H&M International Marketing Success Case Study Analysis Final: Integrative Case Analysis: Read the closing Case: H&M: International Marketing Success Stor

H&M International Marketing Success Case Study Analysis Final: Integrative Case Analysis:

Read the closing Case: H&M: International Marketing Success Story (pp. 455-456, end of chapter 16)

Then answer each of the five questions at the end.

Each question carries 40 points for a total of 200 points. You can answer each question in one page max (single spaced, 12 point font) for a maximum of five pages for the entire case analysis. Make sure to answer all parts of each question.

Use information, ideas, theories, and concepts from any chapter in the book to explain, clarify, or justify your answers, as necessary.

Book: International Business, The new realitites. Cavusgli, Knight, Riesenberger. Fourth Edition. prices,
Global account management
(GAM)
Serving a key global customer in a
consistent and standardized manner,
regardless of where in the world it
operates
lobal account management (GAM) means serving a
key global customer in a consistent and standardized manner, regardless of where in the world
it operates. Walmart is a key global account for Procter & Gamble, purchasing many different
P&G products. Walmart expects consistent service, including uniform prices for the same P&G
product regardless of where in the world it is delivered.
Key accounts such as Migros, Zellers, and Walmart typically purchase from a collection of
preferred suppliers that meet their specifications. Suppliers target these key customers by shifting
resources from national, regional, and function-based operations to GAM, whose programs fea-
ture dedicated cross-functional teams, specialized coordination activities for specific accounts,
and formalized structures and processes. Private IT-based portals facilitate the implementation
of such systems. Each global customer is assigned a global account manager, or team, who pro-
vides the customer with coordinated marketing support and service across various countries.
MyManagementLab:
Watch It! 2
If your professor has assigned this, go to the Assignments section of mymanagementlab.com
to complete the video exercise titled Companies Look at the Hispanic American Consumer.
CLOSING CASE
H&M: International Marketing Success Story
H&M is a Swedish clothing retailer specializing in fast fashion and fashions in city stores and maintained more conservative items at
cheap chic styles for men, women, and children. The firm generates suburban mall stores. A decision to launch a colorful apparel col-
about $24 billion in global sales, making it one of the world’s larg- lection backfired, forcing retreat to traditional styles with subdued
est fashion retailers. The Gap and Zara are key competitors. When shades. Compared to Europe, top management noted that U.S.
H&M opens a new store, it is accompanied by much attention and stores need to be more inviting. U.S. salespeople prefer focusing on
interest. From New York to Berlin to Tokyo, store openings typically a single segment such as children’s wear or men’s clothing.
receive massive media coverage. The Pasadena, California, store
launch was covered from news helicopters, and numerous people Rapid Response Retailing
slept outside the store the night before it opened. In May 2015, H&M emphasizes fast turnaround: the ability to take a garment from
H&M opened its largest, new flagship store in New York City with design to store shelf in three weeks. Although this falls short of com-
a performance by Grammy winner John Legend. Such excitement is petitor Zara’s two-week turnaround, H&M’s prices are usually lower.
typical of H&M store launches worldwide.
Known for its flexibility, H&M constantly monitors sales and restocks
The firm began as a women’s clothing retailer, Hennes, and later stores daily to replenish popular merchandise quickly.
merged with the Swedish men’s store Mauritz. Management changed Another cost-saving measure comes from outsourcing apparel
the name to H&M to simplify worldwide perception of the brand. manufacturing to 700 independent suppliers through 20 production
Initially, H&M was cautious with international expansion, re- offices, mainly located in Asia and Europe. Large quantities of mate-
stricting its reach to nearby European countries, where Germany, rials are ordered from suppliers, allowing economies of scale that are
France, and the United Kingdom became top markets. In 2000, H&M passed on to consumers.
opened its first U.S. store on Fifth Avenue in New York. The firm
Rapid response retailing means that H&M ensures the right
expanded into China, Japan, Russia, South Korea, and the Middle product gets to the right stores at the right time. It requires careful
East. Today, H&M has more than 130,000 employees operating some cost control and management of lead times with suppliers, factories,
3,500 stores in about 55 countries. The retailer’s top markets are and distributors. The approach results in retail prices that are sub-
Europe, Canada, and the United States
stantially lower than those of competitors.
On the heels of the spacious Fifth Avenue store launch, H&M
opened several more outlets in the United States. The success of its Market Segments and Branding
Manhattan store did not consistently translate to other locations. The H&M brand symbolizes “fashion and quality at the best
Some new stores were too big, forcing management to downsize price.” Men’s and women’s collections emphasize innovative styling
them. In the United States, H&M quickly learned that styles vary for fashion-minded people of all ages. Strong branding increases
between cities and suburban locales, Management focused trendy marketing effectiveness, stimulates brand loyalty, and enhances
END O
456
PART 5 • FUNCTIONAL AREA EXCELLENCE
MYM.
customer confidence in purchase decisions. It helps customers know
Go tor
methods to communicate with customers. Partnering with mar-
prices. The brand drives management decisions about how to design marketing campaign targeted to 20- to 40-year-old women. The
what H&M stands for-simple, stylish fashions offered at popular keting agencies Mobiento and Adiento, H&M launched a mobile
sites and a website with click-through slideshows and animated im-
campaign included banner ads placed on carrier portals and media
lenging. Weak brand image limits H&M’s sales potential and its ability Club and its loyalty rewards program. Consumers received alerts and
is substantial. However, brand awareness is still limited in other parts ages of the firm’s latest designs. Beyond promoting new additions
mobile coupons redeemable at nearby stores.
venturing into the home textiles business. H&M Home’s products,
Recently, the firm expanded beyond traditional apparel by
H&M has more than 100 in-house designers who interpret apparel including pillows, towels, curtains, and other textile products, are
some stores. For example, collaboration with Chanel design chief H&M launched its online sales in several countries to complement its
Karl Lagerfeld drew large crowds to H&M stores, selling out the ex- physical stores. It also initiated a new beauty line featuring cosmetics
products and where and how to launch new stores.
Most H&M stores are located in Europe, where brand awareness
of the world. In some markets, building a strong brand remains chal-
to recruit and retain employees, who are crucial to long-term success.
Marketing
Key TE
adaptation
global ac
(GAM
global br
trends and create fashions accessible to everyone. H&M collaborates
with well-known designers, offering limited edition clothing lines in
clusive line in only three days. Other design partners include Stella
McCartney, Madonna, and Versace. At the Tokyo store opening, H&M
introduced a collection with Comme des Garçons, one of Japan’s most
respected fashion houses. The initial response exceeded expectations,
with customers waiting in line for three days before the launch.
Global Strategy and Localization
Sumi
In this
• Glo!
Dev
the
abo
H&M management follows a global approach by emphasizing a
uniform global brand and similar apparel in all its stores. Company
H&M employs unique strategies to reach target markets and at- designers at headquarters draw inspiration from key markets so that
tocations profers to new stores. Management is careful to choose the different regions’ styles are incorporated into apparel designs
. The
location of stores in each city
, preferring exclusive shopping districts product assortment is 80 percent the same in all markets, and local
managers adjust the remaining 20 percent to fit local tastes. Apparel
with high traffic. Stores are intended to be fun, inspiring, and invit-
offered in the Tokyo stores is essentially the same as that offered in
ing, with interior design and displays that communicate what H&M
stands for. Together, the products, shop floors, displays, and staff Europe, but the presentation is modified.
make up the whole package that communicates the H&M brand.
The head office provides substantial guidance on global strat-
The firm employs conventional promotional tactics such as print egy, and store managers localize tactics to their markets. At indi-
advertisements and catalogues as well as more novel approaches. vidual stores, local managers can adapt pricing, advertising, and
H&M Magazine offers readers a mix of fashion and the latest lifestyle product range to suit local conditions. The firm offers smaller sizes
trends. The firm has its own Facebook page and sends out tweets in Asia, conservative apparel in Islamic countries, and garments ad-
on Twitter, maintaining a social network with fans around the world. justed for seasonal differences between the northern and southern
The H&M YouTube site offers Fashion TV and inspirational films. hemispheres. In a fickle industry, H&M has been a smashing success.
Use of celebrities such as Benicio Del Toro and Molly Sims helps The firm has applied skillful marketing to triumph in markets around
maintain a trendy image. H&M experiments with nontraditional the world.
ma
hov
cus
ing
glc
ca
• S
m
H
t
AACSB: Reflective Thinking Skills
elements, what can management do to ensure that H&M
Case Questions
succeeds in these markets?
16-4. Visit H&M’s website at www.hm.com. What are the character-
istics of H&M’s global market segment(s)? How does H&M po-
sition itself in the minds of target customers around the world? Sources: Dan Butcher, “Retail Giant H&M Runs Multifaceted Mobile
16-5. How does management at H&M use global branding and Marketing Campaign,” 2009, http://www.mobilemarketer.com; Patricia
global product development to create and offer its fashions? Cheng, “H&M Customers, Lured by Madonna Line, Flock to Asia Store
How does the firm use marketing mix elements to market its Debut,” 2009, http://www.bloomberg.com; H&M corporate website at
offerings around the world?
http://www.hm.com; “Clothing Culture: International Designers Cut Their
16-6. A key aspect of H&M’s strategy is to provide value to customers
Cloth to Suit Local Tastes: Management Briefing: Japan,” Just-Style,
by maximizing perceived product benefits, minimizing prices, or
October 2009, pp. 13-16, Ingrid Giertz-Mårtenson, “H&M: Documenting the
both. Given this, how can H&M further increase the value of its
Story of One of the World’s Largest Fashion Retailers,” Business History 54,
offerings to customers? That is, what steps can management
No. 1 (2012), pp. 108-115; Jens Hansegard, “H&M Expansion Pushes Sales
take to increase the benefits and reduce the prices that its cus-
Higher,” Wall Street Journal, January 29, 2015, www.wsj.com; Katie Smith,
tomers encounter when shopping for H&M products?
“The 5 Things Making Zara and H&M Successful,” New Zealand Apparel,
16-7. How does H&M strike a balance between standardization and
April 2015, p. 28; Marina Strauss, “H&M’s Next Move: Taking it to the
Streets,” Globe and Mail, May 22, 2009, http://www.theglobeandmail.com;
adaptation of its marketing program? What advantages does
H&M gain from standardization? From adaptation? What fac-
Stephen Wigley and C. R. Chiang, “Retail Internationalisation in Practice: Per
tors drive management to adapt offerings in particular markets?
Una in the UK and Taiwan,” International Journal of Retail & Distribution
16-8. Increasingly, H&M targets emerging markets such as China,
Management 37, No. 3 (2009), pp. 250-270; WWD: Women’s Wear Daily,
Russia, and Saudi Arabia, which are often characterized
“Versace’s H&M Invasion.” November 18, 2011, p. 4; WWD: Women’s Wear
Daily, “H&M Eyes Expansion with More U.S. Stores,” April 16, 2015, p. 1.
Note: This case was prepared by Professor Erin Cavusgil, University of
by distinctive cultures, lower incomes, and inexperience
with leading-edge fashion. In terms of marketing program
Michigan, Flint, for classroom discussion.
Fourth Edition
International Business
The New Realities
Cavusgil
Knight
Riesenberger

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