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Primark and H&M clothing are clothing retail companies that have many branches all over the world. Primark began its operations in 1969 in Dublin, and it has grown to 232 stores to date. H&M, on the other hand, began its operation in 1947, and it has more than 23,000 companies worldwide. The two companies use the marketing mix to ensure efficiency and effectiveness. These include product quality assurance and price control. It also includes ensuring the goods reach customers in convenient places and promoting the products too. The companies also have strengths and weaknesses, which they capitalize on for more production. They also face threats that slow down business and grasp opportunities that foster business. The study of these four qualities forms the SWOT analysis. The two companies ensure they consider the adversary’s skills to deal with competition. They also get feedback from customers to counter competition.
Background Information about Primark
Penny’s Primark first commenced its operations in June 1969 in Dublin. The stores increased to four within the same year in the same locality. Success was mostly recorded in stores in the locality, and in 1971, a Branch was opened in Cork. By 1983, there were 22 stores in Ireland, and 22 other stores in the UK (Primark 2012). Immediately after 1983, the company took part in its first multiple acquisition and purchased five Woolworth stores in Ireland. By 1994, 13 more stores had been added up, bringing the stores to 66. The stores in Ireland increased to 34, while the stores in the UK increased to 32. In 1995, they acquired BHS One-Up discount Chain, adding 16 more stores in UK. In 1999, they acquired 11 more stores form the Co-Op. In 2000, acquired 11 stores form C&A, which had retreated from the UK. The size of the Company has increased over the years, bringing it to 232 stores worldwide. It has 156 stores in the UK, 38 in Ireland, 7 in Belgium, 22 in Spain, 5 in Portugal and 3 in Netherlands (Primark 2012).
Primark trades in clothes, which include Women’s wear, men’s wear, and children’s wear. They normally provide all styles to their clientele at remarkably affordable prices (Primark 2012). It operates under ethical standards, which include building sustainable businesses and strong communities in areas, where they operate (Primark 2012). The company also promotes the livelihoods of those who work within the organization. The management ensures it does this by providing the best workplace for the manufactures of its products. They also ensure a minimal impact on the environment, where they operate.
H&M clothing, on the other hand, is a Swedish company that offers clothes for men, women children, and teenagers. It commenced its operations in 1947. Erling Persson opened it at the Vasteras in Sweden. The company only dealt with women wears at that time and operated at the name of Henes. It acquired the inventory and premises of Stockholm hunting Equipment store in 1968. This marked the beginning of the company, dealing with menswear, which was in the stock of the newly acquired company. It changed its name to Hennes & Mauritz (H&M). Stefan Ealing’s son took over the management of the company in 1990. In 1998, he became chairperson of the Board (H&M 2012).
H&M operates in 43 countries, where more than its 23,000 stores are spread. It also employs a large number of employees as by 2011 it had 87,000 employees who were employed in all the branches. It is the second largest fashion house in the world after ZARA clothing. It operates in Asia, Europe, North America, and Africa. In each of the continents, it has branches in many countries. It has 213 stores in the United States, 158 Stores in France, and 202 stores in the United Kingdom. Most of its production is done in Asia, mainly in the nations of Bangladesh, China, and India (H&M 2012).
Primark and H&M, like any other organization, face a stiff competition from its main competitors. These include Zara Company and H&M Company. The competition is heightened by the fact that so many companies that deal in clotheslines are emerging. So the management in the company constantly tries to make the company maintain a competitive advantage in the trade.
4ps of Production
One key strategy used is consideration of the 4ps of production that includes the product, place, price, and promotion. The main emphasis is given to the products that Primark Company produces. The administration always works towards ensuring that the products are up to standard. They ensure that style and quality is met to satisfy the expectation of the clients. They ensure that the production team is advanced enough to ensure consistent new styles to keep customers coming back for more. They also ensure that research is done before the creation of new products to meet the expectations of the customer and to create an appropriate product range for each category of clients. For men, they stock casual and formal wear (Haberer 2010). For women, they provide clothing essential for holiday, work and all occasions that mark a woman’s life. They also offer to style stuff for the client’s homes that include curtains cushions and bedding. Primark also uses quality assurance, where they offer their customers an exceptional value for their money. The management ensures that products are tested in their production stages.
H&M Company, on the other hand, ensures that it offers variety to its customers. These include spring wear and modern classics. The company states in its vision statement that they love quality (H&M 2012). They, thus, ensure that the best quality products are produced. The company records half a million quality-tests within a year. The management also ensures that the products of the company are differentiated from those of the competitors. This involves the introduction of new designs. The introduction of new fashions that have not been introduced in other stores is critical in maintaining a competitive advantage (H&M 2012).
In H&M, prices are also well considered within the organizations to ensure that they are competitive. The organization ensures that the prices are set in an affordable manner in all the stores, especially depending on the location of the store. The management sets prices fairly to be the fairest among the competitors. In Primark, the prices are low because the company has no advertising costs. The management relies on the customers to pass information to other customers (Primark 2012). They believe that if they just produce the best products, then, customers will tell others about the products, leading to increased sales. The companies also use the strategy of buying and selling in bulks, making their prices the lowest. The overheads within the organization are also kept at a low level in order to keep the product prices relatively low.
Both companies use different pricing strategies in different seasons and different places. These include competitive pricing, which is used in the designs that are common, even among the competing companies. Cost plus profit is where the profit that is needed is added to the cost of production (Haberer 2010). Skimming pricing is also used, especially at the introduction of a new design.
Place is also given emphasis to ensure that the products reach the customers right at the place where they are. The management attains this objective by ensuring that stores are opened in different sectors of the world. H&M clothing operates in 43 countries at it has over 23,000 stores, which are spread all over the world. Primark clothing, on the other hand, has 232 stores over the world, which serves to enhance proximity to the customers. The management of H&M clothing use advertisement to inform the clients about the availability of their products. The advertisements inform customers about the different brands of the product that are available to clients. They also inform the customers of the stores locations worldwide (H&M 2012). Some of the main advertisement channels that are used by the companies are the website, where they post their products and locations. They also use the television and fashion magazines to show some of their products to their customers to buy from them (Hoverer 2010). The companies also use Public relations, where exhibitions are organized to trade and promote the products of the company. Primark uses the production of superb quality products as a means of advertisement.
Performance of the Companies
In the financial year 2010-2011, the sales volume of H&M increased by 9 percent. The sales in this season remained unchanged. The sales amounted to SEK 79,047 and the profits after tax amounted to SEK 10,464m. In the third quarter, this is the last three months of the financial year, the sales increased by 5% in the local currencies. In the financial year 2011-2012, the sales of the company are likely to increase due to the more vigorous approach the company has undertaken to maintain a competitive advantage (Haberer 2010). Primark also reported an annual increase in its sales in the various stores. There is likely to be a further increase in the sales figure as the company management intends to launch deeper worldwide. This will increase sales and, in turn, the profits in the years to come.
Primark and H&M operate competitively by taking into consideration various factors. Key among the considerations is the work force that is employed within the company. They ensure that recruitment is done on extremely strict bases. This ensures that they only employ the best people within the organization (Wenderoth 2009). More emphasis is laid on the production department, where the best people are employed to ensure the most competitive designs are produced. Attractive compensation is also given to the workers as a motivational measure among the employees. These include handsome retirement benefits. The company also deals with competition by monitoring the customer feedback. The companies ensure that the customer feedback is acted upon in order to produce products that suit the customers’ needs. Competitor monitoring is also used to get feedback about the competitors and ensure that they act on it.
Primark Company has ethical trading standards, and it, thus, has a carbon policy. In the policy, the company recognizes that the climate change causes some serious threats to the people in the nation. Thus, it recognizes the need of the reduction of the emissions that are produced by the various companies. The management ensures that they work towards reducing the emissions that are produced. The main measure that is put in place is working with the carbon trust to come up with a long-term carbon strategy. The first initiative they seek to achieve by the alliance is the reduction of the UK carbon emissions by 10 % relative to sales by the year 2013. The organization also calculated its Carbon Footprint and annually measures it. This is geared towards taking into account the greenhouse gas Protocol Accounting Standards.
The organization also undertakes a remarkably thorough assessment on the carbon performance across all the stores. The carbon efficiency is also central to the store refurbishment and the specification criteria. The management is also in the process of establishing a model called the green store that provides low carbon emissions from the company. It also plans to establish a carbon measurement system. This system will also report the carbon emissions, which will serve to track the company’s progress towards the achievement of the set targets.
The H&M Company also has an environmental sustainability policy that ensures the promotion of the environmental awareness. The management ensures that environmental awareness is constantly communicated to suppliers and the employees (H&M 2012). They also ensure that they respect nature by always taking caution in the decision making process. The environmental concerns are also shown within the organization by resource recycling and conservation. The management also ensures that efficient transport is used to have a limited influence on the environment.
The strengths of Primark and H&M include the fact the good reputation they enjoy. It also has cost advantages that result from the proprietary knowledge that it possesses by the management team. The company also has strengths of favorable access to its distribution networks. The patents and rights that the company holds in the different nations of the world mark strength within the organization (Wenderoth 2009).
One main weakness that is experienced by H&M Company is its large investment in its manufacturing capacity. This makes the organization not to react instantly to changes in the organization’s strategic environment. Threats, faced by the companies, include changes that are experienced by the companies and the shifts that occur in the tastes of consumers. This is caused by the fact that the fashion industry is exceedingly fragile, and it changes very instantly.
This poses a threat to the companies, as they have to work constantly on new designs. The emergence of new substitutes by the competing companies also makes the products of the organizations move slowly. Other threats that are faced by the two companies include new rules and regulations in various companies that may affect the sales of the companies. Increase in trade barriers also poses a threat to the business of the organization.
The opportunities that arise to Primark and H&M Companies include the existence of a gap in the market. These include the existence of a customer need that is not yet fulfilled. This gives room to the companies to produce such products. The loosening of laws and regulations also opens opportunities for the companies to do business easily. Opportunity for business also presents itself, when there is a removal of international trade barriers.
Conclusively, the fashion industry is increasing, and there is more room for expansion for the two companies. The global interactions create an opportunity for the companies to open new branches in other parts of the world. This will create more opportunities, increase the market size and sales volume, and increase their competitive advantage, as opposed to countries that only trade locally.