Summary: This article is a successful story about a Swedish retailer, H&M (Henne’s & Mauri tz).
In 2002, H&M! |s pretax income is about $833 million, a 34% increase form the previous year. That is an amazing growth especially in today! |s slowing global eco om. The profit growth is not only due to its expansion, but also its targeted strategy for different markets.
For example, in U. S. market, the company looks for female customers who are younger and more fashion-conscious, but in Europe, H&M operates more like a department store. The company tries to lower the price (average price is $18) and keeps its quality fashion at the same time. When the chairman first joined the company, H&M was all about price, until he and his crew added quality fashion into the product.
The company introduced the winning formula of to! SS Treat fashion as if it were perishable produce: keep it fresh and keep it moving!” . Because of low price and good quality, the gross margin for last year was 53%. Even though H&M would have 844 stores in 14 countries by the end of 2002, the Chairman of H&M is still plans to enter a new country in every two years. How the article relates to class: This is the case that follows the target marketing and value-base pricing concepts. For the concepts applied in target marketing, H&M first segments the market into several groups, and then focus on certain groups and defines its product! |s position. For instance, in the U.
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S market, the group of young fashionable female is the target market that the company decides to serve, but not necessary the same target market in other countries. When the company enters new markets, it tries to use different segmentation variables. Beyond the market segmentation and marketing targeting, H&M successfully positioned it as a cheap, fashion, and quality retailers. Second, the company follows the value-base pricing concept. This concept means the target price is set base on buyers! | perceptions of the product value.
In the case, H&M used to set their prices based on it competitors! | charge price. Now, the price is not only the factor that H&M beats other competitors, but the fashion quality is adding the product value. H&M provides affordable fashion. H&M! |s successful use target marketing and value-base pricing concepts demonstrate to me what it takes to efficiently market products..
