Running head: H&M CONSUMER BEHAVIOR

H&M Consumer Behavior

Name

Institution
H&M CONSUMER BEHAVIOR

CONTENTS

1. Situation Analysis 3
1.1. Company Background & Products 3
1.2. SWOT Analysis 4
1.3. PESTEL Analysis 5
1.4. Unique Selling Proposition 6

2. Target Market Profile 6

3. Target Market Decision Making Process 7

3.1. Problem Recognition (Awareness of needs) 7
3.2. Information Search 7
3.3. Evaluation of Alternatives 8
3.4. Purchase 9
3.5. Post-Purchase Behavior 9

4. Personal Influences on Buying Behavior 10

4.1. Age & Stage in Life Cycle 10
4.2. Occupation& Income 10

5. Social Influences on Buying Behavior 10

5.1. Social Class 10
5.2. Culture 11
5.3. Reference Groups 11

6. Psychological Influences on Buying Behavior 11

6.1. Motivation 11
6.2. Perception 12
6.3. Learning 12
6.4. Beliefs & Attitudes 12

7. Marketing Strategy, Recommendations & Conclusion 13

7.1. H&M Brand Identity 13
7.2. Positioning 13
7.3. Product Strategy 13
7.4. Price Strategy 13
7.5. Place Strategy 13
7.6. Promotion Strategy 13

8. Reference List 16
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1. Situation Analysis

1.1. Company Background & Products

As the globe’s second largest retailer in the fashion industry, Hennes and Mauritz (H&M) has

done well in establishing and maintaining customers’ trust since 1947. The Swedish Company

was founded by Erling Persson, who opened the first store in Västerås as Hennes (Swedish

word for “hers”), offering fashionable women’s wear. In 1968, he acquired Mauritz Wildforss,

a hunting and fishing equipment store located in Stockholm and began the extension of men

and children’s clothing lines. H&M then diversified over the years and progressively

expanded its product width to include accessories, shoes, top-to-toe beauty care products and

cosmetics and home furnishing collections.

Since its inception, H&M has rapidly grown into the global markets with more than 3924

stores spread in 61 countries (Cruz, 2012) and more than 148,000 employees (Hm.com,

2015). H&M has made Singapore its 5th Southeast Asian debut in 2011 after Hong Kong,

Shanghai, Japan, Korea and has robustly expanded across the island and opened ten stores

within five years after entering the market.

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1.2. SWOT Analysis (Singapore)

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1.3. PESTEL Analysis (Singapore)

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1.4. Unique Selling Proposition (USP): H&M has started its first collaboration in 2004 with

influential celebrities such as David Beckham, Madonna, Lana Del Rey and famous

international designers including Balmain, Alexander Wang, Karl Lagerfeld and others shown

in the exhibit below. The partnerships have created masses outreach to luxurious fashion at an

affordable price, gaining brand awareness and fulfillment of consumer’s desires. It created a

unique brand positioning that offers competitive advantage amongst its rivals.

Exhibit 1: H&M collaborated brands

2. Target Market Profile

H&M targets the middle class and the working class, who view shopping as a social activity

that provides pleasure to their daily life. They have a lower purchasing power for luxurious

brands but desire to keep up with the fast-forward fashion with minimal investment. H&M

has broad selections that caters for all ages but the primary target customers are the

youngsters and women between the ages of 15 to 35 years old.

Women are irrational shoppers who drive the world economy. They have the habits and

mindsets of buying clothes but don’t wear them and always complaining that they have
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nothing to wear when they have a wardrobe full of clothes. It is also their personality trait of

impulsiveness that affects their unplanned buying behavior that is triggered by the visual

appeal of the products. Furthermore, women are the ones who tend to shop for their family

members or friends as shown in Exhibit 2 below.

Exhibit 2: Study On The Percentage Of Women Purchasing For Family And Friends

Source:http://insights.popsugar.com/32-Women-Purchase-Apparel-Spouse-35626518

3. Target Market Decision-Making Process

3.1. Problem Recognition (Awareness of needs): This is the primary stage of the consumer

decision process that involves recognizing a need or problem that is triggered by internal

(personal perception) or external stimuli (advertising or word-of-mouth) and needs to be

satisfied. Ther are three different categories of needs:

i. Functional need: The search for a product to solve the consumption issue. An example

may be the consumer found out that his suit for the wedding event had torn, and he

went to purchase a new one; he bought the suit for its functional use.
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ii. Social need: The need for social recognition, acceptance or sense of belonging in the

social environment. Like buying the H&M’s Coachella collection that everyone is

crazily over to fit in the trend.

iii. Need for change: The desire that the consumer has which may influence a purchase of

new clothes and accessories because he feels a need to change into a new style to

follow the latest trend or to change a new wardrobe.

3.2. Information Search: After recognizing a need or want, the consumer will begin the

process of searching for the information necessary to make a purchase decision. The data can

be obtained from internal parameters such as recalling memories of past experiences and

externally through word-of-mouth from friends, family, acquaintances and coworkers;

reviews from social media; market-controlled sources of advertisements, sales promotion,

salespeople; and experiential sources of personal handling and examining of the product.

3.3. Evaluation of Alternatives: After acquiring the information, the consumers will proceed

to evaluate and compare the options that best suites and benefits him. Factors below will be

assessed among the alternative retail stores (e.g. Forever21, Uniqlo, Topshop, Zara).

 Price: H&M offers the best value compared to competitors of similar product designs.

In fact, it is of average 40% less expensive than its rivals (C. E., & C. T. (n.d.).

 Product: H&M has a wider product mix from head to toe of basics to high-end

fashion.

 Service: In comparison with a rival like Forever21, H&M has a diverse workforce of

age, gender, race and ethnic group, which provides a greater reach in responding and

serving diverse consumers.

 Environment: H&M has bright and spacious stores that are well organized with

different departments, concepts, trends, and colors. Its visual merchandisers are
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constantly changing the in-store displays and fixtures to keep consumers engaged and

feeling fresh.

 Location: H&M Singapore has more stores than its rivals that are widespread across

the island and readily available for consumers.

3.4. Store Selection & Purchase Decision: This is the stage when clients make up their mind

to purchase the most favored brand out of the alternatives. However, the actual purchase can

be affected by factors such as attitudes of others, unanticipated situation, and consumer’s

perceived risk.

 Attitudes Of Others: The opinion or feedback of friends and family may cause a

tendency to forgo purchase decision.

 Unanticipated Situation: Purchasing decisions may be altered by unexpected

situations such as loss of job, other urgent purchase that needs to put in priority,

unpleasant shopping experience or competitor’s sales promotion.

 Perceived Risk: The amount of uncertainty or assurance towards the products or

services such as the availability of exchange or return policy or the time risks of the

lead time needed to restock or deliver as promised.

H&M’s distinctive products and services are able to enhance consumer purchase with its 30-

days exchange or refund policy that is also applicable to the sales of items and a quick

inventory turnover and daily replenishment.

3.5. Post-Purchase Behavior: At this stage, it involves either satisfaction or dissatisfaction

of the purchase made. A satisfied consumer will likely to repeat purchase, which builds brand

loyalty. On the contrary, a dissatisfied customer may suffer from post purchase dissonance

where he is disappointed by the variation between actual and expectation. For instance, when

a consumer buys a shirt but realized he does not like it, or the garment has a defect; he might

do an exchange or return or abandon the product. It may result in a brand switch or

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unfavorable talk of the dissatisfaction to the people around him. With the broad product mix

at H&M, chances of satisfying the needs and wants of the consumers are increased.

4. Personal Influences on Buying Behavior

4.1. Age & Stages in Life Cycle: The way people see things and their priorities changes

throughout the life stages. When they were a child, having new clothes as a gift was what

they are looking forward during festive seasons, however, as they grow older, getting to

choose and wear the style of clothes they will like to buy becomes a bigger priority.

4.2. Occupation & Income: The occupation and income have a significant impact in

influencing individual’s buying behavior or power. Social status determines the attire an

individual prefers. However, fashion is not always expensive which means the lower income

earners can afford. The large middle-class population of Singapore is the market target of

H&M products.

5. Social Influences on Buying Behavior

5.1. Social Class:

Social class can be differentiated from the capability to satisfy one’s desire, and likewise

identified through the purchasing habits and consumer behavior. The wealthy can afford

specialty products than those with lesser disposable income. Consumers of the lower class are

more price sensitive, and they undergo longer purchasing decision process in gathering

information and comparing brands (Amaldoss & Jain, 2002). In fact, they are willing to

accept that “they get what they pay.” The upper class, in contrast, “pay to get what they

expect” regarding the premium quality and social benefits from the products and services.

H&M benefits and satisfy customers of all social classes with fashion and quality at best

value.
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5.2. Culture: Is considered one of the most fundamental external factors that affect individual

thoughts and consumer behavior (Amaldoss & Jain, 2002). It is the differences in beliefs,

values, and attitudes that shape the distinctions of consumption patterns among different

groups of consumers. Singaporean culture is a mix of Asian and western cultures, and the

country is considered as the meeting point of the West and East. This aspect influences the

consumer lifestyle many Singaporeans and is adequately evident in the fashion industry. The

western dimension of the culture is seen from the high appreciation of the modern lifestyle

whereas Asian part of the mix evident in the consistent drive to seek for lower prices on all

products. The modern design of H&M products and the best prices offered suites the needs of

this market.

5.3. Reference Groups: Reference groups have a profound influence on the consumer choices

and consumption behaviors. These groups include friends, family members, neighbors and

coworkers that a person interacts with on a regular basis. Singapore’s consumers tend to seek

high-quality products for the lowest prices. For that reason, an individual is likely to buy a

product from an explicit vendor following a recommendation from someone else. By

providing quality products and customer service, H&M attracts more reference

purchase[Eur15].

6. Psychological Influences on Buying Behavior

6.1. Motivation: Refers to the driving factor within an individual that gives reason to make a

purchase. The primary source of motivation for all consumers is the desire to satisfy a need

(Durmaz, 2014). The needs of the lower class, middle class, and the upper class are entirely

different hence exhibiting different purchasing patterns. Singapore is a middle-class country

with at least 10% wealthy individuals and 30% lower class population. The middle class are

heavy spenders are known to spend beyond their means. Spending is motivated by the desire
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to lead a comforting lifestyle unlike the wealthy who devote most of their earnings on

investment and retirement plans. For this reason, there are numerous retail outlets in

Singapore whose customer base is the majority middle-class population. H&M feeds of this

phenomena by providing classy wears at an affordable retail price.

6.2. Perception:

Perception is a system of interpretation of the meaningfulness of certain aspects of a product.

H&M products are highly regarded and believed to represent good life and higher social

status. Although a product sold at H&M store may serve the same purpose as the cheaper

product sold in another clothing store, a consumer may choose to buy the expensive item

because it elevates one to a higher social status and is perceived to be of a higher quality.

H&M strive to maintain this image to attract a particular segment of fashion consumers that

exhibit the desired perception.

6.3. Learning: Consumer buying behavior changes based on past experiences that they

learned from the product (Durmaz, 2014). It's the reason people don't purchase a crummy

item twice. Customer service is also taken into consideration as a brand image where bad

service is most likely to turn a consumer away. H&M consistently provide new shopping

experiences and excellent services that are the reason why consumers are psychologically and

physically compelled to return.

6.4. Beliefs and Attitudes:

Beliefs and attitudes towards a product are builds through experiences and other people’s

opinions (Durmaz, 2014). Favorable evaluation arises when the consumer is satisfied with the

service provided and the quality of the product purchased. Providing consistent quality wears

and a welcoming customer experience at the H&M stores ensures the development of positive

attitude towards the company’s brands.

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7. Marketing Strategy, Recommendations & Conclusion

7.1. H&M Brand Identity: H&M aims to provide quality and wide-ranging wears for men,

women, teenagers, and children at reasonable prices.

7.2. Positioning: H&M targets the middle-class population that is the majority in Singapore.

It however should focus on accommodating the upper class and the lower class by developing

products that different price ranges such as the H&M Raffles Place that targets the working

class (RockTheTrend, 2015). The company will focus on offering sports collection that will

include trendy yoga pants, gym fittings, and weather outfits.

7.3. The Product Strategy: Exceed customers’ expectations by providing durable, safe, and

functional products that are sustainable and at the best prices. To achieve this objective, the

company will enhance it laboratory tests at the supplier level and by independent third-

parties.

7.4. Price Strategy: H&M shall offer exciting, high-quality fashion products that reflect

value for money. This is achieved through in-house design, purchasing the best products from

the right suppliers, buying in bulk, efficiency in logistics, elimination of middlemen, and cost-

consciousness in operational activities.

7.5. Location: H&M targets the dynamic and evolving retail market, which means that the

company shall lease stores rather than own them so as to remain flexible. Stores must be

located in centers and streets that are convenient and readily available by the customer.

7.6. Promotional Strategy: H&M sales fast-fashion products and is, therefore, a subject to

the seasonal fluctuations in the market. Therefore, the company will put out promotional

activities in popular advertisement Medias at the onset of festive periods especially towards

the end of the year. To build and enhance brand presence, H&M will increase its social and

environmental engagement such as donating a portion of the income generated through the

sale of HIV branded clothes. The company will continue using celebrities to help increase
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sale and strengthen brand identity.

These strategic approaches will gear up the growth in sales by 2.1% annually and an overall

expansion of 21% in ten years. H&M aims to achieve the following milestones during this

period:

a) Develop loyalty programs such as providing basic demographic information that will

aid H&M in improving the target market strategies.

b) Focus more on individuality and uniqueness by adopting personalized approaches in

fashion designing and customer services.

c) Promote the creation of sustainable fashion where products can be preserve value for

longer, can be reused and recycled while reducing the cost of production at the same

time.
d) Strengthen social responsibility, communities, and the environment by adhering to

ethical standards such as partnering with suppliers that pay workers reasonable wages

and provide humane working conditions.

e) To move in swiftly and tap the market opportunity for the lower and upper-class

population by developing products that match their needs. The income of the lower

class and the upper class in Singapore has shown consistent growth. According to the

Department of Statistics, the bottom 30% and the top 10% have experienced a

significant rise in income (Hamsaveni, 2016).

f) To open five new stores at various locations to satisfy the demand of the lower class

population whose income is expected to grow by 52% by 2020 (The Real Life

Company, 2014).
g) To promote a strong brand loyalty through tokens, trading stamps, and gift cards.

The Singaporean market provides a great opportunity that will enable H&M increase sales,

market share, and brand presence. This is because:

1) The income level of the lower class and the upper class is growing at a consistent rate

hence expanding the market.

2) Singapore has a large percentage of the young population (median age of 33.8 years)

(Kim, 2015) that forms the primary market for H&M products.
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3) The quality and affordable prices of H&M wears has earned popularity among fashion

enthusiasts and local media platform, hence a higher level of customer awareness.
4) The majority of Singaporean population lives in urban settings that promote and

accommodates classy and official attire, providing a market advantage for H&M

products.

Adherence to the informed recommendations made will ensure that H&M achieve maximum

growth in sales and brand development.

References

Amaldoss, W., & Jain, S. (2002). Analysis of the Impoact of Social Factors on Purchase

Behavior. Review of Marketing Science Working Papers, 1-46 (2)1.

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Cruz, J. (2012, September 17). Hennes $ Mauritz Sales Miss Estimates After August

Heatwave. Retrieved from Bloomberg:

http://www.bloomberg.com/news/articles/2012-09-17/hennes-mauritz-sales-miss-

estimates-after-august-heatwave

C. E., & C. T. (n.d.). Innovative Quick Response Programs in Logistics and Supply Chain

Management. Retrieved May 28, 2016, from https://books.google.com.sg/books?

id=gkVaagvELLgC

Durmaz, Y. (2014). The Impact of Psychological Factors on Consumer Buying Behavior and

an Empirical Application. Asian Social Science, 194-205 (10)6.

Euronomitor. (2015). Consumer Lifestyles in Singapore. Retrieved from Euronomitor

International: http://www.euromonitor.com/consumer-lifestyles-in-singapore/report

Hamsaveni. (2016, March 1). Why it Sucks to be Middle Class in Singapore. Retrieved from

Salary.sg: http://www.salary.sg/2016/it-sucks-to-be-middle-class-in-singapore/

Hm.com. (2015). Working at H&M. Retrieved from H&M:

http://about.hm.com/en/About/facts-about-hm/people-and-history/working-at-hm.html

Kim, W. W. (2015). Populations Trends 2015. Singapore: Department of Statistics Singapore.

RockTheTrend. (2015). H&M is opening another new store… at Kallang. Retrieved from

Rock The Trend: http://rockthetrend.com/shopping/hm-singapore-

kallang/#.V1HhG5edf5k

The Real Life Company. (2014). Hopes and Aspirations of the Middle Class In Asia. The

Real Life Company.