H&M is a fashion and design group that meets the needs of its consumers through well-established brands such as COS, Cheap Monday, Other Stories, Weekday, Monki, H&M, Arket, and H&M Home (H&M, 2018). H&M Company has been operational since 1947, it aims to democratize fashion while ensuring sustainability to meet its customer needs always (H&M, 2018). The company's vision is utilizing innovation and technology for the good of society. H&M uses the science-based approach to promote growth in the fashion industry while ensuring their operation are fair and equal to everybody (H&M, 2018). Notably, H&M brands provide well-established trends and styles in the homewares, beauty, fashion accessories, and new experiences including modern and healthy foods.
The H&M brands are uniquely great and each has its buying department, whereby, a group of people with great skills and experiences operate to produce well-suited designer garments (H&M, 2018). Moreover, the company applies automated processes and analytics that are advanced to provide support, which is necessary for the provision of customer insights and the establishment of a supply chain that is flexible, fast, and thus more responsive (H&M, 2018). H&M investments are all directed towards enhancing the customer experiences during shopping, strengthen their products, and personalizing the communications with the customers in their various brands (H&M, 2018). To remain relevant the H&M brands are constantly operational to improve their product range to avail sustainable choices, which are of the best value. This paper is a discussion of brand extension in the H&M group to cater to the new market niche in the luxury market.
Delegate your assignment to our experts and they will do the rest.
Extension Idea
In most cases, the apparel brands provide limited edition goods to appeal to many people in the market as they make the products highly accessible through appealing prizes and good distribution channels (Childs, 2014). H&M depends on supplies from 700 independent suppliers, as it does not own factories (H&M, 2007). It often applies the limited extension plan through collaborating with various designers such as Roberto Cavalli in 2007 (Childs, 2014). During the brand extension edition, Cavalli's products were ranging between $49-198 different from $8,000, which is the original cost of a piece of clothing in the parent brand. During, the limited extension edition, H&M was able to deliver quality fashion to more than 1,500outlets (H&M, 2007). Thus, H&M should collaborate with various high-end designers, such as Carvalli to implement full-time brand extensions.
Benefits from the vertical downward extension approach in H&M, accrue to the parent brand that receives greater exposure in a new market base that can order it in the future (Hennigs et al., 2013). The downgrading strategy through collaboration with high-end designers will increase the market share for H&M brands by attracting the price-sensitive type of consumers. Consequently, the loss of prestige and dilution of the parent brand image by the downgrading approach can be neutralized using linguistic and graphical techniques of separating the core and the extended brands (Hennigs et al. 2013). Hence, a collaboration of high-end designers and H&M can increase their market base by availing to the prize sensitive customers while making the parent brand known to new markets.
Target Market
The management of luxury brands nowadays is becoming complex. Hennigs et al. (2013) relate the complexity of luxury industries to demand increases of luxury products in the developing countries such as China and India and the high rates of spending among the middle-class people. The market for luxury products tends to be growing since the 1990s, as the products are not only serving the elite communities but also serving the demands of the middle-class group of individuals who can occasionally purchase the products of the luxury producers (Hennigs, et al. 2013). According to Hennigs et al. (2013) democratization of the markets for the luxury brands to avail the luxury brands to a larger group of individuals, is calling the producers to reposition themselves to attract and meet the needs of the new group, different from the perspective of the old luxury.
A brand extension is a very important option in H&M to help with the growth of the brands. Hennigs et al. (2013) define the concept of new luxury as goods and services whose quality is magnificently high, their taste is good and so is their aspiration compared to other goods in the same category. With so many changes in the luxury concept, positive views on it are emerging making people recognize it as the satisfaction of people's needs beyond the average or ordinary way of living (Hennigs et al., 2013). Thus, H&M brand ought to utilize the new characteristics of the new luxury concept to serve the middle class by reducing the overall prices of its product extensions.
Importance of Brand Extension in H&M
Adopting the brand extension strategy in the H&M group will be beneficial as the new apparel brand will benefit from the H&M current market’s achievements. According to Kushwaha (2012), brand extension is the best approach in introducing a new product in the market as the success of the existing brand influences the acceptance of the new product in the market. Notably, the establishment of a new brand happens to be very expensive and labor-intensive especially in the building process of a good market base that is willing to associate with the new products (Kushwaha, 2012). Kushwaha (2012) asserts that launching a new product in a company that possesses well-known brands such as H&M lessens the failure of the new products hence minimizing the market costs.
The H&M apparel brands downgrading vertical extension in new designs will increase the market base for the company thus improving the overall sales (Kushwaha, 2012). The new apparel brand extension is in line with the overall H&M business idea which emphasizes offering high-quality fashion products that are best priced in a sustainable manner (H&M, 2018). H&M operates towards democratizing fashion, with the belief that great designer fashions can be availed to everyone thus, collaborating with high-end designers such as Roberto Cavalli, helps the company to achieve its mission by availing designer products to many people.
Launch Strategy
There is mass growth in internet use over the years, an example is the 444% growth in the year 2000-2010, which tends to affect consumers' behaviors especially in selecting products and services (Capgemini, 2017). Social media continued growth tends to have significant effects on the channel of launching a commodity. With the mass adoption of social media, online communities, blogs, and social networking the internet is becoming a customer’s new touchpoints. Notably, Facebook is becoming highly visited and most popular social networking platform since the year 2010, and many other platforms have emerged in the world (Capgemini, 2017). These information channels have an immense effect on the customers purchasing behaviors, socially connects as well as browsing new information. Therefore, H&M can use the Facebook and other social media platforms to introduce the new brand extension to a massive population in the new market segment. Moreover, the company can gain more ideas by developing an online forum (crowdsourcing) whereby consumers can influence collectively the brand extensions' ideas (Capgemini, 2017). Awards should accrue to the most brilliant idea of launching the new brand in crowdsourcing and encourage the generation of new customers, which tends to have minimal overhead costs in advertising as well as in researching the new market segments.
During the launch, the company should build upon tie-in sales with the existing established brands which are likely to increase the compatibility of the new product through association with the already existing brands (Saari, 2015). Market skimming is an appropriate option during the launch of the extended brand because of the relative advantage existing between the new brand and the parent brands (Saari, 2015). The lower prices in the launching of the new product tend to speed up the diffusion process of the product in the new market as well as encourage the early adoption of the product. The pricing strategy in the extension brands should be low compared to the parent brands which, is likely to appeal to a larger market base.
Ethical Considerations
Production of the new brand extension ought to be done sustainably while following the sustainability guidelines (Shen, 2014). H&M group circular approach of production is important in the new brand extension because of its sustainability with minimal wastes (H&M, 2018). The brand extension ought to meet the eco-product quality to protect the environment as well as to capture the attention of consumers interested in sustainable fashion commodities (Shen, 2014). Nevertheless, increasing customer awareness on their roles towards protecting the environment in the use of the new product is necessary to help H&M maintain their circular approach of sustainability.
References
Capgemini Consulting, (2017) Channel Strategy: Framework for Success, How to Maximize internally and Customer benefits Through Effective Channel Management, Capgemini 1-14 https://www.capgemini.com/wp-content/uploads/2017/07/
Childs, M. L. (2014). Effective fashion brand extensions: The impact of limited edition and perceived fit on consumers' urgency to buy and brand dilution . The University of North Carolina at Greensboro. https://libres.uncg.edu/ir/uncg/f/Childs_uncg_0154D_11372.pdf
H&M Group. (2007). H&M Group Annual Report. Stockholm, Sweden . https://about.hm.com/content/dam/hm/about/documents/en/Annual%20Report/Annual_Report_2007_en.pdf
H&M Group. (2018). H&M Group Sustainability Report 2017. H&M: Stockholm, Sweden . https://about.hm.com/content/dam/hmgroup/groupsite/documents/masterlanguage/CSR/reports/2018_
Hennigs, N. Wiedmann, K. P., Behrens, S. Klarmann, C. Carduck, J. (2013) "Brand extensions: A successful strategy in luxury fashion branding? Assessing consumers’ implicit associations", Journal of Fashion Marketing and Management: An International Journal, Vol. 17 Issue: 4,390-402. https://core.ac.uk/download/pdf/151155665.pdf
Kushwaha, T. (2012). Brand extension: a strategy for competitive advantage. Samvad , 5 , 18-27. https://www.sibm.edu/assets/pdf/brandextension.pdf
Saari, T. (2015). Marketing Plan for a New Product: A Study for a Case Company. https://www.theseus.fi/bitstream/handle/10024/92324/
Shen, B. (2014). Sustainable fashion supply chain: Lessons from H&M. Sustainability , 6 (9), 6236-6249. https://www.researchgate.net/publication/275555624_
