ICON College of Technology and Management
Department of Business and Management Studies
BTEC HND in Business
Coursework
Marketing Principles
Tutor: Mr. Mo Willan
Submitted by: CiprianHalota
ID No: 13223
Session: September 2014
Task 1 (LO1) -1.1/1.2
a) Examine a few definitions (at least two) of marketing and explain the
marketing process with example drawn from H&M.
H&M Hennes&Mauritz AB (H&M)appreciated for its fashionable clothing for
women, men and teenagers, is a Swedish multinational retail-clothing company.
H&M develops its activity in 53 countries and has over 116,000 employees. It was
firstly opened in 1947 in Sweden. Currently it has over 2,650 stores and is
considered the second largest clothing retailer, after Inditex (Spain based) and
placed above GAP Inc. (USA based). H&M’s aim is to expand, and its plans are
based on the fact that it has a great success already in the existing markets.
BTEC in Business
Marketing Principles
Marketing is “management process responsible for identifying, anticipating and
satisfying customer requirements profitable.” (CIM, 2011)
Its aims are to achieve new customers and to retain and increase the number of the
existing customers.
Although the old point of viewof marketing process was to increase the sales of a
product telling and selling, thenew marketing point of view of marketing process is to
satisfy the needs and wants of customers.
“The right product, in the right place, at the right time, and at the right price” is what
marketing process is offering according to Kotler.
It is also stated that marketing is the management process that identifies, anticipates
and satisfies customer requirements profitably. (CIM, 2011)
In conclusion, Marketing Process has 5 steps: Understand the marketplace and
customer necessities, Design a customer driven marketing strategy, Construct a
marketing program, Build good relationships and create customer pleasure,
Capture value from customers.
At H&M the designers, pattern makers and buyers working together, having a
different background and finding sources of inspirations in travel, art, film, fashion
from the catwalk and focusing on quality, trend an reasonable prices.
The company makes sure that the products offered to customers are well
manufactured, in order to satisfy its customers. Customers can buy from H&M a wide
range of products (clothes, shoes, accessories etc.) so they can create their own
style.
b) Discuss the different kinds of marketing of marketing orientations and
recommend the most suitable marketing orientation for H&M.
The marketing orientation makes reference to the processes and procedures
implemented and used by a company in order to make sure that the customers have
a pleasant experience.
The marketing management has 5 orientations, as it follows:
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Marketing Principles
The market concept is based on the thinking that a company has to be more
efficient in the creation, delivery and selling its products than its competitors in order
to have a profit. This concept can be implemented by researching the target market
and customer’s wants and needs at the same time with marketing the product.
The oldest marketing concept, relying on the fact that the customers are attracted by
low prices and availability is the production concept.This concept is appreciated
among the developing countries where population is not concentrated on the
features of an item.
The product concept relies on the fact that customers prefer high-tech products.
The managers create unusual, superior products that can be upgraded in time.
The selling conceptrelies on the belief that the consumer should buy whatever the
company is producing, and the managers are focusing on what it produces rather
than in customers wants and needs, adopting an aggressive way of implementing a
product on the market.
The final marketing management orientation is the societal, or holistic, marketing
concept. This concept relies on the belief that if attention is paid on customer’s
wants and needs, the best product will be released and it will turn to a success in
sales resulting in a profit for the company.
It can be observed that the organization follows the societal, or holistic marketing
conceptfocusing on its customers desires and trends before manufacturing the
product.
H&M is aware of the economical situation, it promotes ‘the cheap chic trend’, the
average price of a product being £10.
For example, H&M has been strongly implemented itself in UK and the US but the
marketing of the products differs. H&M is exuberant, fashionable, reasonably priced,
a ‘money-making machine’.
TASK 2 (LO2) -2.1/2.2/2.3/2.4/2.5
a)Analyse the macro and micro environmental factors that influence the
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marketing decisions of H&M.
The micro environmentalfactors are those that concern the proximity of the
company and macro environmental factors are the external factor that have power
over the decision making process of the company consisting of: demographical,
legal, political factors, changes in technology, hazards.
In the marketing context, the microenvironment refers to the factors that can change
the normal course of the ability on a company in serving its customers.
In order to audit an organization and its environment and to help it focus on the key
issues, a SWOT analysis is required.
For H&M the SWOT analysis makes us aware of the following:
Strengths –The H&M products are recognized for their quality and low prices and
trendy style.
Weaknesses – Some consumers may believe that accordingly to the low prices the
quality of the products might be affected. Not being truly sure about the quality of the
products, some people buy them just because they are trendy and the fashion
changes and they don’t want to invest in expensive clothing, shoes and accessories.
Opportunities: H&M can win over the customers buying for the first time through the
quality of the cheap, trendy products sold there.
Threats: The opening of another big brand next to it that is making promotion and
has even lower prices than H&M (e. g. Primark)
The macro environmental factors are: economic, political, social and technological.
1. The political factor consists in stability of the political context in the country
that the company develops its activity, trading partnerships, taxes.
2. The economical factor refers to stabilization, unemployment rate, inflation,
economic crises.
3. The social factor refers actually to the interaction with the community, the
acceptance of the products worldwide.
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4. The technological factor has a great impact on H&M and refers to the
development of technology and with it, the improvement of the production
process in factories, the improvement of the computing technology and with it
the online sells.
b) Propose a new product for H&M and examine the concept of
segmentation and recommend segmentation criteria and targeting
strategy to be used for the newly developed product.
The aim of H&M is to purchase new designs for different types of consumers
worldwide. H&M has a strategy implemented, it can follow up the needs and wants of
the customers and can design and produce clothing after each country’s population
desires and preferences.
If is to propose a new product for H&M, I would suggest the wedding dress. They are
very appreciated among women who desire to marry wearing a beautiful dress and
they can rely on H&M on finding the best quality at affordable price. A good quality at
a very good price is what customers need and request and as a result, having this
product in H&M stores reduces the stress that the perfect wedding dress brings for
most brides.
The segmentation is the discovering process of similaramong a group of customers.
H&M
makes
use
ofdemographic
and
psycho-geographic
segmentation..
Acknowledging that H&M opened new stores in new marketplaces, the demographic
segmentation criteria is the best to apply for H&M business activity. H&M is able to
find out details about financial situation of the targeted people, as well as important
facts about their way of living and lifestyle in order to predict if people living in that
area are able to pay for H&M products.
Task 3 (LO3) -3.1/3.2/3.3/3.4/3.5
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a) Using H&M as your chosen company, explain how the new product
was developed to achieve sustainable competitive advantage.
It is a known fact that H&M brand is loved worldwide because of the quality and
funkiness and design durability of the clothes. The clothes is what most of the
customers want for that particular time, for an event, or season to keep up with the
latest fashion tendencies.
They have spread their products through online market, everybody being able to
have at their doorstep the desired product. One of the aims at H&M is to offer the
products for different types of people all over the world.
If is to propose a new product for H&M, I would suggest the wedding dress. They are
very appreciated among women who desire to marry wearing a beautiful dress and
they can rely on H&M on finding the best quality at affordable price.
The competitive advantage is that advantage that a company wins over other
company by offering to customers trust, greater value, newer, first seen clothing
models, sizes at a very good price.
The product that I have proposed for H&M, wedding dresses has a wide range of
models and sizes is trendy and can fin in anybody’s overall budget. I believe that the
competitors should be aware that H&M’s new released product can bring competitive
advantage, having the similar products with other stores, but as told above at a more
affordable price.
b) Evaluate a range of distribution methods that H&M can use for the
newly developed product to provide convenience to a target group of
costumers.
Being both in the position of importer and retailer H&M makes analysed choices for
each transport link from the factory to the stores. They are conscious about the
importance of having the requested stock in the stores, because they do not have
back up stores, the stock has to be refilled from the distribution centers.
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Moreover H&M strives for green transports and they ensure that their transports do
not affect the environment. That would be the reason why H&M is focusing on better
logistics.
Having the above in mind, the new product, wedding dress, can be distributed in
each store, re-stocking the products sold or most required, can be shipped at
costumer’s doorstep providing convenience to any bride-to-be who desires to have
her wedding dress stress-free.
c) Discuss and critically evaluate the various pricing methods used by
businesses and recommend pricing strategy that H&M can use for the
newly developed product.
When setting a price, a company has to follow three main approaches:
1. Cost-based pricing: the price is set by adding an amount on top of the
manufacturing price of the product, the amount could be a fixed amount or a
percentage added. This strategy is widely used although is old-fashioned. The
customer is mostly interested by the benefits that the product can bring rather
than the cost of manufacturing.
Cost plus pricing is a strategy used in retailing in order to know the profit of
each sale will bring to the retailer. Like this, some products may be priced uncompetitively.
2. Customer-based pricing: prices are set by the believes of a company of
what a customers is willing to pay for.
Penetration pricingsupports the new entrance of a product on market, a lower
price than the competitor’s would promote the product and if it proves interest
for the customers, the penetration pricing meant to increase the market share
of that particular product will increase.
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Price skimming represents a high price set for a particular product before
competitors come with challenging ideas of the product. The product usually
has no competition or little competition but once the competitors develop
alternative products, the price will be set in report with competitor’s prices.
Predatory pricing (illegal) is set as very low by a dominant competitor in order
to eliminate any sort of competition. It is illegal under competition law.
Psychological pricing is set to make the customer believe that the product
bought is actually cheaper.
3. Competitor-based pricing: when the prices are set on the competitor’s
already set prices.
In case of competition in the market, the customers can choose from where to
buy. There are sometimes very cheap providers that offer the best services.
Costumers are aware about the reasonable prices, most f the companies not
having the power to set up the prices higher than its competitors. The main
advantage of the competitor-based pricing is that selling prices should be in
line with the competitors
The pricing strategy H&M should adopt for the newly developed product, wedding
dress, is penetration pricing, because it can provide the opportunity to increase the
price once the product penetrates the market.
d) Explain the concept of integrated marketing communication and
discuss the elements of promotional mix including the extended
marketing mix as relevant to H&M’s newly developed product.
Integrated Marketing Communications is a very simple concept whichensures that all
forms of communications and messages are carefully linked together.
Integrated Marketing Communications, or IMC, at it’s very basic level strives for the
integration of all the promotional tools in order to work in harmony.
Promotions have their own own mix of communications tools.
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The Integrated Market Communications has plenty of benefits, such as: profits, sales
increase during saving money, time and stress.
I would recommend the penetration pricing as a promotional method for the new
product-wedding dress at H&M.Once the product idevelops on the market and
becomes well known and required, its price can easily increase, having already the
approval of the buyer.
TASK 4-4.1/4.2/4.3
a) Evaluate the marketing mix variables for two segments of the
consumer market and discuss how different it would be for business-tobusiness services (BSB).
The four ‘P’ factors of the marketing mix are the following: product, place, price and
promotion.
In order to develop two different segments of the consumer market a research
should be carried out. In this way the company will have accurate information about
the environmental factors, places, the culture, political factors, competitors.
The index indicates the likelihood a specific segment is to shopat H&M than the
general population of shoppers. Women aged 18 – 34 have the highest usageindex
within the gender & age demographic. 18 – 34 years old women are246% more
likely to shop at H&M than the general population.
Segments
4 P’s
Product
Young Women
Middle Aged Women
(18-34 years old)
(35-50 years old)
Jeans, t-shirts, shorts, skirts,
Shirts, long skirts, parkas,
bags, purses, dresses, tights,
bags, scarfs
hair accessories, jewellery
Price
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A bigger quantity, weekly
Adopted to material quality,
shopping, affordable prices,
decent prices
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cheap chic
Place
In malls, big streets, online
In malls, big streets, online
Promotion
Advertising, product
Advertising, product
placement, discounts, student
placement, discounts
discounts, social media
The personal relationship makes is a distinguishing feature of business-to-business
markets. As an example, a regular customer form the business-to-business supplier
is easy to approach, and through this way the trust develops. It is an usual fact for
business-to-business suppliers to have loyal customers over the years.
Business-to-customers (B2C) is another process where H&M is implied, the
company using promotion to make the customers aware about the new released
products
Product offered by H&M
Service offered by Transport for
London (TFL)

Is concrete, can be touched


Is homogeneous
process, therefore it cannot be

It can be standardized by the
touched
Represents
an
activity,
a
Company

Is heterogeneous

Can be kept

The employees are the ones that

Also can be stored

Replaced in case of breakage

once bought, it can be owned
ensure the quality of the services

The production, the distribution
and consumption happen at the
same time

The core value is produces in the
process
of
buyer-selling
interaction

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It cannot be owned and
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
Cannot break

Cannot be returned to the seller.
b) Assuming that H&M decides to enter the international market with the
new developed product, examine and discuss the differences between
domestic marketing and international marketing.
In order to develop its activity a Company has to know very well the markets, so the
products and services provided to meet the necessities and desires of the consumer.
The market place’s economic situation establishes the prices of the products to be
launched on that specific market place, but the responsibility of the company is to
advertise and promote the products in order to be known by the customers. In case
the company desires to extend, from domestic market to international market should
have acknowledgement about the socio-cultural forces.
In case of the domestic marketing, H&M knows the economical, political and sociocultural environment, is aware by its competitors, uses the local currency for trading,
can predict the risks and the local regulations to be applied to the firm are well
known. The newly developed product, the wedding dress would be a success,
because the customers are looking for cheap chic products at a good quality that
H&M relates on. The company is well known in the domestic marketing, so the brand
will work itself for the selling of the newly developed product.
On the other hand, on the international marketing, some factors are not familiar: the
environment is unknown, different currencies are used, there will be difficulties to
predict the risks, the product might not develop very well, the brand cannot work for
itself being new on the marketplace, both national and international regulations have
to be applied and followed. As for the newly developed product, the wedding dress
the situation on the international market can be unpredictable. It can be a massive
success, because of the people that already know the brand from before or if is very
well advertised or could be a failure because of the customers thinking that the price
tag is what gives value to an item.
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Either way, the newly developed product- the wedding dress- needs strong
advertising in order to let customers know about its appearance on the market, and
once seen, they can make themselves a judgement.
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