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Marks and Spencer is one of the best known high street retailers in the UK. It has over 450 stores and employs over 65,000 people. It also operates overseas. Marks and Spencer is one of the UK’s leading retailers of clothing, food and home products. They have a strong presence in Scotland where they have been trading for over 80 years. Marks and Spencer currently have 31 Scotland stores (including 8 simply food stores) and own two distribution centre’s at Cumbernauld and Westfield, Glasgow. There are 4,800 people directly employed in Marks and Spencer stores in Scotland, plus 500 in distribution centres.
In the face of more intense competition in the UK retailing sector, Marks and Spencer has had to develop a new strategy. This created a period of change for the retailer, involving a refocusing on core areas of quality, value and service along with innovation and trust. Marks and Spencer developed a promotional campaign based on the slogan “YOUR M&S” which helped customers to connect with the business. The process had three key features:
Financial skills or leadership. Marks and Spencer uses a profiling system to identify skills gaps. It matches current skills against a matrix of skills required. Where these do not match, training can take place. At the end of every six months, an appraisal takes place to review performance and progress. In discussion with managers, employees identify where they have made improvements in their profile. They then agree on a plan for further development. This helps them to construct a realistic and structured career path. This process creates a cycle of improvement.
Marks and Spencer Plc – Company Profile
Marks and Spencer is one of Britain’s oldest retailers created through a partnership in 1884 between Michael Marks and Tom Spencer.
The company have total store of 450 globally and 375 UK stores had a turnover of 9.2 billion pounds in the 2008 up by 12.51 percent from the previous financial year. Operating profit also increased by 31.8 percent. (marksandspencer.com)
Although Tesco has the largest UK retail chains, Marks and Spencer Plc is the UK leading mixed retailer. A mixed retailer is defined as a retail store which sells a number of lines of merchandise such as apparel and fashion accessories, furniture and home furnishing, small house wares, hardware, food and dry good. (Euro monitors 2006).
Marks and Spencer is a mixed retailer, but offers a product range less diverse than its department store competitors, being restricted to clothing, footwear, gifts, food, and household goods. There is also a financial services division offering store cards, personal lending, unit trusts, life assurance and insurance. However, this financial service portfolio was sold to HSBC PLC as the company decided to stick to areas which really fit its core business strategy. This portfolio is still own and managed by HSBC under the Marks and Spencer brand name.
Marks and Spencer has long been the leading retailer in the UK’s apparel sector, and this is a position that the company undoubtedly aspires to maintain. The bulk of its turnover is attributable to clothing and footwear (approximately 50%) and food (44%). Food retailing has performed retailing well, registering consistent growth in like-for-like sales. However, as competition in the apparel sector intensified in the late 1990s, Marks and Spencer struggled to maintain market share.
1-1 DEFINITION OF MARKETING:
Marketing is an activity that is directed at satisfying the needs and wants of customers through exchange processes which continually occur in the market between buyer and sellers. Marketing encompasses many more activities than most people realize. Selling is but one of several marketing functions. If the marketer does a good job of identifying consumer needs, develops good products, has appropriate pricing, effective distribution and targeted promotional activity, then these goods can sell very easily. Marks and Spencer success over the decades has been due to this underlying principle of marketing.
Marketing is management process which identifies, anticipate, and supplies customer requirement efficiently and profitably. (Chartered institute of marketing).
Marketing is social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging product and value with others. (Kotler, Armstrong Saunders & Wong).
The main characteristics of marketing oriented organization like Marks and Spencer
Marketing orientation occurs when all people in a business organization measure themselves in terms of the benefits offered to the customers. A market oriented company will:
Identify customers’ needs and wants through market research.
Develop products that meet the consumer needs and wants by research and development.
Through pricing, the organization decides the value of the product to consumers.
By distributing the product, the organisation makes the product available to consumers at the right time and place.
Through promotion, the organisation is also able to create awareness of the existence of the product to the consumers and persuade them to by it.
Marks and Spencer demonstrated all this principle that why they are successfully supermarket in the UK.
1-2 MARKETING CONCEPTS
Marketing concept is where firms analyze the needs of their customers and then make decisions on ways of satisfying those needs in a way that is better than their competitors. There are four elements of marketing concept.
Customer orientation: Marks and Spencer store card statement is sent to ten million customers every quarter, itemising the points they earn from their shopping. Each statement also contains additional coupons and vouchers, targeted to reward and provide incentives for shopping behaviour. In fact, there are now over 250,000 different targeting variations. The programme is highly sophisticated, yet it consistently achieves sales uplift results.
Yet the application of store card shopper is much broader than the customer reward statement alone. The major benefit of the scheme for Marks and Spencer (and ultimately its customers) is that t analysis drive organisation-wide customer decision-making to direct promotions, category management, local store ranging and even store location. Indeed, customers are analysed and grouped into hundreds of different segment permutations and combinations, according to factors such as regency, frequency and value, lifestyles, lapse rates, promotional responsiveness, coupon redemption behaviour and many others.
Marks and Spencer clearly recognise the value of the customer knowledge and maintain a carefully constructed “knowledge profit and loss account” to measure customer investments in the scheme, the amount of analysis resources applied and the additional returns and new customer value created.
Sales orientation: Marks and Spencer seem their main problem to sell more product or services which they already had available. Therefore, they can be expected making full use of selling, pricing, promotion and distribution skills (just like a marketing orientated business).The differences of a sale orientation business is this, it pays a few attention to customer needs and wants, and doesn’t try particularly hard to create suitable products or services.
Production orientation: A production orientation business is spoken to be mainly concerned with doing as many units as possible. Concentrated on producing approximate volumes, such a business aim to maximize profitability by exploiting economies of scale in a production orientated business, the needs of customers are secondary compared with need to increase output. Such an approach is probably most effective when a business operates in very high growth markets or where the potential for economies of scales significant.
Product orientation: It is subtly different from a production orientation. Consider a business which is “obsessed” with its own products may be arrogant about how good they are. Their products may start out as fully up-to-date and technical leader’s .Even through; to fail to consider changing technological developments or subtle changes in consumer tastes a product-orientated business may find that its products start to lose ground to competitors.
1-3 MARKETING ORIENTATION OF MARKS AND SPENSER
An overview of the marketing process, including situational analysis, strategy formulation, at this point in the process, the marketing plan has been developed and the product has been launched.
Under the marketing concept, the Marks and Spencer find a way to discover unfulfilled customer needs and bring to market products that satisfy those needs. The process of doing so can be modeled in a sequence of steps: the situation is analyzed to identify opportunities, the strategy is formulated for a value proposition, tactical decisions are made, the plan is implemented and the results are monitored.
The Marketing process
Marketing Mix Decisions
Implementation & Control
Situation Analysis: A thorough analysis of the situation in which the Marks and Spencer serves as the basis for identifying opportunities to satisfy unfulfilled customer needs. In addition to identifying the customer needs, the Marks and Spencer understand its own capabilities and the environment in which it operate. The situation analysis thus can be viewed in terms an analysis of the external environment and an internal analysis of the Marks and Spencer. The external environmental can be described in terms of macro- environment factors that broadly affect many companies and micro-environmental factors closely related to the specific situation of the company.
The situation analysis should include past, present and the future aspects. It should include a history outlining how the situation evolved to its present state and an analysis of trends in order to forecast where it is going. Good forecasting can reduce the change of spending a year bring a product to market only to find that the need no longer exists. The situation analysis reveals gaps between that consumer’s want and what currently is offered to them, then there may be opportunities to introduce products to better satisfy those consumers.
From this summary, the Marks and Spencer can match its own capabilities with the opportunities in order to satisfy customer needs better than the competition.
There are several frameworks that can be used to add structure to the situation analysis:
5C Analysis: company, customer, competitors, collaborators, climate.
Company represents the internal situation; the other four cover aspects of the external situation
PEST Analysis: for macro-environmental political, economical, societal and technology factors. A PEST analysis can be used as the `climate` portion of the 5 C framework.
SWOT Analysis: SWOT Analysis, is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in in a business venture. It involves specifying the objective of the business venture and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. SWOT analysis groups key pieces of information into two main categories:
Internal factors – The strengths and weaknesses internal to the organization.
External factors – The opportunities and threats presented by the external environment.
The internal factors viewed as strengths or weaknesses depending upon their impact on the organizations objectives. What may represent strengths with respect to one objective may be weaknesses for another objective. The factors may include all of the 4Ps; as well as personnel, finance, manufacturing capabilities, and so on. The external factors may include macroeconomic matters, technological change, legislation, and socio-cultural changes, as well as changes in the marketplace or competitive position. The results are often presented in the form of a matrix.
SWOT analysis is just one method of categorization and has its own weaknesses. For example, it may tend to persuade companies to compile lists rather than think about what is really important in achieving objectives. It also presents the resulting lists uncritically and without clear prioritization so that, for example, weak opportunities may appear to balance strong threats.
Marketing strategy: Marks and Spencer have opportunities to satisfy customer needs are identified. A strategic plan for pursuing the opportunity can be developed. Marketing research provide specific market information that will permit the organization to select the target market segment and optimally position the offering within that segment. The result is a value proposition to the target market. The marketing strategy then involves.
Targeting (target market selecting)
Positioning the product within the target market
Value proposition to the target market.
Marketing Mix Decision: detailed tactical decisions then made for the controllable parameters of the marketing mix. The action items include:
Production development-specifying, designing and producing the first units of the products.
Promotional campaign development
Implementation and control: at this point in the process, the marketing plan has been developed and the product has been launched. Given that few environments are static, the result of the marketing effort should be monitored closely. As the market changes, the marketing mix can be adjusted to accommodate the changes. Often, small change in consumer wants can address by changing the advertising message. As the change become more significant, a product redesign or an entire new product may be needed. The marketing process does not end with the implementation continual monitoring and adaptation is needed to fulfill customer needs consistently over the long-term.
Marks and Spencer distribution: Marks and Spencer got one of the best distribution network in the UK. Marks and Spencer have recently introduced their new ‘lunch-to-go’ direct delivery service aimed primarily at the corporate market where hassle-free catering, typically for business luncheons, seminars and training courses is increasingly in demand.
The service is available at a number of centres around the UK, but the central London area is the first to benefit from a dedicated fulfillment centre with other fulfillment courtesy of EXE Technologies, versatile exceed TM warehouse management system. The operation cleverly uses the existing supply chain infrastructure in order to maximize the efficiency of direct from customer order fulfillment
Orders are placed via the traditional channels of telephone and fax as well as e-mail a channel which has grown significantly since Marks and Spencer introduced a CD-ROM for LUNCH-to-GO’ uses listing about 380 ‘LUNCH-to-GO’ items. CD-ROM allows easy browsing and single click simplicity when ordering items.
Marks and Spencer non-food function aims to work with select group of customers to increase order for mainstream ready supplies provide a learning opportunity for producers, building skills and confidence to reach a new type of consumer and build better awareness of fair trade and traidcraft in the mainstream.
Marketing environment is a marketing term and refers to all of the forces outside of marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. The market environment consists of both the macro environment and the microenvironment.
The microenvironment refer to the forces that when or how are related are close to the company and affect its ability to serve its customers. It includes the company itself, its suppliers, marketing intermediaries, customer markets, competitors, and publics.
The company aspect of microenvironment refers to the internal environment of the company. This includes all departments, such as management, finance, research and development, purchasing, operations and accounting. Each of these departments has an impact on marketing decisions. E.g. research and development have input as to the features a product can perform and accounting approves the financial side of marketing plans and budgets.
The suppliers of a company are also an important aspect of the microenvironment because even the slightest delay in receiving supplies can result in customer dissatisfaction. Marks and Spencer are watching their supply availability and other trends dealing with suppliers to ensure that product will be delivered to customers in the time frame required in order to maintain a strong customer relationship.
Competitors are also a factor in the microenvironment and include companies with similar offering for goods and services. To maintain competitive Marks and Spencer consider who their biggest competitors are while considering its own size and position in the industry. Marks and Spencer develop a strategic advantage over their competitors.
Public is any group that has an interest in or impact on the organization’s ability to meet its goals. For example, financial publics can hinder a company’s ability to obtain funds affecting the level of credit a company has. Government publics can affect the company by passing legislation and laws that put restriction on the company’s actions. The general public can greatly affect the company as any change in their attitude, whether positive or negative, can cause sales to go up or down because the general public is often the company’s customer base. Finally, the internal publics include all those who are employed within the company and deal with the organization and construction of the company’s product.
The macroenvironment refers to all forces that are part of the larger society and affect the microenvironment. It includes concepts such as demography, economy, natural forces, technology, politics, and culture.
Demography refers to studying human populations in terms of size, density, location, age, gender, race, and occupation. This is very important factor to study for marketers and helps to divide the population in to market segments and target markets. An example of demography is classifying groups of people according to the year they born. This can be beneficial to a marketer as they can decide who their product would benefit most and tailor their marketing plan to attract that segment. Marks and Spencer covers many aspects that are important to marketers including family dynamics, geographic shifts, work force changes, and levels of diversity in any given area.
Economic environment- This refers to the purchasing power of potential customers and the ways in which people spend their money. For example, great depression, exchange rates, interest rates, and inflation. Organizations should analyses the trends in the economy to prevent loses in profit and order for them to stay at the top of market. Marks and Spencer are looking at ways of increasing their sales due to the undoubtedly more difficult economic outlook. They expect the costs to rise ahead of the overall growth in the market.
Natural forces is includes natural resources that a company uses as inputs and affects their marketing activities. The concern in this area is the increased pollution, shortages, of raw materials and increased government intervention. As raw materials become increasingly scarcer, the ability to create a company’s product gets much harder. Also pollution can go as far as negatively affecting a company’s reputation if they are known for damaging the environment. Marks and Spencer takes part in the UK emission trading scheme. They also monitor electricity in most of their stores every half an hour via computer systems.
Technology: It is one of the fastest changing factors in macroenvironment. This includes all developments from automobiles and credit cards. Marks and Spencer develop and create a new markets and new uses for products. They also stay ahead of others and update their own technology. Marks and Spencer stay inform of trends so that they can be part of the next big thing, rather than becoming outdated and suffering the consequences financially. Marks and Spencer has invested in information technology such as online shopping, issuing credit cards, and also introducing the electronic point of sale (EPOS) system which has driven up sales, increased customer service and also improved their efficiency.
Political: This includes all laws, government agencies, and groups that influence or limit other organizations and individuals within a society. Some products are regulated by both state and federal laws. There are even restrictions for some products as to who the target market may be, for example, cigarettes should not be sold to younger children. Marks and Spencer is aware of these restrictions as they can be complex, and they are monitoring all government laws and restrictions.
Cultural: this consists of institutions and basic values and beliefs of a group of people. The values can also be further categorized into core beliefs, which passed on from generation to generation and very difficult to change, and secondary beliefs, which tend to be easier to influence. Marks and Spencer know the difference between the two and they focus marketing campaign to reflect the values of a target audience.
Dealing with marketing environment it is important for a company to become proactive. Doing that, they can create the kind of environment that they will proper in and can become more efficient by marketing in areas with greatest customer potential. It is important to place equal emphasis on both the macro and microenvironment and to react accordingly to changes within them.
The traditional ps have been added because today marketing is for more customer oriented than ever before, and because the service sector of the economy has come to dominate economic activity in the UK. These 3 extra ps are particularly relevant to this new extended service mix.
Physical evidence: this element of marketing mix allows consumer to make judgment about the organization or where the service is being provided. This may in clued internal and external appearances of the premises, waiting areas etc. marks and Spencer is looking forward to increase its physical evidence by modifying its stores. Some of the major changes will be construction work, new flooring and making changes to how they lay out their stores. Marks and Spencer is trying to ensure that its stores are in good shop for the customer.
Process: this refers to the systems that are used to assist an organization in delivering its service. For example, fast service tills, part time staff to assist during peak periods etc. marks and Spencer has introduced online buying and fast moving tills which reduce long queue and overcrowding in store. This involves given that service with the behavior of people, which may be important near customer fulfillment. All systems supporting the front line must be efficient to avoid error and delays and security measures should be taken for customer confidentiality.
People: the most important element of a service is people. The staffs in an organization have to be well trained; the appearance and attitude should also be of a high level. They also set aside two month for training. Some people who are coming to contact in the company of customers may have a crash on the taken as a whole satisfaction. Whether like place of opinionated service in the direction of product or involved within total service, people are for the most part important, for the reason that customer’s eyes, they are normally inseparable since whole service. Marks and Spencer have well trained staffs and the appearance and attitude of the staffs towards the customers is well satisfied.
People: The most important element of a service is people. The staffs in an organization have to be well trained; the appearance and attitude should also be of a high level. They also set aside two month for training. Some people who are coming to contact in the company of customers may have a crash on the taken as a whole satisfaction. Whether like place of opinionated service in the direction of product or involved within total service, people are for the most part important, for the reason that customer’s eyes, they are normally inseparable since whole service. Being having a result of these habits, they may be appropriately taught politically and skilled fine motivated with the right kind of person. Marks and Spencer should motivated their staffs through training and provide canteen where they can have tea break.
Process: This refers to the systems that are used to assist an organisation in delivering its service for example fast service tills, part time staff to assist during peak periods etc. Marks and Spencer has introduced, online buying and fast moving tills which reduce long queue and overcrowding in stores. This involves given that service with the behaviour of people, which may be important near customer fulfillment. All systems supporting the front line must be efficient to avoid error and delays and security measures should be taken for customer confidentiality. In order to make process faster, Marks and Spencer should introduce self service machines to reduce over crowding at tills and long queue.
Physical evidence: This element of marketing mix allows consumer to make judgments about the organisation or where the service is being provided. This may include internal and external appearances of the premises, waiting areas etc. marks and Spencer is looking forward to increase its physical evidence by modifying its stores. Some of the major changes will be construction work, new flooring and making changes to how they lay out their stores. Marks and Spencer is trying to ensure that its stores are in good shop for the customer.
The financial service business was one of the strongest elements in Market and Spencer’s portfolio and the in – store Marks and Spencer account card remained popular with 5.2 million account holders. Clear profit centres translated into a fundamental reorganization of the business, into five distinct operating divisions UK retail, international retail, financial service, property and ventures. For the first time the colossal UK retail business was to be managed as a whole rather than along product lines. Central management was to be streamlined giving store and regional managers more control over operating decisions. Meanwhile, the organization’s knowledge of its customer focus catapulted marketing concerns up the management agenda. The new department would help to ensure:
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