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Marks and spencer overview and market analysis

I have selected Marks and Spencer for my assignment which more than 100 years of history and one of the biggest name in the supermarket industry. M&S brand is considered a premium brand and they charge a comparatively higher price for this brand.

Marks and Spencer – Company History

Marks and Spencer started as a small partnership in 1893 as a penny store which was selling everything for one pence on their very first day. The company states that the principles on which its business was founded are Quality, Value, Service, Innovation and Trust. It’s a company which started to sell products with a Slogan “don’t ask the price, it’s a penny” to becoming now one of the Britain’s biggest retailer which is considered in this modern competitive market as a quality product retailer.

Marketing Techniques to Ascertain Growth Opportunities

Supermarket Industry has done considerably better than other industries during recent global recession. Therefore there is growth potential in this company , specially in those areas which attract low sales volume at the moment. M&S has low sales volume in Home Department and has a definite opportunity to grow as it is only 20% of the M& S customer buy these products (from M&S website).

Target Market

M&S planned to focus on the UK market in years 2010 to 2013 and from 2013 to 2015 on international markets. In the UK, the target is for 95% of the population to be within 30 minutes drive of a full-line M&S store by the end of 2015. For this to achieve, they will step up the pace of space growth to around 3% per year until 2015. They will also increase the number of “Simply Food” stores within the UK , so that these are tailored to meet the needs of customers in their local area.

Segmenting Markets

Segmenting the Market means dividing it into sections that correspond to the different people involved in the purchasing power or buying decision (Luther 2001). M&S have segmented markets according to demographic, geographic, psychographic and behavioural segments. Their main geographic segment is UK but they also have 337 stores in 41 international territories (M&S website). The company has segmented the market geographically like building stores in the territories that are easy for the customers to shop and bu keeping the similar store environment and by following the consistent packaging architecture so that the customers find ease in shopping.

M&S has also segmented the market demographically so that the customers of different age groups ,social class, ethnic groups and different gender can buy the company’s products. In order to do this company has MADE ITS BRANDS ,STORES,FOOD AND CLOTHIMG BY KEEPING IN MIND different market segments

Positioning Segmented Markets

Marks and Spencer has positioned itself as a premium brand in the supermarket industry. As customers are willing to pay a premium price for the M&S brand so they have set their prices higher because of this premium brand perception in the minds of customers.

3.2

Devise a plan to use various marketing options in a market of your choice

Devise a Plan to use various marketing options

Porter’s Generic Strategies

M&S Generic strategies

According to Porter there are three main generic strategies available to all companies including M&S to either become the lowest-cost supplier or differentiate their products and services in such a way that it is valued by customers to the extent that they will pay a premium price or focus on one segment of the market.

By applying these strengths in either a broad or narrow scope, three generic strategies result:

Cost leadership,

Differentiation, and

Focus.

(Source http://www.mindtools.com/pages/article/newSTR_82.htm)

M&S’s core product categories (food and clothing), it employs a focus generic strategy as it concentrates on a narrow segment of the market (a particular buyer group (executives), market segment (high-end), product feature (freshness) and within that chosen segment M&S attempts to achieve differentiation from Tesco’s, Asda, BHS, Top Shop etc. The premise is that the needs of the group can be better serviced by focusing entirely on it.

Competitive

Scope Competitive advantage 

Lower cost Differentiation 

Broad target (industry wide) Cost leadership Differentiation 

Narrow target (market segment) Cost focus Differentiation focus

Core Competences

"A core competency is an area of specialized expertise that is the result of harmonizing complex streams of technology and work activity." ~ C.K.Prahalad

Core competencies are the most important value creating skills within a company and key areas of skill which are unique to a company and vital to the company's long term success and growth.

Probably in its sourcing methods

Gave it the ability to deliver high value, reliable, consistent quality

Investors and customers trusted it

Its quality of management was ranked very high

Consequently ‘what was good for M&S was good for the Nation’ feeling

Epitomised the best and most honest face of commerce

3.3 Key Marketing Objectives for Marks and Spencer

Marketing Objectives for M&S

Selling existing products to existing markets

They plan to focus on the UK market in years 2010 to 2013 and from 2013 to 2015 on international markets. In the UK, M&S plan to improve their Home Department to increase sales which at the moment only have 20% of all the Marks and Spencer customers.

Selling new products to existing markets

During the years 2010-2013, In food business, they plan to reduce the non M&S brands product lines from 400 to 100 predominantly reducing the different pack sizes and at the same time introducing the new 100 international brands exclusively available in M&S in order to attract new customers.

Selling new products in the new markets

Marks and Spencer is planning to launched customized products in the clothing range. The objective is to provide its Online Services to new international markets.

4.1 Changes in external environment

Technological Changes

Changes in technology are affecting almost every business today. People are busier than ever and want to buy things online from the convenience of their homes so retailing methods such as clothes sales via the Internet is now common trend. So Marks and Spencer already offer online retailing and I recommend that they should market more for their products online. Businesses and people both prefer paperless operation, therefore the company operations are managed by IT systems.

Importance of Customer Service

Customer are now well educated about their choices and due to high availability of products and diversification they demand more from businesses. So changes in their taste and lifestyle represent both opportunities and threats for a company. Marks and Spencer stores are difficult to shop for the customers (as described by M&S 5 year plan) but still the customer service is their priority.

Globalization

Globalization refers to the increasing integration of economic resources around the globe, particularly through trade and financial resources. When businesses grow locally then they develop themselves to cross boundaries to get new customers. So when businesses get global they have threats from the existing competition and also they themselves are threats to existing businesses. Marks and Spencer is a global brand but they mainly concentrate on their local UK market. They should concentrate more on globally operations as well as their local operation.

Erosion of brands

With the growth of businesses the number of products have increased as well as their availability. Therefore customers have become more price sensitive and less brand loyal. This is the reason companies need to keep on reminding their brands to customers in order to reduce the chances of brand erosion. This procedure is being done through different kinds of advertising. For example Marks and Spencer advertise their products and brand as “Quality worth every penny”

Fashionlization of Markets

Retailers that allow consumers to have input into product development will be well placed in the future. Increasingly consumers want to personalise purchases, through colour, style and functionality, as well as providing feedback to both retailers and peers about how they believe products and services could be enhanced.

The pace of mobile technology and growing

acceptance of its ‘intrusion’ into everyday

lives, means consumers will expect brands

to be ready to interact when they want,

requiring brands to be ‘on’ 24/7.

Changes to family dynamics mean UK

consumers are looking for alternative

communities, either ‘real’ or ‘virtual’ to achieve

a sense of belonging. In the retail space,

this may lead to more brands setting

up community pages or forums

4.2 SWOT Analysis

Marks and Spencer SWOT Analysis

Strengths

M&S Brand loyalty

Internationally recognized UK Brand

Provides high quality products

Access to online shopping

Diverse range of products

Strong cash flows (company’s latest financial reports)

Develop overseas supply chain

Weaknesses

Slow to change

High cost of production

Lack of newness

Too much concentration on brand rather than products itself

Poor management - failure to recognize and react to changing market trends

Opportunities

Better use of stores

Can use better customer resource management systems to analyze customers well

Threats

Customer Perception of high prices

Customer sophistication and knowledge

Existing and New competition

Changing Economic conditions e.g. Global Economic recession that hit UK (main business place of M&S) the most within Europe

Low cost retailers

4.3 Strategic Marketing Responses

Impact of globalization

Globalization has affected M&S as it has affected other organizations and countries around the. It is the new catchword in the world economy, which is ruling the globe since the last decade of the 20th century. M&S also went global in 1990s and it opened new horizon for them. International organizations such as M&S started playing a critical role in the growth of developing countries. It is easier to reach many different nations and markets to transport good and services. The transfer of technology assured better productivity and thus better standard of living.

Globalization changed the way companies do business. As with its advantages, globalization has also opened various challenges such as inequality across different countries, instability in the financial markets and worsening in the environment. Another negative aspect of globalization was that a majority of developing countries stayed away from the entire scene.

The economic integration by 'globalization' facilitated the free flow of information, , technologies, goods and services, capital, finance and people. The economic integration happened through following four channels

Transfer of Goods and Services - International trade ensures allocating different resources and his specialization in the processes leads to better productivity.

Movement of Capital - The production base of a developing economy gets enhanced due to capital flows across countries. It was very much true in the 19th and 20th centuries. The mobility of capital only enabled savings for the entire globe and exhibited high investment potential. A country's economic growth doesn't, however, get barred by domestic savings. Foreign capital inflow does play an important role in the development of an economy. To be specific, capital flows either can take the form of foreign direct investment or portfolio investment. Developing countries would definitely prefer foreign direct investment because portfolio investment doesn't have a direct impact on the productive capacity expansion.

Financial Flows - The capital market development is one of the major features of the process of globalization. We all know that the growth in capital and mobility of the foreign exchange markets enabled better transfer of resources cross borders and by large the global foreign exchange markets improved. It is mandatory to go in for the expansion of foreign exchange markets and thus facilitate international transfer of capital. The major example of such international transfer of funds led to the financial crisis - which has by now become a worrying phenomenon. 

Thus, globalization has the fair and rough share of its impacts and thus we can surely hope for more advancement in the global economy due to this process. 

The strength and weaknesses of competitors

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