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H M And Its Strategy For The Indian Market Marketing Essay

H&M originated in Sweden it is a retail clothing company that has become renowned for its
range of clothing collections which are based on the most recent fashion trends in the market.
H&M was established in the late forties in Sweden, and started business only with the sale of
female clothes. (www.hm.com) They later extended their sales and production to mens
clothes in the later part of the sixties. Today, majority of the clothes sold in H&M stores are
produced in Asia, Europe, and Northern Africa; specifically, Egypt, Pakistan, Bangladesh,
china, India and turkey. (www.hm.com) H&M today boast of over 2200 stores in 38 countries
ranging from the United Kingdom, Denmark, Germany, Switzerland, Russia, Austria, various
Asian Countries and The United states of America. As of early 2011, H&M employs in the
region of 87000 people across the world. (www.hm.com) Very recently, H&M began selling
online and towards the end of January 2011 began offering online sales services in the United
States of America. (www.hm.com).
H&M has succeeded to thrive in this current fashion oriented world because they try to and
with success stick to their corporate objective goal of providing fashion and quality at its best
available price. (www.hm.com) Expanding and maintaining financial stability are this
companies two strategic objectives and as of 2008, H&M had as goals to as much as is
possible, increase and maximize sales in existing stores, and to increase the number of new
stores by an average of ten to fifteen percent every year. (www.hm.com)
Considering that H&M has a desire to grow and maximize its financial capabilities, it is only
but logical that as it company it should consider increasing its stores in other countries. A
continuous saturation of stores in an existing country would not do the company as much
good as if they decided to explore and make efficient use of all the resources available to
them in a new market. This proposal will be looking at the avenues through which H&M can
enter and take full control and advantage of the Indian fashion market. We will be looking
effectively at the market entry strategy that can be used by this company to penetrate the
market.
The market entry strategy will give us an idea of how H&Ms products can be sold,
distributed and delivered in the Indian market. It s important to note that when goods and
services get exported to another country, the market entry strategy will have to define the
various methods by which these goods and services will be delivered and also how contracts
can be acquired. Considering that India currently produces part of H&M clothing I am hoping

that penetrating this market is not going to be a very difficult thing to do. This is because
being an employer in the country already they have to an extent a platform with their
employees from which they could start building on.
If H&M is going to have to consider conquering international market in general and India in
particular, then they have to consider the options of risk, cost and control that the company is
going to have to deal with in the new market. Therefore in planning a market entry strategy
for a country like India, management of the company will have to decide which products are
better off being sold in this region.
So far, it can be said that H&M is a considerably renowned brand, so amongst the options it
has for penetrating this market, it could get into things such as joint ventures or set up in an
export processing zones.( Menon, et al. ,1999). An export processing zone, more often than
not is an area which is typically set up in developing countries by their governments to
encourage an hence increase industrial and commercial exportation. (Menon, et al. ,1999).
Exportation to an extent can be considered as the simplest form of a market export strategy,
and it involves the use of direct and indirect exportation methods. Some of these methods
include the use of agents as well as the use of counter trade. Counter trade is a process where
by goods and services are exchanged for goods and services and their values are written off
against each other when the company is balancing its accounts. (Menon, et al. ,1999). As a
result of advancements in technology, companies are more likely to indulge in direct
marketing. For example, The world has gradually become a global technology village. In the
case of H&M, they could simply alter the delivery options of their online website to include
deliveries in India. They could also simple just create an H&M website in local Indian
languages which is going to effectively serve the Indian population.
Relationship marketing has totally evolved the ways in which traditional marketing is carried
out and in more recent times has become the model of marketing practice. (Menon, et al. ,
1999). It has not only done a lot by changing customer advocacy from satisfaction to delight,
but it has tried to exceed expectation by increasing the quality of services offered. According
to Berry and Parasuraman, ( 1991) Relationship marketing is concerned with a mix of trying
to develop, retain and attract relationships with customers and potential customers. (Berry
and Parasuraman, 1991) Taking relationship marketing and management into perspective,
H&M will be able to develop an approach which is going to be able to target the various
challenges of the modern Indian market. Relationship marketing has the ability to transform
to multiple service usage from single service usage.

Competition nowadays, and demand for customers in the fashion industry keeps on growing
at an ever increasing rate, therefore, as such, a positive attitude to customer care, attracting
customer and the ability to retain them should be a top priority if penetrating the new market
is going to be feasible. (Berry and Parasuraman, 1991) If H&M bear this in mind when trying
to penetrate the Indian market, there is every chance that they are going to succeed. As this
will strengthen their position to offer an effective and an efficient customer service in the
Indian market. This evidently gives India the chance to introduce new products into the
Indian economy as such providing a market entry strategy for the company. The components
of Relationship marketing, include things such as sustained orientation, finding reliable
buyers, making a difference between the different levels of relationships between a buyer and
a seller, Long term orientation, very high levels of consumer satisfaction and service quality
should be the duty and responsibility of every employee.
It should be noted that the benefits a successful marketing relationship plan is that indifferent
customers are transformed into loyal customers and there is a real chance of retention of
clientele and H&M can greatly benefit from this as customer retention is a good platform for
long term profitability. (Menon, et al. ,1999).
Customer retention can be achieved through a customer relationship program, which focuses
on retaining customers. Over time, customer retention has become more important to a
company than customer acquisition. It has been said that if the rate of customer retention is
high, there will be a corresponding high net present value of a customer. ( Dawkins and
Reichfield ,1990) As such , if HM are able to not only acquire customers, but they do
everything with in their ability to try and keep these customers, they will notice a tangible
benefit from a sustained income stream. Saren and Tzokas ( 2000) brought up the usefulness
of relationship marketing by coming up with a difficult to copy and unique knowledge though
the channels of interacting and dialoging with customers. The long term goal of this to H&M
undoubtedly is sustained long term profits.
The factors that determine the customers store choice, Loyalty of a customer, Customer
retention and relationship marketing have been extensively studied around the world. It is
therefore almost accurate to say that they is the existence of a rich literature review regarding
the fashion industry. ( Dawkins and Reichfield ,1990) It must however be said that they is
still considerable scope for improvement in existing literature. Very little has been done on

the emergence of new store formats in India and how they impact on consumer behavior.
These are thing, which H&M have to research on heavily in order to me able to penetrate the
Indian market.
This marketing proposal therefore is going to take a look at how H&M can make use of the
marketing mixes available to it, look at the market segmentation, targeted goals and it will
make a SWOT analysis of the proposal looking at the possible, strengths, weaknesses,
opportunities and threat involved in entering the Indian market. ( Dawkins and Reichfield ,
1990)
MARKET SEGMENTATION.
A process of aggregation, are the words by which you can describe market segmentation. The
ability to put people with specific needs into a particular cluster. ( Perreault & McCarthy,
2002). Customer segmentation is very important for an effective market entry strategy. If
market segmentation is carried out properly, then H&M will be able to identify the particular
market for its particular products. Market segmentation is a very important part of a
successful market entry strategy. For market segmentation to succeed, segmentation has to be
in line with the different levels of products that the company is will to put out in the market.
As such H&M have to make use of this market segmentation resource to be able to make use
of market segmentation properly to be able to identify the segment of the market that they
intend to target. H&M can segment its market either by using demographics, geographic,
psychographics and behavioral segmentation methods. . ( Perreault & McCarthy, 2002)
Life style, variability in personality, social class and life style form the bases of
psychographic market segmentation. How important customers immediate environments are
to them is of utmost importance Social class also brings with it different or altered demands
and needs If these variables are used, a psychographic profile if the market can be built and
with this in mind, H&M can know or have a better idea of what products will be better suited
for that kind of market. . ( Perreault & McCarthy, 2002)
Variables which can be taken into consideration when doing a demographic segmentation
include things such as age, gender, The size of families, family life cycles, income, education,
population, ethnicity, religion and social class.. If H&M takes these things into consideration
if it does a demographic market segmentation, then they will know what king of product to
better serve the market and it will give them a better chance of better market entry.

Geographic market segmentation, can also be used, in this case the market can be segmented
based on the climatic conditions, regions in the country, size of a metropolitan area etc. If a
particular region in the country is known to be either too cold or too wet, this kind of
information helps H&M to penetrate the market as it knows exactly the kind of fashion or
clothing items that this sector of the economy can be interested in.
The market an also be segmented on the bases of behavioristic segmentation. This is based on
actual consumer behavior toward the products and services. Various variables such as
readiness to buy, brand loyalty, usage rate, and occasions available in the particular region
will affect the way in which the market can be segmented. If there is a particular sector of the
country that is constantly in festive mood, then H&M will have to take this into consideration
when segmenting the market as it will give them a better idea of what products to supply that
part of the country and It further gives the company a chance to penetrate the market. Market
segmentation is vital for a company and in order that a company like H&M can be able to
penetrate the Indian market, these various market segmentation techniques have to be taken
into consideration.
Situation analysis.
The SWOT analysis can be made to see the strengths, weakness, opportunities and threats
that H&M can be exposed to in its bid to penetrate the Indian market. I think that the first
potential threat that this company is going to have to face in the new region is the cultural
differences that exist between the lifestyle in what I can call the normal H&M markets and
the lifestyle in this part of the world, with out trying to sound round, India is a culturally
conservative country, as such it will be difficult to an extent to penetrate the market with what
I will term "western trendy fashion" the culture demands that lot for the woman cover up
their bodies, but modern day fashion design exposed a lot of the body and leaves very little to
imagination.
A potential strength of entering this market is that H&M already use suppliers from this part
of the world, as such with a little more research and changes in design, they will be able to
produce goods which meet the requirement of the Indian market.
As opportunities go, penetrating the Indian market will provide a a great opportunity for
H&M, the country has a very high GDP and a very large population. People are the bases of a
business and with a large number of people available in India it is only right to say that there

is a market for the goods and services that H&M has to provide, as such, this market really
only needs to be tapped right
The major weakness that H&M will face in this market is that it will be entering this market
as a novice as such it will face a lot of competition from other existing retail businesses in the
area.
Goals Targeted.
Generally, the main goals of H&M will be to penetrate the market efficiently. This
penetration is going to give the company a chance to build long term and long standing
relationships with its clients which in turn will lead to a sustained source of income and
profits generation in the Indian market.
The marketing mix
The marketing mix is a very important part of any marketing proposal, it is very important to
note that the marketing mixes give and idea of how the goals and aims of the company can be
achieved. Putting this into perspective, Having an idea of the product, the promotion
technique which will be used, the market place, keeping the people at the center of the
business, being aware of physical evidence, the process which will be used and ultimately the
price at which goods are going to be sold. All in all, for the company to succeed in
penetrating this market, the mixture of these seven P has to be gotten right.
PRODUCT
H&M originated in Sweden it is a retail clothing company that has become renowned for its
range of clothing collections which are based on the most recent fashion trends in the market.
(www.hm.com) H&M was established in the late forties in Sweden, and started business only
with the sale of female clothes. They later extended their sales and production to mens
clothes in the later part of the sixties. Today, majority of the clothes sold in H&M stores are
produced in Asia, Europe, and Northern Africa; specifically, Egypt, Pakistan, Bangladesh,
china, India and turkey. (www.hm.com) H&M today boast of over 2200 stores in 38 countries
ranging from the United Kingdom, Denmark, Germany, Switzerland, Russia, Austria, various
Asian Countries and The United states of America. (www.hm.com) As of early 2011, H&M
employs in the region of 87000 people across the world. Very recently, H&M began selling
online and towards the end of January 2011 began offering online sales services in the United
States of America. (www.hm.com)

H&M operate with a business concept of giving customers the best value in fashion in todays
market at the most affordable price. It is important to note that H&M do not produce their
own goods; they buy their goods from various sellers and distributors in the Europe and Asia.
(www.hm.com) Considering that H&M is trying to penetrate the Indian market. It can be an
important point to make here that liaising a lot more with suppliers in the Indian market will
be very useful, as they have a better idea of the kinds of products, which are in high demand
in this market. (www.hm.com) It s also important to note that India has different cultural
values, For example, the females in this region generally put on clothes which cover a lot
more of their body.so it will still be important to liaise with the suppliers so that they supply
the kind of items that are required in this kind of society. (www.hm.com) If H&M takes this
these things in to consideration, there is a greater chance that they will be able to penetrate
the Indian market more effectively and more efficiently. As Such, Know what exactly is
required by the Indian market and enough research to find out what is good for this part of the
country will therefore be very important in building a proper product customer relationship
and enhance market penetration.
PRICE
Pricing is another very instrumental tool, which can all but determine if the company will be
able to penetrate the market. It is important here to note that unlike a lot of markets that
H&M currently operate in, India is a third world economy, better put, India is a developing
country. ( www.economywatch.com)They have a gross domestic product of 1.43 trillion,
making them the fourth biggest economy in the world. They have had an average economy
growth rate of about 7.5% in the last couple of years. This shows that there is real market
penetration potential in this economy for H&M. ( www.economywatch.com)It is however
very important to note that even though they have one of the worlds largest and a very
impressive gross domestic products figures, they are ranked in the 140,s for per capita
income. When compared to other countries, this means that people in the Indian market
generally have a lower level of disposal income to themselves. (www.economywatch.com)
Putting of this this into perspective, in the case of H&M penetrating the Indian market, the
pricing of the goods and services have to be done right. Pricing will be very essential in that
the more affordable the goods are that H&M bring to the market, the more likely people in
this market are going to buy these goods and services.
There are various pricing strategies that H&M can implement. For example, they make use of
the penetrating pricing strategy, where in they set the prices of their good at a considerably

low level, with the main aim of capturing the market, giving buyers a chance to have a feel of
their product, and when they are convinced that they have attracted and retained their
customers, and are sure that the customers fully appreciate the value of their goods, they can
begin increasing the prices. Other pricing strategies that can be used by the company include
the economy pricing strategy, premium pricing, price skimming, price discrimination, pricing
based on geographic, psychological pricing and product line pricing. What ever the pricing
strategy that H&M decide to implement, it is important that they get t right as this can totally
make or me the whole market penetration strategy in the economy.
PLACE
Personally, I am of the opinion that because H&M already make use of producers and
suppliers in this market, they are at an advantage because they are almost already aware about
how the sector of the economy functions. Firstly, because these goods are going to be sold in
the Indian market, H&M will have to source more cost efficient suppliers of their items. They
therefore have to find a channel of distributions of their goods which is going to permit these
good arrive in the hands of the customers at the most cost efficient price. In order to minimize
cost, rather than maybe setting up or investing in building stores of their own, H&M can rent
space in large well renowned departmental stores. This to an extent reduces the overhead cost
of penetrating the market and this reduction is past on to the consumers in the form of lower
prices and it gives H&M a real chance of penetrating the market through the penetrating
pricing strategy. H&M can also get involved in joint ventures with already established
organizations in the area. This will give them a real chance of placing their products in the
Indian market. H&M can also benefit from research about the market, which has already been
carried out by its partner in the joint venture. All of these will translate to a reduction in the
prices at which goods will be offered to the Indian market. Generally, we can say that there
are various channels that H&M can consider when doing this. They can decide to use a direct
channel of distribution by selling directly to the consumers or and indirect channels by selling
through a wholesaler.
PROMOTION.
If H&M is going to succeed in this market, advertisement is going to be very important. And
it could actually e the deal breaker. Putting up billboards and engaging in radio and tv
advertisement will be key. It is also important to know that the sporting culture in India
centers heavily on cricket. As such it will be important for H&M to try to indulge in some
form of cricket sponsorship. This will be striking their consumers at their softest spot and will

go a very long way to attract customers and retain customers. E marketing is another
technique, which can be utilized. However the extent to which this can be used is limited as
India is a developing country and the extent to which everybody can have assess to the
Internet is limited. This might be effective but not as effectively as H&M might have wanted.
On a whole, advertise is very important to and a very necessary ingredient to penetrating the
Indian market.
PEOPLE
In order to succeed, H&M must put people at the forefront of its business. People in this case
refers to the customers that it intends to serve. Customer satisfaction needs to be its priority
and in order to achieve this, H&M will have to engage in effective training of staff who deal
with customers. They will have to train them to respond and act in ways which are acceptable
in the society within which they operate. The customer service teams have to me fully aware
of the technical knowledge and should baa be to provide adequate technical support as and
when required. This will go a long way to help H&M penetrate the market.
Finally, we have the physical evidence and the process in which these mixes have to be
achieved. Presentation of items, which are for sale, is very vital; dealing with customer
services is quite difficult as the material part is almost impossible to measure. As such people
will base their judgments on things like the way in which the shop is arranged, decorations,
presentation of staff, how nicely the website looks as well as how well the brochure has be
resented.
The process by which these mixes will be achieved is also of utmost importance
Finally, the success of this proposal in penetrating the market will eventually be measured in
financial terms. After the first year of operating in this market, we will see using a profit and
loss account whether continuation is a good option for the business. The main aim of any
venture is to generate profits as such we will have to continuously evaluate our position to
make sure that we are striving to continually achieve our goals.

TOP NEWS:

Global Fashion at low


prices is H&M India growth
strategy: Janne Einola
After waiting for three years to enter India, the $53.16 billion
Swedish fast-fashion retailer H&M, has opened its first store at
Delhi's swish Select Citywalk mall on Friday, just ahead of India's
biggest festive season.
By: Sunny Sen | Updated: October 1, 2015 9:31 PM
7

0 G+0

Janne Einola, chief executive of H&M India, who has been


with the retailer since 1997 tells FEs Sunny Sen in an
interview that the company is betting on bring global
fashion at low prices as part of its growth strategy in India.
(Express photo)
After waiting for three years to enter India, the $53.16 billion Swedish fast-fashion
retailer H&M, has opened its first store at Delhis swish Select Citywalk mall on Friday,
just ahead of Indias biggest festive season. Janne Einola, chief executive of H&M India,
who has been with the retailer since 1997 tells FEs Sunny Sen in an interview that the
company is betting on bring global fashion at low prices as part of its growth strategy in
India.
How important is India in H&Ms scheme of things, and how do you plan to expand
in the country?
For H&M it is highly respectful to be present in India, now. It is the 60th country for us. It
is the right time to be present here. The India market is developing. Western European
fashion is growing all the time here at least in the bigger cities It is too early to say
how many stores we will have. We have opened our first one, here in Saket (Delhi).
Then we will have one in Vasant Kunj (Delhi) later this year, and there is one in
Bangalore. We are look at all the big cities and at all the prime locations pan-India.
During expansion we will not compromise with location.
Brands like Debenhams and Marks and Spencer did not have a good start. H&M
has been looking at the India market for three years now. How do you de-risk
yourself from failure?
We are looking at all the key markets that we are not present in India, because our
target is to grow at 10-15% every year. In 2015, we have opened more than 400 stores.
When it comes to the India, our fashion, style and the best price on a sustainable basis
is what customer are looking for.
How is the India market different from the US, China an European market?

I dont know about the US and China market. However, each market is different in terms
of what people are looking for, but fashion is global, now.
One concern is that few international brands are getting the global trends into the India
market a year later
We will have the same collection as we have in the rest of the world. That is how we
work we have the same collection in all countries. So what you are seeing here is
what you will see in our stores in Paris, New York, where ever you go. It is important to
listen to our customer, and adapt the store as per the local demand, but I dont see that it
is required to have any special collection for India.
You have a long sourcing history with India. Does that change?

We have been sourcing from India for the past 30 years. our current sourcing is 80%
from Asia and only 20% from the US. We have to increase our current sourcing by 30%
to comply with the foreign direct investment (FDI) norms. There is room to increase
capacity in India. How much Made in India clothes we will have in our stores will vary
from time to time, depending on the collection and customer demand. We will not have
any special assortment for India.
How do you plan to fight competition from both home-grown and international
brands like Zara, etc?
Of course, there is a lot of competition. We have a lot of big competitors like Zara and
GAP, and we a have mutual respect for each other. I think our biggest competitor is us
H&M. We have to keep growing the business sustainably, and offer best prices.
Is there a difference in India pricing and global prices, or is there a symmetry
across geographies?
This is our India pricing. These are not special prices, or introductory prices.
How does H&M keep its prices so low?

Whatever we do at H&M we do it effectively. We a fantastic design team in Sweden. We


have a really effective buying prices. If you do everything yourself you can keep the
prices low.

Do you have any e-commerce strategy for India?


Hopefully we will have something in the future, but right now we will focus on retail

&Ms India Mantra: Quality, Fashion,


Sustainability & Pricing
The Retailer magazine caught up with Karl-Johan Erling Goran Persson,
CEO and president, H&M during the India launch and talked on the
companys India strategy, competitive pricing and future plans.

Tags: H&M, Karl Johan, Fashion, Retail, Select City Walk mall
BY NITIN ABBEY | OCTOBER 03, 2015 | COMMENTS ( 0 ) |

Karl-Johan Erling Goran Persson

Swedish fast-fashion retailer Hennes and Mauritz AB (H&M), 30th on the


Forbes list of Most Valuable Global Brands, opened its first 25,000 sq. ft.

store in Delhis Select Citywalk mall on October 2, 2015, amid much


fanfare.
With fans and shopaholics queuing up 24 hours in advance, the retailer
became the talk of the town at least a month before the launch day
thanks to hoardings at several sites across the city. The company operates
3,900 stores across 59 markets, generating around $22 billion in revenue.
H&Ms India strategy is to focus on pricing and sustainable, affordable
fashion, and the Global CEO Karl-Johan Persson sees the country (India) is
a very promising market. With India, where the brand has entered alone
unlike other International brands, the fashion retailer has increased their
footprint to 60 markets. Already in talks to pan out a second store launch
before the end of year in Vasant Kunj, H&Ms main focus is its customers
and not sale and budget numbers.
The Retailer magazine caught up with Karl-Johan Erling Goran Persson,
CEO and president, H&M during the India launch and talked on the
companys India strategy, competitive pricing and future plans.
Edited excerpts:
H&M is all geared up for India. Theyve painted the city red and
have built a lot of traction already. The customers seem to be
very excited! What is going to be H&Ms strategy in India?
Going by the reaction of our customers here, I think it looks very
promising. But, I cant really say anything right now. It is too early. We
have had people waiting to get into the store as early as 24 hours ago. I
also think we have a very good offering which is why there are so many
customers queuing up a day ahead of the official launch. So far, the
customers are looking extremely happy. I am optimistic about the future in
India!
What is H&Ms pricing strategy? In comparison with markets in
other Asian countries, how are your products priced in India?
Its the same in all markets around the world. We are value for money and
never compromise on quality and fashion! Regardless of location, we want
to give our customers a fantastic offer when it comes to quality,
sustainability and fashion, but of course also the pricing. And the same
goes for our current entry into the Indian market. So far the customers
reaction has been very positive; around the world they find our pricing
very amazing and it is right in the India market also.
What is your sales target and how much time would it take for the
brand to achieve it?
We never set that expectation! We do set our budget for every market but
that is never the number one priority for us. The most important thing for
us is to do really well, to treat our customers really nicely and to have a
good product offering. Thats all! And I believe if we do that well, the
selling will happen and the sales will come.
How many stores are you looking to open by 2017?
We are looking to open a lot many stores hopefully! We are looking at
many locations, for example in more locations in Delhi, in Mumbai and
Bengaluru.

- See more at: http://retail.franchiseindia.com/interview/retail-people/profiles/HM-s-India-Mantra-Quality-Fashion-SustainabilityPricing.i814/#sthash.f1SMxxHk.dpuf