Optimal Marketing Strategies of Marks and Spencer - Essay Example

? MARKETING – MARKS and SPENCER Marks and Spencer is one of the leading British retailers founded in 1884, dedicated to the sales of a host of products in categories such as clothing, homeware, beauty and food. Since its inception the outreach of M&S has gone international, as of 2010 it was reported that the group had presence in approximately 40 nations across the globe (Finch 2010). In a marketer’s quest to create value for customers, so that a foundation of strong relationships between the customer and the business can help the latter to obtain value from customers in exchange, it is important to understand the significance of developing a marketing strategy which is customer oriented. One of foremost steps in creating a successful marketing strategy is that of Market Segmentation, which refers to the division of a whole market for a product into smaller segments based upon the characteristics or aspects that are shared by the groups. By conducting market segmentation, a business is able to understand and evaluate various aspects of each division, group or segment in order to target a group or several groups that are then catered to with different marketing mixes (Vieceli & Valos 1998). As buyers become more diversified and unique, market segmentation acts as a key tool in designing the marketing strategies of successful organizations who understand that the diverse characteristics of customer needs, wants and preferences make it a requirement for any business’ success that the nature of its customer’s needs and wants is precisely defined and then handled accordingly (Lamb, Hair & McDaniel 2011). Market Segmentation can be conducted on the basis of four primary variables that are Geographic, Demographic, Psychographic and Behavioral and will be discussed individually based on their relevance and applicability to Marks and Spencer. Geographic Segmentation: World region or country: The primary market for the retailer is still the United Kingdom; moreover, it has also expanded into Asia, Africa and other European nations. City or metro size: The location of Marks and Spencer shops is primarily Major cities with population crossing 4 million and mainstream cities with population above 1 million. Density: Urban and suburban population. Demographic Segmentation: Age: Middle-aged. The average age of a customer can range from 35-55. Gender: The existence of product categories such as women’s clothing, lingerie, beauty, kids, home furniture, food and gifts seems to attract a largely female audience but that does not mean that men are not M&S buyers. Family life cycle: Customers are usually single, married, married couples with children, unmarried couples and older people who are family oriented. Income: ?30,000 and above per annum Psychographic Segmentation: Social Class: Usually middle class and upper middle class buyers looking for products that are of a decent quality but also economical and suitably priced at the same time. This suggests that customers of M&S seek good value for money. Personality: Customers are not generally perceived as trendy, fashionable or imaginative when it comes to choices related to clothing. Older customers are not considered to be ambitious or achievers who wish to shop at the retailer to project a sense of success and affluence (Business World). Behavioral Segmentation: Occasions: The M&S shopping experience is not limited to special occasions; buyers may shop at M&S for regular commodities and go to other high-end retailers for special occasion shopping such as Christmas. This was reflected in a drop in sales of M&S by 3.8% for general commodities during the holiday season of 2012 (Ruddick 2013). Benefits Sought: Users seek economy and convenience when shopping at M&S as much of the commodities are affordable and not high-priced. Loyalty Status: Customer’s buying behavior for regular and basic commodities such as grocery and basic clothing is low involvement, habitual buying behavior. Therefore, the majority of the buyers cannot be termed as extremely loyal customers since switching amongst retailers is a possibility. Usage Status: Much of the users are repeat users rather than first-time users, as direct competition from BHS, Tesco, Top Shop and The Gap is threatening to the growth of M&S’s customer base. The long term objectives of the business as established in 2010 are to transform Marks and Spencer into a global multi-retailer, by diverting much of its attention towards the UK and enhancing the brand image of M&S in its home country. Secondly, the organization is looking to develop an idea of multi-channel retailing by cementing its presence online, on smartphones, applications and other internet-based platforms. This would allow M&S to appeal to the buyers of the internet age who do not consider Marks and Spencer as their first choice for shopping. In an attempt to expand its international horizons M&S intends to enhance its presence on a worldwide scale by expanding further into global markets. Expansion and growth as a long-term strategy means that M&S should target a market segment or multiple market segments based on their expected growth and overall monetary attractiveness along with an understanding of the competitive threat and the power of buyers and suppliers respectively. Perhaps, a favorable target market would be one that is different from the segment which is currently being targeted by M&S. A slump in recent sales, an increasing threat from more urban, trendy and youth-oriented retailers and a lack of marketing to enhance the brand image of M&S has led to the creation of a general perception in the eyes of the public which does not favor Marks and Spencer as its choice for shopping. Therefore, a target market based on the youth, which prefers to carry out much of its purchases online rather than in retail outlets, would be more aligned with M&S’s long term objective of expansion into various geographic markets. As the customers of the brand age, it is understandable that if M&S continues to operate in its current market segment, it would lose out to its competitors in terms of a large sales volume. This is particularly true for the clothing operations of Marks and Spencer as older customers tend to make fewer purchases in comparison with younger customers when it comes to apparel and fashion related products. In a collective dimension a favorable target market for Marks and Spencer in alignment with its long term objective of expansion can be represented as follows: Geographic Segmentation: World region or Country: United Kingdom and other European nations, Asia specifically the Middle East (Dubai, Qatar, Bahrain etc) and Africa. City or metro size: Major cities and Mainstream cities. Density: Urban and Suburban. Demographic Segmentation: Age: Specifically targeting 18-30 age group for clothing range while, the food category supplying groceries and everyday items could still focus on 35-55 age group. Gender: Not a relevant segmentation base. Family size: 1-2 Family Life Cycle: Young, single, bachelors, married couples with no kids, unmarried couples with no kids. Income: ?30,000 and above per annum Psychographic Segmentation: Social Class: Middle class and upper middle class. Lifestyle: Self-expressive individuals, desiring a degree of excitement, ambition, energy, risk and variety in their life, could be categorized as experiencers and makers according to VALS framework. Target market can also be that of health-oriented and weight-conscious customers who wish to purchase healthy and organic food as compared to a more traditional concept of regular item purchase where customers are not concerned with the ingredients or health benefits of the product. Behavioral Segmentation: Attitudes towards the product: Buyers should possess a positive, promising and enthusiastic attitude about the product. Benefits sought: Buyers seeking quality, value for money, self-expression, fashion, variety and a friendly customer service should be targeted. User status: Users will primarily be first-time buyers belonging to a younger age group looking for a suitable and exciting shopping experience. As per the assessment conducted regarding the long term objectives of Marks and Spencer it can be understood that the company seeks to promote its growth on a national and international scale by implementing a strategy called “Plan A” that seeks to project a sustainable image of M&S by acting upon policies that deal with ethical trading, decline in waste and the usage of production materials that are recyclable and sustainable (About Plan A). In developing its Product Attribute Decisions M&S should focus on highlighting the quality of its products so that its clothing range can be represented as having a higher quality in comparison with that of the competitors. The most important strategy to undertake in revamping the image of M&S should revolve around the branding of the company’s product line, and a transformation of its image of a boring, safe and unimaginative brand. It should be noted that Marks and Spencer does have a great degree of brand awareness which can be attributed to its presence in the market since the late 19th century, however, its brand preference appears to be declining as customers opt for high-end retailers and stores. An assessment of the product-lifecycle of M&S’s clothing division suggests that the clothing ranges targeted at women, children and men have reached maturity stage in the product-life cycle, which according to Kotler and Armstrong (1991) is a stage in the product-life cycle where the product exhibits slow growth in sales and a reduction in profits primarily because of the emergence of tough competition in the market. In the case of M&S its clothing departments faces tough competition from Primark’s affordable yet trendy interpretation of British high street fashion and Debenhams’s extensive and impressive promotional campaigns (Wood 2012). Kotler and Armstrong (1991) note that products in maturity stage tend to remain stagnant in terms of creativity and innovation, and perhaps this seems to be the problem with M&S’s clothing range as well. An appropriate product strategy in this regard could be that of product modification, this could be done by implementing two methods; first the company could hire new designers to revamp the range of clothing for women, children and men, secondly, modifying the product also suggests that the company could explore new market segments and try to identify new users for the product. For example, developing a clothing line that is young and trendy could be beneficial for M&S owing to the large pre-teen and teen clothing market. The new clothing range could be repositioned in the market with exclusive focus on brand positioning. Breaking into an international market is always risky, especially when national sales are declining due to competitive pressures and increasing costs, it should be noted that in such a scenario M&S should not launch its brands in international markets on their own but use the product strategy of co-branding. According to Kotler and Armstrong (1991) co-branding is a concept that entails the establishment of a mutual arrangement between two different companies to launch a product using their respective brand names, for example if M&S The Cook Range brand under the line of Cook India and Cook East were to enter the Asian market, the retailer could launch products in collaboration with local businesses and manufacturers that enjoy great brand loyalty amongst their Asian customers. Owing to the diminishing profits of M&S this strategy would be less risky even if the products do not succeed in capturing the market, however, legal aspects of this concept would also have to be considered by the management in order to proceed with co-branding in international markets. Woods (2012) reports that for the 2012 holiday season, M&S’s business was boosted by its foods division where sales escalated by higher percentages than was expected and projected by analysts. Kotler and Armstrong (1991) suggest that it in such a scenario, rising sales and profits allow for a reduction in average cost per customer and companies move forward with their current marketing strategies to capture a greater market share. Therefore, product strategies for M&S food business’ product lines could include product extension, for example, the Simply Kids brand that sells products such as biscuits and cakes could also extend into gum, candy and chocolate market. Similarly, the retailer could focus on carefully selecting its most popular food brands, based upon aspects such as market share, sales, profitability and expected growth to further strengthen its marketing mix. For instance, the brand Gastropub also includes Lunchtogo and Bistro range under its umbrella, where Lunchtogo is marketed as a luxury food item targeted exclusively towards businessmen and executives who want suitable lunch options on the go, this product could also be extended into options for middle-class employees and workers who cannot afford to pay similar prices to that of businessmen and executives but seek simpler and affordable lunching options. In a bid to cut costs, reduce waste and increase profitability, M&S should also consider closing or discontinuing brands that have not been performing well and generating below-par revenues for the business, an extensive action such as this should be taken after thorough and comprehensive evaluations of current brands over a host of M&S divisions and departments. Managing several different brands that have not been performing well can be undesirable for a business as operating numerous brands means that each brand will capture only a small percentage of the market share which could act as a barrier to market leadership. Consequently, M&S can also focus on establishing a megabrand rather than a plethora of underperforming brands. As one of the main concerns for the retailer currently happens to be external pressure resulting from dominant competition, distribution of food products belonging to other brands should be discontinued to promote M&S owned brands, thereby, restricting the distribution channel of non-M&S products. Most importantly, M&S should focus on a strategy of brand development to attain a newfound standard in the market. In doing so the company would have to identify and distinguish between the brands that have been performing well in comparison with the brands whose sales have declined in the past years. For instance, Per Una which is a clothing line for a young female audience has proved to be a continued success for M&S, considering this situation M&S should engage in a brand extension strategy to introduce Per Una accessories, handbags and jewelry as well. On the other hand, home furnishings brand such as Alfresco, Manhattan, Lyon, Supima and Hamilton that have reported poor sales should be replaced with new brands, but an even more effective strategy to handle M&S’s homeware brands could be to introduce the concept of megabrands rather than multibrands, this concept asserts that as consumers are clogged with too many brands without any significant differences the brands begin to lose their distinction and meaning. Consequently, it is important to channelize the marketing budget in a way that it is only spent on nurturing a home furnishing megabrand which holds the top or second position rather than several brands that have little or no significance which is the case with the home furnishings products of Marks and Spencer. Bibliography ABOUT PLAN A. Retrived from: BUSINESS WORLD. Company of the Month: Marks & Spencer (2). Retrieved from: FINCH, JULIE. (7 November 2010). Bolland looks to middle England and overseas for Marks & Spencer blueprint. The Guardian. Retrieved from: KOTLER, P., & ARMSTRONG, G. (1991). Principles of marketing. Englewood Cliffs, N.J., Prentice Hall. LAMB, C. W., HAIR, J. F., & MCDANIEL, C. (2011). Essentials of marketing. South-Western Pub. RUDDICK, GRAHAM (10 Jan 2013). Marks & Spencer hit by poor clothing sales over Christmas.The Telegraph. Retrieved from: VIECELI, J., & VALOS, M. (1998). Marketing Management. Atlantic Publishers & Distri. WOOD, ZOE (10 Jan 2012). Marks & Spencer clothing profits hit by rivals' discounting. The Guardian. Retrieved from: Read More