A Comparison Of H&M And Uniqlo: Global Marketing Strategies In The Retail-Clothing Sector

Customer Value Proposition

Question:

Analyse the an international fast fashion clothing retailer and its competitor.
 

The main objective of this study is to draw out the comparison between the two companies. The two companies that have been undertaken in this study is H&M and Uniqlo as they have achieved their success through numerous business strategies and how they have managed to influenced each other. The project despite having an economic approach aspires to highlight the customer’s value proposition in the retail-clothing sector.

The project gives a basic overview regarding the basic concepts behind the comparative study of both companies, which operates in the fast fashion to facilitate the understanding of the customers and the prevailing market competition. In addition to this the study draws out the comparison in terms of their commercial profile by analysing and confronting them based on global marketing strategies which lead them to success on international stage (Grace and Lo Iacono 2015). 

Perception is regarded as key for every business. The perceived value of consumer is regarding a brand is what the marketers demand in order to compel a customer to buy a product. This is how a product is justified weather it is a premium product or not. If the consumer perceive that their dedication is towards the quality as brands which luxury have dissipated (Wong and Yazdanifard 2014). Several marketers and sales teams have mastered the art of dangling the designer clothing brand over the consumers with average purchasing power. Several marketers have undertaken the strategy of implementing high price in order to keep the value of brand and consumer perception of middle class families to purchase their product. 

Benefit of shopping at fast fashion cloths	Sacrifices of visiting supermarkets
Convenience a.       Wide selection of products which goes beyond the scope of fashion b.      Large number of retail outlets located centrally c.       Ease of access for both pedestrians and vehicles	Monetary a.       Cost involved in purchase of retail cloths b.      Cost involved for the customers to travel to the retail outlets
Monetary a.       Affordable prices b.      Rewarding schemes c.       Points scoring vouchers	Efforts a.       Time involved by a customer to travel stores b.      The time a consumer consumes to purchase a product
Quality a.       Items which are standardised and backed by the consumer regulation standards b.      Large brands which offers certain degree of quality and trust Social a.       Social esteem associated with large brand names b.      Self esteem from purchasing higher quality of goods	Health a.       Stress arsing due to overcrowding in retail outlets as result of this consumers are unable to purchase products Opportunities a.       The lack of opportunity to buy high quality goods.

Table 1 (Consumer perceived value proposition)

Source (Grace and Lo Iacono 2015. pp.560-570.) 

Intrinsic vs Extrinsic value:

	Extrinsic	Intrinsic
Active	a.      Wide range of products available for selection b.      Large number of outlets are located centrally c.       Offers service 24×7 d.      Online shopping includes door to door delivery through the use of smart phone application e.       Offering ease of access	a.      Offers the flexibility of purchasing luxurious and branded clothes. b.      Offering recreational opportunities in stores such as serving coffee and some sort of refreshments.
Reactive	a.      Products are under the regulation of consumer standard. b.      Established brand names facilitate certain level of quality and trust among the consumers (Zimmerma 2012)	a.      Neat and clean outlets b.      Easy and simple to follow the outlays of stores (Gallarza et al 2016). c.       Attractive display of products to attract consumers.
Other orientations	a.      Enhancement of customers self esteem through high quality goods.	a.      Preserving the ecological surrounding through the use of environmentally friendly bags b.      Establishing a community support schemes.

Table 2 (Intrinsic value vs. Extrinsic value)

Source (Zimmerman, M.J., 2012. Intrinsic vs. extrinsic value)

H&M has expanded exponentially during the last decade from a small family business to a global sensation rivalling the giants like Uniqlo, which is one the retail apparel fast fashion industry. H&M target market is very broad since they do not define the target market by segmenting the ages and lifestyle as traditional retailers do. H&M generally targets the youth and educated mass of people who prefers fashions, as they are sensitive to fashion. It is noteworthy to denote that in the present era where technology acts as a communication to several devices which has more access to information regarding the fashion (Parry et al 2012).

Henceforth, fashion it is recognised as more internationally standardised and H&M uses this to their benefit by offering the latest trends in apparel. It is to be believed that around 80-85% of the fashion apparels which company offers are of relative high fashioned products. The study highlights that the international strategy adopted by H&M is excellent since it has adopted the balanced approach to mix the standardisation and customisation.

H&M looks up the customer’s value proposition in the form of gain, which defines the acquisition of the product and services (Jewell et al 2013). On the other hand, it must out weight the pain of acquisition, which is cost of difficulties while obtaining the item, service and uncertainty regarding making the right choice and cost of making the wrong decision.

Benefits of Fast Fashion Shopping

H&M identifies the certain numbers of customer’s value proposition based on value parameters:

• H&M aims to meet and exceed customer’s expectations, which is not based on price.
• H&M being a leader in the retail fashion industry offers a quality environment, which enables the customers, feel valued and comfortable.
• H&M being a leader in the fashion sector also provides customers with the service, which exceeds beyond its competitors.

As a company, H&M needs to match up with the customer’s values and beliefs by reflecting the same on their products through the advertising and sales promotion which surrounds it. 

Sheth identified the five dimensional concept of customer’s perceived value, which was based on the value of social, emotional, functional, epistemic and conditional.

1. The functional value is understood as the perceived usefulness of the service offered by the H&M to its customers.,
2. H&M provides emotional value, which is based on the feelings of effective states being generated by the customer’s consumption experience.
3. The social value is given by the acceptability based on the individual level and the relations with the social environment.
4. Epistemic value gives the ability of the service to generate the curiosity in order to satisfy the desire for the knowledge.
5. The conditional value is related to the situational factors such as the disease or the specific social situations.

Sheth models defines that H&M which is a retail brand can be compared with the rival brand to alleviate boredom with the Uniqlo which aims to satisfy the desire to learn and feel something new in relation to the response to such aroused interest (McColl-Kennedy et al 2013).

Due to this cognitive-affected and multi-dimensional nature of customer’s perceived value, it is mandatory for H&M to evaluate the customer’s perceived value from viewpoint of customer’s consumption experience. The models defines that the customers based on the experience of value-in-use often create value. While H&M can establish and communicate the value proposition, it is the customers, which creates the value using specific value creation having based on dynamic situations.     

Basis of review:

H&M and Uniqlo is one of the relatively new sub-industry within the greater clothing industry which is characterised by companies competing in the fast fashion industry. A comparative study is performed based on the price, promotion, product and place.

Product: Uniqlo primary objective relating to the product is to provide the customers a variety of affordable, innovative and stylish clothing of high quality. To differentiate its products with the rival company H&M and remain comparative in the declining industrial trend Uniqlo sells its products in wider array of colours. One such example is socks, which comes in 50 different colours at its Tokyo outlets. On the other hand H&M developed another draw for its customers specifically during the colder months made of fabric, which is used for inner layers and has been applied to the products such as leggings. Uniqlo offers a wide range of clothes to its customers during all times of year which ranges in style from casual wear to more fashionable wear of high quality and of many colours (Payne and Frow 2014).

A sum of products offered by Uniqlo and H&M is listed below

Design	Several colour variations, simple, adapt to numerous needs, casual to formal
Quality	Controlled quality, creative fabrics and functions
Features	Offering wide varieties of products with innovative and affordable price
Branding	Fashionable, economical, reliability and desirable

Table 3 showing sum of products offered by Uniqlo and H&M

Source (Barnes, L (2013) 45(2-3), pp.182-207) 

Pricing strategy: In line with the product strategy in foreign markets, a penetrating strategy is used to enter into the retail clothing market. At a lower price point than the competitors, Uniqlo aims to provide its customers high-quality goods at relatively low price. The prices are of certain products are comparatively low for example socks offered by Uniqlo is priced lower than the one provided by H&M. The comparative study also defines that t-shirts and button down products-shirts are priced lower by Uniqlo than that of one sold by H&M.

Hence, it must be noted that the basic objective of Uniqlo is to increase the volume of sales and expands its market share while H&M strategies are focussed towards wide distribution and products cost. It is assumed that the cost of operations will gradually decrease for H&M as a result of new store outlets which is being opened and with multiple stores sharing inventory and more stocks can be shipped from Asia during any given period of time. Such strategies adopted by Uniqlo can reduce the repeated incurring of product costs and shipping cost will be reduced (London et al 2015)..

Sacrifices of Visiting Supermarkets

On the other hand, Uniqlo will also utilise its enhanced levels of branding awareness with the help of continuous advertising and convincing the customers that products offered by Uniqlo is highly desirable in terms of fashioned retailers

Promotion: Having experienced a sudden decline in the brand perception of Uniqlo due to the oversaturation in the market and wide array of apparels products introduces by its competitors H&M it was noticed that Uniqlo were often taunted as a “Unibare”. Though it experienced decline in its brand it still had the pride of serving a wide range of assortment and high quality products. Such strategies have been aimed at classier brand image by offering high value perceived to its customers (Kyhnau and Nielsen 2015). Uniqlo has high innovative fabrics, which offers consumers to with wide array of products. Such varieties help in creating consumers awareness and ultimately helps in brand promotion for uniqlo. While on the other hand H&M aims to strive and redefine the relationships between the affordability and quality in order to attract wide range of customers and pool together to sought values such as the quality, style and affordability.

Place: H&M strategizes to establish and expands themselves into the international market which is focussed towards establishing a powerful brand image being centred on the systematic opening of large flagships outlets. On the other hand, Uniqlo aims to open its outlets under the Australian flagships, which it considers as an ideal location for expanding it retail-clothing stores. An identical form of central location will be sought by Uniqlo as their main of transit in Sydney outlets, which will be located in trendy, young shopping neighbourhood, and the store in gold coast will be located in a central and touristic area (Huang and Wang 2012).

Uniqlo is considered as one of the fast fashioned retailers who have outperformed the retail clothing department stores and less nimble speciality stores, which not only creates high profitability but also increases the speed of revenue growth. Uniqlo has the vertical scope and sells apparels for men, women’s and children however both the brands put more emphasis on women’s clothing. Uniqlo owns much of its productions and retail outlets in comparison to H&M but it outsource all of its production. In contrast to this H&M has invested largely on the production but study reveals that licensees ran its stores (Grönroos and Voima 2013).

Those two competitors are also placed differently in the product space from Inditex’s chains. According to the Inditex trends H&M is generally perceived as more fashionable than Uniqlo. The survey shows that Uniqlo is more fashionable while H&M on the other hand, offers products at lower price.

Figure 1 – Value Map of Uniqlo and H&M

Source: (Grace and Lo Iacono (2015) pp.560-570.)

Low price: The prices of retail clothes for Uniqlo are affordable so that a customer can buy its products. This is because Uniqlo has better manufacturing and distribution systems than H&M as it aims to reduce the operational cost. This serves as an advantage for Uniqlo to create a value proposition as it is easy to attract the consumers and sell them products at relatively lower price.

Intrinsic and Extrinsic Values of Shopping

Unique and better products: To execute the value proposition among the customers both Uniqlo and H&M, this will cause the customers to consider the product of both the brands, based on superiority of the competition. Such strategies help to establish uniquely batter value proposition so that the buyers are sure of the quality of products being offered by both the retail brands.

Offers hassle free customer experience: This value proposition is designed to create hassle free customers experience with the products and services offered by the Uniqlo. This will enable the customer to buy products in order to save time and mental energy. The advantage of this type of value proposition is that the customers just do not think about the products and services offered to them as they simply buy them (Aarikka-Stenroos and Jaakkola 2012).

Ownerships of customers results: Uniqlo performs the customers business more better than they could perform as it can been seen that a part of enterprise ensures that the customers are offered what they need meanwhile it also controls the overall controlling cost.

Cost: Customer’s value perception is generally defined as a customer’s evaluation of what they get in return for what they give. The cost value proposition is recognised as the perception of customers whether the value created by H&M and Uniqlo is worthy enough of the cost paid. The cost paid by the customers can be of monetary terms based on time and effort, which the customers invest in a firm’s offering.

Customer roles: This refers to the in general the customer’s familiarity during the communications with the seller. Value can be added to relationship along with the magnitude consisting of product, quality, services, delivery performance, suppliers know how and process cost. Such creation of customer’s value establishes and maintains the customers relationships with the suppliers so that it can obtain hassle-free purchase and consumption mode (Grönroos and Voima 2013).  

Performance: Uniqlo manufactures open source of software and correlated services, which do not rely entirely on the source of software. They often combine the proprietary and open source of offerings and implements hybrid business models to deliver greater value to consumers.

Uniqlo retail value proposition is mostly centred on low product prices. Nevertheless, several surveys has suggested that currently Uniqlo is not successful even though it offers clothing apparals at low prices. Uniqlo has created a strong brand that is linked with the fashion and top designers such as Cate Moss, Madonna and Stella Macharty as Uniqlo has managed to create something unique. The fact the company is offering products at lower price does not mean that brand has to be a cheap one too. It is regarded that Uniqlo has put in a great amount of effort to build up its brand, which is associated with range of price, which cannot be related with H&M (Osterwalder 2012).

Uniqlo demonstrates that how a company can build brand even if the organisation is selling the products at comparatively lower cost. Nothing can be considered as only black and white and one can understand that Uniqlo is one of the luxurious brand in most of the countries. On the other hand when other fashion brands like Uniqlo started acquiring market in retail clothing there were rising speculations about how the connections to H&M would affect the Uniqlo reputation as high quality brand. At the moment Uniqlo is feeling satisfied with the choice of work together with the one of the bolstering retailers in the fashion industry.  

1. Price: Price can be defined as the sum of expenditures paid by a customer for a product and any associated services that is required by the product. The total cost for high end clothing apparels offered by H&M and Uniqlo to support the dedicated fashion trends followed by the customers. The price for a product also includes the price of the services hence, in customers value proposition price is considered as the value of product and not the cost. Customer’s value proposition is the cost that is not reflected in the price as the cost is reflected in the value experience.
2. Support: As it is mentioned earlier, the customers value proposition emphasis on experiences. Uniqlo initially identifies these experiences when it profiled how a key-targeted set of customers would use the product (Chandler and Lusch 2014). In the evaluation of value proposition process, customer support is necessary between the products offered by Uniqlo would offer them the benefit, which is equivalent to those that are negative users.
3. Features: Human live in world where the products offered by several clothing retailing industry are constantly changing as new features are constantly gets added. Prices gets changed, competitive products are enhanced and new alternatives are introduced. All such elements effect the customer’s value propositions.  
4. Reputation: Evaluation of customer value proposition is based on the reputation or the image of brand. Offering high and better quality products with wide array of assortment Uniqlo proposes to establish a classier brand reputation by offering higher perceived value to its customers (Grace and Lo Iacono 2015).

Basis of distinctions	H&M	Uniqlo
Price	Lower	Lower-Middle
Quality	High	Middle-high
Fashion	High	High
Age group served	For ages ranging from 15-30	For ages ranging from 15-40
Kind of Supply	Generally Casual	From Casual to Formal
Brand reputation	Good	Under-development
Production	Out sourced	60% outsourced

Quality

Table 4 (Value proposition of H&M and Uniqlo)

Source (Payne and Frow (2014) pp 213-227)

Globally most of the fashion retailers have followed the customer value proposition to keep the new trends and the fashion prevailing all corners of the world. Uniqlo and H&M follow the value proposition, which is largely successful, as both the companies understand the importance of customer value proposition. Uniqlo differentiates from H&M in order to find and follow latest trends. Uniqlo believes that customers are more cautious regarding the quality and value than lending a rapid response to changing style (Osterwalder et al 2014).

On the other hand, H&M uses long developmental strategies to test new materials and designs. It creates collaboration with the vendors based on long term strategy. Such strategies is similar to that of car manufactures who spend long period of time in product development in order to create a new product (Kyhnau and Nielsen 2015). Uniqlo recognises the product with style which do not go out of fashion rather easily and discovers a new of creating levels of differentiation with those styles. On the other hand H&M aims to build a strategy to the trends and needs of consumer by embracing the rapid change to the consumer tastes and preference. Uniqlo has established a high range of receptive supply chain that facilitates the liberation of fashions as soon as a trend materializes.

Uniqlo approach is somewhat more of a hybrid in nature than that of H&M models. It serves to combine the commitment to prolonged existence while staying receptive to the latest fashion trends. The study reflects that Uniqlo outsource production to a network from more than 500 suppliers.

H&M retail value proposition is predominantly centred on low prices of product. However, a number of surveys has suggested that presently H&M is not flourishing though it offers clothing apparels at reduced prices. H&M has created a muscular brand name that is connected with top designers such as Cate Moss, Madonna and Stella Macharty as H&M has managed to create somewhat exclusive. The truth is that the corporation is offering products at reduced price that does not necessarily represents that brand name has to be inexpensive too.

Figure 2 model of mission statement

Source (Grönroos, C. and Voima, P., 2013. Pp 133-150) 

It is understood that H&M has put in a enormous effort to construct its brand, which is allied with wide range of price, which cannot be associated with the small boutiques. H&M demonstrates that how a company can build brand even if the establishment is selling products at reasonably lower cost. Nothing can be painstaking as only black and white as one can understand that H&M is one of the lavish brand for the most part of countries. On the other hand, when other fashion brands like Uniqlo started acquiring marketplace in retail clothing there were growing speculations about how the connections to H&M would affect the Uniqlo status as high quality brand. At the moment Uniqlo is feeling satisfied with the choice of work together with the one of the bolstering retailers in the fashion industry (Chandler and Lusch 2014). 

Monetary Benefits

A vigorous and meaningful value proposition is necessary for any industry to effectively engage and establish a connection with the consumers, partner’s stakeholders and decisively internal workforce by precisely communicating the differences and worthiness of making such purchase (Hollensen 2015). The implementation of external and internal implementation plan of new value proposition is listed below;

Figure 3 relationship between internal and external marketing

Source (Hollensen  2015)

Provides directions: The Value proposition offers directions by identifying the perfect-targeted audience right from the front, rather than understanding and recognising the central needs. This can be contented by the planed solution (Smith et al 2012). A comprehensible value proposition helps in wastage of time and money by offering product and service, which are less relevant to customers.

Figure 4 Relationship between internal and external marketing

Source (Hollensen  2015)

Creates focus: A robust value proposition system offer fundamental initiatives and activates the aspects of business which have the greatest impact on meeting the defined targeted customer’s needs. Such value proposition helps in delivering excellence for H&M. It also outlines what it must deliver to meet and define the audience’s needs and create an overall remarkable experience for customers.

Figure 5 Perception of problem vs willing to change perception

Source (London, N., Pogue, G. and Spinuzzi, C., 2015 99 1-8)

Improves customers understanding: Implementing value proposition provides H&M with the opportunity to understand how the consumer’s view products and services.  This enables them to talk to customers which breeds misunderstanding or to certain extent alienation. The value proposition identifies the factors that not only make a difference to the targeted audience but also inspects the ways that are meaningful to H&M (Kyhnau and Nielsen 2015). 

Figure 6 relationship between employee and customers satisfaction

Source (Hollensen 2015)

Conclusion:

In a world where retail fashion is fast changing along with the changing buying behaviour of the consumers it is significant that the companies like H&M and Uniqlo is well equipped with the flexibility where it is able to adopt to all kinds of changes very quickly but even more it is able to anticipate and predict such changes. As a reason of this both the companies operates in the pull systems and gives emphasis on the customer value proposition. It is precisely evident that both the companies seek to enhance their efficiency and improving the customer’s satisfactions. As shown in the above study, that customer value proposition allows the exchange of ideas from the downstream area of chain to the upstream area. The study also provides numerous advantages in terms of cost and time to both the organisation. 

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