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Marks and Spencer Market Failings Essay

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This report outlines the market failings of Marks and Spencer in the 1990’s, why it happened and how they managed to come out of it. This factor will be compared to today’s successful company along with its new strategies and tactics to keep the business successful. Using online resources within the report will show that the research is up to date more so than using books which don’t keep up in time to the fast moving technology and changes to the fashion industry.

This report will also show how the company has monitored the market to identify new trends, changing market sectors, how they keep up with the customers increasing expectations and most of all, how they out rise their competitors. It is a leading online and high street fashion retailer. It also has a significant food business which operates standalone M&S Simply Food stores. The company has also extended its brand into the financial market with M&S money. (Rosie Baker, Marks and Spencer. Marketing Week. Online. November 27 2012) Marks and Spencer Fashion Market Sector and Competitors

The retailer offers a variety of sectors to keep up with their competition. They offer clothing, food, home, financial and online services so that they can attract a variety of customers and offering more within the company helps them to overcome their competitors. * Marks and Spencer is within the top 6 UK retailers, operating over 300 stores within the UK and 29 different countries. This means that they are very successful and they are constantly improving their services to keep on top of the competition. (Marks and Spencer, The Company. Marks and Spencer. Online.

November 25 2012) * Their general competition can be identified as: smaller high street retail shops, other department stores, furniture shops and supermarkets. (Marketing Retail Assignment. Business teacher. Online. November 25 2012) * Comparing 2012 with the 90’s, Marks and Spencer used to place its stores, located in very close proximity with outlets which are in entirely different sectors of the retail industry. This was so they could attract customers who also shop at different retail stores, including supermarkets and drug stores. (Gary Akehurst, Nicholas Alexander, G. A, N. A, 1995. Retail Marketing . 1st ed. London: Routledge. * In 2004, Marks and Spencer’s quickly recognised that they didn’t respond quickly enough to there competition and consumer needs. The company’s main competitors are John Lewis, Debenhams and Next; all three of these retailers are as big as Marks and Spencer and they all target the same type of customers. * As the new CEO Stuart Rose stepped in, he quickly recognised the decline within the customer relationships. This was due to confusion and disappointment because they were not fulfilling their needs and desires. The competition became a struggle as more retailers were offering luxury brands and the same prices as M&S.

Retailers including Tesco and T K Maxx were also offering basic clothing at lower prices. (David Bobby (2007). Management: An Introduction. 4th. ed. London: Pearson Education. ) * The customer’s desires and needs are becoming increasingly more demanding. When the store was first opened by Michael Marks, the type of customers targeted were working class people on low incomes. This shows that society is now changing through a conservative way because now the customers are middle class who are on a medium salary. (Chislett, H. C, 2009. Marks in Time: 125 years of Marks and Spencer. 1st ed. Oxford: W&N. * In 2004, Marks and Spencer came up with a number of strategies to keep up with their competitors and improve the service’s they have to offer. They came up with fresh ideas for the women’s and men’s clothing range and included other improvements such as : (Marks and Spencer press release, 2004)

* Marks and Spencer’s main competition within the fashion market sector would be Debenhams. Debenhams state that they are Britain’s favourite department store. However, Debenhams actually fall behind Marks and Spencer due to their international expansion; they only operate in Britain, Republic of Ireland and 15 other countries. Debenhams Annual Review 2004) * In 1999, whilst M&S was having a hard time with the decline in sales, Debenhams wanted to take away the market share of the company so they started focusing on working women. In this year, Debenhams increased its share of the UK lingerie market, previously an M&S staple, from 3. 75% to 4. 8%. Marks and Spencer had to fight back the competitor so In 2000, the company introduced its first designer menswear collection within 5 stores in the UK. (Wendy Lomax, Adam Raman, W. L, A. R, 2012. Analysis and Evaluation 2007–2008 CIM coursebook. 1st ed. London: Routledge.

* Debenhams main focus is the domestic market and their strategy for international growth is only for franchise which doesn’t help towards overcoming Marks and Spencer and other competitors. (Debenhams, ‘About Debenhams’. Online. November 25 2012) * Another competitor of Marks and Spencer is Primark which has been recently proven with their percentage rise. On 7th November, whilst M&S reported a sharp decline, Primark reported that its sales rose 15%. Now Primark’s annual revenue has now cleared £3. 5bn for the first time which is more than double of what they were five years ago. The rise of Primark with its low-costing which illustrates the changing face of the British high streets and the competition Marks and Spencer faces, particularly in womenswear. (Graham Ruddick, ‘M&S kitted out to fight new wave of rivals’. The Telegraph. Online. November 27 2012) Proposed Future Strategies

* Improving the management team by giving all staff initial training to the new roles which must be undertaken within the company. * Store refurbishment to give the company a new look which will improve the attractiveness of the stores thus more customers coming into them. Opening ‘simply food’ stores to make their special food more available; the food within the company is really popular so opening standalone stores will give them more sales and will meet the customer’s requirements. Re-branding their financial offer by coming up with new plans for the customers which would benefit them more than the old offers. (Marks and Spencer Annual Report 2004) * The ‘Dine In’ campaign they introduced has proved a winning response to the competition of other food stores including Asda and Sainsbury’s. This response has helped to increase their volume of sales. (Y, T.

Y, 2012. Strategic Analysis of Marks and Spencer (M&S) Group. The Write Pass Journal, 1, 4. ) Current Targeting and Positioning along side Market Segments Marks and Spencer’s current targeting and positioning within the market has been clearly identified in the annual 2012 report. The chairman stated “our executive team has driven forward our business plans with consistency and pace. The strategy, set out by Marc Bolland in November 2010, withstood the test. Despite the challenging market conditions that have put on-going pressure on our customer’s budgets, we all agreed on our course”. They took a risk by taking on Marc Bolland seeing as he has a food background. He must incorporate what he knows about retailing food into the large company of clothing, make up and accessories. * In the tough market, M&S have made clears progress within the market sector and sales are up 2%. The result demonstrates a good performance against the strategic goals. * The company now plans to deliver sustainable growth to become an international, multi-channel retailer. They plan to do this with all their new plans, including ‘Plan A’. They invested £800m so they could get to grips with new technology which is used by customers.

They are hoping this will be a big success for the company. (Marks and Spencer Annual Report 2012) * The company has now hired the chief creative officer of Victoria’s secret to be the new director of lingerie and beauty. Annette Browne, who was the womenswear director, is now leaving M&S with immediate effect. (Graham Ruddick, ‘Marks and Spencer profits fall 10pc’, online, The Telegraph, November 27 2012) The market segmentation is very important within any company because they need to decide what kind of the customers they want to target, also including age and gender.

The market segmentation concept is related to product differentiation, so whatever the company is aiming at, they will adapt to different variations to satisfy those segments which they are offering. * For example, the Per Una range within Marks and Spencer targets the young female shopper. This is so the company can have a variety of customers who are attracted to the brands and styles. * To attract customers, companies use celebrity endorsements within their campaigns and adverts. Marks and Spencer have used Myleene Klass, Dannii Minogue and Twiggy for a number of adverts.

However, for their recent campaign in autumn 2012 they swapped these celebrities for models who better represent their customers. * The new M&S models range in age from 20 to 57 and in size from 8 to 16. This is because Marks and Spencer now want to target a wider variety of customers for their clothing. * In Autumn 2012 they launched Rosie Huntington-Whiteley’s lingerie collection and it is already the best selling in history; This is because the customers obviously look up to her and want to be here, therefore buying her lingerie will make people feel closer to being her.

The range is so successful because her range offers a variety of styles and sizes so the consumers will always be able to find something they like and also that fits them. (Liz Jones, ‘First look: M&S unveils its autumn TV as campaign featuring grey hair and curves and gets glowing review from our expert Liz Jones’. Daily Mail. Online. November 27 2012) * Marks and Spencer generally target people who have a number of factors: over 55, professional, women, middle class, nuclear families and people who want to buy everyday products rather than looking for something special. (Wendy Lomax, Adam Raman, W. L, A. R, 2005.

Service Franchising: A Global Perspective. 1st ed. London: Routledge. ) * The company also generally targets people who live in the inner cities because M&S has a good variety of products which people need in their everyday lives. This includes clothing, food and appliances. * The competitors in today’s marketplace are now using the model of a ‘shop within a shop’. Supermarkets have started introducing ‘high quality’ food ranges such as Sainsbury’s with ‘Taste the Difference’ and even inexpensive ranges of clothes with ‘Designer labels’. Asda has introduced ‘George at Asda’. (Y, T. Y, 2012. Strategic Analysis of Marks and Spencer (M&S) Group.

The Write Pass Journal, 1, 4. November 27 2012) Marketing Mix at M&S Failure and Comeback of Marks and Spencer 1990’s * It is really important for any company to follow the Marketing Mix if they want to be successful. When they first opened, Marks and Spencer started off using one scheme by offering exceptional value for money which was developed in the late nineteenth century by Michael Marks. He sold a range of low priced goods on market stalls with the advertising slogan ‘Don’t ask the price, it’s a penny’. In 1915, when his son Simon and his partner took over the business, they continued to use the same scheme.

Simon quickly recognised in the 1930’s that the customers needs were never static as he described successful retailing as involving ‘constant alertness and study of the changing habits, desires and tastes of the consumer. * When the company expanded overseas in the 90’s, the company began to lose tough with their key customer groups. By the late 1990’s the mainstream customers, women over 35 years expected fashion as well as value for money. Slowly from then, the company’s brands began to lose appeal as fresh, new designer labels became widely available. The company had to start refocusing on the customers and what they want.

The new chairman Luc Vandervelde overturned Marks and Spencer decided to introduce new brands and ranges such as ‘The Limited Collection’ and ‘Salon Rose’ Lingerie. Up until Vandervelde was replaced by Start Rose, the company was slowly returning the business to its ‘core values of Quality, Value, Service, Innovation and Trust’. * This shows how important it is for a company to adapt to the changes of the consumers and how they can use Marketing Mix to keep on top of the vast evolving societies. (Stokes, D. S, 2008. Marketing: A Brief Introduction. 1st ed. Kingston : Cengage Learning.

November 27 2012) M&S Marketing Mix 2012 * Product- They ensure that they use brand names that are appealing to the customers. The products need to be advertised at a high standard otherwise people will not want to buy them. * Price- They products at M&S vary in price. They tend to be fairly cheap and affordable. This is a good factor because but their clothes are all produced with quality fabrics, where as some customers may think the products are not good quality if they are cheap. The company tends to offer good discounted prices at times where people may be short on money. Place- The stores are placed in busy city centres and the stores are set out certain ways to invite people in. The ladies fashion is placed in the store where it is easy to locate. The clothing is split into different sections, such as work wear, lingerie and evening wear. M&S is clever when it comes to placing their products within the stores. Because the food section is so popular they may put it at the back so that customers will walk though the store and find other items to purchase. * Promotion- The 2012 Christmas campaign is to invite customers into the shops to buy Christmas presents.

The campaign shows their most loved ranges such as cosy knitwear and stylish party outfits. The campaign uses M&S greatest hits including ‘I need you tonight’ ‘Celebration’ and ‘Have yourself a very Merry Christmas’. The tracks make the customers happy whilst watching the advert from the up beat tunes. (Nikki, 2012. Marketing Mix on M&S. News and Media, 1, 20. November 27 2012) * People- The type of people M&S use within their company are Graduates, Designers and high management. The designers must have knowledge of the brand so that they can aim at the targeted consumers.

The management team is also very aware of the customer relationship and the specifications that they want. * Process- The process options for the customers are very useful because M&S offers more than one type of payment, returns and the customers can also order a product they want to the store for picking up. This process is really successful because customers appreciate that they can order a product which is out of stock. If a product is out of stock, the customers also have a choice of going to a store where it is in stock. * Physical Evidence- The Company is always very committed on making the stores look good.

They think about the store layout and how they can invite people into the shops. Visual Merchandising is very important for the company because customers want to be able to be invited in from seeing something spectacular. The store windows must look good otherwise they consumers will walk past and not notice what the store offers. M&S SWOT Analysis What is SWOT? The meaning for SWOT is: Strengths, Weaknesses, Opportunities and Threats of a company. This method is used to analyse these factors to find out their current position within the industry and see what they can improve on.

SWOT analysis is an effective way for M&S to plan because it takes into account the external business environment as well as the internal. Strengths * Reputation/Brand * Market position * Provides quality products * Allows for online shopping * Multiple payment options for customers. | Weaknesses * Slow to change * Lack of newness * Clothing: does not really reflect younger women’s taste | Opportunities * Keep renewing their womenswear range * Better defined target age group (currently, it is not clear: older or younger women? ) * Stores refurbishment: provide a more upbeat look. Use of good CRM systems that can help them keep track of customers’ demands. | Threats * Loss of market share as a result of intense competition – Food sector markets due to supermarkets such as Sainsburys, Tesco and Asda. * Competition from other large departments stores such as John Lewis and Debenhams. | Conclusion In Conclusion Marks and Spencer is a successful company. It obeys the government policies and it protects the natural environment. Moreover, M&S is influenced by factors such as technological, economical and social to make sure the business strategies are up to date with the fast moving societies.

The company from start to present has created a good, long-term relationship with the customers and the suppliers and continues to focus on what the customers want. It is important for the company to satisfy the customers and therefore, building up customer loyalty. Unfortunately for Marks and Spencer, they have a lack of clothing market segmentation which causes them to loose its brand awareness among the existing customers. This is because they are following their main strategy of creating new potential customers within a lower age bracket and maintaining their existing customers.

To sum up, the analysis of M&S shows that they have main focus to follow the trends of society so that they keep in position in the market, increasing potential market share and keeping on top of their competitors. M&S SWOT Analysis. 2012. [ONLINE] Available at: http://irishseagull. tripod. com/msswotanalysis/. [Accessed 29 November 2012]. . References Books (Chislett, H. C, 2009. Marks in Time: 125 years of Marks and Spencer. 1st ed. Oxford: W&N. ) (David Bobby (2007). Management: An Introduction. 4th. ed. London: Pearson Education. (Gary Akehurst, Nicholas Alexander, G. A, N. A, 1995. Retail Marketing . 1st ed. London: Routledge. ) (Stokes, D. S, 2008. Marketing: A Brief Introduction. 1st ed. Kingston : Cengage Learning) (Wendy Lomax, Adam Raman, W. L, A. R, 2012. Analysis and Evaluation 2007–2008 CIM coursebook. 1st ed. London: Routledge. ) (Wendy Lomax, Adam Raman, W. L, A. R, 2005. Service Franchising: A Global Perspective. 1st ed. London: Routledge. ) Journals (Nikki, 2012. Marketing Mix on M&S. News and Media, 1, 2. ) (Y, T. Y, 2012. Strategic Analysis of Marks and Spencer (M&S) Group.

The Write Pass Journal, 1, 4. ) Reports (Debenhams Annual Review 2004) (Marks and Spencer Annual Report 2004) Online Websites Debenhams’, Marks and Spencer’s and Allders’ Marketing | Business Teacher. 2012. [ONLINE] Available at: http://www. businessteacher. org. uk/free-marketing-essays/marketing-retail-assignment/. [Accessed 25 November 2012]. Debenhams: About Debenhams. 2012. [ONLINE] Available at: http://www. debenhams. com/about-debenhams. [Accessed 25 November 2012]. First look: M;S unveils its autumn TV ad campaign featuring grey hair and curves … nd gets a glowing review from our fashion expert Liz Jones | Mail Online. 2012. [ONLINE] Available at: http://www. dailymail. co. uk/femail/article-2198545/First-look-M-S-unveils-autumn-TV-ad-campaign-featuring-grey-hair-curves—gets-glowing-review-fashion-expert-Liz-Jones. html. [Accessed 27 November 2012] Marks and Spencer, the company – Marks and Spencer. 2012. [ONLINE] Available at: www. marksandspencer. com/thecompany. [Accessed 25 November 2012]. Marks and Spencer Annual Report. 2004. . [ONLINE] Available at: http://corporate. marksandspencer. com/documents/publications/2004/2004_annual_