INTRODUCTION

Marks and Spencer, the Britain retailer, is a general retailer that sells clothes, foods, home
furnishings, etc. under the brand name of St. Michael. The goods they have are perceived
be of excellent value and quality. It has been seen that the company adheres to top-down
management approach and watched under the close supervision of its top management.
This was going good with the company for several decades, but latter part of the 90s
there was a noticeable decline in the sales and in the overall performance of the company.
The core values of M&S: quality, affordability and service were under the attack from its
competitors. As they operate in many segments like food, cloths, etc. so they have to deal
with a lot of competition. Moreover, M&S failed to understand the changing trends in the
market. Other retailers provide the customers with better fashionable and trendier designs
with good value, top-quality premium food products like chilled ready meals. But M&S
has not changed enough to be competitive; this resulted in M&S losing its profits and
market share. All this shake-up the whole organization.

M&S is trying to gain market share and for them to regain its market share and dominance
they need to invest. Currently M&S takes on the larger market share and is still suffering
in its profits. This implies weakness in a rather cutthroat world of retail. Giving access to
quality food and clothes to all is their vision. They are committed to understanding and
meeting the customer’s needs consistently, in this ever competitive retail environment.

Plan to Build Customer Relationships through an Integrated

Marketing Mix/Program (4 P’s)

OR

Preparing an Integrated Marketing Program to give intended

Value

1. Product:

Main products at M&S are garments and food (only food accounts for 40% of revenue).

Marks and Spencer's garment products are known for their first-class quality, reliability,
style, and variety. Since its incorporation, Marks and Spencer's has never compromised
on these important factors; the reward of which is in the form of loyal customers all over
the world. But the garments products are becoming unattractive, lifeless/old-fashioned
and failed to attract customers plus youth is ignored in their clothing ranges, resulting in
50% decrease in profits during 1998/99.

All products are under the label of St. Michael and no designer name is displayed in
clothing ranges.
Product oriented approach …. M&S made a mistake of paying more attention to the
quality or continuous improvement of the products than to the benefits or experience
produced by theses products.

2. Price:
Marks and Spencer's charges a medium to high prices for its own in-house brands for
garment (reasonable price to very expensive price) because of its premium quality. But
most of its products have premium prices which only target a specific upper class of
consumers. The company adopted promotional pricing strategy i.e. discounting but very
early (only week after the ranges had gone into the stores) which erode a brand’s image
in the eyes of the customers.

Not all customers belong to a single income class. It is more profitable for competitive
organizations to make their products acceptable and affordable for as many income classes
as possible. Marks and Spencer's makes garments of varying prices, but they are not
affordable for low income people and target only the upper income class.

3. Place:
Just making a product and running a marketing campaign for it is not enough. The products
must be available at convenient places for the target customers. Marks and Spencer has its
presence all around UK and a well-established international existence in North America,
Asia and continental Europe. This is important to capture a target market before the
competitors do so. So its products are easily available in the cities and towns of UK as well
as other developed countries …. It has diversified products result in bigger and slower
supply chain. Because competitors are adopting efficient and quick product turnover,
smaller and faster batches, M&S clothes, when arrived to stores cannot stand the
competition. Costumers find them out of fashion.

M&S depend heavily on UK suppliers’ for its products (65%) while some competitors are
making their supplies from cheaper countries.

4. Promotion:
No promotional strategies even no separate marketing department for M&S. Spend only
GBP 4 million, 5 to 12 times less as compared to its competitors.

Now the customers have become more knowledgeable and style conscious. They choose
every product after exploring all the alternatives. So the retailers of garment products have
to expend a great amount on their marketing efforts. Marks and Spencer also has to allocate
a big portion of its marketing budget on promotional activities. This is essential to keep the
image of the brand alive.
Analyzing Primary & Secondary Activities of M&S through Porter’s Value Chain
Model

Porter’s value chain model involves reviewing the primary and support activities of an
organization to identify areas where an organization achieves the greatest value and then
focusing on those areas of value to achieve competitive advantage.
1) Primary Activities (deal with the actual production and delivery of the product or
service)

In the area of inbound logistics, Marks and Spencer receives inventories coming from its
UK suppliers. The dependency of the English suppliers is huge and more than that of its
competitors. They have to choose to receive materials from suppliers from other countries
to cut costs and compete in the market. Especially, coming to Pakistan, inventories must
be purchased from local but quality suppliers as dependency upon foreign suppliers will
raise the cost, time & prices.

In terms of operations, Marks and Spencer is involved in the selling of apparel, foodstuff,
and even home furnishings.

In the same manner, they are also involved in the distribution of these items to all the
Marks and Spencer stores spread across UK. This essentially covers the outbound
logistics of the organisation. In Pakistan, M&S should also adopt order and delivery
options as in case of some local stores and provide extra convenience service for online
shopping by offering next day delivery options.

Moreover, sales and marketing of the company seems to be the week area and need
priority solutions. With the intense competition present in the industry, competing for
consumer favour and adding value to the brand takes a step above the rest of these
primary activities …. They need to be customer oriented instead of product oriented

In the area of service, the customer service standards have been low allowing the
competitors to capture the market by providing quality service.

2) Secondary Activities (do not add value directly but help to improve the efficient
delivery of the primary activities)

In the context of human resource, training is required to improve customer services. On

the other hand, the use of technology covers e-commerce and other online transactions.
Free Wi-Fi facility can be provided at each store. Further, infrastructure needs proper
attention and renovation.

For M&S, the areas of greatest value in its value chain appear to be that of outbound
logistics (warehousing and distributing finished products to customers) linked to
infrastructure (798 stores highly visible and easily accessible on almost every high street
in the UK) and supported by technology (IT systems and fast growing e-commerce
business).

To maintain its position in the top 10 forever, there is a need for Marks & Spencer to
improve its procedures on its inbound logistics, operations, suppliers, store designing,
layout and many more. Their warehouses should be made clear of old stocks to give way
to new up-to-dated stocks. The packaging of their products should also be given due
considerations. It is recommended for Marks & Spencer to consider purchasing supplies
from overseas to save cost so as to provide customer product at less price. There is also
a need for Marks & Spencer to redesign their store in ways that give space, convenience,
and comfort to customers while they are browsing, fitting and shopping. Marks & Spencer
management should eliminate delays in decision making and use digital manufacturing
systems. Marks & Spencer needs to hire perfect, innovative, enthusiastic, punctual, honest,
and trustworthy personnel.

Developing strategies for Growth in Pakistani Market through

Ansoff’s Product/Market Expansion Grid

M&S is following Market Penetration strategy in the UK market by engaging in more

aggressive promotional campaigns and sales promotions and adopting a competitive
pricing strategy. The firm has opened many outlets in their captured markets in order to
increase sales of their existing products.

Entering in the Pakistani market, they will be adopting market development strategy
not only in terms of new geographical boundaries but also in terms of demographics as
almost half of the total population is young or below 28 years of age, so the marketing
strategies of M&S should be totally different than that adopted in the UK or other
countries.

Diversification
The emerging economies of Russia, India and Western countries provide opportunities
for innovative products to be marketed for example introducing Western cuisine into its
food lines. As M&S focuses on achieving market/product growth, it should consider
developing products that fit closely with the company’s core philosophy and competencies as
too many product lines can result in cannibalization. In addition, despite the attraction of
increasing internationalization, timing as well as the elements of the PESTEL framework
are key factors that must be taken into consideration as these can impact the success or
failure of any strategy being undertaken.
Applying SWOT Analysis on Marks & Spencer

Strengths:
 It’s been for more than 100 years so it has a good history of trade.
 It has a long term relationship with its UK suppliers
 Loyal customer base
 Reputation / strong brand image in UK.
 Domestic (UK) & global presence/coverage ….. stores all over high streets in UK
 All stores have large trading space.
 Excellent and high quality products
 Profitable company and has a large market share in the retail sector

Weakness:
 It is heavily reliant on British suppliers where as its competitors use foreign
suppliers for low cost products.
 They have an old and classical fashion image …. Considered old fashioned and
being behind the time according to their product range.
 Advertising is poor / no separate marketing department / Weak public relation
campaigns
 customer focus/service is low
 Non-acceptance of credit card
 Does not target youth / No knowledge about the market for the younger
generation. Clothing: does not really reflect younger women's taste.
 Slow to change …. Slow to adopt to change in customers tastes
 Dependent on suppliers.
 Less promotional activity for stores and company.

Opportunities:
 Expansion in growing product areas such as Food, Home and Beauty as they have
customers trust for their quality and innovation
 Target younger audience …. Especially with perspective of Pakistan
 Focus on cloths market segment by age group and introduce clothing line for kids
and teenagers.
 It can introduce designer names in to the stores
 More advertisement and promotion / Reinforce brand image in an advertising
campaign
 M&S has to enter the e-business effectively as their competitors
 Uses of good CRM systems that can help them keep track of customers' demands.
 Stores refurbishment

Threats:
 Since M&S operate in many segments like food clothing and others they have
many competitors such as Tesco providing quality stuff in reasonable price and the
customers are price conscious too …. Growing competitive pressures …. Stores with
more fashionable clothes to lower price
  Fashion is changing rapidly / customers are always looking new fashion cloths /
Changing buyers needs and tastes.
 M&S has not done well in the foreign market after expanding abroad. Still 85% of
sales & 90% of profit comes from UK market and UK market is also becoming
competitive day by day
 Price competition and expensive.
 Internet allows the customers to shop from home online.
 Rising sales of substitute products.
 Vulnerability to recession and business cycle growing.
 Growing bargaining power of customers and suppliers.
 New market (Pakistan), new laws … external environment changes (customer
behavior & taste, etc.)

Portfolio Analysis through BCG Approach

M&S’ main drivers are clothing and food. Other products/offering have not been reflected
on the matrix as the focus of this case study has been limited to the company’s core business of
food and clothing.

Question Marks
From the case study, clothing/garments seem to be plotted in the category of Question
Mark. The garments products are unappealing and old-fashioned and failed to attract
customers, resulting in 50% decrease in profits during 1998/99. Revamping women’s wear
by designing fashionable clothing to attract the youth is the growth strategy that is being
recommended.

Cash Cows
M&S has a good-sized cash cow i.e. food which accounts for 40% of revenue. Since it
represents the backbone of the company so it should be vigorously defended by holding
onto sales and market share; for example, continually introducing new-taste and
appealing food. Funds generated from this cash cow can be channeled into the stars and
the promising question marks to develop them into cash cows.
Dogs
Premium priced clothing has been identified in the dog category. With low share in a
mature or declining market, M&S should give strong consideration to divesting this
product line as it may continue to place a drain on resources without the desired level of
returns.

If it does not balance these products well in the portfolio, the company can be in for
trouble. Investment in fashionable clothing, tasty and healthy foods supported by
increased advertising are the strategies that M&S should pursue as it moves into the
future.

If M&S is taken as an organization in BCG Matrix, it could be positioned as "Star"

because despite of its declining performance and poor customer services, it is able to
capture large market share of UK. But increasing competition in the market is a serious
threat for its Star position. The international operation seems to not get large market
share as expected and this will also affect its competitive advantage. M&S must aim to
remain at Star position as consumer market is growing day by day and there are great
opportunities to grow.

Porter’s Generic Competitive Strategy

It can be said that M&S employed the “Differentiation Focus” strategy in case of its core
products (food and clothing) as it concentrates on a narrow segment i.e. a particular buyer
group (executives), market segment (high-end), and within that chosen segment M&S
attempts to achieve differentiation in order to become a leader in the UK market. Clearly,
the products of M&S are different from the other retailers in terms of quality and
innovation. Moreover, adding the quality dimension to all its products M&S secured high
amount of customer satisfaction and loyalty.

However, especially in view of the Pakistani market, M&S must go for “Differentiation”
strategy and try to provide quality products to broader segment of Pakistani market.
Uniqueness competency should not only be maintained in product quality but should also
be maintained in the services and store infrastructure and the overall experience which
customers get at companies stores.
CONCLUSION

As a long-standing UK business, M&S’ differentiation strategy emphasized quality and value

at a premium price but neglected a key founding value, that of innovation. It must now
refocus its efforts to become an innovative, customer-oriented business with specific
emphasis on introducing new products and services, adding new features to existing
products and services and developing new ways to bring them to the customer. M&S
drifted away from its core values and failed to notice that the competition was getting
tougher and was not in line with the changing trend, this made them to lose a few
customers. M&S should come up with a contingency plan to not only focus on
differentiation, but also to encounter the growing rivalry from other supermarket chains.

The market is demanding fashionable clothing. M&S must focus on “wearable style” and
wardrobe essentials, offering high quality, increased availability and improved service.
The target customer does not want the latest catwalk fashion, they demand quality, fit
and contemporary style. That means having clothing that is high quality but also
comfortable and fits well. If M&S get the core quality right, they can sell more. And they
have to do that by focusing on fit and finish.

In Food, one of key insights is that customers look M&S as an exciting place to shop as
opposed to average supermarket, whereby it feels like more of a necessity. In contrast,
shopping with M&S for food is more of an interesting and exciting experience.

Changes to M&S’s price strategy is necessary. A “strong position on price” is required to

ensure M&S is no more expensive than competitors but is better quality. “More for Same”
is the right positioning strategy for M&S. In the past, driving up sales through promotions
“trained the customers” to buy on discounts. That must end now, with M&S cutting down
on the number of flash sales in its calendar to focus on value-added treats.

M&S need to be more strategic about promotions. It’s also about understanding the
whole customer experience. Finding out what customers think, feel, and do – and having
a very clear view about what you want them to think, feel and do in the future. Then,
working out what you can do to create that behavioral change, and tailoring
communications accordingly. It should then increase its investment in advertising to build
its brand image on fashion to support innovation and value. Personalized promotions is
required like some loyalty program.

A focus on the long-term brand revival not short-term sales

M&S must focus on long-term brand revival not short-term sales. From cutting prices to
improving staffing levels – all this will impact on the profitability in the short term. Yet
profitability should not be the focus of M&S. M&S should not chase sales at any cost and
this is likely to be challenging in the short term. The priorities must be the customers and
brand and how to recover clothing and continue to grow the food business. That involves
evaluating customers’ reviews and look at fit and quality. M&S must aim for sustainable
and get profit growth back.
Interestingly, the customer base is much more evenly spread. It’s true that the older
customers - female, 50 and who shops with the retailer about 18 times a year - tend to
shop with M&S a bit more frequently and therefore have a higher spend, but actually it
has a lot of younger customers coming through the door – particularly in categories like
food and clothing.

If it does not balance these products well in the portfolio, the company can be in for
trouble. Investment in fashionable clothing, tasty and healthy foods supported by
increased advertising are the strategies that M&S should pursue as it moves into the
future.

The external challenges of increased competition and technological improvements will

require M&S to continually develop and rely primarily on its internal resources and
competencies to achieve competitive advantages. Ultimately, the ability to provide the
right product to the right customer at the right time through the right channel to provide
an exceptional customer experience will be a defining factor in the success or failure of
any M&S future strategy

Acceptability: Looking at the current weaknesses like not following the market trend in
the clothing line and no proper customer service that M&S have it can’t sustain the
challenge from other retailers like Tesco, Sainsbury, gap and Zara as do market research
and follow the current trend that is in the UK.

Sustainability: For M&S strategy to be sustainable and prosper in the long term their
core competences has like value to customers, Rarity, inimitability has to be looked at.
Because customers feel they are not getting value for their money as the competitor are
offering goods for cheaper prices, Their products are not rare and can be imitated by
other competitors.

Recommendation:
Come up with new quality products in areas of cloth food home and financial services
and achieve customer satisfaction through quality service.
Regain lost market share in clothing: Improve the Per Una brand as people like it.They
have to be customer oriented and do a market research on the current trends in the UK.
Start providing trial rooms so to attract customers. Use Zara’s concept of communicating
with the manufactures abroad through media.
Obtain customer opinion and feedback this helps not only in keeping up with the
current trend in the clothing line but also helps to do research in the food and home
appliances sector.
Improve online shopping this not only helps in reducing costs but also helps in
increasing sales and to be competitive and also an opportunity to advertise in the internet.
Make the advertising big as M&S is an old organization and the younger generations
who are not aware of it would rather go to stores which are attractively advertised. Putting
up hoardings in the streets and may be in the Tube stations would help attract customers
not only in UK but also tourists.
Improve the customer shopping experience: M&S need to invest in its stores in areas
like stock availability and better customer service which adds to the value to the customers
and uniqueness quotient.
Improve franchising in foreign: This helps to capture market share in other countries
with less capital.