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H&M: Target Costing and Business Model Essay

In the world globalization competitive increasingly environment, how is H&M’s business model maintain and enhance the competitiveness of high-speed growth? With the research of target costing and business model of system innovation theory, you can understand the H&M’s successful business. And you can understand to make much more profit by controlling target costing. Password 1: Accurately grasp and dig into the demand of the client value. Customer, this is undoubtedly the center of the whole enterprise. Philip Kotler , who from American Marketing From EMKT.com.cn think solving the problem in accordance with the conventional innovation of logic in such a competitive market is no longer applicable. But creative thinking that is based on customers showing growing charm. It is by the original alternative concept and product development to stimulate new markets and profit growth.

Obviously, H&M is the master of “creative thinking” to customer demand, H&M noted that almost every shopper likes fashionable design and image of luxury clothes. But the vast majority of people have to wait until the clearance sale. Why cannot meet the customers demand of famous brand fashion design and cheap parity? According to the survey of professional organizations Verdict Research, the average price of clothing in 1995 fell 34%. But in the same period the number of women buying clothes has doubled. This suggests that consumers pay more attention to the fashion style. They buy more clothes, but wearing the times less.

Meanwhile, the current consumer market is showing to the two extreme diversion state of “luxury” and “save money. In the “luxury” mode, consumers buy product and service of high quality, reflecting the personality characteristics and meeting the emotional needs at any cost. In the “save money” mode, consumers try their best to find low-cost but high-quality goods. These “contradictions” demand implies the desire of consumers for affordable fashion. H&M Fashion Group, which is to see the change of social structure and consumers, seeking to find crack password equilibrium point, creating a cheap fashion clothing brand positioning. It use the combination of its use of changing fashion and luxury quality and public evaluation to realize trafficking “fashion” like McDonald’s selling hamburgers.


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