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Introduction
A market entry strategy maps out how to sell, deliver and distribute H&M’s products in another country such as India. When products and services are exported to another country, the strategy will define ways of obtaining contracts and delivering them in that country.
If H&M has decided to conquer the international market in India, it is opened to many choices. These options may include the cost, risk and the degree of control that the company will encounter in the country. In entering an international business, it is important that the management of the H&M should be able to choose marketing entry strategies and carefully choose the product that the company will market in India.
Exporting, is the simplest form of marketing entry strategy which includes direct or indirect method such as using an agent, in the case of direct method and counter trade if the company opted to implement an indirect method. Due to technological advances, direct marketing is staging a comeback, leading to a relationship orientation.
Moreover, since H&M wants to be known globally, there are many other ways the company can choose from like joint venture or export processing zone. The management of H&M may decide to choose the export strategy and include in their operation the specific channels to market their product.
Relationship marketing has revolutionized the traditional marketing and has become the biggest paradigmatic shift in marketing practice in recent decades.It has not only changed customers to advocate by replacing customer satisfaction by customer delight but has also increased quality service offers that exceeds expectations. Similarly, it will open new horizons for H&M. It will trigger the H&M to introduce new products and services. According to Berry and Parasuraman (1991: 25) “relationship marketing concerns attracting, developing and retaining customer relationships”. Relationship marketing will provide H&M with necessary selling approach to cope with various challenges, set by the modern market in India. Relationship marketing transforms single usage to multiple service usage and will strengthen H&M by providing them the wherewithal with which they can carry out effective customer services in India.
Nowadays, competition in fashion industry and demands of customers are increasing constantly. They demand for global fashion company like H&M where there are provisions for an incentive to the customer. So, strong commitment to customer care, attraction and maintenance at all levels are the top priority of H&M, while dealing with the customers. Relationship marketing will help H&M to overcome these problems and make the sales procedures much simpler. Palmer (2001) enumerated the components of relationship marketing as being: a focus on customer loyalty and retention; long term orientation; tracing identifiable buyers; distinguishing different levels of relationship between the buyer and the seller; high levels of customer dedication; and service quality as being the responsibility of every employee. Relationship marketing will transform indifferent customers into loyal clientele and emphasizes on their retention. Customer retention is the means to delivering long-term profitability in H&M.
Customer relationships management focuses on customer retention, and customer retention is believed to be more profitable than customer acquisition. Dawkins and Reichheld (1990) found that higher retention rate leads to higher net present value of customers. The longer customers can be retained by H&M, the more and more tangible benefits will accrue from a sustained income stream. The end goal of relationship marketing is profit for H&M. Saren and Tzokas (2000) raised the usefulness of relationship marketing in creating unique, difficult to imitate knowledge through the processes of interaction and dialogue with the customer. Knowledge about customers can only be enhanced if H&M is able to maintain lasting relationships with their customers.
The determinants of store choice, customer loyalty, patronage behaviour, customer retention and relationship marketing have been widely studied around the globe. Therefore, a considerable volume of literature exists, especially regarding fashion industry. However, there is still considerable scope for research in this field as the environment of fashion industry is in a constant state of flux and the emergence of new store formats in India has led to dramatic changes in consumer behaviour. New and existing fashion industry tend to provide a completely new experience for their consumers by offering sophisticated customer service, a wide and assorted variety of goods, breakfast ambience, quality imported and branded products.
Since, fashion has invading people style of living and H&M’s the product that has been chosen to go international market. Hence, this research will suggest a marketing entry strategy for H&M using Porter’s Five Forces model (Porter, 1980) and SWOT analysis of other H&M’ companies in other countries. The company is a new entrant to the Indian Market, thus, this paper will provide a marketing entry strategy analysis for the company as it invade the market in India.
Competitors Analysis
Competitor’s analysis is very important since H&M is a new entrant within the market place. It is essential so that the H&M will be able to know their competitors and the possible strategy that they may use to level up such competitors and know the needs of the target market. Thus, this means that H&M will enter the India as a beginning industry considering many competitors within the market place.
Marketing Entry Analysis
Utilizing Marketing Mix
Marketing is considered as one of the most important element underpinning successful business creation and because of its complex applications, marketing is defined in a variety of ways (Sheth, Gardner, and Garrett 1988). According to Elliot (1990), the marketing concept was first promulgated in the late 1950’s. The importance of marketing concept incorporates oft-repeated elements such as: customer orientation; integrated marketing efforts; and resultant profitability (Elliot, 1990).
The marketing mix principles can be adjusted on a frequent basis to meet the changing needs of the target market and other dynamics of marketing environment (McCarthy, 2004). In relation to marketing plan, marketing mix includes both short term and long term strategies makes for a more profitable marketing mix. Long term strategies build brand/company awareness and give sales revenue a permanent, gradual boost. Short term strategies create a temporary, immediate revenue boost by giving buyers an incentive to purchase. By implementing both long and short term strategies, you can attend to immediate sales goals while building your business reputation and goodwill (Kyle, 2004).
1.1. Product
H&M AB (originally known as Hennes & Mauritz) is a Swedish clothing company, known for retail of low-cost designer clothings. It was established in Västerås in Sweden in 1947 by Erling Persson, though at the time it only sold women’s clothing and was called Hennes, which means “hers” in Swedish. Persson acquired the premises and inventory of a Stockholm hunting equipment store named Mauritz Widforss in 1968. Persson expanded into menswear and renamed the store to Hennes & Mauritz, later abbreviated to H&M (www.hm.com).
H & M is the world’s favourite and preferred designer of apparels and clothing for man and women. In addition, H & M is also known not only for their fashion cosmetic but because of the quality of the clothes designed durability and the funkiness of its clothes. Through the online stores, H&M provides the regional, continental and European Market an exclusive clothing designs. The main goal of H&M is to provide innovative designs of apparels and clothes for different types of people in different countries all over the world. The company is known because of its strategy of providing clothing designs exclusively for each country’s preferences and needs.
1.2. Pricing
H & M is believed to have advantages when it comes to its pricing tactic. In order to be known into the market place and as a new entrant, the company will provide its target market with an affordable cost while providing them a high quality products and services. The company will be given the customer and client a price that is lesser than its competitors so that the consumer will be enhanced to buy and patronize the H & M clothes and cosmetics.
1.3. Placement/Distribution
The H&M’s products will be distributed directly to its clients and consumers in order to be known in the market place. H&M products can utilize joint venture strategies with distinguished distributor of apparels, clothes and cosmetics, providing them with great offers, so as to market the product of the H & M internationally.
In 2003, H&M announced its entry into the traditionally exclusive Milan fashion scene. It remains to be seen if H&M and other low-end retailers will be able to find a market there. In February 2004, The Gap, another prominent international retailer, sold off all of its German outlets to its competitor, H&M.
H&M launched its first American outlet on March 31, 2000 on New York’s famous Fifth Avenue. Following the success its stores, additional outlets were opened in the SoHo, Gramercy, and Herald Square areas of Manhattan, followed by outlets in Upstate New York in Syracuse, Utica, and West Nyack. The brand then expanded to other regions of the country, including Chicago and its outlying suburbs.
The first two H&M stores to appear on the West Coast of the US opened in San Francisco, California on November 19th, 2005. H&M opened its first Canadian store in Fairview Mall in Toronto and soon after, its store in Toronto’s Eaton Centre was opened in March 2004. Following great financial success, H&M opened ten other stores within the Greater Toronto Area. Stores were also opened in Montreal in Spring 2006.
H&M continued its expansion in the Canadian market and doubled the number of stores in 2006. It planned new markets include Barrie, Hamilton, London, Kitchener/Cambridge/Waterloo, St. Catharines and Windsor and Ontario market, Fairview (Pointe Claire) shopping centre, Rockland Centre, the Galeries d’Anjou and the Carrefour Laval. (www.hm.com)
1.4. Promotion/Communication
H&M can use video advertisements, print advertisements and the concept of e-marketing to promote its products. These promotion and communication strategy will tend to meet the consumers form different places everywhere, especially those target markets or the consumers in the working place.
Moreover, since the trend in the market place today is the usage of e-marketing, the company will provide a website that any client can access. The use of the Internet is changing technologically advanced marketing overnight while different industries have been trying to use it as part of their marketing strategy. It does not only reconfigured the way different firms do business and the way the consumers buy goods and services but it also become instrumental in transforming the value chain from manufacturers to retailers to consumers, creating a new retail distribution channel (Donthu and Garcia, 1999). E-marketing is a powerful tool used that can be used by H&M. E-marketing is defined as the process of achieving marketing objectives through the use of electronic communications technology (ICT). Smith and Chaffey (2001) have provided a 5Ss’ learning devices on how the internet can be applied by all business firms for different e-marketing tactics. These 5S’s are useful for H&M and are selling, serve, speak, save and sizzle.
E-marketing or online marketing strategy can be used by H&M to market its products. Thus, the H&M has created its own website (www.hm.com). H&M will use the e-marketing strategy is to keep in touch to different internet users and to be able to attract more clients and consumers. H&M will use e-marketing to accelerate its business portfolio whether the user of the website is a customer, employee, stockholders, vendors, retailers or end customers.
1.5. Market Segmentation
Marketing segmentation is defined “as an aggregating process – clustering people with similar needs into a market segment” (Perreault & McCarthy, 2002: 74). According to Ravesteyn (2005), customer segmentation is critical for an effective relationship marketing strategy. H&M will provide its target consumers for its product by using market segmentation strategy. The segmentation of the market is a critical aspect of relationship marketing and the segmentation of business customers by H&M must be in line with the different levels of relationship offered by the company. They need to make use of relationship marketing and management at segment or market level to identify the target market they intend pursuing (Stewart, 1995). Primarily, the context of the market segmentation for this company will be the Psychographics. Strydom, Cant & Jooste (2000) identify the following four types of segmentation: demographic, geographic, psychographic and behavioural segmentation. Psychographics includes social class, lifestyle, and personality variables (Chiagouris and Kahle, 2000). The end result of using these variables is a psychological profile of each market segment. Issues also examined the customers’ loyalties, habits and self-concept. Social class describes how individuals want their office automation will meet their comfort and satisfaction, what they consider important about their immediate surroundings, their opinions on various issues, and their interests.
As lifestyle studies concentrates on what the consumer requires, using these study results as marketing strategies eventually became a marketing concept. The marketing concept is a basic philosophy that maintains that H&M should endeavour to satisfy the needs and wants of customers through a coordinated set of activities that also allows the H&M to achieve its goals at a profit. The H&M must be able to consider its consumer, especially the demands of the consumer so as to let the business have an opportunity of having an expansion of its business portfolio as required by the consumers.
The focus of this overview is on the behavioural segmentation process, which refers to the segmentation of buyers or customers into groups on the basis of their knowledge of, attitude towards, use of or response to a product or service of a H&M. The behavioural variables identified by Kotler (2000) include:
Occasions – occasional buyers develop needs, purchase, or use products.
Benefits – refer to the benefits that buyers seek.
User status – includes potential users, regular users, non-users, first-time users or ex-users.
Usage rate – will include light, medium or heavy users.
Loyalty status – are classified as hard-core loyals, split loyals, shifting loyals and switchers.
Buyers-readiness stages – where the customers are either aware or unaware of the product or service, informed, interested, have a desire for the product or service and have intent to buy.
Attitude – enthusiastic, positive, indifferent, negative and hostile.
Research Objectives:
Relationship marketing will contribute significantly to the development of H&M in India. Therefore, it becomes essential to study its applications in a fashion company in India. This study fulfils this need. The study addresses the different pros and cons of relationship marketing in a fashion company in India.
Thus, the general purpose of this research investigation is to identify, describe and analyse factors that have an impact on relationship marketing, customer retention and customer acquisition in Indian fashion context. The main objectives of this study are given below,
To identify, describe and analyse factors that will have an impact on relationship marketing, customer retention and customer acquisition in a fashion company and at H&M in India.
To appraise the views of customers of H&M in India, how they feel about the company’s relationship with them.
To gain insight on how H&M in India build customer relationship marketing tactics.
To understand and determine the mediating role of customer behavior between relationship marketing and customer retention and acquisition.
To indentify the market entry strategies for H&M in India.
Research Questions:
What is the relationship marketing tactics practiced by the H&M in India?
What is the market entry strategy practiced by the H&M in India?
Deliverables:
As it has been described in the objectives of the research project that the main purpose of this study is to examine the market entry strategies and relationship marketing by H&M in India and customer relationships in Fashion Company and to find out how fashion company relationships with customers promotes its entry in India. The final product of this research project will be a report, containing the H&M’s relationship strategy and market entry strategy in India, what are their advantages and disadvantages. The report will contain the perceptions of employee and customers. Finally, the report will highlight some relationship marketing problems of H&M and a fashion company and suggest some guidelines to remove these problems and improve its customers base in India.
Research Methodology:
Interested customer and would be customers of H&M in India will be approached to collect the data. There are two kinds of data.
Primary data
Secondary data
Primary data includes the information about relationship marketing and market entry strategy available from customers of H&M in India. This also includes responses by the different employee of H&M on the shop-floor. Secondary data will tell about the impact of relationship marketing in the retailers and the data has been available in their system. To collect the data, retailers’ employees, posted at different positions, will be contacted. Similarly, to assess the changes in retail services, caused by the relationship marketing, customers’ views will also be found out.
The tools to collect this data will be the surveys. For this, employees and customers will be interviewed, where as to know the views of customers, different questionnaires will be prepared to ask them different questions.
To analyze the collected data, different statistical techniques will be used.
Qualitative research can be referred to as the opposite of quantitative research method. Any research method has its advantages and it disadvantages. Qualitative research is a study done that produces its results and findings that do not result from statistical means or other method of quantification. This method of inquiry requires a high level of intelligence and experience from the researcher to arrive at a more realistic and targeted data from the respondent.
Quantitative research is referred to as a measurement of how people feel, think or act in a particular way and that this survey tend to include large samples from fifty to any number of interviews, structured questionnaires containing mostly closed questions that require questions along with set responds. This involves the clear statement of variables i.e. specifying the dependent and the independent variable.
Resources:
The most important thing to carry out any research project is to know the background, research objectives, and research methodology of the research project. For this literature is searched out. The University Library will be the primary source to review the literature. Books in hard and soft form will be obtained from the library. Similarly, different research journals and articles in the library will be valuable assets to prepare a comprehensive research report.
To prepare the questionnaires, surveys done by Fashion Company to know the relationship marketing and market entry strategy will be used. Similarly new questionnaires, depending on the situation, will also be prepared.
Project Plan:
The project is divided into three stages.
Literature review
Interviews of employees of H&M and their customers
Report writing
Literature Review:
To carry out any research project, a research must be able to review the literature. This makes researcher aware of work, done by other people in the respective field. The main source of literature is the journals, in which different researchers publish their findings of problems.
Interviews of retail employees and customers:
In order to collect information on the impact of market entry strategy and know impact on relationship marketing in the Indian fashion company, the employees of H&M will be interviewed. They will be asked about the positive and negative points of relationship marketing utilization in their stores. Similarly, customer views will be taken through the interviews. Considering all these views, suggestion to improve the customer services will be advised.
Report writing:
The final product of the research project will be a written report. The structure of my report will be divided in following categories,
Introduction:
In the introduction, the market entry strategy and history of relationship marketing use in fashion sector will be discussed and how different relationship marketing systems will be used to address the issues of H&M, with the passage of time.
Aims and objectives:
In this part of report, purpose of the research project will be stated very clearly; what are the aims of the study and what are the problems, which will be discussed in the report.
Research methodology:
This is the core part of the report. After stating the problem, different research methodologies will be explained to gather the data. The primary source will be the interviews of the employees and customers. From these interviews, impact of relationship marketing and market entry strategy of H&M will be assessed. The questions asked to employees and customers will be provided in the appendix of report.
Conclusions:
After describing the problems and research methods, suggestion will be advised to eliminate the highlighted problems.
Risk:
In order to carry out any research project, it is very important to study all the aspects of the project. One of the main aspects regarding any project is the risks involved. There are also some risks involved, regarding the research project under consideration. One risk can be privacy. H&M employees can be duty-bound and show reluctance to give information about their working procedures and on relationship marketing operations, used in the fashion company.
Impact and Beneficiaries of Research:
The main objective of this research activity is to investigate the market entry strategies and relationship marketing by H&M in India and customer relationships in Fashion Company and to find out how fashion company relationships with customers promotes its entry in India. This research can be very helpful for the fashion sector. For instance, it will analyze the effectiveness of relationship marketing and its market entry strategies in India. It will determine the views of H&M employees about the introduction of relationship marketing in their working environment. From this, both positive and negative points about the role of relationship marketing in the fashion sector, put forward by the H&M employees, can be known. Similarly, the customers’ views about the insertion of relationship marketing and the effect of H&M’s market entry strategy can be found out. Customers’ level of satisfaction about the H&M’s customer services can be assessed. This report will also show the comparison of different strategies among different H&M’s companies worldwide and how they use relationship marketing to achieve the same target. By knowing the views of customers through this study, their difficulties while dealing with H&M, can also be discovered. This report will also address these issues and suggest solutions to eradicate these problems. So, the major beneficiaries of this report are the management of H&M and by considering the suggestions of the report, they can improve their market entry strategies, customer services and hence the customer relationship from H&M will be invigorated.
