Marks and Spencer Food Retails Sector - Assignment Example

Executive Summary Marks and Spencer has been regarded as one of the most recognisable brand s in the world. In UK, the company has the reputation of being "the most trusted retailer." These exemplary remarks given to Marks and Spencer are only part of the big picture. Indeed, the desire of the company to become the leader in the industry has transformed the organisation differently. Also, the intense competition has threatened Marks and Spencer's position in the market. Several firms concentrating on food retail have also improved in all aspects of their operations. Primarily, the focus of this discussion is centred on the marketing initiatives of the company. At present, it is unclear whether Marks and Spencer has an established market. Also, it is evident that the products of the firm are still far from establishing a permanent image in the minds of the consumers. It is important to segment the market and decide a particular group that will serve as the target market. Moreover, the marketing team needs to reconcile the attributes of products perceived to be ideal by the consumers and the attributes of the products as developed by the company. The other marketing initiatives necessitate the identification of the price, promotion, product, and place. Mixing these aspects will improve the marketing strategies of the company. It is imperative that Marks and Spencer needs to take advantage of its strengths and limit the negative effects of its weaknesses. Marketing ideas have to be done using creativity with the inclination to use the fundamental tools and concepts. UK Food Retail Industry The growth in the UK food retail industry has been unprecedented. Amidst the geographical limitations, UK houses several food retail firms with global distinction. Excluded from this group are the different food retail companies based from the US and the neighbouring European countries. According to the British Retail Consortium (2001), the impact of the food retail industry in the overall economy of UK has been gaining prominence. The figures suggest that the industry has been employing 1.2 million individuals. This translates to more than 5% of the total workforce in UK. Also, the industry is consisted of approximately 60,000 enterprises. Overall, the industry has contributed about 10% of the Gross Domestic Product. Aside from these actual results, the industry continues to flourish with the establishment of policies geared toward competition and favourable market conditions. The sophisticated UK retail market shows variations to styles in relation to the development of products. Despite the failures of some innovations, firms have been optimistic in introducing new products in the market. In particular, food retailers have cited their strengths in marketing as the source of competitiveness. Indeed, the marketing efforts observed in most food retail companies have provided positive outcomes. In particular, firms have become highly focused on the consumers instead of satisfying the corporate goals. The marketing strategies promoted by the firms have become the determinant of success. It is likely that food retail companies with superior marketing dynamics will emerge as the top player in the industry. In UK, the developments in food production have greatly affected food retailers. Specifically, the changing preference of consumers has defined the direction taken by food retail companies. Recent trends suggest that products that are fruit flavoured will become highly popular in UK. Likewise, UK consumers will be highly receptive to food products with distinct yet uncommon combination of flavours. Moreover, functional foods will be highly regarded in the market as well as food that contain low carbohydrates. Basically, UK consumers have become more aware of their food intake because of the hazards attributed to such activity. Health issues and concerns are primary drivers that influence consumers in purchasing certain food products. In the beverage sector, beer manufacturers will continue to challenge the wine manufacturers in UK. The packaging of the beverages will serve as an important attribute (Moore, 2004). The UK food retail industry continues to evolve yet most products in the market are advertised to provide similar benefits. For instance, healthy products appear to be different on paper, but the benefits attributed from different brands are proven to be similar. Competition in the market calls for innovative measures that extend beyond product development. Most new products fail because the marketing initiatives are inadequate and at some point ineffective. It is hard to convince the consumers that a certain food products are superior without the proper marketing strategies. Several UK food retailers have recognised the need to be one step ahead in terms of marketing mechanisms used. Making a difference in industry entails an understanding of the most complicated entity which is the consumers. The current improvements in the UK food retail industry in relation to marketing have been aligned with technology. Although traditional marketing tools such as branding are still extensively used, focus on the employing technology has increased. This is evident in the use of the Internet as an avenue for product advertisement. The usual promotional activities involve television commercials and posters. Because of technology reaching more consumers, some firms have resorted to creating websites to gain more market access. Marketing through technology allows food retail firms to reduce their spending on television and print advertisements. Also, the method is effectively embracing different market components. Aside from the specific target markets, firms are enabled by technology to expose their food products to other consumers who can derive benefits from the goods. Since technology has been mentioned, its effects on the production of food and marketing are highly regarded. Also, it is imminent that technology will continue to improve the industry. Food retailers in UK value the role of competition in their growth. Holistically, UK food retailers have been continuously focusing on two important aspects of their operations. First, funds are sufficiently allocated to the research and development group for product enhancements. More important, food retailers have realised that concentrating on marketing creates better reputation and long-term consumer relationships. Credibility in the industry is a critical element that food retailers have to develop. More than just quality, it entails intelligent and strategic marketing to achieve such goal. It is challenge posed to food retailers in this new era. SWOT Analysis Hussey (1999) defined SWOT analysis as the scrutiny of the strengths, weaknesses, opportunities, and threats of an organisation. This serves as an assessment of the firm's current market position. Essentially, the current success of Mark and Spencer has been attributed to its strengths. The company can enumerate several of these positive facets. The most notable strengths, however, are noticeable it's the branding strategies and store design. Marks and Spencer has been a brand with huge consumer following. The company's famous tagline illustrates that the product is not just food; it is Mark and Spencer food. At first glance, consumers are instantly provided with impressions that the food Mark and Spencer sells is of great quality. Another source of competitive edge for the company is its renovated stores. These modernised shops have successfully attracted several customers. Basically, the aesthetic view has become a luring sight for food shoppers. Aside from the strengths, there are weaknesses of Marks Spencer that has to be discussed. First, its traditional approach has made the food sector a subsidiary instead of being one of the main products. It is hard to deny that Marks and Spencer is still known for its clothing lines. Its traditional image has deprived the consumers from being exposed to the company's food products. Also, Morton (2005) stated that Marks and Spencer has no definite target markets. Although its products are easily identified by age groups, the economic bracketing appears to be uncertain. Specific consumer targets allow the company to effectively establish its marketing plan. In UK, food consumption still occupies most of the budget that households have. Resources are adequately allocated by consumers for the purpose of complying with the daily food requirements. Because of the growing demand for food, Marks and Spencer is provided with new markets to explore. This trend will continue to develop in an immense phase. Moreover, the improvements in technology and globalisation also provide opportunities for the company. It has to be noted that Marks and Spencer operates globally and its food retail chain reaches other locations. The opening of foreign markets allows the company to establish its reputation in varying methods. Also, the firm will be able to study different markets and will further enhance their marketing capacities. Finally, the current trends in the UK food retail industry are favourable for Marks and Spencer. The industry is a vital economic contributor and policies have become highly supportive to the industries. Among the threats, Marks and Spencer considers the growing level of competition as the toughest. Aside from the local based food retailers, foreign firms have also entered the UK markets. This makes the task of controlling huge market shares challenging. Because of the competition, the company has increased its efforts in improving quality and promoting the food being distributed. Also, competition threatens to take away its current position as the market leader. Finally, market uncertainties are indeed threat to all industries. The movement of market aspects are relevant to the success of the company. Once the market conditions become highly unpredictable, targets will be distorted and goals will be changed. Resource Analysis In viewing the resources of the company, it is important to determine the assets that Marks and Spencer have at present. Although the data only provides consolidated assets, it is sufficient to define the capacity of the company to improve its performance. Overall, the assets of the company are higher than the total liabilities. The net assets of the company have increased from 2005 to 2006. This shows that the company continues to acquire resources that are vital for the company. The figures may its entirety, but the impact in the food retail sector is expected to be felt. One significant observation that can be made is that the company has wide range of quality food sources. This is in references to the responsible food sourcing that the company adopts. The supplies of the company are considered as one of its valuable resources. Because of its outstanding food production materials, the quality of the finished products has improved. Boosting the food with the finest inputs allow the company to effectively satisfy the needs of the consumers. Subsequently, the quality sources also make the company more cost-effective. Another important resource of the company is its identity. This is established through the brand name of Marks and Spencer. Despite some criticisms, the brand has the gained the distinction of being the most trusted retailer in UK. Over the years, the brand name has been embraced in different areas of the world. The credibility of the company is one of its intangible resources that deserved to be recognised. Moreover, Marks and Spencer greatly depend on its employees for positive results. Indeed, the performance of the workers will influence the success of the firm. Marks and Spencer boasts a workforce loaded with competency and talent. The hiring system of the company ensures that the best are selected at the end of the process. Also, the company provides comprehensive training programs to continuously equip the employees with the skills needed in the industry. Definitely, Marks and Spencer manages the growth of the employees and enhances the overall capacity of the workers to be contributors and difference makers. Among the physical resources of the company, the stores are regarded as one of the finest. The stores of Marks and Spencer are uniquely designed and created to capture the imagination of the customers. Unlike conventional food stores, the stores of the company are enough to persuade consumers. The company emphasises of proper location which makes the stores effective. The success of the stores is credited on the ability of the firm to match substance and form. It is important to instil in the minds of the consumers that more than quality food, buying at Marks and Spencer stores is a wonderful experience. Lastly, the franchises that the company has established worldwide has helped the company is establishing global market presence. The franchises represent Marks and Spencer overseas and such resource has provided huge dividends. Several investors in other countries have noticed the increased attention given to the food products of Marks and Spencer. Eventually, this will translate to better opportunities in the future. Competitive Marketing Strategies Indeed, Marks and Spencer is provided with several sources where competitive advantage can be derived. In particular, some of its marketing attributes can lead the company to unprecedented success. The company has to start from the basics before making complicated strategies. This entails the analysis of current environments where the marketing strategies will work. Also, the company needs to use marketing tools that will allow the effective use of its resources to make the marketing initiatives easier to manifest. Overall, there has to be a clear direction as to the marketing strategy for the company. First, the competency of the company is taken from the expertise of the employees. Specifically, its marketing personnel have been considered as the best in the industry. Second, the company has developed a database for its customers. Databases are marketing mechanisms that have extensively used by several prominent companies. Basically, the database allows the company to track its customers including the movements of consumers in and out the firm. This serves as the gauge that determines the performance of Marks and Spencer in gaining more customers. Aside from these advantages, there are characteristics that the company can use to fuel its marketing strategies. Marketing techniques such as segmentation and targeting will further specify the marketing needs of the firm. Holistically, competitive strategy in relation to marketing comes with a complete understanding of the general concepts and procedurally use different marketing mechanisms using quality instruments. Market Segmentation As discussed earlier, the market concentration of Marks and Spencer is viewed in a general approach. Because of the nature of its food products, the most logical method of market segmentation is by age. Based on the reports, the food retailed by Marks and Spencer are classified as healthy. Basically, identifying the health requirements of each age group bodes well for the company. Aging is an important aspect that has to be considered in product advertisements. It is hard to sell products without classifying the right group that will benefit the food. In segmenting the market, the company has to determine the proper bracketing of consumer groups. Normally, individuals who are in their later years will require food distributed by Marks and Spencer. Healthy living is important nowadays and focusing on individuals above the age of 40 will provide great benefits. Identifying the older consumer groups will allow the company to maintain its strategy of selling healthy food. Aside from the older customers, there is a possibility that the market will be expanded to other age groups that are highly concerned with healthy eating. Another method of segmenting the market is to categorise the consumers into their economic status. Usually social classes are determined by the income earned in a given time. By concentrating on the market that has the capacity to pay for the food sold by the company, Marks and Spencer will avoid overspending on marketing initiatives that are designed to attract the general market instead of specific groups. Market Targeting Selecting target consumers is manifested after the entire market has been segmented. Preferably, the company will target consumers that are aged 40 years old and above. Healthy foods are generally recommended for individuals who are within and beyond the mentioned age. In UK, majority of the consumers in this age bracket have started taking healthy foods. In order to maintain their robust health, these individuals have to ensure living healthy lives. It was also observed that the population of UK has been aging. This means that the demand will continue to increase even after saturating the market into groups. Another target group that the company can focus are customers who value healthy food. Because of the inevitable rise of health hazards, the best way to reduce the risk of getting sick is to eat healthy food. Health groups are possible consumers that the company can target. Aside from their growing number, social groups easily influence their members to patronise products. More important, social health groups are also capable of driving non-members to buy Marks and Spencer foods. Their role as initiators in the market will be beneficial in the long run for the firm. Finally, another market segment worth targeting is the group young professionals. The demand in the professional world is damaging to health. Thus, professionals have to maintain their physical wellness through quality food. Given this demand, Marks and Spencer can start focusing on this group. Eventually, specific targeting will specify the demand for the products and will enable the company to formulate particular marketing strategies. Market Positioning In theory, positioning refers to the perceptions developed in the minds of the target market. Basically, it entails the creation of image of the brand and the entire organisation (Trout and Rivkin, 1996). As expected, positioning is purely procedural and relies on the completion of stages before making further improvements. First, the company has to define its target market. It was earlier determined that the company will target consumers belonging to the 40 years old and above bracket and health conscious individuals. Second, Marks and Spencer has to emphasise the attributes of the food, which is healthy option. The company needs to analyse the perception of the consumers on other products focusing on the attributes. Then, the mind share of the food products has to be established such that when a group of consumers purchase healthy foods, the customers will ask for Marks and Spencer instead of the specific food. It is also imperative to ascertain the location of the company in the product space. After this, the ideal preference of the target consumers has to be identified and compared with the attributes of the product. Finally, the company can develop the product that will fit both the capacity of the company and customer satisfaction. To further enhance the position, the company has the option to provide perceptual mapping. Marks and Spencer food products has to concentrate attributes that will likely appeal to the consumers. This includes the taste, affordability, health benefits, and availability. Basically, the Marks and Spencer has to balance the products according to target markets (see appendix B). Marketing Objectives Despite of Marks and Spencer's success, its food retail section still needs to raise its performance. Given the potentials and the company's reputation, the strategies needed are extensively focused on the marketing initiatives. It is evident that the quality of food and the attributes are well regarded by the consumers. Using the techniques discussed earlier, there are several strategic possibilities that can be developed for the firm. Also, the company needs to concentrate on the importance of balancing its strengths and the possible risks that are likely inevitable in the food retail industry. In segmenting its market, Marks and Spencer has to consider all possible criteria before establishing the groupings. Among the social and economic indicators, age, income, and social affiliations come to mind. It is important for the marketing personnel to identify the age groups that will likely be convinced to buy Marks and Spencer food. The income of consumers is also necessary since it will be useless to promote the products to customers that are financially incapable of making purchases. Social affiliations need to be considered since some attributes of the firms foods conform to the preference of such groups. Choosing the target markets presents another strategy for the company. Unlike before, Marks and Spencer has to shift its focus on specific groups of market. After segmenting the possible consumers, the marketing team needs to identify the priorities. Since the food products of the firm remain the same, the company has to underline consumers in the 40 years old ad above bracket, health groups, and young professionals as the likely target markets. Building an image among the consumers has some tweaks and intricacies. Marks and Spencer food products, however, have sufficient attributes to overcome the difficulties. Since the company has different target markets, building a general image will be highly complicated. Each segment has some expectations that the products have to fulfil. The varying preference will serve as a critical challenge for the firm. Older customers will be likely inclined to buy food that is both tasty and healthy. Health groups value food that provide supreme health benefits and readily available. Lastly, young professionals will prefer food that can be easily afforded, but is considered as healthy. Given this information, the marketing team has to draw a perceptual map to illustrate the best possible position for the company. It is crucial for the Marks and Spencer to identify the right combination of attributes to please all the target markets. In this process, the position of the product becomes more defined as an attribute is highlighted. Preferably for the company, the product has to be dominated by health benefits. Moreover, the taste has to be maintained without gaining additional cost that will increase selling price. The availability of the product can become an issue only when sales skyrocket. Furthermore, the company needs to enhance its online promotional activities. The company has a website packed with all the products. The company needs to continue its online advertisements to extend the identity of the products to other markets. Also, the Internet allows customers to easily gain information on the food products retailed by Marks and Spencer. That knowledge is important in building positive perceptions of the products. Marketing Mix Combining the different aspects associated to marketing is vital to the company. The development of marketing mix entails strategies that are design to ensure consistency in the quality of performance (Culliton, 1948). The first aspect that has to be considered is the price of the product. Despite the high quality of inputs used by the company, the price of the foods has been competitive. Still, the company has to devise better strategies to reach the lower echelon of the society. That means increase in demand and the possibility of extending the market beyond the current targets. Promotional activities have to continue using all the options available. Television is an effective media and providing print advertisements is highly recommended. Most important, the company has to focus its promotional initiatives on the extensive use of the Internet. Aside from being cost-effective, the strategy has worked for most firms in the industry. Moreover, the product needs to reflect the credibility and reputation of Marks and Spencer. It has to satisfy the ideal preference of the consumers and be produced within the capacity of the firm. Lastly, the place where the products are sold has to portray a magnetic personality that pulls the customers. The location needs to be perfect and the products have to be easily viewed. Overall, the combination of all the suggestions will improve the performance of the food retail sector. Considering all the aspects will enable the marketing crew to draw the actual picture and determine the areas classified as possible risks. Budgetary Requirements The marketing department will require a boost in budget allocated by the organisation. In this process, marketing for the food retail sector is handled separately. The budget needed for the marketing activities is allocated among three basic areas. These include market research, advertisement, and promotions. In conducting market research, the marketing team will require funds to support the undertaking of surveys and data analysis. Acquisition of the survey instruments and mechanisms will serve as the primary sources of expenses for this section. Expenses for advertisements cover most of the budget allocated for marketing. Marks and Spencer is highly dependent of the advertising agencies it contracted for this matter. The company, however, has to provide inputs on matters that will improve the advertisements. The firm also needs to provide funds for the airing of the advertisements on televisions and even radios. Advertisements done using newspapers and other prints need to reflect the essence of Marks and Spencer food products. The advertisements in the website need to be easily viewed and accessed. (Drummond and Ensor, 2001) The final part that takes a piece of the budget pie is the promotion. The traditional methods include freebies, discounts, and free samples. Other successful promotional schemes include prizes and coupons. These are possible tools that the company can use. Also, the idea of getting the customers' money back when dissatisfied with the food is highly used. It is important for the company to get the most out these impending expenditures. References British Retail Consortium. (2001). Policies and Issues. "Food policy." London: BRC. Culliton, J. (1948). The Management of Marketing Cost. Boston: Harvard University - Graduate School of Business Administration. Drummond, G and Ensor, J. (2001). Strategic Marketing Planning and Control. London: Butterworth-Heinemann Ltd. Hussey, R. (1999). A Dictionary of Accounting. "SWOT analysis." Oxford: Oxford University Press. Moore, L. (2004). Business Insights. "Future innovations in the food and drinks to 2006." Morton, J. (2005). The Edinburgh Academy. "The marketing problems with Marks and Spencer." Trout, J. and Rivkin, S. (1996). The New Positioning: The Latest on the World's Number 1 Business Strategy. New York: McGraw Hill. Appendices A. Food Sector Performance Total sales increased by 7% to 3.6 billion British Pounds More than 200 new products added to stores Increased of sales in foreign operations Establishment of new store in Europe and other parts B. Perceptual Mapping Health Benefits Availability Taste Affordability Older Consumers - Young Professionals - Health Groups - Strategic Position - C. Market Grouping 1. Age 12 years old and below 13-21 years old 22-39 years old 40-55 years old 55 years old and above 2. Income Non-earners Low earners Middle earners High-middle earners High earners D. Budget Distribution Read More