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H&M IMC Project Part 1 Ruben De Avila • Rachael Podbielak • November 30, 2012

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Table of Contents Executive Summary!

4

Situation Analysis!

5

Current Brand Position

5

Unique Customer Benefits

5

Current Markets

6

Industry Overview

6

The Problem

7

Analysis of Primary Competitors!

8

Zara

8

Forever21

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Topshop

8

Urban Outfitters

8

SWOT!

9

Strengths

9

Weaknesses

9

Opportunities

9

Threats

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Target Audience! Brief Description/Background

A-Quad!

10 10

11

Attributes

11

Attitudes

11

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Allies

11

Adversaries

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Media Communication Plan!

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Communication Goal

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Strategies

12

Tactics

12

Business Objectives

12

Creative Strategy!

13

Brand Promise

13

Main Ideas To Communicate

13

Call To Action

13

Online Profile!

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Consumer Information

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Profile Security

14

Style Quizzes

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Example Style Quiz

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Mobile Application!

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Smart Recommendations

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QR Codes

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Loyalty Program!

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H&M Plus

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H&M Loyalty Cards

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Point Earning Opportunities

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Reward System

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Tiers

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Community Forum!

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Advertising Schedule!

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Timetable

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Promotion Budget!

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Evaluation!

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Appendix!

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Executive Summary H&M is the second largest clothing retailer in the world that is based out of Sweden. It is a company that values economic, social, and environmental sustainable initiatives. They provide consumers with a variety of fast-fashion, high quality clothing at low prices. H&M’s biggest challenge lies in the retailers inability to establish its stores as a one stop shop; a place where consumers can easily create and purchase an entire outfit. Currently, target consumers view H&M as a place to pick out a single piece of clothing that complements their current wardrobe. The primary reason why consumers are reluctant to purchase their entire wardrobe at H&M is due to their view of the clothing as throwaway fashion; clothing of inadequate-quality and low-prices that can be discarded. H&M fails to successfully communicate their high level of quality to consumers. We want H&M’s borderline customers to view H&M as a retailer that provides high quality, fastfashion clothing at affordable prices, while recognizing H&M as a one-stop-shop. We want to change borderline customers into core consumers. The target audience consists of females who consider themselves fashionable and are between the ages of 17 and 26. They usually shop at four or more stores and want to update their current wardrobes. They want to be unique, but stay current with the trends. To address this challenge, we will create a loyalty program and a mobile application to encourage the target audience to use H&M as a one-stop shop. The mobile application will include member log-ins that will keep track of the benefits they have earned, as well as their previous purchases to help customize apparel recommendations. The recommendations will include clothing, bags, accessories, and shoes. It will create an entire look based on user interaction with in-store QR codes and purchase history. The entirety of this campaign, based on H&M’ previous advertising budgets, will cost $1 million. It will include the execution of a new loyalty program, a mobile application, a competition, and the creation of a new forum. All of the components of this campaign can be integrated and used together at the consumer’s discretion to create a customized user experience. H&M • Integrated Marketing Campaign

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Situation Analysis

Current Brand Position H&M is a retailer that is looking to provide consumers with fashionable, high-quality clothing at the best price possible. They offer “fast-fashion” clothing, in other words from runway to racks in record time, and sell European influenced clothing in the American market. Additionally, H&M carries clothing in a variety of categories including women’s casual, men’s business, children’s wear, footwear and accessories. The company is the second largest clothing retailer in the world, and actively engages in Eretailing. H&M is also economically, socially, and environmentally sustainable. Unique Customer Benefits Customers have access to fashionable clothing almost immediately after new trends have been publicly released. H&M offers multiple apparel categories including anything from footwear to

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accessories to allow for one-stop shopping. Moreover, the quality of H&M’s clothing and the integrity of the company are not affected by its affordable prices. Current Markets • Global: Asia, Africa, Europe, North America •

Women’s Apparel

Men’s Apparel

Children’s Apparel & Footwear

Accessories

Footwear

Cosmetics

E-commerce

U.S. Apparel Market

!

The online market is constantly growing and mobile shopping through the use of

!

smart phones and tablets has become increasingly common. 64% of consumers are

!

interested in scanning products with smart phones to get more information while 76% of

!

consumers are interested in instant offers via smart phones for things they were already

!

looking for. Additionally, popular mobile apps include mobile coupons, store

!

information, mobile self-checkout and digital receipts (Appendix A-1).

Industry Overview The multinational retail clothing market consists of thousands of retailers competing for market share. Within the United States, hundreds of retailers are competing to produce high quality, affordable clothing to meet the demands of consumers. The industry determines the trends and fashions that will be available each season. Every season the trends change and the industry leaders dictate what is fashionable, which determines that the past season’s fashions are no longer trendy. As a whole, the industry usually pushes consumers to purchase more clothes than are necessary for the sake of fashion. Additionally, the apparel retail industry is shifting towards a greater online presence to become more efficient and timesaving for consumers. This online “store” is interactive and can reach more consumers than a physical location. Also, some retailers are beginning to incorporate

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mobile phones into the consumers shopping experience by developing applications and creating profiles on social media sites. An industry trend for consumers is to be budget smart, discount searching and thrifty. Consumers want to feel like they saved a bundle without compromising quality. They also want to feel that they got the most out of their money and came away from a quality shopping experience with clothing that they love. The Problem H&M’s current brand promise is not aligned with the target consumers’ opinion of the brand. H&M fails to translate that their fast-fashion quality clothing is of high quality. They are no longer relevant in the consumers’ mind and consumers do not feel that the money spent matches the quality of the clothing. H&M fails to successfully communicate their main unique selling points.

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Analysis of Primary Competitors Zara •

Fast-fashion

Multinational retailer, part of Inditex - Flagship in Spain

Human rights concerns: sweatshops, slave labor, shop staff abuse

Sell apparel through brand website & has smart phone application

Equal price range to H&M

Forever21 •

American chain, globally located

Low quality, fast-fashion clothing

Merchandise does not have uniform size specifications

Sell apparel through brand website & has smart phone application

Equal price range to H&M

Topshop •

British multinational retailer, part of Arcadia Group

Moderate quality for fashionable clothing

Sell apparel through brand website & has smart phone application

Equal price range to H&M

Urban Outfitters •

American Chain, global locations

More hipster fashions

Includes luxury brands and designer collaborations

Sell apparel through brand website & has smart phone application

Slightly higher in price than H&M, same target market

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SWOT Strengths, Weaknesses, Opportunities, Threats

Strengths • •

Leader in Global market (2nd) Affordable & high quality clothing

• •

Fast-fashion Throw-away fashion

• • •

Strong presence in multiple markets (Women, Men, Kids…) Celebrity endorsements Strong social media presence

• •

Price does not effect quality Company website and blog

Weaknesses • • •

Brand awareness of individual apparel brands sold in stores Fit is not consistent due to variety of manufacturers and supplies Customer service

Opportunities • •

Promote current sustainability practices Increase word of mouth in both female & male audiences

• •

Online market including social media Mobile Marketing

Threats •

Secondary competitors such as Express, Charlotte Rouse

Primary competitors: Forever21, Topshop, Urban Outfitters, Zara

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Target Audience Brief Description/Background The targeted consumers are fashionable females who are highly concerned with their personal style. They are between the ages of 17 and 26 and typically shop at four or more stores. These females consider themselves fashionable/trendy and are looking to update their wardrobes with current trends. They want their style to be unique and consistent with their own personal selfexpression, but still adhere to current-season trends. The target audience wants quality clothing that lasts seasons beyond its purchase date and demands fast-fashion in order to keep up with current trends. Moreover, these women are looking to purchase affordable, fashionable clothing and want to expand on their current wardrobe with clothing, accessories, purses, and shoes to provide them with a variety of looks. The consumers are not highly brand loyal; rather they shop at multiple retailers in search for the perfect fashion pieces. They shop anywhere from four to six stores on average. The target consumer values price, high product quality and a large variety of apparel. They like retailers with loyalty programs and good customer service. The target consumer reads fashion magazines and owns a smart phone. When the consumer goes into a store, she has the intent to shop and is interested in expanding into mobile retailing. Additionally, her friends’ opinions are very important to her and she is heavily influenced by word-of-mouth. She is interested in every detail of her outfit, from her nails to the shoes on her feet. Every piece of her outfit has been carefully selected to establish an updated fashionable look.

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A-Quad Attributes, Attitudes, Allies, Adversaries

Attributes •

High quality clothing at affordable prices

On average, lower prices than competitors

Fast-fashion that meets consumers need for current trends

Clothing that lasts beyond the season

Socially, economically, and environmentally sustainable

High retailer brand awareness

Attitudes •

Fashionable and trendy

Seeking quality, fashionable clothing at bargain prices

Confident in outfit choices and expression of trends

Strong desires to constantly update wardrobe

Allies •

Fashion outlets (i.e. magazines, blogs, retailer websites)

Celebrities

Target consumer’s close circle of friends and family

Adversaries •

Fast-fashion retailers

Lower-priced retailers

Manufacturers that sell directly to consumers

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Media Communication Plan Communication Goal We want H&M’s target audience to view H&M as a retailer that provides high quality, fastfashion clothing at affordable prices. We want to align the target audiences’ current perception of H&M’s clothing quality with the consumer’s desire for high quality clothing. Strategies •

Stress that quality is not affected by low price

Utilize global presence on social media websites

Incorporate global trend of mobile retailing

Highlight large variety of trendy clothing options as complete outfits

Make borderline customers into core consumers

Tactics •

Create integrated social media photo competitions using Facebook and Twitter

Establish a loyalty program

Design a mobile application that can be integrated into consumers’ shopping experiences

Create an open forum to facilitate consumer discussions

Business Objectives •

10-15% growth in number of stores by December 2014

Gain 1,000 more Facebook likes and 2,000 Twitter followers

Increase sales in Women’s Casual by 5% and in Women’s Formal by 5%

Increase sales in Accessories by 2% and Footwear by 1%

Become largest clothing retailer in the world by December 2015

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Creative Strategy Brand Promise H&M gives consumers the opportunity to convert runway fashions into their own unique style with affordable, high quality fashion apparel and accessories. Main Ideas To Communicate •H&M is a one-stop-shop for all your fashion needs •H&M provides low cost apparel and accessories without compromising quality Call To Action Encourage current consumers to continue shopping at H&M. These consumers should expand their purchases beyond apparel categories and being purchasing accessories and footwear. We want consumers to purchase entire outfits and complete their wardrobes with H&M.

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Online Profile Consumers will have the opportunity to sign up for an online profile on H&M’s website and through the mobile application. Additionally, there will be flyers in stores explaining how to sign up online. Consumers will be asked to provide basic demographic information and to take simple style quizzes. Previous purchase information will be available for the consumer’s use. Additionally, there will also be a link to an optional survey where consumers can let us know about their shopping experiences and how we can improve their next H&M experience. Consumer Information Basic demographic information collected from the consumer will include gender, age, address, e-mail address, and H&M store most frequently shopped at. Consumers will also be asked what is their preferred method of contact and will be asked to provide the related contact information. They will also have the option of storing credit card information in their profile to make their online and mobile app purchases smoother and more efficient. Profile Security Consumers’ information will remain private to H&M and will not be sold to outside vendors. The target demographic can be assured that the website and mobile application are safe and secure. All information provided by consumers will belong to H&M and only H&M. Style Quizzes These short quizzes will include pictures of H&M models in H&M clothes. Each model will represent a variety of styles, and the consumer has the option of choosing which photos are more appealing to them based on personal style. Additionally, other individual items of apparel, accessories, and footwear will be compared side by side. Once the 3 minute quiz is complete, the profile will be updated with the unique style choices of the consumer. This quiz can be retaken as many times as the consumer would like to remain up-to-date with the consumers ever changing style.

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Example Style Quiz

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Mobile Application Custom Shopping Experience - Unique Recommendations Going along with the national trend of mobile shopping (Appendix A-1), we feel that H&M should expand their current mobile application to include a new custom shopping experience for consumers. This application will allow users to keep track of their previous purchases and will use that information to make recommendations about new clothing that would fit the consumers unique style. These recommendations would show complete outfits including apparel, accessories, and footwear. While in store, consumers can scan QR codes that will be printed on tags. Consumers must create an online profile in order to efficiently use the application. Smart Recommendations Once users create an online profile, which is available through the application as well as the website, and take the style quizzes their style choices will be stored in their profile. Based on their answers, consumers will receive unique apparel, accessory, and footwear recommendations. While browsing these recommendations through their smart phones, consumers have the option to reject a recommendation they do not like. Once rejected, the mobile application will ask if it was due to a difference in style or general dislike. This information will be stored on the users profile and will update the next selection of recommendations to include this new information. QR Codes QR codes will be available for all apparel, accessories, and footwear in store. These QR codes can be scanned by the mobile application on smart phones and will access information about the item scanned. This information includes price, alternative color options and recommendations on how to complete the outfit. The consumer will be able to browse through clothes in store and on the mobile application simultaneously. This will create a unique shopping experience for the consumer and make the store easier to navigate.

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Loyalty Program Loyalty Card, Points, Reward System, and Tiers H&M PLUS H&M’s target market believes that customer service is an incredibly important part of the shopping experience. However, customer service through the use of employees can be very expensive. To keep employee costs low and add the value of customer service, we believe that loyalty program should be implemented. This loyalty program will consist of consumer cards, point earning deals, unique rewards, and tiers. It will be an opt-in program and will protect consumer privacy by keeping their shopping habits and information private. H&M Loyalty Cards Consumers will have the option to participate in H&M’s loyalty program. The program will be free for consumers and will have guarantee privacy protection. The card will be the physical manifestation of an online profile, tiers, points, and benefits. At check-out or online, consumers will be asked if they would like to be involved in H&M Plus. If a consumer agrees, she will be asked to fill out a basic survey asking for information such as demographics, current shopping habits, and personal opinion about H&M. The consumer will then receive a plastic card that will document all of her purchases and will be tied into her online profile once registered. Tiers, points, and benefits can be monitored online with the use of the profile. Point Earning Opportunities Consumers will earn points through every purchase they make. Every dollar spent will be equal to one point. Additionally, there will be days where everything is triple points or certain categories will be double points. At the end of each season, seasonal merchandise will be triple points to help get merchandise off the shelves and make room for the next season’s new apparel. Each tier will have a certain number of days in which they can make their own double point day.

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Reward System Consumers will receive various benefits that are unique to their shopping habits and tier. The consumers tier will be evaluated based on the points they accrue. Each tier will have basic rewards, but consumers will receive unique deals based on items they frequently purchase. Once consumers hit a certain price point within their tier they can get H&M cash back. Tiers In order to encourage consumers to shop more, the loyalty program will consist of four tiers that will be based on spending habits. Each tier will have unique benefits available to them and will be associated with a different color. Once the consumer has reached the top tier they will receive a new card that will directly indicate their H&M status. The consumer’s tier will be re-evaluated based 6 month periods to determine if they should move tiers. Additionally, once the spending level has been met, they do not have to maintain this spending habit to remain there.

Tiers

Bronze

Silver

Gold

Platinum

Spending Range

$100- $200

$201- $400

$401- $700

$701+

Buy one get one

Buy two get one

Buy one get one

Triple Points on

20% bags

50% footwear

50% off

Cosmetics

Benefits

accessories Double Days H&M Cash

0

1

2

4

$10 after $100

$20 after $200

$30 after $400

$50 after $700

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Community Forum Open Forum, Social Media Integration, Photo Competition In order to engage the target audience we will develop a new page on the H&M website that will integrate different social media channels. This new page will be called Community Forum and will be connected with Twitter and Facebook. The creation of this webpage will initially be promoted on H&M’s social media channels and company blog. There will be two stages for Community Forum: the first stage will be a photo competition and the second will be an open forum for consumers to talk about H&M clothing and accessories. In order to create an exclusive community feel only H&M consumers with online profiles can access the content. This will provide H&M with a channel that can be used to directly communicate with the target audience. On the forum, consumers will be encouraged to post photographs of themselves or their friends wearing H&M clothing and accessories. The idea is to let consumers express their personal style with the help of H&M. Participants can promote their posts by integrating their social media accounts with the forum. Additionally, other consumers can vote on outfits they like by liking or tweeting the images. The participant with the most likes and tweets will win a $500 shopping spree, along with a post about her experience on the H&M blog, including photographs of the her new outfits (complete with apparel, accessories, and footwear). Once the competition has concluded, the webpage will be home for an open forum. The forum will still be a place for consumers to post photographs of their H&M outfits, but will also become a place for consumers to ask fashion and style questions. Consumers will have the opportunity to interact with other H&M shoppers along with H&M employees. Selected H&M employees will be asked to monitor the forum and respond with fashion advice. These employees will also take note of participants that are incredibly involved in the forum and have quality content and great style. These participants will then be offered the opportunity to guest blog on H&M’s blog. Finally, the Community Forum will be categorized into a photograph section and a conversation section. The photograph section will then further be broken down into various style categories.

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Advertising Schedule The campaign will take place over the course of six months. The tactics implemented in this campaign have the potential to remain permanent fixtures in H&M’s future marketing campaigns. There will be four stages during the campaign; each tactic will be launched sequentially. Timetable Stage 1: January - February, H&M Loyalty Program Stage 2: March - April, Community Forum Competition Stage 3: May - June, Mobile Application Stage 4: June, Community Forum Competition Concludes - Open Forum Instated Jan!

!

Feb!

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Mar!

!

Apr!

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May!

!

Jun

Stage 1 Stage 2 Stage 3 Stage 4

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Promotion Budget This campaign will require a budget of $1 million. The funds will be allotted based on importance of each component on completing the business and communication objectives.

20%

Online Profile Mobile Application Loyalty Program Community Forum

10%

30%

40%

The most important component of this campaign is the mobile application. The mobile application seamlessly integrate the rest of the campaign into an entirely new shopping experience. This will include fees for creating the mobile application, writing QR codes, and maintaining the mobile applications. Additionally, it will help us reach our objective of increasing sales in all Women’s apparel categories, along with accessories and footwear. Moreover, the target audience strongly emphasizes the importance of customer service. In response, the loyalty program will be the second most important component. The funds will pay for the loyalty card, and the discount promotions associated with each tier. Finally, the community forum webpage and online profile components need to be added and incorporated into the H&M retail website. This requires a web designer to create the page and a set group of employees to monitor the H&M Experience survey results, as well as, monitor the content that participants post to survey for direct contact opportunities. This component of the webpage will aid in increasing H&M’s social presence and add to H&M’s Twitter followers and Facebook likes. H&M • Integrated Marketing Campaign

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Evaluation In order to evaluate the success of this campaign, we will use measurement units based on our business and communication objectives. Our most important metrics are the number of online profiles and sales percentages. These measurements will be the most accurate way to evaluate the success of this campaign. To begin with, we will monitor sales in all of the women’s apparel categories, women’s accessories, and women’s footwear. If all of the sales have a consistent increase across the various women’s categories, than the idea of making H&M a one-stop-shop has been a success. Next, we will gauge our success on social media channels by keeping track of the increase in likes and new twitter followers. Additionally, we will monitor the traffic on the new Community Forum webpage and the company blog. We will use unique visitors to measure the unique IP addresses. This will allow us to better understand how many viewers have visited the website rather than how many times the website has been visited. Furthermore, we will observe the content that is being posted on the Community Forum page to determine if consumer participation is optimal. Most importantly, we will calculate the number of online profiles created. Using the demographics survey we will analyze how many of these profiles are from within the target market. Moreover, we will determine the percentage of profiles that were created online or on the mobile application. We will also evaluate the loyalty program based on number of consumers that have opted into participating. Not only will we use the number of profiles, but we will also monitor how many times the average consumers uses their card. Finally, we will use the H&M Experience survey mid-campaign to gather direct feedback from the consumer. This will help us analyze our current process and determine if changes need to be made. If changes are deemed necessary they can immediately be implemented to ensure the campaign proves successful in completing all of our business and communication objectives.

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Appendix

Appendix A-1!

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Appendix A-2!

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Appendix A-3!

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Appendix A-1 Mobile Shopping Habits RETAIL

DATAPOINTS Smartphone Uses at Retail

More than a third (36%) of smartphone-carrying shoppers said they have used their smartphones to scan a product’s bar code to get additional information while shopping, such as pricing, product reviews and nutritional information, according to a survey of 1,027 shoppers with smartphones conducted last month. The results of the survey, done via Zoomerang and sponsored by Boston-based in-store mobile commerce provider AisleBuyer, showed that smartphone-enabled shoppers are interested most in

POPULAR APPS Sought-after features of in-store mobile applications

69%

34%

MOBILE COUPONS

STORE INFORMATION

31%

27%

MOBILE SELF-CHECKOUT

DIGITAL RECEIPTS

mobile coupons — 69% cited that as the most desired retail shopping app. In addition, 76% expressed interest in receiving offers for items they were shopping for, and 74% said they would switch brands as they were putting a product in their shopping cart if they received an offer on their smartphone for a similar product, of similar quality, at a better price. SOURCE: AisleBuyer’s Mobile Shopping Survey Series

76% interested in instant offers via smartphone for things they were already shopping for

“Nearly half of shoppers said if a line is too long they will either leave the store without purchasing anything or only buy the few items they came for, without shopping the rest of the store.” ANDREW PARADISE, CEO, AisleBuyer

Abandoning a Purchase

Shoppers who would consider leaving without buying for these reasons

Bring a List

Shoppers who bring a list of items to the supermarket or drug store

% of those who bring a list whose list specifies brands

8%

39%

21% 81%

LONG LINES

List Specific Brands

LINE FATIGUE % who “hate waiting at line” at these stores Grocery stores

52%

Mass merchants

51%

Drug stores 29% Quickservice restaurants

27%

Club stores 26%

64% interested in scanning products with smartphones to get more info

NO REGISTERS OPEN

8 SN March 12, 2012

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Appendix A-2 Survey

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Appendix A-3 Survey Results

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