Analysis Of Marks And Spencer Company: Challenges And Recommendations

History

Marks and Spencer started more than 125 years ago when the Jewish immigrant Michel Marks came to the north of England. He began as a pedestrian salesperson who sold simple goods such as needles, cottons, pins and sewing accessories door to door. Soon he started a market stall in Kirkgate market in Leeds. He classified everything by price, but quickly stopped selling more expensive items when the penny section succeeded. Michel decided to look for a partner to help manage his growing business. He initially approached Isaac Dewhirst, who had loaned him money towards his original startup costs. Isaac declined but recommended Tom Spencer- his senior cashier. With the capital of £753 invested in the business, the partnership grew with new shops being opened and their own warehouse built in Manchester. In 1903 the partnership went public. On incorporation the business was registered to “carry on bazaars in Manchester and elsewhere”. It was worth £3000 and had at least 36 shops.

Shortly after, brand established the foundations of the business, both men retired from the company and their sons took over the business. Thomas Spencer died in 1905 and Michael Marks in 1907.

Products/ services

Marks and spencer well known for their retail clothing and food but also, they offered furniture, home products, beauty, wine, flowers & gifts. Also, M&S bank service.

In retail clothing includes men, women, lingerie and kids. with these ranges, M&S use a number of own brands such as M&S Collection, Auto graph, Limited edition, per una, Twiggy, Rosie for Autograph, Blue Harbour, David Gandy for Autograph.

Within Marks and Spencer food ranges, it first pioneered sachet meals in 1972.The company sells main meals, sweets, cakes and other savory items. It launched its “Percy pigs” sweets in 1995 and it was a great success also has an extensive wine and beer range which was first started in 1973.M&S’s relatively successful interior design ‘Home’ brand was launched in 2005 and featured products such as bedding, bathroom accessories, dinnerware, cook ware, luggage/suitcases etc.

Positioning of the Brand

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 premium brand perception in the minds of customers.

Brand Elements

Marks and spencer is a success when consider as a brand name as its memorable and very close to Europe people as mark & spencer are common names in the community. Also, its logo is very simple yet remarkable as its contain letters M&S. Just the first letters of both names.

'Don't ask the price, it’s a penny' was the slogan Michael Marks used when he opened his first bazaar in Leeds in 1884. It couldn’t be any simpler and but meaningful. From then M&S had very memorable, persuasive slogans time to time aligning with their marketing campaigns. Your M&S, Spend it well, Only at M&S are successful slogans among them.

Distribution

Marks and Spencer provide store experience as well as online facility. There are around 1035 stores across the U.K. including 615 that only sell food products. Internationally M&S has 468 stores in 58 countries across Europe, Asia and the Middle East which are a mixture of franchise, joint-venture and company owned. Some of the countries are Ireland, Paris, Philippine, Netherland, Malaysia, India UAE, Australia, Spain, Turkey, Hong Kong etc. M&S utilizes all major channels to broadcast and promote its products. Initially the promotions of M&S were found in news-papers, televisions, radio and magazines; and later the brand has entered promotions using online marketing.

Market share

Mintel’s research shows that consumer spending has disjointed away from the middle market retailers such as M&S and Matalan and joints with low market retailers. Among them high performer is Primark. Non-specialist retailers such as Sports Direct, Debenhams and JD Sports also outperformed M&S.

Current Status and Key issues

Decrease in profits

Marks and spencer has reported a huge and sharp fall in annual profits as it revealed a worsening in clothing sales & extensive store closure costs. In the past year, M&S’s brand metrics have fallen against every brand measure, according to reports.

In the general retailer category, M&S’s overall score, which takes into justification how consumers rate the brand in impression, quality, value, reputation, satisfaction and whether they would recommend it, were very high earlier but as per researches they have come down drastically.

Less quality

Younger shoppers have been tempted away by competitors which are cheaper, faster and more aspirational, while the so-called fast fashion retailers like Primark and H&M have enhanced their quality. Meanwhile, older shoppers have complained that they are no longer being stylishly catered for, and there has been reliable condemnation that the in-store experience is confused and uninspiring.

Marks and Spencer always differentiate themselves from its competitors for their premium quality. Unfortunately, in these recent years its position as quality retailer has lost its influence and has resulted in continuing decline in sales.

Lack of innovations

Offering lack of new trends and innovation has affect the number of people who comes in to M&S stores. M&S operates in a market in which innovation keep one's brand consistent and in line with the requirements of an ever-changing customer base .In clothing business, the threat of substitutes is high – copying or imitating existing designs is becoming ever easier. The decline of M&S was largely due to competitive retailers operating with cheaper imports. Its premium position is threatened by shifting customer preferences; they might prefer to shop for a label or look for similar quality products offered at a better price elsewhere. Marks and spencer reputation and brand positioning must be revaluated and restored if sales are recovered.

Strategic Recommendations

While M&S should start delivering on their quality promise they also have to catch up on the Competitive Points-of-Parity about fashion. And always they should look to improve their qualities which is stand them apart from other retailers.

Enhancing customer loyalty

M&S is different from other retailer in the market by targeting the customers that demands for ethically produced goods and clothes. In addition, this would strengthen their position in the quality goods and introduce an opportunity to enhance their brand image through PR. Regardless of M&S’ problems, the company still holds a loyal customer base and they are well placed to benefit from the aging population. However, they need to ensure they keep attracting the next generation of loyal customers by appealing younger customer into their stores.

Offering innovative quality products

M&S should Emphasized quality and value at a premium price but also should look at 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. The market is demanding fashionable clothing. The external challenges of increased competition and technological improvements will require M&S to continually develop and depend on 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 extraordinary customer experience will be an essential factor in the success or failure of any M&S future strategy.

The Marks and Spencer brand resonance model pyramid is equally strong in every part considerably. But they have to work more to strengthen the judgments by brining innovations & design. Addition to that if reestablishing the quality will add more strengths to judgmnts. This will help to complete the resonance when customers become more loyal to their premium brand.

M&S customers value quality of clothing over low price (Mintel, 2013) they have the potential to use value-based pricing by providing quality goods with slightly higher prices than its competitors such as Primark and H&M. However, in order to boost like-for-like growth this should be balanced with regular promotional discounts especially in goods that are not picking up demand as anticipated. If M&S were to invest in bringing back some of its manufacturing back to UK, the new lines would have the potential to be sold at a premium given that there is most interest in clothes made in Britain .Also they should be a different pricing level to the group who they show above-average interest in new collections and are increasingly mixing and matching more expensive clothes with cheaper clothes. One of the problems Which M&S needs to correct is insufficient differentiation between sub-brands. A differentiated pricing strategy that its competitor including Zara has used to attract different socio-economic groups would be part of the solution. Researches shows that people who shop at John Lewis, Zara, Debenhams and M&S place the most importance on quality of the product finish and the durability of clothing, while consumers who buy from Primark, Matalan and supermarkets see low price as more important. Especially the youngest customers aged 16-24 see low price as a priority. So M&S should consider value pricing and competition pricing when they decide the price ranges.

Correcting the Product

The company’s strength throughout the history has been the quality of its goods, and despite all the problems people still associate the M&S brand with quality. As 87% of customers value the quality of clothing as important, the company is doing the right thing in emphasizing the quality image. M&S has an opportunity to both reinforce its position in the quality goods market and target the increasing number of consumers interested in clothes by giving them best quality products. In their existing product lines clearer differentiation and sub-branding for different target markets is required to attract different target consumers and increasingly fashion aware customers. M&S should cooperate more closely with designers to bring the new trendy product as Debenhams have done.

Especially the older generation sees customer service as very important and 66% of all customers see in-store customer service as important. Even though the attention should be on the product, customer service is an important part of the brand awareness and continuous staff training should be maintained. Four fifths of consumers see return policies important and a quarter places a high importance on free returns or a longer refund period. People who shop online for clothes at M&S, Debenhams and John Lewis are the most concerned by a retailer’s returns policy. As a result, M&S needs to ensure they have a updated process for returned goods and that returning clothes is a pleasant experience for the customer.

Improving Distribution channels

Stores - Products are sold through 766 stores across UK in varied locations across high streets and out of town retail parks. A new store concept has been introduced to over two-thirds of the stores. M&S Also should work now to attract younger customers. Even though it is not their core target market this is a positive direction indeed because the company needs to ensure they have a consolidated customer base in the future when the older generation of loyal M&S customers die out. To attract more young customers, smaller specialist stores which filled by excitement could be opened. Online Sales – M&S have increase in online sales every year. M&S should work more on online sales as this going to be the mode of sales in future. Currently it has home delivery and collect from stores after online ordering, they should more work on their online such as to developing a mobile app.

Also M&S should work on with a pull strategy to respond to the growing consumer hunger for updated collections and the company’s recent stock management problems. A possible solution to this problem is to bring external expertise into the house in supply chain management.

Promotions

M&S should increase its investment in advertising to build its brand image on fashion to support, innovation and value.

M&S should has objectives in its marketing communications campaign. It should show that its products have been categorized and separated from the competitors’ products by its high quality, stylish, great value and to enhance the perceptions of consumers in terms of quality and fashion. At the end every season from each year, M&S carries out marketing communications campaign.

The ad was screened on the TV, which could provide higher levels of awareness and reach to a large number of target audiences. Besides, it also was launched in the cinema. This is a great success and they should be continuing this.

At the same time the ad can launched on the internet to support the TV and cinema launch. Always M&S Christmas advertisements has had a strong impact on sales. However, M&S needs to focus on delineating the sub-brands further, ideally by bringing further celebrity and designer input into the brands. Also M&S should has a consistent in their advertisement campaigns.

In addition to getting celebrities to endorse the company’s clothes, M&S could get a celebrity to endorse their Plan A and sustainable working ethics. This combined with the new ‘British clothing’ line the company’s brand image would see great enhancement potential through PR and the company would appeal to the customer segment that increasingly values ethically produced clothing. M&S has currently online presence in the social media including Twitter, Facebook and YouTube in addition to direct online marketing. A recent study by Bazaar voice, a US based company that does online reviews for retailers including Marks & Spencer and Next, found that when a brand’s response to a negative online review offered to refund, upgrade or exchange a dissatisfied customer’s product, consumers were 92%more likely to purchase than those who saw no response. This study shows the importance of responsiveness in the online social media, which Marks & Spencer has to pay attention to. So this means not only maintaining an online web site is but also be responsive & interacting with customers are very important.

Also they can expand their innovations such as made-to-measure men's shirts, to products including dresses and jeans.

M&S should more look in to promotions as other retailers run seemingly non-stop promotions. As a result, they like-for-like sales grew around 5%. But special offers helped M&S to grow their like-for-like sales only around 1% for the last years. M&S should drive its profits by investing some of its gross margin in price cuts and attractive promotions. Personal selling does not play a major role in M&S’ business but through customer service and in-store selling the consumers perception about M&S’ brand and business can be affected. M&S should train their employees to have personal conversations with customers, discussing their needs and what they are looking for, offering options for them to try, and general relationship building and to keep the customer's needs foremost and engage positively with customers.

Conclusion

As a long-standing UK business, M&S’ differentiation strategy accentuated 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. The market is demanding fashionable clothing. M&S has to step up efforts towards meeting this demand through a joint venture with a strategic partner to achieve competitive advantages. It should then increase its investment in advertising to build its brand image on fashion to support innovation and value.

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.