Analysis of a company: H&M

Abstract

Large companies and major conglomerates tend to have a more enhanced transparency than small and medium sized businesses. They are present in our daily life via their marketing campaigns, communications and advertising. Their products incite our desires to gain ownership over these seemingly unattainable wares which seem to be out of the grasp of ordinary mortals. Yet, they remain immune to vulnerabilities and crises just like any other business.

Studying a large group such as H&M is the challenge we set ourselves. To an external observer, the company seems to be performing very well indeed and H&M's recipe seems to be standing it in good stead. Nowadays, H&M is rethinking its positioning on the market; the company is trying to shed its entry level image to achieve a more exclusive status in the eyes of its customers as evidenced by "M by Madonna". While certainly its relatively low prices reflect the spirit of H&M, some of its products carry surprisingly excessive prices (dresses at €50, leather coats around €152 etc).

And H&M plans to give more direct competition to Zara. For its new collection, H&M once again tapped into the celebrity craze by signing on pop legend Madonna. After introducing the designer lines of the likes of Karl Lagerfeld, Stella McCartney and Viktor & Rolf, H&M continues to associate its brand and the creation of its clothes with stars of high status, who are known to wear high end clothes, and luxury fashion designers. H&M uses the same celebrities and the same designers for their collections, which are distributed the world over.

Is this a good strategy to communicate without resorting to a standard of adapting to cultural specificities of each country in which H&M operates? While stars like Madonna are internationally recognized, stars like Emmanuelle Beart (lingerie collection for H&M in 2006) does not hold the same reputation on the international stage; he is remains relatively unknown even in the United States.

Is it wise to continue to operate a standard communication in all the countries? Also, with the expansion in the Middle East and Asia, it will be harder for H&M to continue in this niche. Our problem is thus based on this question: Should we not revisit the concept of the communication standard in favor of an appropriate communication to reach customers more effectively through customized advertisements?

2006 was a good year for the company's operations in the Nordic countries. However, Germany remains the company's single largest as well as its most profitable market. The reasons for this commercial success can be attributed to the large resident population, the number of large cities as well as the strong purchasing power of the Germans. The United Kingdom upped its momentum and overtook Sweden as H&M's second biggest market. In the same year, more stores were also opened in the United States, Spain, Germany, France and Canada.

In September 2006, H&M has opened franchises in the Middle East, namely Dubai and Kuwait. A franchise agreement was signed with MH Alshaya Co, a leading name in international franchise retailing. The company manages over 900 franchise stores in eleven countries. And H&M sells and delivers its products to Alshaya which sells to end customers. This has enabled H&M to locate in a region where it is impossible to create private subsidiaries. It makes sense for the company to set up in this geographical area, as the economy is constantly growing and customers have high purchasing power.

Tags: Marketing campaigns, communications, advertising, Madonna, purchasing power, franchises, profitable market.