Marketing plan of Marks and Spencer - Assignment Example

Table of Contents Table of Contents Introduction 2 Marks and Spencer- Overview 2 Company Products 2 Corporate Strategy - Growth, Decline and Revamp 3 PEST Analysis 4 SWOT Analysis 6 Market Analysis 7 Target market 8 Marketing - The four P's 9 Product 10 Pricing 10 Place 12 Promotion 12 Conclusion and Recommendations 13 Sources 16 Marks and Spencer Introduction Marks and Spencer- Overview Marks & Spencer is a well-known name in the retail world. It was a high street retail chain that came into being in 1894 and became a listed company in 1926. Marks and Spencer is one of the largest retailers in the United Kingdom, and has a hard earned reputation of being extremely qualitative as far as its products are concerned. Customer confidence in the Marks and Spencer brand remains second to none. According to recent research undertaken by the Company, it shows that, in clothing, Mark and Spencer has a clear lead over all its major competitors in the key areas of fit, quality, trust, breadth of range and customer service. Company Products The group's merchandise includes clothes, household goods and food sales, with their clothing line contributing half the revenues. It has also diversified into financial services that include accounts cards, pensions, loans, and life assurance and contributes about 5% of its total revenues. Marks and Spencer divides its operation as UK retail, International retail and financial services. The UK Retail division is its major chunk of the business and contributes the most to the turnover. It sells Women's wear, Men's wear, Lingerie, Children's wear, Beauty products, Household goods, and groceries. The International Retail business prevailed from Europe to North America to the Far East a well. The Financial services division offers personal insurance, personal loans and store cards. Corporate Strategy - Growth, Decline and Revamp Until the late 1990's Marks & Spencer was largely successful and recorded highest profit growth in the years, 1997 and 1998. In 2000, Marks and Spencer launched lingerie outlets in Paris, Hamburg and Dusseldorf that met with considerable success. It is a leading seller of lingerie in the UK with a 20% market share. However, Marks and Spencer had a slump, plagued by external and internal problems. Marks and Spencer business model was to maintain UK sourcing for its products, ensuring a perceived high value for the customer. Consequently when competitive retailers sourced from low cost Asian suppliers, Marks & Spencer found its core business model a great liability and it had to succumb to the trend. Product quality deteriorated and customer dissatisfaction caused it to lose a lot of its base. It also was faring badly in the International arena, due to its lack of direct control on its franchises. At the same time, it also ignored employee feedback and was a bureaucratic company. This reflected it being unaware to changing trends and fell way behind on delivering the customer on their needs. In 2001, the company sold off loss making stores, decentralized operations and catered to customer preferences. It sourced from low cost suppliers but put it quality control measures. By 2003, Marks & Spencer rebounded and had recovered its financial health. Sales increased and the company had increased its market share. Although on its growth path again, the company has lost considerable market share. It needs a sound marketing plan, to scale the heights of its former glory. Source from website < http://en.wikipedia.org/wiki/Marks_&_Spencer> PEST Analysis Political: The political government is stable conditions are stable and there are no major legislations that affect the operational capabilities. Environmental concerns are increasing and these may bring legislations that may enforce stricter control that may affect the stores in the long term. Advent of other legislations like minimum wage changes, labelling, licensing etc. may affect operation in the long term. Economical: The European Union and the Euro may contribute to better purchasing power without currency conversion issues especially online. A major economic downturn or recession will discourage consumers from purchases especially clothing and luxury items that will impact the bottom line. Increasing oil barrel costs that triggers gas price increases will increase transportation and utility costs impact the cost structure and cause changes in the pricing policies. Social: Social causes would include increased mobility of the people who are now willing to travel more to realize a bargain. The people have more choices now and therefore customer loyalty is no longer a guaranteed entity. Wider geographical areas dedicated to shopping add pressure to the storeowner to bring the customer in to make a purchase. Increase in GDP has put more disposable incomes in the pockets of the consumers and increase in leisure time has allowed the customer to shop in multiple locations before making a purchase. At the same time, more income allows more premium brands and higher end of the market to benefit. Concerns on the environment and harmful interventions due to business activities, may create and enhance value when the concerned business entity is going "green" in its activities. Technological: Technology in the form of increased efficiencies, in machinery, better supply chain logistics and Internet online shopping has brought in rapid changes. The Internet explosion has made people more aware of trends and styles available worldwide and free shipping and online shopping has widened the shopping arena across geographical boundaries. Hence, this may be a concern for the Marks & Spencer if they lose customers to online sites. Innovation of newer clothing materials may trigger a need so that customers patronise a store that introduces it first. SWOT Analysis Strengths: Marks & Spencer's greatest strength is the goodwill it has built painstakingly over the year for its quality products. The company has worked hard to rebound from losing market share in 1990s, and has earned its image once again. Its premium outlets were bought at a nominal price and these have now become highly valued real estate pieces. It has good relationship with its traditional target customers and has now completely tuned in to their needs. It maintains an efficient supply chain and is on good terms with its suppliers who are required to have an ISO 9000 certification, in order to maintain quality. It has a wide range of products and fresh produces for which it's well known. It sells its own clothing brand that gives it better control over quality and price. It has enormously improved customer service by motivating employees. Weakness: Its main weakness will be the target segment. It has a bureaucratic and mature image of the store that deters other audience. It scope for expansion is not much since it has already extended itself to a vast degree. It has a track record of not responding to changes quickly enough, and it needs to take care that it does not do that in the constantly evolving clothing market. It uses visible advertising only sparingly and banks on more its old established image of a post-war retailer. Opportunities: E-commerce may be the next best thing happening. With the growing Internet user increases, online shopping presents great opportunity undeterred by geographical boundaries. The European Union and a single currency are beneficial for investors and purchases as well. Threats: Lack of targeted customer marketing would definitely be a threat since the customer needs to perceive the store has the right to be on her list of shopping locales. The high number of existing and new entrants as competitors who could range from low-end chains to global players is detrimental too. Aggressive cost cutting or loss leaders initiated by them may spell disaster for the company. Stock price falling would result in loss of faith in the company by stakeholders and customers and it has to be monitored. Market Analysis Marks and Spencer's is active in both the food and the clothing sector and has a brand value in both the sectors. The clothing market is a very competitive and varied from low cost casual wear to high fashion clothes and trendy boutiques. With the advent of sourcing to low cost of suppliers and technological advances that has led to improved efficiencies in better machinery, the number of players has phenomenally increased especially with the supermarkets joining the fray, and therefore the margins in this industry are moderate. The clothing retailers may sell their own brand, or sell sourced from others or may be just smaller independent operators. Most of the turnover is often in the mid-priced segment. But recessive economies do prompt people to cut down on purchases. The advantage of the food market is that even in a recession while people cut out on the luxuries, food always remains a basic necessity. Supermarkets are sustained by their food sales that keep growing every year. Non-essential food items have been garnering sales as well in the supermarkets. With more people opting for frozen ready to eat meals as well as prepared meals on the go, these sectors have been doing well too. Marks & Spencer's core business is aligned to both of the above markets and overall mixed goods market is both mature, saturated and margins are moderate. Acquiring and maintaining market share is difficult and has to be constantly monitored and energetically kept varied and updated to respond to changing dynamics. Applying Porter's five forces, the increase in competition due to the increase in the number of players, both competitors in food sector alone or in clothing as well, instils a need to keep the prices competitive, keep the innovation going and create promotions and sales to increase sales. The buyer is highly powered by his purchasing power and myriad options and no switching costs. New local entrants bring the added pressure of increased supply to existing demand, but their barrier of entry is made difficult by lack of scale and volumes. International chains like Gap Inc. are greater threats due to their scale. The threat of substitution is always high because of changing needs of the consumers who may be attracted to a newer product or food item that is available instead of the one they are looking for. Therefore, firms will constantly be in absolute earnest to outsell each other using any lucrative means as possible. Target market Market segmentation is the process of dividing a market into a distinct group of buyers that require different products or marketing mixes. This in turn allows the firm to target a particular market segment to offer a product or service, which utilises its resources, cost effectively and satisfies a group of consumer's common needs. Segmentation may be based on demographics, (which is by age, class, sex, education etc), geographic (by region, country etc) or psychographics (lifestyle, personality) or frequency of usage. Marks and Spencer have been catering to a variety of customers across many different customers with diverse tastes and needs mostly based on age and geographic segmentations. Its target audience has been mostly middle-aged women and above and sales have been mostly from the above 40+ years segment, whose emphasis is more on quality than fashion with a sensible cut and style. The 60+ seniors though are looking more for comfort at a reasonable price, because again their retirement incomes are moderate. With its long established history as a "post-war" retailer it is unable to bring in the other target segments of 20+ to 40 years because people are unable to identify with the store due to its image. It has been steadily losing market share due to its constrained focus. Statistically, the younger generation invest in fashions and styles more frequently than the current target segment it is catering to. Therefore Marks & Spencer in the future has to target younger consumers to the rival high street retail fashion boutiques offering great discounts. Marketing - The four P's A marketing plan is a general term used to describe the overall plan for marketing a brand, which outlines goals and objectives for the brand, and how to reach the consumers. Let us now discuss the current scenario of Marks and Spencer and analyse what it can do to move forward in the 4P's of marketing. Product The product is often used to cater to the mass market or the niche market. Marks and Spencer caters to the mass market. This makes its very susceptible to growing needs and changes. The rising consumer expectation is a key driver of change. The definition of fashion keeps constantly evolving. Traditional fashions are infused with newer trends and colours to cater seasonally. Fashion has become a life style concept that allows expression of the individual needs all within a limited budget. Marks and Spencer carries products for all the ranges, but its products have a dowdy image that it not able to shake off. Teenagers shy away because of the assumption that if their parents shop there it's not fashionable enough for them. Customer-focused products and rapid fashion reaction will help M&S keep the leading position in the UK clothing retail market. Bringing in designers for the youth lines and designing clothes along the lines favoured younger celebrity trend will serve to attract. On the food side, its product freshness and price are good, and its banquet meals and frozen entres have a strong selling feature. In keeping with the latest high nutritional low calorie trends, foods without additives and preservatives, low sodium and low calorie meals and other ethnic foods catering to the diverse population will be beneficial. Pricing In the food sector, it has been credited with brand value, and therefore it mainly competes with Tesco, (that has a turnover of 34billion and is diversified and extended itself), Sainsbury (that is an established player like Marks and Spencer and has a brand image) compete as a premium brand and Asda with a 11% market share, but is considered a low cost competitor. In the grocery department, eventually scale and volumes dictate survival, but a multitude of strong players keep the prices on a downward spiral to maintain competitiveness and presence. Therefore, the marketing plan in terms of price will be a constant price comparison with the vendors to maintain market share. In the clothing sector, Marks and Spencer is perceived more as a "premium" brand rather than a low cost one, basically because of the higher perceived value for its products in the consumer's eyes. Its pricing is generally in the mid-priced segment where the most turnover is. The middle-aged target segment is more quality conscious and is willing to pay a higher price for Marks and Spencer products due to its established better quality image. But the younger segment though, their emphasis is more on the price rather than the quality, since their purchasing power is lesser than the other middle aged segment. With styles constantly evolving, frequency of purchases is more because the youthful crowd keeps up with the changing trends. Therefore, Marks and Spencer, will be able to command a slightly higher price for the mid-aged consumer that its younger consumer. This will be necessary to bring back the younger consumers who are now attracted to its major competitors like British Home Stores, Gap Inc. and Next plc. High street local boutiques also offer better discounts. However, the volumes due to frequent purchase will compensate this. Place Marks and Spencer has its outlets in premium locations that is an enormous benefit. Also, its stores have a wide range of products that enable consumers to meet all their shopping needs from grocery to clothing to household articles at " one stop shop" which is a tangible advantage. However, its stores need to be renovated and their ambience improved giving it a new and fresh look. The aisles and point of displays should be made more accessible and attractive and the dcor more tuned towards the audience it caters to. This will serve to infuse fresher synergies for its products. Promotion However great the product or competitive the price, the consumer needs to know that such a product exists to make a purchase. Promotion involves communicating the existence, features and benefits of a product to new or potential customers directly. Promotion creates awareness, retention of product, instil desire to purchase that ultimately culminates into a purchase. Marks and Spencer has traditionally used more print advertising, but rather sparingly. With the globalisation and explosion to the immense amount of information, advertising and promotional campaigns have to really geared up to announce visibility. A promotional mix of print, electronic media and sales campaigns will be advised. Commercial slots in the midst of popular TV programs enjoyed by the target segment both young audiences and mid age segment, as well as seasonal advertising through events and games, print advertisements in the magazines popular among the target segment will help. Involvement as sponsors non-profit organizations and academic events will enhance its image. Promotional sales campaigns in stores with early bird discounts and door prizes for every 1000th customer between given dates etc will generate interest. Overall, promotional campaigns serve to create visibility and renewed interest and bring the customer to the store, and this differentiation in a saturated and mature market is indispensable. Conclusion and Recommendations The future strategies of Marks and Spencer should be towards gaining market share operating in a highly competitive and dynamic environment. It needs to exploit its current strengths and its core competences like brand name and image to bring in new customers. As a company, internally having decentralized its management, it needs to keep close tabs on its operational processes. Taking care of its employees well, for which Marks & Spencer is well known is critical. Making sure that employee feedback is obtained is crucial. This allows Marks and Spencer a finger on the customer's pulse and aware of changing needs. It should treat each store as a cost centre and customize it to cater to the demographics and operating geographic area. Sourcing suppliers who add cost benefits without compromising on quality will aid in keeping the costs low. Marks & Spencer needs to be constantly aware and evolve with the times. In its business model, competitive pricing, quality control and products that cater to current needs will be the way to go. It should conduct periodic market research to find out what customers really want. To improve its image and revamp its image projection to the public it can start with some store improvements. The stores should be airy, bright and clutter-free with broad aisles and piped gentle music, which makes shopping a pleasure. The food and clothing divisions should be segregated to improve focus to the consumer. It can add ambience to its stores and improve the shopping experience. Having a supervised "kids centre" while the caregiver shops will bring the shoppers in and leave them to shop peacefully and buy more. A lounge with a TV, caf and a reading corner for reluctant men shoppers and seniors wanting a rest will be a expression of caring for Marks and Spencer. In the food sector, Marks and Spencer has a very strong presence and a very high perceived value. Therefore, it needs to leverage on it. Recently, it has introduced highly nutritional meals for kids that are a great timely strategy. It can even niche market some diabetic meals, or low calorie frozen dinner that may vibe with today's health conscious choices people make. Once the customer orders online, it can also home deliver groceries at a nominal cost that will be welcomed by the rushed working customers or seniors who need not be troubled to get to the store. In the clothing sector, its is faced with a few more challenges. Although it has a faithful customer base, it needs to focus on a wider range of customers to increase sales and figure out a way to bring younger consumers to the store. With so many stores competing differentiation is the key. While it has the solid customer base of middle-aged segments, enticing the young consumer is the challenge. Highly visible advertising campaigns proclaiming sales and promotions, linking young celebrities purchasing at Marks & Spencer will help rejuvenate its tired image to a trendy one and lure the younger segment to its stores. Having " free makeovers" for the younger customers who buy a stipulated amount of clothing, or a "buddy design expert" that help them put an outfit together for a special occasion will bring interest. At the same time it should take care to keep its current segment in place by targeted advertising. Its image as a family store with "fun fashions for the young and young at heart" and "quality merchandise for those who want the little extra" will appeal to all the segments and widen attention. Rewarding returning customers or high value purchases with discounts and points may be enhanced and spa vouchers and salon vouchers given to ensure customer loyalty. Online customers should be treated similarly since the overheads associated with an online purchase are way lesser than with a physical purchase. Therefore to accrue these benefits, online shopping must be promoted as well just like in the airline industry. It can also offer special occasion packages like" bridal packages " where the consumer gets a bulk discount for bulk purchases. It can look to do mail order shopping which is favoured a great deal by consumers hard pressed for time. Many companies worldwide are opting for "brick and click" serve where you can shop online and pickup at store saving time. Overall, Marks& Spencer has survived and proved its resilience. With the right product at the right price, supported by a sensible marketing plan, it will be able to achieve its objectives of staying ahead, remaining competitive and meeting customer demands. 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