Past market failure and present development of Marks and Spencer in internationalization - Essay Example

? Business Dissertation Contents Contents 2 5 Introduction of the whole conclusion 3 5 1 Objective 3 5 2 Objective 2 4 5 3 Objective 3 5 5.2 Contribution 6 5.3 Recommendation and further development 6 5.4 Further research 7 Reference List 9 5.1 Introduction of the whole conclusion This is the conclusion of Marks and Spencer in the situation of past market failure and present development in internationalisation. Marks and Spencer is among the top retail chain of outlets providing a variety of products and services. However, many of its strategies in international market have been unsuccessful. In the conclusion, few specific joint ventures of Marks and Spencer and its results have been discussed. The objective is to find out the reason behind these joint venture strategies and their consequences. Further the conclusion talks about the various marketing and management strategies implemented by the retail chain in order to gain market share and growth. With the understanding of the past and present management strategies of Marks and Spencer, few recommendations have been provided for further growth and development. Few of the topics with scope of further research have also been suggested. 5.1.1 Objective 1 Most of the marketing strategies implemented by the retail chain were in terms of pricing and promotion. The target market segments also varied in different regions. For example, in China the retail chain’s initial target were the affluent class. But later as a result of the falling sales the company changed its marketing strategy and started targeting youngsters and newly established professionals. The company initially failed to attract young consumers as their clothing range were perceived to be old fashioned and for older customers. In order to solve this issue, the company established a complete new range of clothing and fashion taking cue from the fashion and lifestyle followed by young Chinese customers. The company also changed its pricing strategy in china as most of the consumers felt that the products were overpriced (Morris, 2008). Marketing strategies of M&S in UK were mainly focused into retail clothing, as the company gained majority of its sales from clothing section. In order to increase the popularity of food department in UK, the retail chain introduced local food items which were famous and popular in the country. The promotional strategies in UK were not successful as the company was implementing strategies which were old fashioned and outdated. Instead, the company decided on using celebrity endorsement strategies using big celebrities such as Elizabeth Jagger, Twiggy, Danii Minogue, Laura Bailey etc, to target UK customers (Hackley, 2009). Looking at the present promotional strategies, the company thought that celebrity endorsement will be the best strategy for creating positive brand equity. Since most of the products of the retail chain are perceived to be of high quality and sourced in an ethical manner, the pricing strategy for grocery products has been placed above average (Alon, 2006). The target management strategy which M&S has been following is to be in line with luxury brands such as John Lewis, Bhs, Debenhams and Next. However, apparel pricing is lower than rest of the brands as the retail chain wants its products to be affordable (Kotabe and Helsen, 2001). Distribution strategies are planned so that products are able to reach target customers through the most efficient channel. Most of the distribution channels are backed by wholesalers, retailers, online sales, forwarding and customs clearing agent, sales executives from the company etc (Zhao, Niu and Castillo, 2010). The objective is to increase the overall customer reach. Therefore location has been the key priority for M&S while establishing its base in any foreign country. In most of the foreign countries, M&S have chosen those geographical locations which are near to the major trading areas as well as attract local customers from the surroundings (Fernie, 1992). Most of the company stores are located around the centre of the city. The major reason behind this strategy is the most of the target customers of the retail chain live within the city (Hallbauer, 2008). 5.1.2 Objective 2 M&S have been using international joint ventures for strategic alliance with international partners. The company has been partnering with local companies in order to share knowledge and resource and to get mutual benefits. However while entering into a joint venture; organization must have sufficient knowledge about the foreign country’s economic, political and social culture. In case of M&S a clear understanding of the foreign country’s retail environment is must. Though M&S have been successful in most of the countries, there were few of the regions were the retail chain could not establish its brand fully. Getting clearances from public bodies as well as the government was another major roadblock during joint ventures. However in regions where M&S was successful, it was able to create a positive brand image as it acquired goodwill and trust from consumers who were associated with the local brand (Wang, et al., 2012). In order to enter the UK market, M&S established a joint venture with BP. This venture helped the retail chain to successfully establish its base in UK market. Multiple food offerings became a huge hit, where M&S was providing fresh fruits, coffee products, groceries and ready to eat snacks. The company did not change its brand name in this market unlike in USA and Far East, where M&S had to use local names and local brand image due to the lost market opportunities. 5.1.3 Objective 3 Mass marketing was one of the major management strategy followed by Marks and Spencer overall. The objective was to target majority of consumers and promote innovation in the production process and cut cost at each production unit. In order to match with the fast pace of business and growing consumer demand, the company also engaged in online sales and collaborated with various e-commerce companies to sell stocks online. Online marketing successfully increased the sales and profit of the retail chain in time. Additionally, the company implemented various other strategies such as discounts, freebies and festive offers in order to attract customers. The management strategies of M&S food products in China were targeted at the middle class consumers. M&S realised that there was a growing popularity towards British food products. In order to utilise this opportunity, the retail chain introduced a series of food products such as readymade frozen curries, porridge oats, cod fillets or frozen salmon etc. Meat and salmon product suppliers importing from Britain had concerns of being copied or replicated, resulting in loss of sales. M&S came to the rescue by providing better distribution and increasing overall import of food products. Corporate social responsibility and waste management have always been included in the various management strategies implemented by M&S. Recycling strategy, where customers can bring their old housing products and get new products for a significant discount has been a hit. It also helped the retail chain to create a positive brand image. 5.2 Contribution The aim of the current research was to throw light on the past market failures of Marks and Spencer and critically evaluate the present development of the retail chain in internationalization. The research used extensive literature review study as well as primary research in order to contribute into this project. The literature review covered various marketing and management strategies followed by the retail chain. The extensive literature review helped in understanding the loopholes and blind strategies followed by the retail chain which led to its failure in many international locations. The literature review also helped in understanding the various joint venture strategies followed by the company and the basic reason behind using those strategies. The study also helped in making a framework for future development and recommendations for further market expansion. The primary research was mainly conducted to find out the perception and knowledge of consumers about Marks and Spencer. Additionally, the research also helped in evaluating the perception of customers while purchasing from the retail chain. The major contribution of the primary study was to find out the customer segment and demographic profile of customers actually visiting the store and percentage of customers actually buying products from the store. 5.3 Recommendation and further development Even though Marks and Spencer has been able to retain its position as a pioneer in retail products, it is no surprise that the company needs new strategies, media channels and distribution plans in order to establish itself as the most preferred one-stop retail store. New formats of the model retail will have to be developed in order to revive its positioning in the international market. Marks and Spencer has always been known for its knowledge of exact customer demands. They have always been a customer friendly organisation. Thus the first step for the retail chain will be to retain this place. In order to do this the company will have to arrange a comprehensive data base of customers in the country where the company has established its base. This can be achieved through a number of sources such as national geo-demographics, panels specialising in industry details such as fashion and national lifestyle lists. The company can also use details from its active accounts which are more than 4 million in number as of now. Once the company gets sufficient information from the database, the next target will be to attract these customers. In order to do this customer can be divided into specific target segments according to age, demographics, gender and lifestyle etc. For example, to target women the company can hire local product designers who will be responsible for designing popular and largely accepted clothing range. The company can also cross-merchandise various ranges and spread offers across various relevant channels. Point of sale displays and advertisements can also be created in order to attract this specific segment. Customer feedback is another strategy which can be very helpful in making effective marketing and management strategies (Keller, 2001). Internal research and observation can reveal a lot of interesting facts. For example, more than half of the children’s wear from Marks and Spencer are bought by the female segment especially mothers. Thus, specific marketing strategies can be implemented in order to woo these segments. In-store marketing is another aspect where the company can gain an opportunity of sales and profit. Survey research and market data is the most suitable way to find out the exact requirements of the customers entering the store. Re-engaging customers with the internal activities of the store is the best way to gain trust and loyalty as well as repeat purchase (Broyles, et al., 2011). Identification of the need of the customer can be the key to close the sale. Maslow’s hierarchy of needs states that a customer goes through various stages of need before making final purchase. If the marketer is able to understand the exact need stage of the customer, then it will be much easier to make appropriate marketing strategies (McColl and Moore, 2011). It has been found that customers are attracted to Marks and Spencer because of an emotional connection. Thus in order to capture the market segment, the retail chain will have to utilise the emotional connect. This can be done by making appropriate advertisements, outdoor marketing and social media marketing with the objective of emotional connect (Park, MacInnis and Priester, 2006). 5.4 Further research The present study was limited to information regarding marketing and management strategies of Marks and Spencer in foreign markets. Further studies can be done in order to find out the success rate in new emerging economies. New countries can be taken on the basis of political, environmental stability and demographic suitability and pilot studies can be established. This will help in understanding the perception of local consumers. Further research can also be conducted in the field of ethics and CSR. Many analysts have argued that CSR is increasingly becoming an important factor in influencing the overall brand image as well as brand equity of a company. Consumers are becoming more aware and concerned about the environment. Companies expect to gain goodwill and positive brand image through CSR activities. Thus, present development of the company in CSR department and its future strategies can be an interesting topic for further research. Reference List Alon, I., 2006. Service franchising: A global perspective. New York: Springer Publications. Broyles, S.A., Ross, R.H., Davis, D. and Leingpibul, T., 2011. Customers' comparative loyalty to retail and manufacturer brands. Journal of Product & Brand Management, 20(3), pp. 205 - 215. Fernie, J., 1992. Distribution Strategies of European Retailers. European Journal of Marketing, 26(8/9), pp. 35 - 47. Hackley, C., 2009. Advertising and promotion: An integrated marketing communications approach, SAGE Publications. Hallbauer, S., 2008. Retail marketing and new retail idea – Marks and Spencer. Munchen: GRIN Verlag Keller, K.L., 2001. Building customer-based brand equity. Marketing Management, 10(2), pp. 14-21. Kotabe, M. and Helsen, K., 2001. 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