The Marketing Approach Taken By H&M When It Comes To Corporate Social Responsibility

Authors : George Iskef & Tzesiana kiosani

This marketing review is a contribution of Ginx Media.

Contact Ginx Media for more information on marketing strategies.

1.    Introduction

It is essential to firstly deal with issues that concern customers and suppliers, and in time these efforts have been expanded to social and environmental issues (Zenisek, 1979). Although CSR can be defined in many ways, it entails particular attention to the ethical, social, and environmental implications of business. CSR efforts can also be a part of the foundation of brand image. For example, Ko et al. (2014) found that consumers may perceive CSR efforts of the brand more positively when they see the attribute and benefit approach positioning of the brand. Looking deeper into H&M relationship with CSR practices, and how their position has a positive effect on marketing practices. The research is examined from a social perspective towards H&M, Hennes & Mauritz business modules. Also, their actions are reflected in a theoretical framework that relates CSR and sustainability as necessities to corporate development instead of growth (d).

Thus, in defining market and corporate stability, we find the following statement important in evaluating social relevance and engagement: “The threat to capitalism is no longer communism or fascism but a steady undermining of the trust modern society needs for growth and stability” (Robert Reich, 2015). And in relation to wealth concentration by any given organism there can be found increased political power, something that further stresses CSR importance in creating fair opportunities and involvement. Finally, this motivates organisations to be ahead of the curve, invested in innovating new technologies and practices regarding Sustainability. Since money is spent for a general interest, the actions taken by corporate executive affect public interest on all levels through economic viability of its stakeholders (Milton Friedman).

For example, the examined organisation has recently invested in an experiment hub, the garment-to-garment recycling system loop, that recycles old garment into creating new clothing. This is a revolutionary solution to sustainability in all regards “finite, entropy, and ecological interdependence” (Daly H., 1987). However, this is relatively new to market and only used locally in Sweden.

In other regards the organisation is globally adequate with physical appearance everywhere. Furthermore, their size is arguably in league with the biggest brands out in the market. In relation to an economic growth debate, we regard biophysical and ethico-social limitations to highlight sustainable practice necessity for corporate development (Daly H., 1987). We further describe economic and natural limitations in H&M analysis. Also, in considering that the above limitations are recognised by academics and even the public as problematic, we support that CSR practices are highly applicable in marketing. Finally, CSR is treated for its benevolent and beneficial activities to society (Martineau, 1958). These activities include not only social-economic activities (e.g. community support) but also environmental activities (e.g. stand on sustainability) (Mozes et al., 2011).

In relation to the above-mentioned CSR is viewed through a strategic (marketing) approach for sustainability and doing what’s right. Marketing is also affected by CSR due to the prevailing attitude that conscious consumers have for a pressing need to have products and services that have social and environmental value (benefits) (Charter et al., 2002). CSR considers to be a marketing need that can be realized by ‘doing the right thing’ that then leads to ‘doing better’ as a positive business cycle (Bhattacharya and Sen, 2004).

Today, consumers are more conscious about environment-related and sustainable issues than ever before. Sustainable marketing by implementing marketing communications through CSR initiatives can build a corporate image and reputation to achieve a firm’s desired strategic position. It has been reported that the CSR orientation enhances employee satisfaction, motivation, and commitment (Aguilera et al., 2004; Kohli and Jaworski, 1990) as well as the commitment of customers and their willingness to pay (De Pelsmacker et al., 2005). We analyse marketing effectives through corporate ability to lead CSR innovation, and be involved beyond legal obligations as market leaders. This is visible by stakeholders’ interest in the activities taking place. Thus, the corporation is primarily involved through inbound marketing.

2.    Research framework

2.1 Annual sustainability report 2019

It is known that the sustainability of a company influences brand image significantly. Sustainable fashion supply chain includes eco-material preparation, sustainable manufacturing, green distribution, green retailing, and ethical consumers. H&M could be characterized as a fast fashion–sustainability brand. Byun and Sternquist (2008) defined the fast fashion approach as a positioning strategy responding to current fashion trends quickly by providing frequently updated fashion products.). Also, a quick supply chain response to consumer’s needs and wants is required to support product assortment in a timely manner (Li et al., 2014). Thus, setting reasonable prices that the consumer is happy with. Therefore, the key components of fast fashion are the ability to quickly find fashion trends and identify potentially popular new designs through careful study of fashion markets (Doeringer and Crean, 2006).

H&M maintains all these key components and through its practices contributes to a sustainable society. They support their success based on three factors: incentive design, the best quality at best price and efficient logistics. (Mark Tungate, 2005).

H&M’s supports a brand image that offers fashion and quality at the best price in a sustainable way. In addition to H&M, the group includes other brands that are not included in this research for their relatively small size. We chose to focus on corporate marketing and social presence that reflects H&M only. At the Corporate Responsibility Reporting Awards, H&M Group was the winner of the Creativity in Communication category, and first runner-up in the Openness & Honesty, Relevance & Materiality, and Best Report categories.

Defining H&M activities through their “sustainability performance report 2019”, we find the following results to be related in CSR marketing concepts. Also, evidence in centralising corporate image as the market leader in sustainability for the clothing industry.

There is evident recognition by  many organisations highly involved in CSR practices and environmental sustainability. Some of these organisations are (CDP, Dow Jones Sustainability index, Global 100 Index, Fashion Transparency Index), and can affect corporate image on global level and B2B practices. Even though we do not reflect B2B handling, it is worth mentioning as it enables for cooperative capital to develop good faith socially and politically.

2.2 Vision & Strategy

The corporation defines its position, and vision for the future in a changing industry to affect this transformation. In particular H&M strategies are defined on their website as follows: “By using its size and scale to lead the way in creating an industrial pathway that operates within planetary boundaries and creates genuine value for people. Strong actions today, collaboration and long-term investments in sustainable solutions will create opportunities that keep H&M Group relevant and competitive in our rapidly changing world”. The brand plans to achieve a climate positive value chain and a circular approach that creates a net positive impact on the climate by 2040.

In relation to their approach in increasing customer engagement, they engage with a rewarding system further inspiring sustainable action by customers. In particular H&M reports with the following statement: “We use incentive and reward systems to engage people across our value chain, and to motivate them to make choices that contribute to positive impact”. Also, research findings indicate that strategies used in the past offered discounts and other benefits to customers recycling old products. In particular they claim that “By increasing customer interest and rewarding certain behaviours, we can help them to make more sustainable choices”. In further regards, memberships schemes are offering exclusive benefits and active engagement for both corporation and customers.

In other regards, marketing related benefits that associate to customer satisfaction are the following examples: 1) Customers can drop a bag of unwanted clothing regardless the garments condition, in store and receive a discounted card of 15% off their next store purchase. 2) They also have a campaign that goes on all year round named ‘3 for 2’, for items with the specific hand tag that are part of their ‘Conscious collection’ made of 100% recycled  cotton. The brand promotes these benefits in their advertisements mostly through their social media accounts and wallpaper ads to increase their consumers’ brand perceptions and loyalty.

Finally, regarding inbound marketing H&M applies its strategies on all mediums. Inbound marketing is methodically attracting users interested in particular ideas by creating valuable and relevant content. Thus, in relation to corporate size and focus based on development rather than growth, inbound marketing seems to be an ideal approach to create and engage an active community interested in sustainability rather than interruptive marketing (Brian.H and Dharmesh.S, 2014). We note that H&M is actively involved in at least the following online activity: Search engines, Blogs, Online forums, Social media and many more.


3.    Literature

3.1 CSR & Marketing

CSR consists of social actions performed by corporations for the purpose of fulfilling social needs (Angelidis and Ibrahim, 1993). Its association to marketing requires a corporation’s willingness to go beyond its legal obligations to set up its policies and practices that are socially involved for the benefit of the society (Enderle and Tavis, 1998). Consumer interest in sustainability has increased, as there are more environmental and social-related problems in our society (Ha-Brookshire and Norum, 2011). Sustainability is used in many ways in apparel businesses (UDSAI, 2009). It refers to the social, environmental, and financial aspects of a company. These three dimensions are often discussed to guide the success of a business.

Also, sustainability can be explained throughout responsible business practices (UDSAI, 2009). These practices can impact workers, consumers, environments, and future generations. Therefore, it is important that companies care about sustainability for both short-term and long-term success. In addition, how the company delivers the sustainability-related messages is important to increase consumers’ positive brand awareness (Keegan and Green, 2011). Cummins et al. (2014) found that environmental messages are important contributors to consumer decision-making. Α company needs to actively communicate to the target audience their brand positioning strategies. One of the effective brand positioning strategies is to actively communicate with consumers in advertisements (Hartmann et al., 2005). Furthermore, brand positioning strategies can be key tools for brand implementation and success in the competitive environment (Kotler, 2000). For example, positioning a brand as “green” in the advertisement can differentiate itself from the competitors by empathizing with environmentally conscious consumers. In line with the findings from Hartmann et al. (2005) and Ko et al. (2014), companies’ efforts in sustainability marketing in advertisements help increase consumers’ positive perceptions about the companies.

Thus, sustainability positioning strategies associate to positive inbound marketing. Inbound marketing has gained advantage alongside the development of digital age. Unlike outbound marketing, inbound does not use disruptive methods to engage the customer but it rather makes the customer engage willingly for organisational associations to added value. This process is good for entailing qualified prospects, builds trust and credibility for business (Juan.P Castro, 2013). In other regards, social media have been defined as platforms that facilitate content publications of interest to them and their friends (Treadway & Smith, 2010).


3.2 Perceptions, trust & engagement

There is a growing concern regarding what is MNCs’ role in society, because of their continued development and growth. This is a multifaceted concern with examples including the following: local communities, polarisation, McDonaldization, Americanisation and their effect on environment and communities. Thus, we distinguish marketing activities by MNCs’, that correlate to Implicit CSR expectations. We develop the research based on the widely acceptable fact that MNCs are dependent on society and in advance customer satisfaction, otherwise legitimacy and complexity are disputed (Andreas Georg Scherer et.).

To clarify CSR perception by the public we distinguish three research areas: First, consumers are social animals that share interests and values with their family and communities, they will be more satisfied with socially responsible products (Daub and Ergenzinger, 2005). Second, CSR initiatives encourage customers to identify with MNCs and engage organically in its development (Bhattacharya and Sen, 2003). Third, CSR elevates the perceived value and legitimacy by consumer satisfaction (Mithas et al., 2005). Finally, customers define trust relationships by firms’ reliability and integrity. Trust is defined as a key element for long-term relationships, providing moral consideration to social obligations and expectancy (Kantsperger and Kunz, 2010; Aurier and N’Goala, 2010).

With all the above into consideration arguments on the physiological effect of CSR can be made. Considering moral obligation and its interrelatedness to long-term strategies, CSR marketing can be argued as an intermediary for engaging customers in a psychological and emotional state (Hollebeek, 2011; Saks and Gruman, 2014). Based on that, we propose that smart CSR marketing does not simply develop a reputation but also engage the customer and/or make the customer feel engaged in social moral.



4.    Analysis


We begin the analysis by defining H&M corporate image and active involvement in CSR practices. Relational to that we facilitate an understanding associated to its global positioning in market. Since 2002, it has regularly composed CSR reports, prepared in accordance with the GRI G4 guidelines, that are later published on the company’s website. H&M publishes its social responsibility report by the name of “Conscious Actions Sustainability Report”. With that into consideration, we can understand that they have been actively involved in CSR practices even before the emergence of the digital age. Today the retail-clothing company is truly global, owning 8 brands and almost 5000 shops in 74 markets. Its shops can be found in most European cities, as well as in Asia, Americas, Africa and Australia.

Getting into market analysis and corporate globalisation, we consider the subjected theories by Bond Christopher & J. O’Byrne Darren (2014) in their article on “challenges of globalisation”. Considering the gathered information on H&M and in relation to tacit based information, we regard their positioning in market to be highly appliable and relevant to all the following subjected theories of globalisation: (Globalization, Liberalization, Polarization, Americanization, McDonaldization, Creolization, Transnationalization, Balkanization).

Regardless of problematic situations found in outside governance politics and local interests, where the organisation does not have full control of the situation. Its manipulation tactics are based on common interest with the decision maker (e.g. farmers, factory owner, government etc.). H&M cooperates with International Labour Organisation and devised a Code of Conduct that contains employee rights, anti-corruption and anti-discrimination rules, promotes equality and fights against harassment. The corporation controls whether the prices it pays to suppliers allow them to pay fair living wages to their employees. It wants to develop tools to measure the optimal price. It also cooperates with governments, mainly in Bangladesh, Cambodia, Myanmar and Ethiopia to make them set stronger legal frameworks regarding minimum wages and enforce the right to the freedom of association, so that workers can create trade unions, as they have the right to a democratically elected workplace representation.

The idea of circular manufacturing came from the will to close the loop of the product life cycle. Dealing with entropy issues, as mentioned in theoretical framework can solve finitude limitations by creating a recycling framework that can stabilize consumption. Also, regarding an ethicosocial propensity corporations need to deal with a globule development rather than increasing growth and competition (Daly H., 1987). H&M framework concept assumes that from design, through raw materials, fabric and yarn production, garment production, transport and sales to use, the clothes should not be thrown away, but recycled, going back to the first stage of redesigning and reproducing them as a new garment.

In relation to such market structure and appropriate response is to approach social media. It is important in the way that it spreads news about brands virally to that they can reach huge amount of audiences (Harris 2017). Audience that is interested in corporate goal for the future will be attracted and supportive through brand loyalty and buzz marketing. Social networks are defined for their ability to facilitate groups and communities with common interests and background (Treadway & Smith, 2010).

Finally, derived analysis on CSR from “Andreas George Scherer et.” on increasing corporate legitimacy, we find that H&M best applies contingency approach in a constantly changing environment. They lead the way by keeping a social understanding and applying their activities and involvement in a mutually beneficial cooperation. The same is reflected by supply chain, production and social presence. And in the same manner, their audience is attracted to corporate practices and market presence simply through their active engagement in social innovations. Social presence is focused on building a corporate image that is regarded by public as environmentally friendly and constantly promotes corporate activity.


5.    Conclusion


As H&M has been greatly focusing on its sustainability efforts, they have a large opportunity to combine their marketing and sustainability strategies to gain an advantage against its competitors. They have the opportunity to show their consumers the cost-benefit balance of purchasing their product versus competitors, as many consumers are becoming more interested in being ‘green’ (Meyer, 2001). Environmental concerns are rising; however, many people feel as though they cannot personally contribute to improving the environment (Martin & Shouten, 2012). H&M focus on educating its consumers by using a combination of their marketing and sustainability strategies, as many people are currently unaware of the company’s activities or how they could personally act sustainably. For H&M, a multinational corporation that operates in many countries in the whole world, the local community is immense. That is why its CSR activities can be seen all over the globe. In the case of contributing to society and local communities, the corporation constantly seeks new ways to build a better place to live in. CSR considerations that are taken by the brand show the potential for further development towards socially responsible business and it is evident that it leads by example. As a result, for H&M being sustainable is a way to promote their responsibility to society and environment so as to gain the competitive advantage in market.


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