H&M CONTEXT ANALYSIS

H&M CW1: CONTEXT ANALYSIS MG602 DECEMBER 2011

1

TABLE OF CONTENTS

Introduction

Page 3

Brand Identity

Page 4

Vision, Purpose, Values Strategic Direction Brand Resources

Page 9

Product Portfolio Brand Architecture Conclusions and Recommendations

Page 14

References

Page 15

Appendix 0ne: Brand Positioning Map

Page 17

Appendix Two: Brands as a Positioning Tool

Page 18

Appendix Three: Mission Statement Analysis

Page 19

Appendix Four: McDonald and Mission Statements

Page 20

Appendix Five: H&M Brand Religion

Page 22

Appendix Six: H&M Brand Architecture

Page 23

2

INTRODUCTION BRANDING IN CONTEXT In a business context; the purpose of a brand is to provide the means in which organisations can gain and retain customers. Brands in essence not only contribute to the customer-based images of the organisation but to the images formed and held by all the organisations stakeholders such as its employees, investors, suppliers and customers. (Hatch, 2003)

There are many definitions as to what a brand is however the common characteristic which is consistently conveyed is that brands provide the means in which organisations can differentiate itself from its competitors driving a competitive advantage.

Kotler (2005) defines a brand as a name, term, symbol, design or a combination of these to identify the goods or services of one seller or groups of sellers and differentiate these from those of its competitors.

Traditionally branding has focused on the external promise making, brand image and personality centralised on the wants and needs of consumers.

However there is a growing notion that branding should not just be based on the external factors of the organisation instead needs to address both the internal and external brand attributes which has led to the shift towards corporate branding.

Buckingham, 2006; argues that a truly successful brand must be an integral part of the fabric, the culture and the organisational make-up of the company.

This report aims to provide a critical evaluation into the role of branding as to how it can benefit organisations and provide commercial success. In doing so, clothing retailer H&M will be analysed to determine the effectiveness of its current brand strategy

3

BRAND IDENTITY VISION, PURPOSE, VALUES

Emotional Value

Unique Personality

Functional Value

Figure 1: Values Driven Relationships Source: De Chernatony (2010:323) Being formed on both functional and emotional values brands are powerful tools, possessing the capability to fuse functional with emotional values enables promises to be made about unique and welcomed experiences. (De Chernatony, 2010)

Functional values however can be easily understood by competitors who can then not only imitate but surpass these. It’s with the emotional values that organisations gain leverage over competitors, as it’s with these organisations’ are able to gain consumer trust and build on relationships.

Just like people brands have to earn trust, in accomplishing this brands need to be honest with authentic relationships, as well as being responsive to the changing needs of stakeholders. Through good managed brands, organisations are able to build favourable reputations which enhance the confidence of staff, buyers and users.

Not only do brands guarantee origin and confirm quality, brands provide emotional reassurance, association and aspirations which are all important attributes in driving added value to organisations.

John Murphy, founder of Consultancy Interbrand, defines a brand as “a trademark which through careful management, skilful promotion and wide use, comes in the minds of consumers to embrace a particular set of values and attributes both tangible and intangible.”

(Brand Evaluation: Stand Up and Be Counted)

4

Currently H&M are market leaders within the value fashion sector, which can be shown in the diagram below, key to the success of the organisation is the result of a coherent branding strategy.

Appendix 1; illustrates the positioning of H&M in correspondence of its competitors, in this quality and price are the attributes which the various brands have been evaluated against as these are core to the values of H&M. Seemingly H&M are viewed to be relatively high in quality and low in price, which suggests that the current brand promise of H&M is being met and received by its consumers.

Kunde’s Brand Religion model

Appendix 6

highlights the current brand level in which H&M

sustains.

From the current market positing of the brand it’s clear that H&M have developed its brand to own a functional benefit amongst its various audiences as the organisation are viewed as being constant in providing the promised values throughout its various product ranges.

However H&M lacks in that the brand culture of H&M are not as involving to the customers or ultimately the culture of the organisation may be misunderstood or disoriented which as result decreases the amount of brand loyalty which the brand could obtain.

Figure 2 illustrates the overall brand positioning strategy of H&M in regards to the brand promise, emotional and functional values.

5

Figure 2: H&M Brand Values

"To provide fashion and quality at the best price� (Annual Report Part 1) Promise

Emotional Values

Ethical and environmentally aware, providing aspirational fashion and clothing

Functional Values

Low cost sustainable fashion and clothing

Offering fashion and quality at the best price is the brand promise of H&M. In achieving this all H&M products are internally designed and produced externally.

Appendix 4

However, H&M do not own or operate in any factories which produce its products (Conscious Actions Sustainability Report 2010).

Instead H&M work with its suppliers being cost-effective enabling the brand to offer low cost products and be ethical and environmentally friendly which is part of its emotional values.

In addition to this H&M are enabling unique customer experiences through the incorporation of high-end fashion lines within its ranges, enabling its consumers to reach their aspirational needs.

Fundamentally H&M are centred upon offering low cost sustainable fashion which provides the basis for the values and culture of the organisation along with any strategies which it may implement.

6

BRAND INDENTITY STRATEGIC DIRECTION Hatch 2003, states that by undergoing corporate branding, organisations are able to use the vision and culture of a company explicitly as part of its unique selling proposition. In doing so, organisations can increase visibility alongside enhancing its recognition and reputation.

H&M CEO, Rolf Ericsson, states that the long term objective of H&M is to “make fashion available to everyone, giving the customers a fashion experience that strengthens the H&M brand.�

According to de Chernatony, 2010; corporate branding provides the strategic focus for clear positioning, facilities greater cohesion in communicating programmes enables staff to better understand the type of organisation they work for and provides inspiration about desired styles of behaviour.

Before implementing corporate strategies organisations need to segment its stakeholders to gain an understanding of what the perceptions and inclinations are of the company in order to successfully compile the organisational strategic direction.

Due to the broad scope of the external stakeholders of H&M i.e. its consumers, the communicated message becomes disorientated in that it’s not focused; primarily the internal stakeholders need to be aware of the message in order to effectively commit and deliver the brand promise.

When looking at brands in a business context; providing the means for organisations to gain and retain consumers, organisations need to gain a broadened perspective of the external environment in which the corporation operates.

However as previously stated in achieving effective strategy results the strategic direction needs to be understood by all stakeholders involved with the organisation whether it being

7

directly or indirectly with a certain consideration to the potential stakeholders such as potential future customers.

Future Environment

Future Environment

To be the best high street fashion retailer in their market segment through the delivery of quality clothing and accessories and excellent customer service.

Brands Vision

Purpose

Values

Purpose

Values

To provide H&M stakeholders i.e. consumers with affordable quality clothing, whilst providing environmentally sustainable clothing for its indirect stakeholders.

The main brand value of H&M is based on quality through both clothing and customer care. The brand place a huge emphasis on its consumers therefore regularly conduct in-house staff training to ensure that the company values are instilled throughout the organisation.

8

BRAND RESOURCES Product Portfolio “H&M’s innovative designers create a broad and diverse selection, which allows H&M to offer fashion for everyone” Home ware H&M have extended their product portfolio by diversifying into the home ware sector.

This has been done through distinctively endorsing the line under the H&M brand rather than through the various sub brands that the organisation own. Through undergoing this strategy H&M are able to continue to meet the needs of their existing consumers whilst using the reputation of the

H&M

brand

to

generate

new

consumers within the home ware market segment.

Accessories and Designer Lines In achieving the long-term organisational goals of becoming market leaders within their sector, H&M have expanded and diversified its product offerings by creating sub-cultures which facilitate the use of luxury items and accessories appealing to its consumers emotional and aspirational desires in which luxury brands provide, reinstating the brands promise of fashion and quality.

9

Women’s Wear

Men’s Wear

Children’s Wear

10

BRAND RESOURCES Brand Architecture Key to brand alignment is the brand architecture in which an organisation sustains; this compromises all the components of a brand such as brand personality, promise and story, visual and operations which ultimately provide the foundations for the brand to be unified into a single structure.

Whitney, 2010, states that brand architecture organises and structures the brand portfolio by specifying the roles and nature of the relationships between the brands.

H&M sustains a hybrid brand architecture whereby in comprises aspects of all Monolithic, Endorsed and Branded structures.

The brand concept of H&M “fashion and quality at the best price� is the underlying corporate message running throughout the company’s portfolio providing the initial values and culture throughout its brands, reinforcing the company brands credibility.

However, even though H&M incorporates its company message through all its company brands, there is no direct link or association between H&M and its other brands which leaves the corporate message disoriented and the individual line left freestanding Appendix 12.

In this H&M has allowed its company portfolio to take on a branded structure whereby each of the brands has different names, lifecycles and personalities of their own. In this architecture brands tend to compete with each other. (Brand Strategy and Architecture)

H&M however have positioned each of its company brands in different markets which results in each of the brands competing only with other organisations in its sectors and H&M as the parent brand being able to endorse its product services.

Three of the company brands owned by H&M have been sought with acquisition which provides the opportunity for H&M to preserve the goodwill associated with the acquisition (Brand Strategy and Architecture).

11

The fact that H&M has undergone the Hybrid architecture means that even though H&M is the parent company (See Appendix 6) if anything were to go wrong with any of the other brands it will not have any direct impact on H&M as an individual clothing brand.

H&M as an individual brand have several product ranges in which they offer with sub-brands under each of these ranges. The sub-brands provide different cultures for the organisation in regards to the positioning of the products as these are used as a means to differentiate the company’s products to its diverse target groups.

In this instance it is clear to understand the positioning of H&M and where its strategic direction stems from, due to the vast array of product offerings that this brand has there is little segmentation needed.

The strategic architecture of the brand has enabled it to be receptive of market space of all fashion and accessory sectors, whether through stakeholders knowingly aware of the involvement with the organisation or not.

12

BRAND CULTURE & ORGANISATIONAL BEHAVIOURS H&M are driven by strong values such as commercial mind-set, simplicity, constant improvement, cost-consciousness and entrepreneurship. (Annual Report Part 1). The values of an organisation are set to drive the founding culture which forms the behaviour standards of the organisation.

When establishing the values and culture of an organisation the Mission statement acts as efficient tools, in the instance of H&M (see appendix 3 and 4), the values of the organisation are fundamental in the ‘envisioned’ culture of the brand in accordance to the brand managers.

H&M strongly believe in entrepreneurship and its staff being responsible at all levels including retail shop floor with employees having a strong personal commitment to the brand in this sense employees are said to have higher responsibilities and individual decision making is vital within this organisation.

However, when looking the attitudes of existing and pre-existing employees of the brand globally there seems to be a different perspective of the behavioural and cultural aspects of the organisation.

Many employees of the organisation seemed to find that what the organisation required from was a lot different from the roles that had initially been applied for, finding that there was a work overload for little benefits. (H&M Reviews)

Thus meaning that the perceived culture of the brand against the culture which is applied in practice is somewhat unaligned, which suggests that H&M may still although stating that the staff is what empowers the organisation (Annual Report Part 1) are not efficiently combining the two stakeholder groups in accomplishing successful corporate brand strategies.

13

CONCLUSIONS AND RECOMMENDATIONS Through thorough research into H&M it is clear that there is a gap between the organisational aspirations concerning the vision of the company in correlation to the culture of the brand; in regards to what higher level managers’ feel the corporation is, compared to what under level staff believe it to be.

This may be due to lack of communication between the organisations and its key stakeholders, the correlation between the vision and image of the brand when concerning its external stakeholders seems to be aligned effectively.

However, although the gap lies explicitly between H&M and its internal stakeholders, in order to achieve strategic objectives organisations, need to take into account both the internal and external contributors ensuring that the key messages are communicated effectively to fulfil made promises.

Since key to the deliverance of brand promise is via organisational staffing H&M needs to implement tactics to re-educate its employees of the core values which it perceives and aspires to be. This should primarily concern restructuring its organisation’s structure with clear indications into the job and role specification.

In restructuring the organisational structure, H&M need to reapply the wage specification to the delegated roles so employees regain motivation towards the company rather than presumptuously delegating higher role specs to lower level staff at a lower basic rate.

This, results in employees feeling over worked and depreciated thus being less committed to the organisation and helping to achieve end objectives.

14

REFERENCES About H&M [Online], Available From: http://www.hm.com [Accessed 23 November 2011].

Annual Report Part 1 [Online], Available From: http://www.eyemag.se [Accessed 25 November 2011].

Annual Report Part 2 [Online], Available From: http://www.eyemag.se [Accessed 25 November 2011].

Buckinghm, I., Roberts, J. (2006) Is Yours a ‘Flagging’ Brand?. Admap [Online], 472. Available From: http://www.warc.com [Accessed 24 October 2011].

Burt, S,. Davies, K. (2010) From the Retail Brand to the Retail-er as a Brand: Themes and Issues in Retail Branding Research. International Journal of Retail & Distribution Management 38 (11/12) [Online], Available From: http://www.emeraldinsight.com [Accessed 24 November 2011].

Chernatony, D,E. (2010) From Brand Vision to Brand Evaluation: The Strategic Process Of Growing And Strengthening Brands 3rd Ed. Oxford: Butterworth-Heinemann.

CONSCIOUS*

ACTIONS

SUSTAINABILITY

REPORT

2010

[Online],

Available

From:

http://www.hm.com [Accessed 27 November 2011].

Elliot, R,R; Percy, L; Pervan, S. (2011) Strategic Brand Management 2nd ed. Oxford: Oxford University Press.

Employer Branding. Journal of Product & Brand Management 38 (6) [Online], Available From: http://www.emaraldinsight.com [Accessed 24 November 2011].

Foster, C,. Punjaisri, K,. Cheng, R. (2010) Exploring the Relationship between Corporate, Internal and

15

H&M

begins

incentive

programme

for

employees

[Online],

Available

From:

http://www.theappointment.co.uk [Accessed 25 November 2011].

H&M Reviews [Online], Available From: http://www.glassdoor.com [Accessed 20 November 2011].

H&M-Our Fashion Concepts [Online], Available From: http://www.hm.com [Accessed 23 November 2011].

Hatch, M,J,. Schultz, M. (2003) Bringing the Corporation into Corporate Branding. European Journal of Marketing 38 (7/8) [Online], Available From: http://www.emaraldinsight.com [Accessed 24 November 2011].

How

to

develop

your

brand

architecture

[Online],

Available

From:

http://www.marketingmo.com [Accessed 2 December 2011].

Proposed Incentive Program [Online], Available From: http://www.about.hm.com [Accessed 25 November 2011].

Randall, G. (2000) Branding: A Practical Guide to Planning your Strategy 2 nd ed. UK: Kogan Page Limited.

SNG, M. (2011) Brand Culture. Admap [Online]. Available From: http://www.warc.com [Accessed 24 November 2011].

Withney, J. (2010) Brand Architecture: Rise of the Meta-Monolithic Brand. Admap [Online] Available From: http://www.warc.com [Accessed 24 November 2011].

16

APPENDIX 1: BRAND POSITIONING MAP From the research gained through looking at the value fashion market segment a brand model has been applied of evaluate the effectiveness of H&M’s brand positioning strategies.

High in Price

Zara Next TopShop C&A Low in Quality

H&M Matalan

High in Quality

New Look

Primark

Low in Price

Brand Positioning Map Sources: Annual Report Part 1

17

APPENDIX 2: BRANDS AS POSOTIONING TOOLS The Balanced Perspective on Brand Positioning model has been applied to establish the brand positioning strategy which H&M has undergone in order to measure its effectiveness within the current market.

UNDERSTAND THE NEEDS OF THE DIFFERENT SEGMENTS OF THE MARKET

H&M have understood the various needs of the market with the HH changes in environmental and ethical needs and wants of consumers as well as pricing attitudes

IDENTIFY THE MOST ATTRACTIVE SEGMENT

Ethical and Environmental fashion is a newly established market with a high growth potential. Low market fashion is increasingly in demand by consumers

DEPENDING ON THE FIT OF BETWEEN THE INTENDED AND PERCIEVED POSITIONING, REFINE THE BRAND ACCORDING TO:

DEVELOP THE BRAND TO “OWN” A FUNCTIONAL BENEFIT AMONGST THE TARGET

 

Sustainable fashion Quality at low costs

EVALUATE WHICH FUNCTIONAL BENEFIT THE TARGET MARKET ASSOCIATES WITH THE BRAND



Quality at low costs

A BALANCED PERSPECTIVE ON BRAND POSITIONING Sources: Chernatony, DE. (2010) From Brand Vision to Brand Evaluation, Annual Report Part 1

18

APPENDIX 3: MISSION STATEMENT ANALYSIS In order to determine the image and culture aspirations of H&M, the company mission was analysed which found the following conclusions.

PURPOSE:

• To provide fashion and quality at the best price

• Constant improvemnet, cost-consciouness , simplicity, quality and entrepreneurship

The purpose of H&M is to provide its

PURPOSE

VALUES

STRATEGY

BEHAVIOUR STANDARDS

consumers with fashion and quality at the best price.

VALUES:

• Cutting out the middleman, in-house design and purchasing department

• Individual decision making and the assumption of responsibility

The purpose of H&M underpins all the company’s values with quality and cost-consciousness being most emphasised, H&M prides themselves on quality not with just the products but with the staff and level of service that consumers receive and.

BEHAVIOUR STANDARDS: H&M strongly believe in entrepreneurship and its staff being responsible at all levels including retail shop floor with employees having a strong personal commitment to the brand in this sense employees are said to have higher responsibilities and individual decision making is vital within this organisation.

STRATEGY: In achieving the organisations purpose H&M strategically cuts out the middle-man with all its products being designed and purchased by an in-house department, working with suppliers in producing its products and reinforcing its ethical and environmental policies providing it with a competitive stance.

MISSION STATEMENT ANALYSIS Sources: Ashridge Mission Model Campbell (1990), Annual Report Part 1

19

APPENDIX 4: MCDONALD AND MISSION STATEMENTS Role or Contribution Profit: £18.27Billion (2010)

Bussiness Definition low cost sustainable fashion

Service: In store and online Opportunity seeker-internet (online sales), consumers price comparisson as H&M are low cost.

Indicators for the Future H&M are currently have launched Versace in 2011 in 2012 H&M will expand men's wear with collaborating with Marni.

Distinctive Competencies All products are designed in house.

They don't own any factory's or operate any. All products are worked on with suppliers to produce.

ROLE OR CONTRIBUTION H&M have a large profit margin with the organisation sustaining £18.27 billion profit after tax, showing that H&M are a stable and growing business and with H&M opening its online store this will generate more revenue for brand in the forthcoming future.

BUSINESS DEFINITION “Fashion and quality at the best price” H&M provide good quality catwalk fashion at affordable prices; they are a trusted brand with loyal customers whom continuously buy into the brand resulting in good brand loyalty for the brand.

DISTINCTIVE COMPETENCIES H&M have many essential skills and capabilities that underpin their success to the brand which has been achieved to date. H&M have their own in-house operation in designing and

20

producing its products which differentiates them from competitors such as Primark and Topshop.

INDICATIONS FOR THE FUTURE H&M have been looking to the future by bringing in top catwalk brands recently stocking Versace and now to stock Marni in 2012. H&M will keep giving the best fashion and quality at the best price. H&M brand will all be about collaborating in the future to bring big brands for reasonable prices.

21

APPENDIX 5: H&M BRAND RELIGION Kunde (2000) argues that as the values of the brand becomes stronger and more relevant to consumers; the brand becomes more involving thus managers need to make their brand values more relevant to increase customers’ involvement.

This model will be used to determine the current value level of H&M to establish whether or not changes need to occur in the position of the brands values and overall message to its consumers.

 BRAND RELIGION

INVOLVEMENT

 BRAND CULTURE

 CORPORATE CONCEPT

 CONCEPT BRAND



PRODUCT VALUE

H&M are currently staged at the corporate concept level of the brand offering fashion and quality at the best price, however to increase on brand loyalty the organisation need to become more involving with its values.

H&M undergo various collaborations with high-end fashion labels and designers, however even though this is undeniably reinstates the notion of H&M offering fashion and quality at the best price it has failed to enhance the brand culture with its consumers.

22

APPENDIX 6: H&M BRAND ARCHITECTURE

MASTERBRAND

INDIVIDUAL BRANDS H&M

CHEAP MONDAYS

MONKI

MTWTFSS WEEKDAY

COS

PRODUCT RANGES

MENSWEAR

WOMEN’S WEAR

CHILDREN’S WEAR

COSMETICS

SUB BRANDS

BiB Plus Size Line

Hennes

Women

Clothes

MAMA

Rocky

Women 25-30

Classic

Current Trends

Maternity

Youth Fashion

Brand Architecture Sources: H&M and our Other Brands

23