termine why they nearly collapsedIdentify Marks and Spencers market position and determine why they nearly collapsed
Marks & Spencer is one of the UK’s foremost retailers of clothing, foods, homeware and financial services, boasting a weekly customer base of 10 million in over 300 UK stores. Marks ; Spencer operate in 30 countries worldwide, and has a group turnover in excess of 8 billion. It has specific values, missions and visions. It’s main vision is to be the standard against which all others are measured’, it’s main mission is to make aspirational quality accessible to all’, and it’s main values are quality, service, innovation and trust. (www.marksandspencer.co.uk).
By the end of 1998 though, there was evidence of a crisis occurring. Customers and media pulled together to assist senior management partake in an internal audit to identify the problems and see if they could come to a solution. The purpose of this assignment is to construct a SWOT analysis, highlighting each of the strengths, weaknesses, opportunities and threats that were highlighted in the internal audit. The SWOT analysis is contained within the marketing plan and is the third step in the marketing planning process, coming after the Marketing audit and before any assumptions. (Joisce, Ted (2002), Marketing Planning Lecture Notes – 14/10/02, Mission, Objectives, Strategy, Tactics)
Conclusions will be drawn from the SWOT analysis, which will attempt to review the company’s position and identify the marketing priorities. Also, Marks ; Spencer’s recent marketing activities will be critically analysed in order to ascertain what improvements have been made since 1998.
This assignment will attempt to determine why Marks & Spencer nearly collapsed and what they have achieved in terms of success and failure as part of their recovery programme.
Strategic wear-out occurs when an organisation no longer meets customer needs and the pursued strategy is surpassed by competitors. (Drummond and Ensor, Strategic Marketing Management, p. 149, Butterworth Heinemann)
Marks & Spencer is a perfect example of a company that had a successful strategy but failed to adapt to the changing environment and have therefore suffered from strategic wear-out.’
Evidence to support this quote comes in the form of Marks and Spencer sending very little on marketing communications and being overtaken by their competitors, but this will be explained later in the assignment.
As Figure 2 shows, strategic wear-out refers to the lack of fit between an organizations strategy and the needs of the marketplace. This was clearly evident with Marks and Spencer when they became complacent about their customer service standards and thought their customers understood what Marks and Spencer stood for without marketing when all along they didn’t.
” the crisis caused a shake up at the top of the organisation and Peter Salsbury took over as chief executive. He said, “We lost touch with our customers and forgot about the competition.”
Salsbury immediately recognised the importance of customer service and how important it is to Marks & Spencer. Piercy states that, “The first step in market-led strategic change is very simple – lets just see if the people in our company know why customer satisfaction is supposed to be the most important thing to our business and lets see if they really believe it. (Piercy, N 1997, 2nd Ed. Market-Led Strategic Change – Transforming the Process of going to Market, p. 27, Butterworth Heinemann, Oxford)
This quote from Piercy is significant for Marks & Spencer because with the takeover and installation of a new chief executive came a responsibility to do what was right for the loyal customers. In recognising this, Peter Salsbury immediately came out with the above quote and stated his intention to recognise the needs of the customer and this is why it is seen as a strength. Ensuring the customers recognise that Marks and Spencer are determined to identify with them once more, things will start to look brighter not only for profits and sales, but also for Marks and Spencer on the whole.
” in January 1999, M & S created it’s first ever marketing department and started to look at it’s communication strategy in response to it’s crisis.”
“The communications strategy will derive from a brands marketing objectives and strategies. It is one of the means for achieving brand objectives.”
(Davidson, H 1997, 1st Ed, Even More Offensive Marketing, Penguin Books, St Ives.)
Davidson exclaims here that to achieve brand objectives, a communications strategy is a must. For Marks and Spencer this meant redefining their Brand Positioning Statement, a starting point for the communications strategy. A clear, distinctive communications strategy is more likely to increase sales than an exciting campaign with no strategy. Recently they have introduced the DB07′ childrenswear range, modelled by Manchester United football star and England Captain David Beckham. The sole intent of this campaign is to communicate to the younger audience by using a modern day icon for children to look up to.
” It was spending very little on marketing communication.”
Marketing communications provides the means by which brands and organisations are presented to their audience with the goal of simulating a dialogue leading to a succession of purchases. (Fill, C, 2002 Marketing Communications – Contents, Concepts and Strategies, Prentice Hall)
As Marks and Spencer spent very little on marketing communication, they bypassed a whole sector of importance both internal and external to the organisation. Yes, the communications process was still there, but it did not have maximum impact, as it could have done had more money been spent on the process. Therefore, this allowed rival organisations spending up to 30 million more on marketing communications, thus creating a larger awareness and outshining that of Marks and Spencer. By competing with it’s main rivals, spend wise, Marks and Spencer could have taken advantage of the market and made their brand more simulating to the audience, leading to higher purchases. This did not happen and they suffered as a result.
” M ; S were complacent about it’s customer service standards.”
“Quality is our best assurance of customer allegiance. Our strongest defence against competition and the only path to sustained growth and earnings.”
(Welsh, CEO of General Electric – adapted from Relationship Marketing Lecture Notes, 21/10/2002)
Marks and Spencer’s customer service standards were once exceptional in the UK retail trade, but the decline in this area allowed supermarkets such as Tesco to catch them up and ultimately surpass them. This is one of the main areas that Marks and Spencer’s should focusing on maintaining quality in, due to the fact that “customers form the base for every company’s success”. (Piercy, N 1997, 2nd Ed, Market-Led Strategic Change, P.129, Oxford, Butterworth Heinemann)
The complacency displayed by Marks & Spencer proved to be damaging for the company and this was evident when profits plummeted in 1998/1999, so this complacency proved to be a major weakness.
” Recent clothing range was described as dreary’ and uninspiring’, indicating that customers were not happy with the ranges or value for money offered in the stores.”
Figure 3 above outlines the major factors that Marks and Spencer were overlooking when they upset’ their customers with their dreary’ and uninspiring’ range of clothing. The model shows that to sustain customer loyalty, you must have quality and customer service. These combined equals customer retention where they come back. Marks and Spencer missed out the quality aspect when they released the recent clothing range. Therefore, profits fell, their customer service standards dipped, resulting in the fact that there was a reduction in customer loyalty and customers were not retained, allowing major rivals to take over.
The model also explains that customer loyalty means building bonds, and customer retention results in people, therefore, a big flaw was exposed when Marks and Spencer’s customers felt they were not receiving value for money.
“decided to reduce the 100% dependency on the St. Michael own label by introducing more sub-brands to give better targeting and perhaps even introducing designer names into the stores.”
By introducing brand names such as David Beckham, Marks and Spencer opened the door to a wider audience. Although the St. Michael brand was successful, they saw a new opportunity for a wider range of clothing and accessories by using sub-brands and designer names.
“A brand is an empty vessel you imbue with value”. (Wally Olins 1988)
This quote relates to Marks and Spencer immensely, because they saw an opportunity and exploited it by adding the name of David Beckham to their range. The name David Beckham is synonymous with value, quality and leadership and when Marks and Spencer introduced his DB07′ range, they imbued the store with value, at the same time attracting a new audience and creating a new brand.
” Marks and Spencer wouldn’t accept credit cards which proved to be very irritating for their customers.”
Straight away there is an opportunity here to be taken aboard by Marks and Spencer. Evidently it is the supermarkets which have the most effective loyalty schemes in enticing consumers to take out their cards. Goldfish is also very successful in this regard. The latter’s loyalty scheme includes the possibility to build up points that can be used to pay off gas bills, TV licenses, purchases at Boots, Asda, Marks ; Spencer and Dixons, or services from AA Breakdown and British Telecom. (www.mintel.com) As such it has a broad mix which appeals to a varied range of consumers. Now that this has been introduced to Marks and Spencer, it might bring back the customers and leave them less irritated as they will see new incentives to shop at the store.
” it was spending very little on marketing communication, around 4 million, compared with other big retail names spending anything from 20 million to 50 million.”
As touched on before when talking about weaknesses, spending very little on marketing communications can be seen as a major threat when their rivals are spending nearly ten times as much as they are. The lack of spending in this area means they are not as focused as their rivals, which include Debenhams and Tesco’s. Change is inevitable. To survive companies need to adapt and to convert the threats created by the changing environment into opportunities in order to avoid strategic drift’. Marks and Spencer is a prime example of a company that did not adapt to the changing customer demands and as a result has lost many of it’s loyal customer base.
What have Marks & Spencer undertaken in terms of marketing terms since 1998.
Marks & Spencer acknowledged numerous issues to address during the past four years as part of their recovery strategy for marketing, mainly with their clothing range – quality, fit, product appeal, pricing, segmentation, and availability. Fundamentally, they aim to ensure they have something for everyone. They aimed to produce higher quality goods, deliver them more quickly, and to do so at better prices, strictly in that order of priority – better, faster, lower cost.
When Marks and Spencer introduced the autumn range in September 2001, they felt the quality of their clothing, the display, and their store environments, made things clearer for shoppers. In this way, the Perfect campaign was the first real indication that their mission to win back the hearts of loyal Marks & Spencer customers was on course. Perfect meant high quality at accessible prices. The response was immense, and was instrumental in re-establishing confidence, not just for customers and press, but also for everyone within the business.
Later in autumn Marks and Spencer trialled five Classic shops, with such success that they extended the shop fit to 130 stores by June 2002 and will be adding 40 more next year. Classics is quite clearly for the traditional dresser and has been particularly successful in attracting back customers who felt the need to shop elsewhere. Unlike competitors, Marks and Spencer cater for a wide variety of people in terms of lifestyles and outlook on fashion, and do so across three adult generations.
They not only segment their ranges by lifestyle attitude, but also offer a large number of styles in clearly differentiated price ranges – all displayed in a way customers can grasp. Marks and Spencer thrive on the principle of providing good, better and best’. Their prices clearly establish the categories, with the Essentials range quite obviously just that – essential.
In January 2002, Marks and Spencer launched their spring collection in 58 stores. The overnight transformation of one million square feet of sales space, to display the 2002 collection proved to be a tremendous team effort. The impact and customer response was excellent, the range described as a return to classics with the emphasis on easy glamour’. (www.marksandspencer.co.uk). The success was due in large part to the influence of their revitalized in-house design team and Womenswear product teams.
Seasonally, they have been improving the fit of their clothing, aided by the previous year’s comprehensive survey involving 2,500 women.
The menswear customers are seen as vital to Marks and Spencer and by improving things in this department, the recovery of the clothing business continues to flourish. This is a good example of market penetration. (please refer to Figure 4: Ansoff’s Matrix)
Overall sales trends in adult clothing have filled Marks and Spencer with enthusiasm and optimism. They know exactly what areas in which they lost market share of adult clothing – but their recent trading instilled them with confidence that they are regaining lost share and continue to do so. They have vigorous plans to support this, and are further developing areas of their segmentation programme which have been particularly successful, such as Classics. These will be refined over the next 18 months, and the segmentation complemented by other ranges, such as the development of their smart-casual wear.
Marks and Spencer are also making big changes in their childrenswear department. They have always applied strict safety testing and have the best quality children’s clothing on the market, and if improved can become very successful as the following quote outlines:
“I think the biggest threat to the retail scene at the moment is Marks and Spencer. Marks and Spencer is very interesting. They have suffered recently but I think they’re more of a threat if they get their act together and get things right in children’s clothing they could make a huge difference – much bigger than any foreign retailers entering the marketplace.” Source: Mintel
In addition, Childrenswear is keen to involve personalities who are fans of Marks ; Spencer, so Marks and Spencer were delighted in February 2002 to sign David Beckham, a real style icon and role model, to help with their boyswear range. The first products arrived in stores in September 2002, and David Beckham himself has starred in adverts promoting the DB07′ clotheswear range.
Many of Marks and Spencer’s marketing activities since 1998 can be defined using Ansoff’s matrix. This provides a useful framework for identifying alternative strategies based on products and markets. Although it does not focus specifically on the way in which competitive advantages are gained, it does help businesses such as Marks and Spencer to consider the different options available to them in terms of growth strategies.
Each section of the Ansoff Matrix shall now be defined and adapted to Marks and Spencer where believed to be necessary:
This involves selling more of the same product to the same customers, much like Marks and Spencer have been with the menswear clothing range.
This strategy involves increased usage by encouraging customers to use a product more frequently i.e. loyalty bonuses.
This involved the development of new products for existing customers, i.e. the David Beckham range of clotheswear for children. Also the Blue Harbour and Classics range from Marks and Spencer.
This is the process of developing new markets for existing products. This can be achieved by targeting new segments or entering new geographical markets, as evident when Marks and Spencer brought 120 skilled jobs to the garment industry in Northern Ireland.
This is seen as a risky strategy. It introduces new products to new markets. The level of risk is affected by the extent to which the new strategy is related or unrelated to existing business.
This proves that things are looking promising for Marks and Spencer, they have bright ideas that are coming into place and are becoming recognised again due to the infiltration of famous faces such as David Beckham and granting him his own clothing range. Their marketing focus is on their clothing range which is probably the right idea due to competitors such as Tesco introducing their own clothing range. To incorporate their own style and image is something their competitors cannot comprehend to, so this is a huge step in the right direction for Marks and Spencers.
To conclude, Marks and Spencer’s obviously suffered from the period of decline. The fall in profits proved this and they were made to count the costs. In fairness though, they have bounced back and are pushing towards the market position they were always proud to hold, at the very top in their sector. This is evident with the new clothing range they have released and the capture of a household name such as David Beckham, they are heading for the top again. The SWOT analysis outlined the problems they faced and the opportunities they had to come back, but as you have read, they have outlined a major focus on their clothing range since 1998, and the profits are starting to come in again. With the Zip, Blue Harbour and Classics range of clothing, they have a vast array of clothing lines to offer new and existing customers. Things can only go up for Marks and Spencer after the disarray of 1998, and if current evidence is anything to go by, they are certainly heading in the right direction. This audit has given a clear view of the problems that were faced and how they have overcome these problems and what the future has in store for Marks and Spencer in terms of marketing.
Total Word Count (Excluding SWOT Analysis, Diagrams, Quotes and References) : 2498 words
ODavidson, H 1997, 1st Ed, Even More Offensive Marketing, Penguin Books, St Ives
OFill, C, 2002 Marketing Communications – Contents, Concepts and Strategies, Prentice Hall
ODrummond and Ensor, Strategic Marketing Management, p. 149, Butterworth Heinemann
OJoisce, Ted – Lecture Notes for Marketing Planning and Marketing Communications
OMeek, H ; Ensor, J, p. 150, Strategic Marketing Management: Planning and Control, 2001, Butterworth Heinemann, Oxford
OPiercy, N 1997, 2nd Ed. Market-Led Strategic Change – Transforming the Process of going to Market, p. 27, Butterworth Heinemann, Oxford)
OWelsh, CEO of General Electric – adapted from Relationship Marketing Lecture Notes, 21/10/2002