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H&M marketing-Dos Aguas Blog

A brief analysis of marketing mix. H&M’s case study

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According to the American Marketing Association, marketing is “an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders”. When a company wants to elaborate its international marketing plan, it is necessary to take into account the traditional 4 P: product (or service), price, place and promotion.

To understand how these concepts work, we are going to study the marketing strategy of H&M, one of the world’s leading  clothing and accessories’ retailer. H&M carries out elaborate advertising campaigns and marketing actions that combine global and local elements. This fact will allow us to better analyze the marketing mix own strategies and to have a broad picture of how marketing works at a business level.

First, H&M is one of the most relevant fashion companies in the world, with sales   reaching up to 210 billion SEK in 2015. H&M Group has six fashion brands – H&M, COS, Monki, & Other Stories, Weekday and Cheap Monday -, with more than 4,100 stores in 63 markets and presence in the electronic market in 32 countries. In addition, it employed approximately 123,178 people in 2017.[1]  Based on this, we will analyze its marketing strategy:

 

Strategic marketing proposal at a global level

Global marketing involves the implementation of a standardization strategy that consists in considering that the market  of a  product is global. Meaning that, despite the differences between nations, companies offer the same product in all markets. Thus, companies offer an international consistent image: the company can project a single universal image among all the citizens of the world.[2] The use of a global campaign aligns with the fact that the company belongs to the fashion world, where there is a homogenization of tastes and consumer demand is greater than in other sectors.

All of this means that H&M, to a greater extent, implements marketing campaigns at a global level. This is can been seen in the fact that H&M offers the same collection in all the countries where it has a presence. In fact, it carries out advertising campaigns with models and celebrities with international trajectories such as David Beckham, for men’s collections, or Gisele Bündchen or Vanessa Paradis, for women’s collections. Also, within this global strategy we can find the so-called “capsule collections” of famous designers, which are presented in selected stores around the world.

Thus, if we access H&M’s website in different countries, we see exactly how the same clothing collection is offered and with the same images, we can see this fact in the image that is shown after the autumn 2016 campaign.

Source: elaborated by Dos Aguas Consulting, using images of H&M websites in different countries. From left to right: Saudi Arabia, Russia, Spain and Japan.

Another element to keep in mind is the price that does not present great divergences in the countries where H&M offers its products.

 

Strategic marketing proposal at the local level

H&M Group also carries out a strategy of adapting its clothing lines to the cultural parameters and values ​​of the country in which it will stablish its market. Therefore, we observe elements of what is known as local marketing, that is, it carries out localization strategies. This implies a greater approach to the consumer since they adapt to the tastes, preferences and local values.

Although it is true the statement made in the previous activity where we defended the homogenization of the world of fashion, it is no less true that clothing is directly affected by the values ​​and customs of society. That is why the companies in the world of fashion are no strangers to it and a representative example of this strategy is that H&M adapts not only its product but also the publicity it carries out in countries with Islamic religion and culture.

Next, we can observe the advertising campaign of the company carried out in 2011 by Gisele Bündchen where it was adapted to the tenor of the country receiving it. In the image on the left we find the photograph as it was seen in the western market and in the right the aspect it presented in the markets of the East to adapt to the “sensitivities” of culture and spatially to the demands of the market of the GCC – are the countries of the Gulf Cooperation Council that are: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE.[3]

H&M-marketing mix Global- Dos Aguas Consulting Blog

Source: elaborated by Dos Aguas Consulting. H&M’s images

The Swedish company is committed to promoting multiculturalism and adapting to countries with deep-rooted social traditions, as far as clothing is concerned. In addition, we cannot ignore the fact that this helps them in their ability to compete with local businesses. Thus, in 2015 it carried out an advertising campaign “Close the Loop” in which it approached different cultures through clothing.[4]

H&M marketing mix- Dos Aguas Blog

Source: H&M’s images

However, not all the changes or adaptations made by H&M are due to demands derived from religious values ​​or demands but rather to adapt to the demands of society. Thus, you could cite by way of example that the fashion chain had to change its range of products in the United States, adapting to the circumstance that male customers in the United States were less fashion conscious than Europeans.[5]

But not everything in marketing focuses on advertising, so when H&M entered the US market it realized that by locating in the suburbs he faced too much price competition. And so, adapted its global strategy and located stores in more exclusive places and in the city center where it continued to offer low prices.[6]

Summary table:

Conclusion

In conclusion, the marketing mix is ​​the adapted combination of the different market variables on which each company acts in order to achieve the sales target established in its target market.

What can Dos Aguas Consulting do for you?

Marketing management involves taking a series of key decisions, such as: what to sell, to whom, how to reach the customer, at what price, how much to sell, how to make known, and how to organize the company. Dos Aguas Consulting can help you to answer these questions with our knowledge of the Spanish market and the profile of the Spanish consumer. In our work as a company specialized in advising and supporting international companies that want to invest in Spain, we can help you find clients and make a profitable business in the country. We can design your marketing strategy or adapt it to this market particularities. Local? Global? You decide! Get in touch with us, our trade and marketing advisors will help you!

Sources:

[1] Statista (2018) Average number of employees (full time equivalent) at H&M worldwide from 2005 to 2017. Statista website. Available online (link) Last accessed: 07.11.2018

[2] Perceptions Everything (February 9th, 2014) Marketing Local vs. Marketing Global. Available online (link) Last accessed: 07.11.2018

[3] Leah Chernikoff (March 21st, 2011) Gisele Bündchen gets covered up for the Dubai version of her H&M campaign, Fashionista. Available online (link) Last accessed: 07.11.2018

[4] The Express Tribune (September 11th, 2015), Muslim girl in hijab unveils H&M’s new collection. Available online (link) Last accessed: 07.11.2018

[5] DUMITRESCU Luigi y VINEREAN Simona, “The Global Strategy of Global Brands”, Studies in Business and Economics. Page:153. Available online (link)  Last accessed: 07.11.2018

[6] DUMITRESCU Luigi y VINEREAN Simona, “The Global Strategy of Global Brands”, Studies in Business and Economics. Page:154. Available online (link)  Last accessed: 07.11.2018

Starbuscks-Marketing

Starbucks and its strategic marketing proposal

By | Marketing | No Comments

Starbucks is a franchise of coffee shops founded in Seattle in 1971, which currently operates in America, Europe, the Middle East, Africa, China and Asia Pacific. It has 277,000 employees, with a sales volume of 23.5 billion dollars in 2018[1] and 27,339 stores worldwide in 2017[2].

What makes Starbucks different from the marketing mix perception?

The marketing proposal that Starbucks has made in its expansion process has a global nature. This article analyzes this marketing strategy in relation to four different elements: product, price, advertising, and distribution channels.

  1. Product approach

1.1. An easily recognizable product

If we carry out an analysis of the product we see how essential the logo is for this brand. Wherever there is a Starbucks in the world, it identifies with the same logo, that is, the green double-tail siren.

1.2. Personalization of the product

The possibility to choose and customize the coffee is a key attribute that is increasingly appreciated by consumers. In addition to writing the name of each consumer in the plastic cups, they can choose from a large number of options to buy their coffee[3]. In this way, they are no longer limited to classic coffee, but have created new presentations and flavors looking for please the customer and satisfy different tastes. With all this, Starbucks has achieved that the consumer feels that he has control over what he consumes.

Starbucks-Marketing-Dos AguasSource: elaborated by Dos Aguas Consulting

1.3. Quality of the product

Starbucks sells high quality products and their price is high compared to coffee places. They have used a high value-added approach that is valued by high-middle class customers but also invites clients with low purchasing power (especially teenagers)[4].

1.4 An emotional connection with customers

They have created what they call “the third place”. If the first place is home and the second place is work, the third place is where everyone goes after home and work. To achieve that third place, they have generated an atmosphere of relaxation that takes customers to a unique experience[5]. In this way, the company offers a connection between the store and the feeling of drinking coffee in a familiar place that makes the costumer feel as if he were at home. Thus, their product is not limited to coffee, but goes beyond and includes a comfortable environment, where one can study, work, read, chat, etc. The strategy therefore is based on converting coffee shops in places that attract customers for the service of excellence, the aroma of coffee, the comfortable open spaces and armchairs, free wifi, and continuos cleaning[6]. All in all, the ideal environment.

1.5. Success

Drinking Starbucks coffee is associated with a modern and successful life. In many TV series and films, principal actors and actresses drink their coffee and they usually have something in common; being young, attractive, and successful. So when the costumer buys a coffee from Starbucks, he is buying more than just a coffee. He is imitating the role set by the movies he watches.

Starbucks-Marketing-Dos Aguas

Source: elaborated by Dos Aguas Consulting. From left to right: Sandra Bullock in “The Proposal” (2009), Sara Jessica Parker in “Sex and the City” (2008), Anne Hathaway in “Devil wears Prada” 2006), Christopher John Grace in “In Good Company” (2004), Alicia Silvestone in “Clueless” (1995), and Tom Hanks in “You’ve Got Mail” (1998). 

2. Price approach

Starbucks products are in a higher range than the rest of its competitors because Starbucks uses a fixing strategy of premium prices. This strategy takes advantage of the trend of consumer behavior to buy more expensive products, based on the perception that high price means high value. Through this strategy of high prices, the company maintains its upmarket image[7].

  1. Advertising approach

Starbucks’ main promotion is spread by their customers. Although the company carries out campaigns when introducing new products or flavors into the market, their advertising expenses only represent around 1% of their income. This strategy goes in connection with the fact that Starbucks does not need advertising because the cinema, tv series, and celebrities already carry out promotional tasks. It is common to see photos in the tabloid journalism of a famous person with a coffee cup from Starbucks.

  1. Distribution channels approach

Starbucks offers most of its products through the company’s coffee shops. However, they also sell on-line store and in the Starbucks app. This means that the company is in tune with the new technologies and market conditions[8].

Conclusion

In short, the feature that differentiates Starbucks the most is that they sell the experience of -emotions while drinking coffee- to customers of upper-middle class that live in the city.

What can Dos Aguas Consulting do for you?

Dos Aguas Consulting can contribute with our knowledge of the Spanish market and the profile of the Spanish consumer. In our work as a company specialized in advising and supporting international companies that want to invest in Spain, we can help you find clients and make a profitable business in the country. We can design your marketing strategy or adapt it to this market particularities. Get in touch with us, our trade and marketing advisors will help you!

Sources:

[1] Forbes (2018) Forbes Companies list. Available online (link). Last accessed: 18.10.2018.

[2] Statista (2018) Number of Starbucks stores worldwide from 2003 to 2017. Available online (link). Last accessed: 18.10.2018.

[3] Entrepreneur (February 19th, 2011) El secreto del éxito de Starbucks, Entrepreneur. Available online (link). Last accessed: 18.10.2018.

[4] César Piqueras (September 12th, 2014) La clave del Exito de Starbucks no es el café. Available online (link). Last accessed: 18.10.2018.

[5] Franquicias de café (November 5th, 2013) Estrategias de Mercado de Starbucks. Available online (link). Last accessed: 18.10.2018.

[6] Luis Mauricio Mija (March 4th, 2016) Starbucks: 5 estrategias de negocio – Análisis del modelo de la compañía de café más grande del mundo. Available online (link).Last accessed: 18.10.2018.

[7] Roberta Greenspan (January 31th, 2017) Starbucks Coffee’s Marketing Mix (4Ps), Panmore Institute website. Available online (link). Last accessed: 18.10.2018.

[8] Roberta Greenspan (January 31th, 2017) Starbucks Coffee’s Marketing Mix (4Ps), Panmore Institute website. Available online (link). Last accessed: 18.10.2018.