because the firm just want to make a sales and do not try to fulfil the needs and wants of the customers.
- The Marketing Concept: The marketing is the most profitable and widely applied concept. According to this concept first the needs of the customers are identified and then the firm offers the product or service which can fulfill the need of the customers. The aim on this concept is to satisfy the customers through the products or service offerings. (Seun, 2013)
Out of these four concepts the marketing concept is applied at H&M as the efforts are made to satisfy the customers’ needs and demands. The products are offered to them on lower prices without compromising on quality which is the need of the youth as they can’t afford expensive clothes besides they want more clothes in their wardrobe because of the frequent changes in the trend.
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Task 2 (LO 2)
A. Analyze the micro and macro environmental factors that influence the marketing decision at H&M.
The marketing decisions are to be made after the analysis of the micro and macro environmental factors because they have a direct impact on the marketing strategy and the marketing decisions need to be taken accordingly. The factors are:
- Micro Environment: The micro environment refers to those factors which the firm can control. These factors define the company’s capability which helps the company to adopt the appropriate strategy and performing the particular operations. Assessment of the micro environment determines the marketing plan of the firm and the strategy that it has to adopt. (Chand (II), 2015). The Micro environment of H&M consists of:
- Company: Before taking the marketing decisions and adopting any strategy the company first need to analyze about its own capabilities that what it is capable of doing.
- Suppliers: The Company also needs to analyze the suppliers available to it.
- Intermediaries: The intermediaries also affect the strategy of the business.
- Competitors: The firm also need to analyze its competitors.
- Public: Public and the characteristics of the public affect the marketing decision of the firm like H&M.
- Customers: The customers obviously have the greatest impact on the marketing decision of the firm.
- Macro Environment: Macro environment also have the impact on the marketing decisions of H&M but the firm does not have any control over it. Thus the firm needs to assess the external environment in order to take appropriate marketing decisions and adopt suitable marketing strategy. PEST Analysis is the most common tool to assess the external environment. (Hotel Mule, 2010). The macro environmental factors are:
B. Propose a new product for H&M and examine the concept of segmentation and recommend segmentation criteria and targeting strategy to be used for the newly developed product.
The segmentation is the process that divides the customers in the group. These are the groups which have similar needs and same buying behaviour. The market is segmented for the purpose of offering the products according to the distinctive needs of customers. (DeVault, n.d.)
Proposed Product for H&M:
The H&M offers a large range of products to its customers from casual wears to lingerie (H&M (I), n.d.). It can offer a new product to its customers i.e. Wedding Gowns. The segmentation for the wedding gowns can be done on the basis of:
- Geographically:The segmentation can be done on the basis of the geographical dispersion of the market and customers.
- Demographically: The basis of the demographic market segmentation is budget, religion and age etc.,
- Psychographically: The Psychographic segmentation is based on the psychology of people what they believe in, their religious beliefs and values etc.
- Behaviorally:It segments the market according to the personality and lifestyle and social class of people. (Marketing flexibility, n.d.) For the wedding gown the most recommended segmentation criteria is demographic and behavioral segmentation. H&M can segment the market according to the income status of people, their style of life, age and social class. After the segmentation the targeting strategy of H&M can be:
- Segment: Brides with low budget, who don’t earn that well and enjoy the popular culture and are aged between 20 to 25.
- Targeting Strategy: The price range must be medium while maintaining good quality. Discounts must be given and the firm must spend less on advertising. The distribution can be nationwide to cover the costs. (Gould, 2010)
C. Identify factors that will influence buyer behavior and propose a new positioning strategy for your organization and its newly developed product.
It is of great importance to know that how the consumer will react in a given situation because his behavior decides the firm’s future course of action. There are mainly five factors that influence the behavior of the buyer. These factors are:
- Psychological Factors: The internal factors influencing the behavior of the consumers are known as psychological factors. The psychological factors are:
- Beliefs and Attitudes.
- Social Factors: The buyer behavior is also influenced by the society he is surrounded with. The decision of the individual is greatly impacted by its society. The social factors are:
- Reference Group.
- Roles & Status.
- Cultural Factors: The buying behavior of the people is the result of the set of values that he has acquired from his upbringing and society. As we grow we acquire certain values and perception from the family. (The Consumer Factor, 2015)
- Economic Factors: The economic factors also influence the behavior of the individual. The economic factors are:
- Income Status
- Consumer’s Credit.
- Personal Factors:These are the personal factors and have a direct influence on the buyer’s behavior like age, occupation and lifestyle of the individual. (Chand (I), 2015)
The recommended positioning strategy for Wedding Gowns is the Customer benefits positioning strategy or product characteristics positioning strategy. H&M can position its product based on the characteristics of the product which the competitors have ignored. The customer benefit positioning strategy is most appropriate strategy as H&M’s newly developed product is the product which is of good quality along with the moderate prices. (Marketing 91, 2015)
Task 3 (LO 3)
A. Using H&M as your chosen company, explain how the new product was developed to achieve sustainable competitive advantage.
H&M Company must develop the strategy which helps it to achieve the sustainable competitive advantage. The following factors have to keep in mind by H&M to sustain the competitive advantage:
Fig: Strategies to achieve the competitive advantage
- Unique: It means that the wedding gowns that H&M is going to offer must have the unique design. It should not follow other designs. (1000 Advices, n.d.)
- Difficult to Replicate: H&M must create the new product in a way that competitors cannot replicate it easily.
- Superior to Competition: The newly developed product that H&M is going to offer must be of superior quality from its competitors.
- Meeting the Latent Demand: Customers don’t stay satisfied with the current features always. They want more in future thus the success lies for H&M to understand those needs and fulfill them.
- Cannibalization: the company H&M must keep cannibalizing its own product. As it has to be trendy in its approach. (Kottolli, 2008)
- Sustainability: the sustainable approach is the most important factor for any company or for H&M. the sustainability can be achieved if,
- H&M is being resource efficient.
- Adopt a flexible approach and adaptable designs. (Business Case Studies, 2015)
- Develop strong vendor relations.
- Provide Value for money products.
- Keep the Low cost with high quality.
- To keep a broader view regarding the alternatives. (Business Insider, 2015)
B. Evaluate a range of distribution methods that H&M can use for the newly developed product to provide convenience to a target group of customers.
There are number of options available to H&M to provide its products to the consumer. The range of distribution methods are:
- Retail Outlet: Like its other products the H&M Company can chose the direct channel of distribution i.e. retail outlet. The distribution approach for retail outlet must be selective distribution as customer won’t mind going to selected dealers for their wedding dress. (Marketing Management, 2010)
- Internet Selling: H&M can also be involved for the distribution of wedding gowns in internet selling as it is very convenient.
- One Level Channel: H&M can also use one level channel where the manufacturer can directly sell the product to the customers. These factory outlets are perceived well by customers as they got to know that they are getting the good quality of products in moderate price because the cost of middlemen has been avoided rather than compromising the quality. (Pujari, 2015)
- Providing the product to the customer must not be the only consideration for H&M. This must also to be considered that the distribution of the production is satisfactory and proper feedback is being received from the customer for further improvement in the distribution approach.
C. Discuss and critically evaluate the various pricing methods used by businesses and recommend pricing strategy that H&M can use for the newly developed product.
Different pricing strategies are adopted by the organization for its different range of product. The pricing depends upon the segmentation and target group. Various pricing strategies are:
- Premium Pricing: When the product or service is unique than the firm can avail the advantages of Premium pricing. Basically the adoption of this strategy is possible when the firm has a competitive advantage. The consumers get High quality products or services and the prices are also charged high for the premium quality.
- Penetration Pricing: This strategy is aimed at capturing the high market share. The prices of the product or services are set lower first and when the firm gains a good share of market then the prices are increased. The high quality product or service is provided at lower price.
- Economy Pricing: The economy pricing fetches a large portion of market share for the firm. In economy pricing Low Frills products or services are provided. The marketing cost along with the manufacturing cost are kept at minimum. The moderate quality of products are provided in lower price.
- Price Skimming: Price skimming strategy is adopted by the firm which have a good brand image or have unique product. In this strategy the prices are keep high but the quality is moderate. (Chand, n.d.)
Among these four pricing strategies the most appropriate strategy for H&M is:
Penetration Pricing: H&M can set lower prices of the wedding gowns that it is going to offer at the same time the quality of these gowns must be good. A huge chunk of market share will be gained by H&M by adopting this strategy.
D. Explain the concept of integrated marketing communication and discuss the elements of promotional mix including the extended marketing mix as relevant to H&M’s newly developed product.
Integrated Marketing Communication refers to integrate all the promotional tools to work together in harmony (MMC, 2015). In Integrated Marketing Communication all
the factors of marketing communication are compiled to increase the sales and maximise the effectiveness of cost. (MSG, n.d.) The promotion mix refers to the decisions of the firm regarding its promotion that how it is going to promote its product. The various elements of promotion mix are:
- Advertising: The term ‘Advertising’ said to be the non-personal form of presentation which aims to promote the idea, products or service of the firm. The aim of advertising is to share the garding the product/service about its features, advantages and the prices. (Pujari, n.d.)
- Sales Promotion: In sales promotion the firm gives various incentives to the consumers for making an appeal to the customers to make a purchase of the firm’s product. Different sales promotion techniques are:
- Personal Selling: This is the direct form of selling where the seller directly meets the potential customers and gives him information regarding the product or service.
- Public Relations: Public Relation as a promotional mix technique is a tool to create and maintain good relations with the public.
The extended marketing mix relevant for H&M’s newly developed product is internet selling. Internet selling is one of the most convenient method of selling for the customers and the seller. It covers a broad range of customers in no time.
Task 4 (LO 4)
A. Evaluate the marketing mix variables for two segments of the consumer market and discuss how different it would be for business-to-business (B2B) services.
Marketing mix is also known as 4P’s of the company. The product, price, place and promotion of the company is known as marketing mix variables. Before launching any new product the decision regarding the 4P’s of the marketing has to be taken. The 4 P’s are:
Fig: Marketing Mix Variables
Marketing Mix Variables for two segments of H&M:
Segmentation that I am going to discuss is on the basis of the Gender:
|Place||Outlets & Websites||Outlets & Websites|
|Promotion||Various Tools of Promotion Mix||Various Tools of Promotion Mix|
B2B refers to selling the products or services to other companies rather than individual customer.
Marketing Variables for B2B Services:
- Product: The products are sold and purchased in bulk in B2B services thus the seller must sell the product which is correspondent to the description of the buyer company.
- Price:Usually in B2B there is no bargaining. As the buyer are buying the mass product they always want strong brand and special offers.
- Place: The distribution of the B2B is very critical and needs to be understood. The distribution of B2B can be understood as:
Fig: B2B distribution for industrial product
- Promotion: Promotion is as important in B2B as it is in B2C. The company must create a brand. The buyer company must be aware of the sellers company’s offerings.
Promotional Tools in B2B:
- A strong brand name.
- A differentiated logo.
- Direct Mail.
- Advertisement in newspaper.
- Yellow pages.
- Email newsletter.
- Trade shows.
- Television advertisement.
- Radio advertisement. (Saha, 2013)
B. Assuming that H&M decides to enter the international market with the newly developed product, examine and discuss the differences between domestic marketing and international marketing.
Running the international business might be challenging (TRADESTART.CA, n.d.). There are various factors that have to be keep in mind while going international. The difference between domestic marketing and international marketing is described below.
|Basis of Difference||Domestic Marketing||International Marketing|
|Scope||The domestic marketing’s scope is local and limited.||The international marketing’s scope is global and broad.|
|Risk Involved||The risks are less here.||There are greater risks.|
|Financial Requirements||Less financial resources are required in domestic marketing.||Huge financial resources are required in international marketing.|
|Market||Only single market is to be dealt in it.||Whereas several markets need to be dealt in it.|
|Challenges||Tapping domestic market is less challenging.||Tapping international market is more challenging.|
|Cultural Differences||The differences of culture is not a big issue in it.||Cultural differences are one of the prime concern in it.|
|Laws and Policies||The laws and policies are simpler because of the familiarity of the home country’s constitution.||The laws and policies are very different in other countries.|
|Set of Consumers||Only one set of consumer is there.||Different set of consumers is the issue in international marketing.|
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The assignment gave me a thorough understanding of various marketing concepts and strategies. After completing the assignment I came to know about the practical implementation of how the market is segmented and targeted and what the various strategies of positioning the product or service of the firm are? The assignment gave me the insights about the usage of marketing mix variables in different context.
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