Marketing Study: Marks and Spencer - Essay Example

Marketing Case Study: Marks & Spencer Table of Contents Week Worksheet.....................................................................................................................2 Week 2 Worksheet.....................................................................................................................4 Week 3 Worksheet.................................................................................................................... 5 Week 4 Worksheet.....................................................................................................................7 Week 5 Worksheet.................................................................................................................... 9 Conclusion................................................................................................................................11 References................................................................................................................................13 Week 1 Worksheet 1.0 Changes in the Marketing Environment The marketing environment has become increasingly competitive, volatile, and risky. The threat of new entrants has been growing stronger over the years. Increasingly easier for new companies to venture into the market (Arora, 2013:19). The image below depicts the internal and external environment of M&S. M&S Internal and External Environment. Source: Stanford (2013:39). Market expansion and higher market fluidity encourage small-scale retailing (Arora, 2013:23). Leading firms are now confronted by more aggressive retailers. New retailers offer variety and affordability (Choi, 2014:31). M&S’s market share was cemented prior to the sprouting of foreign and online competition. It was inevitable that M&S would be subjected to competitive pressure at one point (Ruddick, 2014:1). The company has opted to refocus its brand by targeting high-end consumers (Ruddick, 2014:1). The threat of substitute products, the bargaining power of suppliers, and the bargaining power of customers have also favoured new competition (Choi, 2014:34). 2.0 The Next Three Years The market will be even more dynamic, competitive, and risky. A better legal and regulatory environment will increase competition. This will dilute the “luxury” dimension associated with high-end retail. 3.0 Main Competitors and their Business Models Main competitors are Debenhams, Marks & Spencer, Next Plc, House of Fraser, John Lewis, Asda Plc, Tesco Plc (Stanford, 2013:48). Others include Burberry and other third party retailers like Harrods. Marketing models have become more intricate, comprehensive, and sophisticated (Dawson & Mukoyama, 2013:47). More competition and technologies. M&S versus Next Plc: Profit after Tax. Source: Schuh, et al. (2014:46). Internet marketing – more agile, flexible, and efficient marketing models (Dawson & Mukoyama, 2013:26). New inclination towards emerging markets – India, China, Brazil, etc. (Schuh, et al., 2014:94). 4.0 Primary PESTLE Factors Legal Political Social Economic Technological Environmental 5.0 Marketing Objectives Attain revenue growth of 20% annually for the next three years. Introduce 25 new products into the market within the next five years. Attain at least a 93% superior customer service rating per month. 6.0 Internal Resources of M&S Employees Financial strength Technical ability Sound organisational structure Dynamic and sustainable supply chain (Harrison & John, 2013:39). 7.0 Value for Customers Customers find value in high-quality products that represent the things they stand for. Customers also buy products that are manufactured in the right conditions without violating any ethical principles (Harrison & John, 2013:43). 8.0 Research Topics Supply chain management. Industrial design and development. Market analysis. 9.0 So what does this mean for M&S? Long-term growth plan. Aggressive marketing. Lower operating costs. Target emerging markets. Consolidate UK market share. Week 2 Worksheet 1.0 Target Market Revise target market. Build brand loyalty and stabilise market share (Housden, 2013:24). 18-45; 50-70 – the most important population segments. Target markets influenced by product portfolio (Housden, 2013:18). 18 to 45 – like fancy and fashionable products (Menthula, 2013:37). M&S Market Territory. Source: Menthula (2013:37). Youthful consumers still in touch with latest trends and developments. Younger consumers spend spontaneously (Jackson, 2014:34). For youthful consumers, status and exclusivity are important. Older consumers are more loyal to the brand (Gassen, 2014:106). Older consumers have a strong attachment to the brand (Kaplinsky, 2013:45). Older consumers are conscious spenders, unlike their youthful counterparts. Older consumers are more predictable (Gassen, 2014:19). Older shoppers value reliability, stability, and consistency more than trends and innovations (Kitchen, 2013:57). They might buy the same type of shirts, ties, suits, and sweaters without caring whether new designs have been introduced or other competitors are offering better prices (Kitchen, 2013:63). Marks & Spencer’s customer base is highly diverse. There are smaller, niche customer bases that have specific needs that they would like to be met (Wrigley & Lowe, 2014:25). Younger consumers perceive M&S as a unique brand but keep an eye out for other brands that may offer better products, pricing, or services. According to Ahmed (2014:1), M&S is not explicit on whether it is confronting new entrants like New Look and Primark, which target younger, extremely price-conscious consumers, or John Lewis. M&S seems to have discovered that its average customer is over fifty, not eighteen. 2.0 So what does this mean for M&S? Older consumers are the future. Emerging markets offer more opportunities. Better marketing – more consumers. Better product development. Week 3 Worksheet 1.0 M&S’s Consumer Engagement M&S interfaces with both prospective and existing customers in different ways. Prospective Consumers Social media platforms. Marketing campaigns. Lowering emissions and waste. Corporate social responsibility (CSR). Actual Consumers Social media platforms. Efficient supply chains. Marketing. Design and ambiance of stores. Quality after-sales services. 2.0 Communication Strands All communication strands carry a common message: the quality and rich history of the company’s products. Marks & Spencer was founded in 1884 and is older than most of its rivals (Rayner, 2013:28). Rich history equals a stable marketing platform related to its understanding of the market (Le Bon, 2014:32). 3.0 Key Brand Values Highest quality service at the best possible value throughout. Customers are the priority at all times, and this is clear in all features of its services (Rayner, 2013:16). Customers view the company as unique, progressive, and highly innovative (Rayner, 2013:17). Marks & Spencer – original, distinctly British brand that has stood the test of time. Having been founded in the late 19th century, Britons consider the company to be one of their last true iconic brands (Post, 2012:68). Superior and unique products are another key brand value (Pettigrew, 2014:42). 4.0 Relevance of the Brand Values Marks & Spencer’s brand values apply to both the internal and external markets. This is shown by the fact that the company is an international brand, not just a British brand (Post, 2012:37). The M&S brand is known from London to Mumbai. M&S’s internal market (the United Kingdom) is just as important as its external (global) market (Pettigrew, 2014:45). Although it sells more products abroad than locally, the UK market is its core segment. 5.0 Enhancing the Company’s Perceived Value M&S can improve its customer service. It can provide superior services at both points of sale, and in other virtual platforms. Creating better customer engagement by interacting with its customers as much as possible (Nihalani, 2011:49). Engaging customers on platforms like Facebook and Twitter (Nihalani, 2011:51). The company can employ differentiation models that separate the company from its competitors (Umemura & Fujioka, 2012:24). Intensify differentiation to remain unique to its current and potential customers (Umemura & Fujioka, 2012:26). M&S Business Divisions. Source: Verma (2012:29) 6.0 Alternative Strapline “The Iconic British Retailer.” This slogan would resonate with the company’s rich history, market understanding, and quality products and services. 7.0 So what does this mean for M&S? Better marketing slogan. Better communication. Better provision of value. Dynamic customer engagement. Week 4 Worksheet 1.0 Brand Development M&S should avoid trying to maintain its market position by providing various products to different people. It should reposition its brand by focusing on upmarket clientele (Verma, 2012:32). This new strategic direction is also obvious by the knowledge that the company is not creating any additional clothing space. The company has been shutting down outlets (Verma, 2012:35). In the six months leading to September 27th, 2014, the company shut down six outlets in Britain (Ward, 2011:84). In addition, the number of upmarket outlets reduced from 232 to 239 (Verma, 2012:37). Recent developments are not entirely negative (Verma, 2012:47). It is good to reflect on a famous phrase in retail about sales resembling “vanity” and profits equating to “sanity.” If M&S wants some reassurance it can look no further than the food services. Its food retail segment is an example of a venture whose success has been accelerated by integration, differentiation, and diversification (Tresidder, 2010:479). Marks & Spencer is considerably outmatching the traditional hypermarkets in terms of profits and sales (Kennedy, 2014:62). Vertical integration has proven to be very effective in other companies with similar business models, especially M&S’s close competitor, Next Plc. The senior management at Next concentrates on stockholder profits over like-for-like sales (Kumar, 2013:13). As a matter of fact, Next Plc never even reports like-for-like-sales (Kumar, 2013:15). While Marks & Spencer has been performing admirably for the last five years, it still needs to improve its overall strategic effectiveness. Decisions on supply chain and brand positioning ought to increase sales and profit margins. The firm should increase the portion of products developed in-house to 25 percent, and supply clothing to outlets more consistently. This should increase its presence in stores and launch new fashion lines more regularly (Zademach, 2013:27). In spite of this, while others have a positive outlook of M&S, other critics are not sure that the company is doing well in terms of strategy or its implementation. Some critics think that the company’s results are not the watershed moment that it is indicating (Zademach, 2013:29). Some financial analysts and industry insiders have stated that there must be an improvement in seasonal fashion lines. The demographic, branding, and age characteristics of the consumers being targeted is still vague (Hubbard, 2013:53). Continued declines in Marks & Spencer’s clothing sales will increase calls for the CEO to resign and let someone more capable lead the company (Szmigin & Piacentini, 2014:68). Although slow seasons like autumn and winter have seriously curtailed sales, there are root issues that are making the company’s fortunes suffer (Szmigin & Piacentini, 2014:73). M&S Share Price per Pence. Source: Yahoo Finance. 2.0 So what does this mean for M&S? Sustainable brand development. Enhanced brand loyalty. Better product development. Brand re-evaluation. Increased investment in key markets. Sensitivity to customer service. Week 5 Worksheet Task 1 1.0 Positioning M&S has one of the best positioning strategies in the global retail market. Its positioning statement involves identifying with its target market and differentiating itself from other rivals (Gassen, 2014:28). The positioning of M&S has not changed in the last 12 months, mainly because the company does not need to revise it in order to enable the achievement of its strategic goals (Szmigin & Piacentini, 2014:51). A positioning statement that embodies M&S today would be: “Marks & Spencer is an esteemed British retailer that has been operating for the last 131 years. With a wealth of experience, a good organisational structure, and excellent understanding of the local and international markets, the company seeks to provide superior products and services to its customers in all parts of the world.” This positioning statement is likely to remain the same in 12 months’ time. Constant revision of the positioning statement, even before consumers identify with it, is a strategic mistake (Atwal & Bryson, 2014:41). Revision would deny customers in emerging markets time to keep up with modifications (Atwal & Bryson, 2014:43). 2.0 Relevance of Positioning Statement to Target Audience The positioning statement created above fits with the target audience and works for all (Jones & George, 2013:18). It is not exclusive to certain markets, such that a different version of the statement is required for each target market. The statement resonates with young people and is rich enough to capture the attention of old customers who have been loyal to the brand for decades (Connor, 2013:45). M&S Positioning versus Rivals. Source: Connor (2013:53). 3.0 Value of Plan A Plan A is extremely valuable to consumers and the brand perception. It provides consumers with an initial impression of the company and allows them to connect within the shortest time possible (Connor, 2013:46). According to Grayson (2011:1023), M&S has positioned sustainability with main strategy. Senior management is implementing the strategy, which is supervised by the board. The company has implemented Plan A with quantifiable goals, timelines and responsibilities. The plan is being incorporated into all M&S business functions and strategic units. It includes workers, suppliers, and consumers. Plan A also compliments the brand perception. Plan A fosters brand loyalty (Jones & George, 2013:27). Performance of M&S Business Divisions. Source: Choi (2014:16). 4.0 Positioning Map for M&S Source: Akehurst & Alexander (2013:23). 5.0 Tasks 2 and 3 Closing stores is not the only option to rebuild confidence in the financial markets. Closing would affect the store’s positioning in the eyes of customers (Jones & George, 2013:36). Customers have already gotten used to a brand that is progressive, dynamic, but also very stable in that it is here for the long haul (Jones & George, 2013:41). Customers have developed an inclination to believe that they can rely on M&S to meet their needs now and in the future (Akehurst & Alexander, 2013:23). If the company decides to start closing brands, it is likely to lose its new customers. It is better to close foreign stores than local outlets. The most loyal customers are likely to stay with the company (Akehurst & Alexander, 2013:28). The closing of stores in foreign markets like China seems to be a strategic move that could benefit M&S in the long term. The company can redefine its Asian operations so that they conform to its strategic vision (Armstrong, 2015:1). Retaining the flagship store in China has ensured that it can stay in touch with upmarket Chinese consumers. According to the Centre for Brand Analysis, M&S has dropped out of the list of the top 20 consumer brands in the United Kingdom (Todd, 2015:1). This is the first time since 2009 that the company has not been ranked. Closing stores would lower the wage bill but reduce the firm’s market presence. M&S 2013 Financial Performance. Source: Bloomberg. 6.0So what does this mean for M&S? Improve brand positioning to rival competitors. Target younger consumers. Understand regulations in foreign markets. Build better supply chains. More product variety. More promotional campaigns – discounts, etc. Conclusion: So what does this mean for M&S? Reposition itself and develop a more aggressive marketing strategy. The UK retail market has become more liberalised and opened the door for new entrants and substitute products. Competition is also becoming more intense, especially from budget retailers that are eating into M&S’s market share (Umemura & Fujioka, 2012:48). M&S’s has struggled to adapt to the rapid evolution of the market. The best growth strategy would be for the company to consolidate the UK market – its core customer b(Umemura & Fujioka, 2012:53). Use emerging markets to expand global presence. Markets like China have an expanding middle class that M&S can attract and use as a launchpad for venturing into other Asian markets (Jones & George, 2013:83). The UK market needs to be supplemented by foreign markets (Southern Europe, Africa) that support high growth and sustainability. Re-evaluate the market to determine whether or not it needs to target other consumer categories (Jones & George, 2013:85). Since its establishment, M&S has always targeted the middle and upper classes that seek exclusivity and brand loyalty (Akehurst & Alexander, 2013:107). Consider targeting price-conscious customers to expand influence. References Ahmed, K. (2014, November 4), Fixing Marks & Spencer, viewed March 20, 2015, from . Akehurst, G. & Alexander, N. (Eds.). (2013) The internationalisation of retailing, London, Routledge. Armstrong, A. (2015, March 2) Marks & Spencer to close five China stores as it reshapes Asian strategy, viewed March 20, 2015, from . Arora, A. (2013) International business realisms globalising locally responsive and internationally connected business disciplines (Illustrated ed.), New York, Palgrave Macmillan. Atwal, G. & Bryson, D. (Eds.). (2014) Luxury brands in emerging markets (Illustrated ed.), London, Palgrave Macmillan. Choi, T. (2014) Fashion retail supply chain management a systems optimisation approach, Boca Raton, FL, CRC Press, Taylor and Francis. Connor, T. 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(2013) Alternative economies and spaces new perspectives for a sustainable economy (S. Hillebrand, Ed.), Bielefeld, Transcript Verlag. Read More