Marks and Spencer has been around since before the Second World War and over this time it has built up a good brand image which has enhanced its reputation. A strong brand image allows for more likely repeated business and customer loyalty.
Weaknesses
In the current state of the economy it is difficult for any high street retailer to increase sales however currently Marks and Spencer are suffering a significant loss in profit compared to previous years.
“M&S, which issued a profits warning in 2008 and said in January that Christmas trading was the worst for ten years, has embarked on a cost-cutting programme, reducing capital expenditure, closing stores and cutting more than a thousand jobs.”
(Wachman, 2009)
At current Marks and Spencer are suffering reduced sales in all merchandise in there portfolio in the UK, above 5%. The UK account for the vast majority of their sales revenue therefore if this continues in would have a big impact on total sales revenue and profit margins.
(Datamonitor, 2008)
Although as seen from Fig.1 sales revenue is at its highest in the last five years however profit margins are at their lowest.
“City analysts expect the company's profits to slump from £1bn last year to little more than £500m next year”
(Finch and Milner, 2008)
At times over the last couple of years they have also found themselves in a weak cash position. If this continues it could lead to “short term liquidity problems”
(Datamonitor, 2008)
Development of new products and services
To stay ahead of competitors in any market requires constant research into new products and services. Marks and Spencer biggest product change in the past was in the 1970s when the company expanded to not only offer clothes but food, this was a risky strategy but has proven very successful.
Recently they have also had to extend their services to the web to keep up with ever changing improvements in technology and new competitors taking customers through easier accessible online sites.
Most recently Marks and Spencer have started to sell heat and light the aim of this is said to trying and reduce the confusion of purchasing gas and electric and is said to help reduce customer’s monthly bills of these items.
(Finch and Milner, 2008)
Competitors
“Personal income and fashion trends drive demand for clothing. The profitability of individual companies depends heavily on effective merchandising and marketing. Large companies can offer wide selections of clothing and have advantages in purchasing, distribution, and marketing. Small stores can compete by offering unique merchandise, targeting a specific demographic, providing superior customer service, or serving a local market.”
(Hoovers, 2009)
Marks and Spencer biggest competitors are those large high street shop chains that offer similar products these are companies such as Debenhams and Next. It also suffers a large amount of competition from supermarkets in terms of its food sector.
The following are Marks and Spencer’s biggest competitors:
ASDA Group Limited
Debenhams plc
J Sainsbury plc
Matalan PLC
NEXT plc
Tesco PLC
Gap, Inc., The.
House of Fraser Group Plc
Because Marks and Spencer supply various products they have a wide range of competitors in various sectors of different markets, therefore products need to be constantly updated and changed in order to keep up with the competition.
Marks and Spencer have been travelling behind large companies such as ASDA for years because of the cheap prices ASDA promotes however Marks and Spencer have kept there prices constant and have relied on the quality and reputation of there products in order to make sales. However with the economy in the economic “slump” it’s in at the moment in the future a different market strategy may need to be adopted if Marks and Spencer want to stay one of the top retailers
Marketing Strategy
Marks and Spencer has been around for decades. The promise of value for money has been backed by well implemented strategies some of which date back to the formation of the company however they have been updated due to an ever changing environment. Clothes and food have a limited amount of growth capabilities and so growth options have had to be look at in terms of financial and international. Marks and Spencer have already entered the international sector but in order to increase growth further, further chains will need to be opened and expanded abroad to gain the same brand image that they currently have in the UK sector.
Especially with the current economic crisis occurring in the UK in order to boost or even maintain profit a different marketing strategy may need to be implemented in order to be specific for global domination.
Marks and Spencer have always targeted a specific market segment of the more relatively “affluent middle-class” customer which may need to be changed depending on the country they are operating in due to culture conflicts.
(Oxford University Press, 2000)
Marks and Spencer have always tried to work closely with suppliers and stay loyal to their smaller supplies in order to build a good Business-Supplier relationship.
(Oxford University Press, 2000)
Marks and Spencer recently, in 2007, put into action their “Corporate responsibility plan” also known as “Plan A” and aims to be well ahead of its competitors by 2012. The 100 point plan is based on being eco-friendly and covers five main points; combating climate change, waste reduction, sustainable raw materials, health and fair trade. The plan has being on-going for two years and as yet has made no significant difference in an economic climate that has seen sales slow. But Marks and Spencer are till adopting this strategy and have bright prospects for it for the future. If this plan is successful Marks and Spencer could take over the retail market, however new marketing strategies must also be undertaken abroad in order to sustain falling profit margins.
(Nagappan, 2009)
Closing comments
Marks and Spencer are a large corporate company, in a market that is seeing many competitors becoming insolvent due to the economic situation. If they can survive this economic period in the UK and become a well established company globally they have the potential to grow to one of the worlds largest retail and general distributers. With the correct marketing strategy implemented well, which could be “Plan A” Marks and Spencer still has a bright future despite current falling sales.
References
Marks and Spencer (2009), www.marksandspencer.co.uk, accessed 8th March 2009
Datamonitor (2008), Marks and Spencer Group, PLC SWOT Analysis, December 2008, p1-8
Datamonitor (2008), Marks and Spencer Group, PLC SWOT Analysis, December 2008, p1-8
Wachman.R (2009) www.guardian.co.uk, Article Monday 16 February 2009, Accessed March 7th 2009
Finch and Milner (2008), The Guardian, Wednesday 15 October 2008. Accessed March 9th 2009
Finch and Milner (2008), The Guardian, Wednesday 15 October 2008. Accessed March 9th 2009
Hoovers (2009), www.hoovers.co.uk/clothing-stores, Accessed March 9th 2009
Oxford University Press (2000), Strategic Management Process, Content, & Implementation; 2000, p313-322, 10p
Oxford University Press (2000), Strategic Management Process, Content, & Implementation; 2000, p313-322, 10p
Nagappan. P (2009) Article, Apparel Magazine, February 2009, Vol. 50 Issue 6, p10-14, 5p
Datamonitor (2008), Marks and Spencer Group, PLC SWOT Analysis, December 2008, p1-8
Datamonitor (2008), Marks and Spencer Group, PLC SWOT Analysis, December 2008, p1-8