Applied Marketing Management - Case Study Example

Table Of Contents: Executive Summary: 3 Introduction: 4 Analysis and Findings: 4 About Marks & Spencer: 4 Branding history of M&S: 5 M & S Promotion: 6 Brand Management at Marks & Spencer: 7 Brand Equity: 8 Brand Positioning: 9 Recommendations: 10 References: 11 Executive Summary: This report outlines a new approach for managing brands that brings the process into line with recent advances in the management of flatter, customer-facing organizations. This report also argues, with Marks & Spencer taken as a the brand to analyse, that the traditional marketing and brand-building approach, characterized by a narrow, product-focussed selling proposition, no longer adds sufficient customer value. As a result, a gap has arisen between the value offered by Marks & Spencer as a brand and the value expected by its customers. The factors which contribute to this value gap are discussed in the context of the changing customer where customer value is increasingly generated by business processes traditionally outside the remit of brand management. Introduction: The report discusses and analyse the overall brand management at Marks & Spencer. This report starts with a brief history and Marks & Spencer and about Marks & Spencer’s brand and then extends further discussing its advertisement, brand equity, positioning etc. Main information is gathered through the internet and magazines and the analysis is also done with the help of the above mentioned sources. In the end recommendation are also given in the light of the discussions throughout the report. Analysis and Findings: About Marks & Spencer: Marks & Spencer commonly known “M & S” is one of the top British retailer companies. It is ranked amongst the most prestigious chain of stores in the UK and is the largest clothing retailer in the UK by turnover. It also is a multi-billion pound food retailer. Most of its shops sell both of these categories. Marks & Spencer also has a third product line related to home wares such as bed linen, but this is far smaller than the other two. For much of the 20th century M&S was regarded as the leading retailer in the United Kingdom, and an icon of British business. In 1997 it became the first British retailer to make a profit before tax of over £1 billion, though within a couple of years it plunged into a crisis from which it has not yet fully recovered. It is now less than one quarter of the size of the UK's largest and most profitable retailer, Tesco. In 2006, M&S has opened a Technology Department in each flagship Store (http://www.marks-and-spencer.co.uk). Branding history of M&S: In the late 1990s, The St Michael brand was discontinued in favour of Marks & Spencer. When Stuart Rose took over in 2004, he introduced a new promotional brand under the “Your M&S” banner, with a corresponding logo. This has now become the company's main brand in its advertising, online presence and in-store merchandising. The clean font and modern colours of the new image are somewhat incongruous alongside the traditional M&S signage and associated fittings that still adorn the stores themselves. In fact the only thing they have in common is the use of M&S traditional green in the ampersand of the new logo. This may seem confusing at first, but the new look has been instrumental in the company's recent resurgence, particularly with the success of a new clothing campaign featuring the legendary model, Twiggy, and younger models associated with the bohemian styles of 2005-6, and the TV ad campaign for their food range featuring Dervla Kirwan and the tagline "This is not just food, this is M&S food". In 2006, "look behind the label" slogans were introduced by M&S and have been extremely successful. Fair trade clothing and foodstuffs are rolled out by all stores and all coffee and tea served in store cafe's are fair trade. Fishing is good for the environment also, so is the way that stores manufacture goods and recycle all of their waste paper products. M & S Promotion: Marks & Spencer is now investing more and more on advertisement to revive its profits and recaptured its lost market share. A typical example is the introduction of limited edition clothes and accessories by Marks and Spencer’s and having a high advertisement expenditure in fashion magazines like Vogue and Harpers & Queen, which were previously the sole domains of luxury brands. Many observers had commented on the fact that the company did not have a marketing department until 1998. Marketing, at least in terms of advertising the brand, had become so important to its competitors, but had never been high on Marks & Spencer's agenda. According to Media Monitoring Services, M&S's total media spending between Dec 1997 and Nov 1998 was just £4.7 million, almost a drop in the ocean compared to the spending of Sainsburys (£42.1m); Tesco (£27.5m); and Woolworths (£21.5m). While other retailers had worked hard on building a brand image, M&S has relied on the quality of its stock to do the talking. The argument was that everyone knew what they were getting with M&S underwear or shirts - good quality at fair, but not cheap, prices. Similarly with food, M&S's offering was about quality rather than price. M&S believed its customers knew what the brand stood for and advertising was much less important than ensuring that it could obtain the right products at the right price. Brand Management at Marks & Spencer: Marks & Spencer is very peculiar about its brand image and therefore for this purpose it provides a clear guidance on how to use the Marks & Spencer brand to ensure maximum impact. Marks & Spencer also work closely with the franchise partner to help them gain maximum value from Marks & Spencer. The M&S vision of the world seems a peculiarly British one, and this shows in its history of international expansion. The brand's retail concept has enjoyed successes in Ireland, Eastern Europe, the Middle East, and other parts of Asia including Hong Kong, but several other locations haven't caught on to the concept. Its stores in the US as well as Canada failed, mainly due to the pricing of its products and its image of being a bit stodgy and old fashioned. In France, the combination of cultural differences and French labour laws forced the closing of all stores there. M&S is a brand that stoically and proudly reflected a quintessentially British image of Britain—nice manners, gray Sunday afternoons and every gentleman wearing a hat. Unfortunately, it was the Britain of 1956. Britain in the 21st century had changed—it was a place where people ate pizza, sat on flat-packed furniture and purchased things on Sunday afternoons (http://www.marks-and-spencer.co.uk). The bedrock of British tradition had shifted under the brand's feet and it had to change—fast. The disparity was reflected in the company's bottom line—in the late nineties, M&S was racking up a billion pounds of profit a year but in 2001 the company recorded a mere £145 million profit (US$ 275M) (Quinn, 2002). M&S had been forced to undergo a makeover. Despite waning profits, a number of takeover bids by British retail. In 2004, Stuart Rose was appointed chief executive and charged with overseeing a major refocus for the brand, increased innovation, and better quality in fashion and food. So far, the strategy is paying off—the share price has shot to 623p (as of September 20, 2006), up from 319p in June 2005 ($12.00 to $6.00) (Quinn, 2002). Brand Equity: The brand symbolizes quality and is as much of a British icon as the Royal Mail, scones with clotted cream, and polo matches. Despite its recent financial problems and its slightly confused brand image, M&S shows what can be done with tradition in the development of brand equity. Standing for values that have a place in society beyond the product can have important cultural ties for consumers. M&S stands for Britain as much as it does for retailing, and that's a symbol that British consumers aren't keen to give up in a hurry. M&S is a superstar of brand stretch. It is stretching its brand across most of the essentials of everyday life (http://www.marks-and-spencer.co.uk). In a sense, M&S is lucky because it has bags of cash to re-invent itself and brand equity (although this may be negative equity in some segments). Personally, I think food is its best bet because even the younger set who hate its clothes acknowledge its food quality. M&S had failed to keep pace with customer service. In many issues of retail development, such as out-of-town shopping centres, Sunday opening and loyalty cards, it had lagged behind its main competitors. While it has stood still, the likes of Tesco and Sainsbury's marched ahead until there was no longer much that felt exceptional about the M&S shopping experience. Analysts argued that M&S had failed to make its store layouts help shoppers bring clothing together to make outfits. In a typical M&S store, all jackets would be located in one area and all cardigans in another, for example. Its competitors had made much greater progress in bringing together co-ordinated sets of clothing which would encourage shoppers to spend more. M&S has also been criticised for making things difficult for customers by not accepting payment by major credit cards. Brand Positioning: M&S is currently competing with: a) Grocers on the food front b) Clothing chains c) Department stores on the home furnishings front This has been heavily argued that Marks & Spencer group needs to make a marketing decision about its food versus clothing businesses. There has been little indication of action in this direction and predicted further declines in trading until it changes. M&S should be one idea, one brand. Food is one brand and clothing is another in M&S's case and therefore this M&S's endorsed approach (company and individual brand e.g. M&S clothing) has a number of negative effects: 1. Bad news in one business impacts the other. This is particularly important for M&S since the media delight in reporting problems in either business division in recent years. They have become an example of marketing strategy that has lost its way. 2. The two businesses require very different strategies to succeed. You don't sell food in the same way that you sell clothes. But as soon as you start a strategy in one division, the market will tend to assume it applies to both divisions because of the commonality in name. Recommendations: M&S believes, possibly correctly, that there is still too much brand equity in the M&S label. But this is declining rapidly. The group needs radical surgery. If it is not going to sell off either division, it should: 1. Brand its food away from M&S (food is a relative new-comer for M&S)(and it seems to be selling off some of its food stores anyway). 2. Invest heavily in re-vitalising the M&S brand as clothing only. This re-vitalisation needs to help throw off the dowdy image (conservative is OK, dowdy is not). So for example, it could sponsor events enjoyed by its target market (this also needs to be clearly defined). References: http://www.marks-and-spencer.co.uk Nicholas Alexander, Barry Quinn, Marks & Spencer CEO: Keeping An Eye On Costs Marks & Spencer profit up 46.6 percent International Journal of Retail & Distribution Management; Volume: 30   Issue: 2; 2002 Read More