Hennes & Mauritz is a multinational clothing retail company based in Sweden. The company is renowned for fast-fashion clothing for children, teenagers, women, and men. The company was found in 1947 by Erling Perrson (H&M, 2013). The company operates in 62 nations and has more than 4500 outlets in these nations. Globally, it is the second-largest retailer in the clothing-retail industry. The company also offers online shopping facilities in 33 countries (H&M, 2019). H&M also operates a number of subsidiaries under its parent brand name. As of 2015, the company had more than 132000 employees across the globe (H&M, 2014). In 2016, the company generated revenue of $25.191 billion (H&M, 2017). The company has also acquired several smaller brands to reduce its competition.
Following are the four dimensions of the Ansoff Matrix for H&M:
Market Penetration
Market penetration is the strategy of launching existing products in existing markets. The first strategy the company uses is to offer various discounts. These can be in the form of sales during specific times in a year of augmented discounts such as discounts on large purchases or buy one get one free. The company also motivates its consumers to use more of the product by marketing various designs through magazines and other channels motivating consumers to try other products and designs. H&M has also acquired various smaller retailers in order to reduce competition and increase its market share. The huge marketing budget also creates entry barriers as developing a successful brand like H&M takes a large advertising budget which most new entrants cannot afford. H&M also creates new store outlets at strategic locations that are meant to entice passers and encourage them to visit the store and purchase something. Each of these market penetration strategies works to increase sales for the brand.
Market Development
In this activity, existing products are promoted in new markets. The first strategy that H&M uses in this regard is to enter into new geographical markets. This is done in two ways. The first way is to enter into new markets where the company does not have any stores. The second strategy is to create new outlets in an already serving market to increase access for consumers. When entering a new market, the company incurs huge expenses in marketing to create awareness amongst consumers. The company mainly focuses on retail stores but also has started online sales in various nations as a new distribution channel. H&M also creates different pricing policies to target specific market segments. These can include low-cost products or premium products aimed at a certain social class. Each market development initiative plays an important role in the success of the organization.
Product Development
Product development is the strategy of launching new products in existing markets. H&M does this in various ways. The first strategy that H&M adopts is to create new products. These are in terms of new designs and colors for existing products. The company also creates new products which it was not selling earlier. The launch of each new product is accompanied by a massive marketing campaign. Also, the time of launch is selected strategically based on the cloth material and design. Each new design the company creates is based on consumer feedback, consumer needs, and market trends. Once a product is launched, feedback is taken. Existing products are also improved after their initial launch. The company has its own designers who work on creating new designs and prints for the products of the company. Each new design takes time and effort. Once a new product is developed, it is launched across the industry.
Diversification
This strategy requires an organization to launch new products in new markets. H&M only operates in the clothing and accessories industry. It can diversify in various ways. It can vertically backward diversify by establishing its cotton fields and textile mills rather than procuring fabric from suppliers. The company can also horizontally diversify by steeping into various related industries such as sports clothing, apparel, hosiery, and so on. Related diversification is a safer strategy. The riskiest would be to diversify into unrelated industries such as sports equipment, consumer electronics, smartphones, and so on. However, each diversification strategy can help the company grow.
References
H&M, 2013. Our History. [Online] Available at: https://web.archive.org/web/20130319073126/http://about.hm.com/AboutSection/en/About/Facts-About-HM/People-and-History/Our-History.htmlOur History [Accessed 14 Jan. 2020].
H&M, 2014. H&M Group. [Online] Available at: https://web.archive.org/web/20141216162916/http://about.hm.com/en/About/facts-about-hm/about-hm/hm-group.html#cm-menu [Accessed 14 Jan. 2020].
H&M, 2017. Annual Report 2016. [Online] Available at: https://about.hm.com/content/dam/hmgroup/groupsite/documents/masterlanguage/Annual%20Report/Annual%20Report%202016.pdf [Accessed 14 Jan. 2020].
H&M, 2019. About. [Online] Available at: https://web.archive.org/web/20141216162916/http://about.hm.com/en/About/facts-about-hm/about-hm/hm-group.html [Accessed 14 Jan. 2020].