USAs Failure Affected the Far East Failure - Case of Marks and Spencer - Essay Example

2.2 USA’s failure affected the Far East Failure By the year 1998, MARKS AND SPENCER had about 500 stores in over 30 nations with the retail gross receipts of almost £8bn. Also, the company owned Brooks Brothers and Kings Supermarkets in the United States (Burt, 2002). Brooks Brothers and Kings, a USA - based brand of clothing and food shopping, had experience in the USA market and thus helped Marks and Spencer’s entry into USA market. Even thus, eventually it did not take over Marks and Spencer as a competitive brand in North American market since it lacked a clear method of labelling and positioning of its products. It faced challenges in satisfying demands for customers; at the same time, a large number of competitors did not give Marks and Spencer a chance to sustain itself in the market (Sparks, 2005). Marks and Spencer kept the names of the USA chains after it bought Brooks Brothers and Kings Supermarket. It used Brooks Brothers’ chain to open a market in the Far East (Alon 2000, p. 8). Three years after selling the Brooks Brothers brand and Kings Super Markets (USA) businesses, Marks and Spencer turned the Hong Kong stores into franchises in a downgraded regional structure and closed the European funds since they were unprofitable (Burt, 2002). After successful entry into the USA market, Marks and Spencer did not alter their brand image, it still used the Kings supermarket and Brooks Brothers’ brand image to create the other marketplaces that the company could not affect its customers through the brand image. Brand image is vital in marketing literature and thus due to the competition, when the Marks and Spencer group sold the Brooks Brothers and Kings Supermarket in USA, it affected its market in the Far East. Marks and Spencer just took over without practicing the typical JV mode and the failure of Marks and Spencer in the USA affected its market in the Far East. 2.2.2 Successful cooperation with British Petroleum (BP) in UK BP signed an agreement with M&S in 2005 as a move to amend the service station experience. The procedure proved extremely successful and to date there are over 120 M&S Simply Food at BP Connect stores that sit alongside the BP’s Wild Bean Café and also gives Ultimate fuel offers (BP, 2013). Their stores supply a selected range of Marks and Spencer’s high quality fresh food products, which include ready meals, fresh produce, wine, sandwiches, flowers, and food marts. It is this combination of M&S Simply Food and a Wild Bean Café brand that offers customers a broad stretch to select between ‘food for new’ and ‘food for later’ and sets BP at a higher competitive advantage than other forecourt providers (BP, 2013). Although Marks and Spencer sells productions in the BP service station, it still utilizes its own trade name and to offer high quality nutrients. To compare the strategy of cooperating with other brands in the UK, USA and the Far East. Marks and Spencer in UK still use its own brand name in BP station, although, in the USA and Far East market it maintained the local brand’s names which, as a result led to Marks and Spencer loss of the opportunities after the failure to set a brand image in its internationalisation. 2.3 Marketing mix of Marks and Spencer Tunnel (2011), Sandhusen (2000), and Mercer (1996) explain that for an organization to become successful in a competitive business environment, it needs to define the marketing strategy in terms of the marketing mix, segmentation and the target market. Kotler et al. (2009) pointed out that organizations need to change the marketing mix including merchandise, price, position and promotion with reference to the situational perspective for them to gain competitive advantage. Kotler et al. (2009) also proved that making links between the implanting right marketing strategy and competitive advantage was successful as Michael Porter modelled it in his proposal (1980, 1985, and 1991). The concept of 4p’s includes the product, pricing, positioning and promotion and are all mixed together in an efficient manner to give effective results (Joshi, 2005). 2.3.1 Product: Ansoff matrix Ansoff matrix is applied in the position of the product in order to realize the importance of the product concept in selling.. Ansoff matrix (Source: Stone, 2001, p. 51) Ansoff matrix explains that companies develop product strategy due to four reasons. 1- To Increase market penetration by existing products in existing markets with an aim to diminish risk factors connected with introducing new markets. 2- To develop new products to the existing market in order to gain competitive advantage over competitors. 3- They use the product strategy to launch an existing product in new marketplaces in order achieve business growth in foreign shore without investing huge amounts of capital. 4- They use the product strategy to assist in launching new products in new marketplaces with the aim of creating brand awareness among customers. 2.3.2 Productions of Marks and Spencer in UK “Marks and Spencer lost its traditional focus in quality in the 1990’s and thus failed to innovate in the face of new competitions and production methods. Quality and style were subsequently re-founded, especially in M&S’s range of high-quality, indulgent foods” (Fisk 2009, p. 118). However, M&S has a marketplace share of 27.4% lingerie market in the UK. Also, the company has 12.1%, 10.4% and 6.8% share in the UK’s men’s wear, women’s wear and kids wear markets, respectively (Marks and Spencer Group plc, 2013). Therefore, the retails of clothing from Marks and Spencer occupied large share of the UK clothing industry. In the situation of food, the Food products developers define strategies for new products, and think of ways to make all the customers’ favourites better for the customer satisfaction (Marks and Spencer, 2013). Marks and Spencer in UK took care of the customer need better than it in other commonwealths. 2.3.3 Fashion line in China cannot catch in the UK and Hongkong In the situation of fashion, in the BBC news (2012), Marks and Spencer said that they would reassert their position as a leading and premium fashion retailer. And the Chief executive Marc Bolland said in 2013 "We want to be very clear that this is a step-by-step approach," he said. "The team will keep on improving. What is important is the direction, and I am real confident that the direction is in trend and quality." However, in The Telegraph (Justin, 2012), James Roy, a senior analyst at Shanghai-based China Market Research Group, said: "In China so far Marks & Spencers clothing lines have not been much of a divergence from what they offer in the UK or Hong Kong. The fashions are mostly the same, and this becomes an issue, since young Chinese consumers view their clothes as they are meant for the middle-aged men and adult females in their late 40s and 50s." Thus, in the area of fashion, Marks and Spencer have not yet launched the newest fashion clothing in the Chinese market. It needs to go through the fresh strategies of fashion in China. 2.3.3 The present evolution in the area of Food Daily Mail (2012) reported that The MARKS AND SPENCER manager for China branch, Stephen Rayfield, reported strong sales. The sales included sales of frozen salmon or cod fillets, ready-made frozen cherries, chocolate-chip cookies and porridge oats by the huge popularity among a new middle class in China families whose diets are getting more and more westernised.. According to Lance (2012) from H Forman & Sons, It will be an opportunity for Marks and Spencer to sell British food in Chinese market. Lance states that, in so many instances, the Chinese have acquired over our manufacturing floor, but with British food they cannot do that. He has been exporting smoked salmon in Hong Kong for the last 30 years and now wants to break into the mainland of China and at the same time he thinks that with the one hundred years of history – the Chinese cant imitate that. Thus, as Marks and Spencer are playing the role of the retailer in Chinese market, it plays an important role in attracting support from suppliers who produce British food in the UK, as well. 2.3Price of Marks and Spencer Macro environmental characteristics of the securitys industry help companies decide the price of products. In some cases, organizations may decide the price of products by enhancing brand image. As a result, when specifying the monetary value of the product, the company must understand perfectly its cost while taking into consideration the customer value perception for the product (Armstrong, Harker, Kotler, & Brennan, 2009). 2.3.1 Too expensive in China In normal situations companies will charge prices that fall within the one that is too high to produce a particular demand and the one that is too low to generate revenues (Armstrong, Harker, Kotler, & Brennan, 2009). In the Daily Mail (2009), it said that the Marks and Spencer in Shanghai, They came, they saw... and went away again, apparently discouraged by the idea of spending a month’s salary on a cashmere sweater or £4 for a small bag of pre-cooked rice. Equally the new Brand to entry in Chinese market, the products at Marks and Spencer is not worth to buy at that high price. The other object lesson would be the cashmere scarves that Marks and Spencer was selling or pretending to fail, as no one bought them, at £50 where it was possible to generate them for far less in the nearby stores (Moore, 2009). 2.3.2 Price strategies in UK According to Sinkovics and Ghauri (2009), Marks and Spencer management has priced their grocery products above average since they are perceived to be of high quality and ethically sourced. And Mathur (2010) informs that Marks and Spencer aims at positioning their clothing products along the same line with popular brands such as Next, John Lewis, Debenhams and Bhs, although, M&S clothing prices are lower than the prices of above mentioned brands. Morris (2008) states that, “M&S targets the middle 60 percent, to leave 20 percent at either end for others to pick up” (Morris, 2008, p. 23). 2.4 Place of Marks and Spencer Companies disseminate merchandise to clients by defining the distribution strategy for each society. System plan, distribution channel backed by retailers, wholesalers, online sales channel, c&f agents (Customs Clearing and Forwarding Agent), company sales executives etc., for the purposes of increasing customer reach of the warfare. So, the position is one of the key elements to a business success firstly due to of being the least compromising of the strategic retailing issues and secondly, because the position sets the geographical boundaries of the trading area from which the stock reaches its customers (William & Ferrell, 2010). 2.4.1 Wrong place in Shanghai Localization is a necessary, but it is not a sufficient condition for success of retailing, which Marks and Spencer Shanghai seemed to stumble at this first vault. In some ways, the well-established Golden-triangle might appear as a prime location, well-known for top section stores and luxury labels. It is a highly competitive battlefield that has claimed as a casualty the famous century-old Hong Xiang department store and allowed its original construction to a new tenant (Marks and Spencer). Nevertheless, for Marks and Spencer to try and tie up this elite club is an expensive endeavour. According to Xun (2009), the rich will give way to the Golden-triangle, in order to indulge themselves in luxuries. The middle and lower income shoppers hunt out their deals at the more domestic shopping malls and the supermarkets. And Xun (2009) also said for the fashion-minded and trendy-seeking youngsters Marks and Spencer is not as appealing as Zara and H&M. To take Marks and Spencer clothing, for instance, the young dont like it, and the middle-aged cant afford it and the wealthy simply wont shop it. In addition, choices for the young, the old, and the wealthy that are cheaper and more appealing are also lined on the same street. Thus, Marks and Spencer chose the wrong location in putting up a store in Shanghai. 2.4.2 Location in UK Marks and Spencer has maintained its presence in the UK high street and has also been pushed by the UK market to open up other stores in different locations within UK (Newman and Cullen, 2002, p. 63). Allon (2006), states that Marks and Spencer has aimed mainly at opening stores in busy town centres and also within the City. Haubauer (2008) has also contributed to the argument supporting the latter point of view, arguing that the rationale behind this conclusion referred to the lack of company target customers; people with above median income and those living in out-of-town locations. 2.5 Promotion of Marks and Spencer Companies use promotion strategies or integrated marketing communication strategy, backed by tools including direct marketing, sales promotion, advertising and public relation in order to promote the product brand. 2.5.1 Advertising failure in USA At that place is an article that would be re-examined with the topic as Marks and Spencer-waiting for the warrior: A case examination of the gendered nature of change management by Rippin in 2005. The article aimed at exploring the gendered narratives of change management at Marks and Spencer, which it would use as a lens for the consideration of the gendered nature of the change process. In Christmas of 2003, a television advertisement of a chronicle that is standardized as the story of Sleeping Beauty with Will Young, who is a famous "out" gay pop singer in the US. According to Frank in 1995, thinking with a story involves feeling it as affecting ones own spirit and seeing in that pretends a certain accuracy of ones life. Nevertheless, the story of Marks and Spencer was about Sleeping the Beauty might with the cultural archetype of the American West gunslinger and to explore the gender aspects of change. The story is probably shown as a narrative saturated with misogyny, aggression and violence that could make the customers’ feel the characterisation of Marks and Spencer is amplified in the second floor. However, in some retelling of the story this is deliberate (Grimm and Grimm, 1993) and in most the lack of an invitation revokes a call for gold canteens of cutlery and a set number of gold place settings. Depending on the side of news report, it might be "about" the onset of sexual maturity (Bettleheim, 1991). 2.5.2 Recycling more and wasting less According to Marks and Spencer, customers have also helped them to recycle materials including 199 metric tons of used Christmas cards, nearly 2,800 mattresses, 4,700 other items of upholstered furniture and 161 million clothing hangers other than shopping (Marks and Spencer, 2013). The recycling strategy increases the brand images of the Marks and Spencer. Read More