Organisation Marks And Spencer Food Department Marketing Essay
MandSs food offering is widely regarded as more adventurous than other retailers', with a broad selection of superior prepared meals, side-dishes and produce, alongside general staples. The company's food offering is widely perceived by consumers to be higher in quality than that of other supermarket retailers. Until 2008, all products have been private label. In-house brands include Cook!, Gastropub and Eat Well. In 2008, however, the group announced plans to open its shelves to a selection of around 350 "must have" branded products including Marmite, Weetabix and Heinz Tomato Ketchup. These will be tested in selected outlets. By spring 2008 close to 290 outlets offered in-store eating. Either with a coffee shop, deli bar or hot food takeaway counter or even a full-service M&S Restaurant. Gross UK revenues from food rose were more or less unchanged in the year ending 2009 at £4.2bn, equivalent to 3.9% share of the national market.
External Opportunities & Threats
(Mike’s Guidelines just to help)
Both the PEST/LoNGPEST (Capon, 2009) analysis and "Porter's Five Forces of Competition Analysis" (Porter, 1980) referred to in task 1 were of course already produced by you for the "Assessed Milestone Seminar" as detailed on page 17 of the Module Learning Scheme. These two analyses now go into the Appendix or Appendices at the back of the report. This is so that you can refer to them when creating the Opportunities and Threats (the OT) of your SWOT analysis, e.g. - "as can be seen from the LoNGPEST in Appendix A, the major economic threats to the organization are ..................." or "if we examine the Porter's Five Forces Analysis in Appendix B, we can see that there is a considerable threat of substitution of this industry's main service by...........".
Company: Marks & Spencer
Palm oil (tonnes): “Small user” (less than 1 per cent of palm oil imported into the UK).
Member of RSPO: Yes
Uses RSPO-certified palm oil: No (awaiting certification for suppliers)
Date for RSPO-only palm oil: No
Marks and Spencer (M&S) is a leading UK based retailer of clothing, foods and homeware. M&S is the UK's largest clothing retailer and footwear by both value and volume. Market leadership enhances its brand image and provides M&S with a competitive advantage over its peers.
Due to improve consumers’ take part in environment preventing awareness. M&S according today’s society ethical trending, to put forward “Green products”.
M&S do its business follow rule of environment, such as climate changing. So, it is the same important as raw materials for food. For instance, soya, cocoa, beef, leather, coffee and palm oil– will come from sustainable sources that do not contribute to deforestation.
Comment: We have identified all of our products that contain palm oil and we have a clear plan in place to reduce our use of palm oil and replace it with suitable alternatives. We recognise the damaging impact of the palm oil industry in valuable forest regions and are working with the WWF to provide funding for the Heart of Borneo project. The project aims to rehabilitate an important forest 'corridor' which joins up two previously split areas of the forest to allow animals (namely orang-utans) to roam freely between the two areas - increasing their habitat and therefore their chance of survival.
In fiscal 2007, the company spent ￡479 million modernizing and redeveloping its stores as well as ￡120 million as news. Totally, it was ￡792 million of capital expenditure this year.
During 2010-2011M&S plans to open more Food stores than previous years, in order to working towards more than 400.
New stores would benefit M&S by expanding its market reach and penetration.
Increasing online sales
UK’s online retailing has grown at a fast pace in the last decade. By 2011, food and grocery factors are going to gain the fastest growth. Moreover, online shopper is set to grow to ￡1,056 per year In 2006-2007, M&S’ online sales grew by more than 60%, well ahead of the market, launched its new website, developed with Amazon, which has a wide selection of online clothing in the UK- over 15,000 items- as well as 10,000 home ware and technology products, flowers, wines and exclusive online ranges, including jewelry. Therefore, M&S is well poised to gain from the expanding demand for online retailing.
Compare to 2004, in fiscal 2005, M&S was the most expensive when compared with its competitors such as Debenhams, Next, BHS and Matalan. It was marginally more expensive relative to the average of this group. After the implementation of price restructuring, M&S is now nearly 10% cheaper than Debenhams and a little cheaper than Next. In food pricing, M&S is 2% cheaper than Tesco’s ‘Finest’.
Strong sourcing capabilities allows for greater efficiency and rationalized costs. Competitive pricing might help in generating more revenues.
Demand for healthy food
Nowadays, consumer put more attention to health issues in food, such as natural, fresh and nutrition. M&S can keep with this trend and make some changes in their food distribution. Today, children’s meals are arisen more and more parents’ attentions. These meals should be less sugar, no artificial colors and no added preservatives. Additionally, meals are based on government guidelines for calorie, fat, salt and sugar content. The trend in healthy eating shows no signs of easing and the company can get benefits from this growing trend.
One major threat facing the company comes from the intense competition that exists in the UK food retailing market. The company has a 4.3% share of the UK food market, and remains a significant distance behind food retailers like Tesco, Sainsbury and ASDA. The intense rivalry that exists between such competitors has led to a price war within many areas of the food industry.
Wal-Mart and other similar companies are increasing dominance today. It has given high pressure for M&S, especially in food, clothing and other finances services.
Rising labor wages in UK
Labor costs are rising in the UK. The UK government announced that the adult minimum wage rate would rise from ￡5.05 to ￡5.35 per hour in October 2006. The national minimum wage is expected to further rise to ￡5.52 an hour from October 2007 in the UK. The rate for those aged 18 to 21 years will be increased from ￡4.45 to ￡4.60 per hour and the rate for workers aged 16-17 years would increase from ￡3.30 to ￡3.40 per hour.
The company employs about 52,670 full time employees. An increase in labor costs would adversely impact the company’s margins.
Thompson,J(2010) Marks & Spencer sets out its sustainable stall.[online] The Independent March 2,2010.last accessed Monday March 15 2010 at http://www.independent.co.uk/news/business/analysis-and-features/marks--spencer-sets-out-its-sustainable-stall-1914358.html
Internal Strengths & Weaknesses
(Mike’s Guidelines just to help)
You have already done the analysis of the External Environment, the reason why you are now doing a SWOT in task 1 is so that you can bring this together with the Strengths and Weaknesses of the organization's Internal Environment: - in addition to its products/services, this includes its structure, its training, its people, its management, its shareholders/investors, its equipment, its premises/factories, its location, its knowledge, its information, its suppliers/supply chain, its distributors/distribution chain or channel, its existing customer base, etc. etc., and how Competent it is at using all of these Resources to produce its products/services; all of this adds up to the Capabilities (competences + resources, i.e. how competently it uses its resources), - what it is good at or has plenty of and what it is not good at or is lacking in, are its Strengths and Weaknesses (the SW of the SWOT).
Marks and Spencer’s Competition
(Mikes guidelines to help us)
Is asking you to use "Porter's Generic Strategies" (Porter, 1985) to decide whether the main service or product is:- aimed at a "Broad Target" (i.e. - a large market segment or a collection of smaller market segments) and whether it is following a strategy of "Cost Leadership" or "Differentiation"; or is it aimed at a "Narrow Target" (i.e. - a single small market segment or a couple of small market segments) and whether it is following a strategy of "Cost Focus" or "Differentiation Focus".
Please remember that if your organization is say for example in retail, it is the actual service of "retailing" that you are looking at, not (generally) the products that it sells! i.e. - a supermarket may sell "basic/value", "own label", "branded", and "prestige brand" versions of products, but that does not mean that it is following all four of "Porter's Generic Strategies" (Porter, 1985)! You have to look at the actual service that it provides and how much it costs the organization to provide it; remember, it is about the cost to the organization and not necessarily the price to the customer, - it's just that low cost generally means that an organization can sell at a lower price if it wants to.
(we will cut the above out its just to help while we write)
Marks & Spencer’s Strategic Fit
I am also being asked what "Strategic Fit" means! This shows WHY you should go to Lectures as not everything I cover in them is in Clare Capon's (2009) book! The concept of Strategic Fit was covered in Lecture 4 - "The External & Competitive Environment". All it means is that since an organization cannot change its external environment (when we meet again in Level 6 you will discover that this is not always true!), it must change itself (i.e. - its internal environment) to fit in with the external environment; e.g. an organization which ignores the strategies of its competitors, or the demands of customers, or government, or the state of the economy, or advances in technology, will not prosper and will soon fail. The concept of "Strategic Fit" is thus matching the capabilities of the organization (Internal Environment) with the demands and pressures of the External Environment.
This is of course a follow on from what you did in task 3 above in that it is asking you to not just look at what is happening in the external environment now, but is also asking you to consider what is likely to happen in the future and what opportunities are there going to be. So a new product or service may be for opportunities that are only just beginning to show themselves.
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