M&S key business areas are men's, women's and children's clothing and gifts, home furnishing, food and financial services.
Table Of Contents
EXECUTIVE SUMMARY 2
.1 THE MARKET 2
.2 MARKETING OBJECTIVES 2
.3 STRATEGIC DIRECTION 2
.4 ACTION PLAN 2
2 COMPANY BACKGROUND 3
3 STRATEGIC MARKETING PLAN FOR M&S FOR THE NEXT FIVE YEARS 3
3.1 MISSION STATEMENT 3
3.2 SITUATION ANALYSIS 3
3.2.1 The market 3
3.2.2 Competition 4
3.2.3 The customer 4
3.2.4 The products 5
3.2.5 SLEPT factors 6
3.2.6 Key points from marketing audit 6
3.2.7 Internal strengths 6
3.2.8 Internal weaknesses 7
3.2.9 External opportunities 8
3.2.10 External threats 8
3.3 MARKETING OBJECTIVES 9
3.3.1 Objectives 9
3.4 ASSUMPTIONS 9
3.5 MARKETING STRATEGY 9
3.5.1 Ansoff Matrix 9
3.5.2 Strategies 10
> Defining the Strategic Objective and Opponent(s) 10
> Choosing a General Attack Strategy 10
3.6 ACTION PROGRAMME 11
3.6.1 Pricing 11
3.6.2 Prestige goods 11
3.6.3 Product proliferation 11
3.6.4 Product innovation 11
3.6.5 Improved services 11
3.6.6 Distribution innovation 11
3.6.7 Manufacturing cost reduction 11
3.6.8 Brand positioning 12
3.6.9 Promotion and communication 12
3.6.10 People 12
3.6.11 Process 12
3.6.12 Physical evidence 12
3.7 MARKETING BUDGET 12
3.8 CONTROL 13
Executive Summary
.1 The market
* M&S key business areas are men's, women's and children's clothing and gifts, home furnishing, food and financial services.
* The main competitor of M&S in the clothing market for the young with more street credibility is Gap, and in the middle of the market are Next, Debenhams and Principles. Furthermore, in the market of home furnishing, the main competitors of M&S are Debenhams and Laura Ashley. Moreover, the main competitors of M&S in the food market are TESCO, ASDA, Sainsbury and Kingfisher (in the UK), and Wal-Mart from the USA and Carrefour in France. Finally, he main competitors of M&S in the financial services are Lloyds, Natwest, Barclays and Midland and other banks.
* By the beginning of 1999, M&S's market value was £10 billion and in the spring/summer of 1999 company's shares fell to a five-year low of 335p.
.2 Marketing objectives
* To increase the market value of the company from £10 billion which was in the beginning of 1999 to £25 billion in the following five years.
* To have a 40% market share in UK clothing market by 2006
* To have 6% market share in UK food market by 2006.
* To have a 6% market share in furnishing and financial services market by 2006.
.3 Strategic direction
* Define the strategic objectives and opponent(s)
* Choose a general attack
.4 Action Plan
* Product development
* Better pricing
* Distribution innovation
* Brand positioning
* Promotion & communication
2
Company Background
M&S is a British institution with a worldwide reputation as a high quality retailer - nicknamed 'Marks and Sparks' by the irreverent British consumer. It is also a global business with operations in Canada, the USA and Caribbean, Europe, North Africa and Southeast Asia, and owns Brooks Brothers and Kings Super Markets in the USA. The 'Britishness' of M&S is such that when Princess Diana died in France, it was the Paris M&S store on which thousands of Parisians converged to pay their respects.
M&S has consistently been Europe's most profitable retailer. The core product area for the company is clothing, and it has dressed a substantial proportion of the men, women and children in the UK for five generations, from their underwear outwards. M&S has around 25% of the UK £15 billion clothing market.
The company is renowned also for its high quality grocery selection - it has become the UK's largest butcher, fishmonger and greengrocer - taking 3-4% of the £60 billion UK food market, traditionally concentrating at the high margin end. M&S also sells a range of household products and furnishings, as well as becoming a major financial services supplier. - it has 5.5 million charge card holders - and the consumer trust in its brand is so high that it can sell investment products alongside clothing and food. The company operates 373 M&S stores, 85 M&S franchises with partners outside the UK, 173 Brookes Brothers stores and 40 Kings Super Markets stores, as well as operating some direct marketing activities.
3 Strategic Marketing Plan for M&S for the next five years
3.1 Mission Statement
M&S's mission statement for the next five years is to become again the leading company in clothing, furnishing and food industry in the UK and Europe. Furthermore, it must develop its financial services programme in order to become more competitive and increase its market share in this industry.
3.2 Situation Analysis
3.2.1 The market
M&S belongs to the retail and wholesale industry. The clothing market is split into three main categories:
* Men's clothing
* Women's clothing
* Children's clothing
The core product area for the company is clothing, and it has dressed a substantial proportion of the men, women and children in the UK for five generations, from their underwear outwards. M&S has around 25% of the UK £15 billion clothing market.
The UK clothing market has changed in important ways. Consumers are buying 'aspirational brand names' or discounted goods. M&S is trapped in the middle of the market offering neither brands nor discounts. The overwhelming pressure is value for money - either in added-value brands or low prices. M&S admits it has lost track of what its customers want and how much they are prepared to pay.
The company is renowned also for its high quality grocery selection - it has become the UK's largest butcher, fishmonger and greengrocer - taking 3-4% of the £60 billion UK food market, traditionally concentrating at the high margin end.
Furthermore, the home furnishing market covers all the furniture a house can have. M&S sells a range of household products and furnishings, as well as becoming a major financial services supplier. - it has 5.5 million charge card holders - and the consumer trust in its brand is so high that it can sell investment products alongside ...
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The company is renowned also for its high quality grocery selection - it has become the UK's largest butcher, fishmonger and greengrocer - taking 3-4% of the £60 billion UK food market, traditionally concentrating at the high margin end.
Furthermore, the home furnishing market covers all the furniture a house can have. M&S sells a range of household products and furnishings, as well as becoming a major financial services supplier. - it has 5.5 million charge card holders - and the consumer trust in its brand is so high that it can sell investment products alongside clothing and food.
3.2.2 Competition
M&S has no major direct competitors. The main competitor of M&S in the clothing market for the young with more street credibility is Gap, and in the middle of the market are Next, Debenhams and Principles. Also, Boots competes M&S in brightly coloured children's clothes and gifts. Furthermore, in the market of home furnishing, the main competitors of M&S are Debenhams and Laura Ashley. Moreover, the main competitors of M&S in the food market are Tesco, ASDA, Sainsbury, Kingfisher (in the UK), and Wal-Mart from the USA and Carrefour in France. Finally, the main competitors of M&S in the financial services market are Lloyds, Natwest, Barclays, Midland and other banks.
3.2.3 The customer
It is estimated that about 40 million customers, men, women and children, shop in M&S each year. M&S's clothes has dressed a substantial proportion of the men, women and children in the UK for five generations, from their underwear outwards. The customer knows M&S as a company with a good brand name, reputation, and reliability. The perception of customer for M&S is in a high level (e.g. Rolce Royce, Ferrari, etc.). The consumer trust in its brand is so high that it can sell investment products alongside clothing and food. M&S is often as a prime example of a company delivering a strategy of superior customer value through excellent customer service and high customer loyalty, satisfaction, closely managed relationships with customers. M&S knows where its customers live, their income, their needs and on and on. Its aim is to find out who the customer is and what he wants, in order to satisfy him. The ability of the company to anticipate and meet customers' needs depends on responsiveness and in turn on the relationships the company has with its suppliers. From the 1920s onwards, M&S has created an intelligence system about consumers, monitoring sales, getting customer reactions to new products, supplemented by informal interpretations from staff in stores who are in direct contact with customers. By the autumn of 1998, Greenbury had seen falling customer confidence. Furthermore, by the end of 1998, establishing a customer loyalty card programme had become top of the agenda to try to win customers back from competitors. Moreover, by 1999, M&S had been shocked by consumers paying high prices for clothes in branded fashion retailers, but refusing to pay full prices for M&S products. One serious strategic mistake of M&S was the fact that it lost sight of what consumers wanted. Consumers are buying 'aspirational brand names' or discounted goods. Finally, in 1999, middle-aged customers alienated by M&S pandering to teenage fashion while offering them less choice, while the young were unattracted by the M&S image and name.
3.2.4 The products
M&S's current product portfolio includes:
* Clothing (men, women and children)
* Food
* Household products and furnishings
* Financial services
The core product area for the company is clothing, and it has dressed a substantial proportion of the men, women and children from their underwear outwards.
In the years following the First World War, M&S bought the freehold of many of its stores and added textiles as an important part of the growing product range. During the Second World War, M&S was heavily involved in the government's Utility Scheme designed to bring good quality clothing within reach of the besieged British population. Moreover, M&S worked with its suppliers and Dupont to pioneer the use of the material Lycra for the mass market. Lycra is now incorporated in three-quarters of M&S clothing, and has been extended to other products such as furniture covers.
From the 1930s onwards, M&S has moved away from buying ready-made garments from suppliers and has acquired the expertise to design textile products, sometimes in-house and sometimes jointly with suppliers. The goal was to create commercially successful designs. Also, in 1998, as overseas suppliers have built relationships to supply M&S stores with local products, those products have been adopted for the British stores as well. Moreover, in 1998 M&S had outdated products (clothes) and it couldn't sell them in a full price. Furthermore, critical to surviving 1999 is the M&S spring/summer clothing ranges. When previewed in January, there was widespread comment that M&S did not have the quality products to hold its position in the market let alone increase it. Questions were raised also about the quality of the clothes. Finally, the new collection was judged way from the traditional M&S strength in high-quality staples.
Except form the clothes, the company is renowned also for its high quality grocery selection. In 1931, made the introduction of a food department selling produce and canned goods. In 1998, Greenbury extends the product ranges in fresh foods to compete more fully with supermarkets.
M&S also sells a range of household products and furnishings, as well as becoming a major financial services supplier. In the 1980s, M&S introduced furniture to its stores and the first home furnishings catalogue for direct selling.
3.2.5 SLEPT factors
* Social and Cultural Environment. In this arena, M&S must understand people's views of themselves, others, organisations, society, nature and the universe. It must market products that correspond to society's core and secondary values, and address the needs of different subcultures within a society.
* Legal Environment. In this environment M&S, works within the many laws regulating business practises and with various special-interest groups.
* Economic Environment. In this arena, M&S focuses on income distribution and levels of savings, dept, and credit availability.
* Political Environment. In this environment, M&S does the same thing as in the legal environment, which is stated above.
* Technological Environment. In this arena, M&S takes account of the accelerating pace of technological change, opportunities for innovation, varying R&D budgets and the increased governmental regulation brought about by technological change.
3.2.6 Key points from marketing audit
After conducting a full marketing environmental audit on M&S to establish where the company is now, the key points were extracted and summarised as follows.
3.2.7 Internal strengths
* History/prestige
* Strong brand reputation-name.
* Quality
* Price
* Service
* The food sector of the company is best in UK.
* M&S is a colossus. It operates 373 M&S stores, 85 M&S franchises with partners outside the UK, 173 Brooks Brothers stores and 40 Kings Super Markets stores, as well as operating some direct marketing activities.
* It has a strategy of superior customer value through excellent customer service and high customer loyalty, a unique brand identity, closely managed relationships with suppliers, employees and customers and continuous innovation in products and trading methods.
* It has been able to renew itself and grow profitably where many others have failed.
* Outstanding long-term growth performance, profitability and customer satisfaction.
* M&S has grown largely organically, testing new markets with low-risk acquisitions.
* It accepted social responsibilities to employees and to the community at a far earlier stage than most, and was a forerunner of the now popular 'stakeholder approach' of partnership.
* Effective supply chain management
* Continuous innovation and learning
* New organisational form - the first 'manufacturer without factories'.
* M&S was one of the earliest retail firms in Europe to integrate retailing and wholesaling, by dealing direct with manufacturers instead of through intermediaries.
* It understood the concept of the 'virtual company' before that phrase was ever invented.
* The brand defines a standard of excellence under which many suppliers can operate and which can be applied to many product areas.
* M&S understand and control products from raw materials to finished goods.
3.2.8 Internal weaknesses
* Constant rivalry between the two board members appointed to safeguard the families' interest.
* The fact that M&S did not provide changing rooms in its store in Paris and French women will not buy underwear without trying it on.
* The fact that Greenbury, the CEO of M&S, is also very impatient with the short-termism of financiers and insists his role is to build the strategy to take the company through the next fifty years.
* The year 1998. This was a year when M&S was in the headlines not for its excellence as a retailer, but for its failing performance and internal upheavals in management.
* Declining overseas profits and no growth in food sales, giving overall a 30% fall in half-year profits (1998). M&S strategy had been undermined by poor UK weather weakening clothing sales, demand in Asia subdued because of the financial crisis there, weakening of the UK furniture market, a fall in tourism to the UK and increased competition in the food market from aggressive supermarket firms.
* Extra costs in a number of areas (new staff for the Warrington, training staff, Cheshire call centre, etc.).
* Internal battles - the fight for control.
* Business crisis.
* M&S' somewhat puritanical 'value-first' retailing model of Spartan interiors, harsh lighting, crammed clothing racks and 'serve-yourself-if-you-can' may be outdated.
* There is no actual change in the company's strategy and management reluctance.
* M&S had lost touch with customers and in areas like food competitors have caught up with M&S' previously unique offerings.
* M&S sales were running around 13% down on the previous years. Clothing sales were even worse, 15% down. Stocking and pricing errors involved further discounting at a cost of £150 million. European operations were disappointing, trimming a further £25 million from profit forecasts.
* Credit analysts downgraded M&S credit rating from triple-A to double A plus, making future financing more expensive and further embarrassing the company.
* M&S fails to respond to customer demands.
* M&S had made some serious mistakes. It bought too much stock, it priced too high and then was pushed into discounting, it aggressively expanded floorspace domestically and internationally at the wrong time, it lost sight of what consumers wanted and it complacently underestimated the strength of its competitors on the high street.
* Greensbury's autocratic management style was blamed for making the company more risk-averse and leaving it without the ability to innovate.
* The disruption caused by the refurbishment was far greater than expected.
* The UK clothing market has changed in important ways. Consumers are buying 'aspirational brand names' or discounted goods. M&S is trapped in the middle of the market offering neither brands nor discounts. M&S has lost track of what its customers want and how much they are prepared to pay.
* M&S did not have the quality products to hold its position in the market let alone increase it. The new collection was disorganised and derivative. M&S was still falling in its attempts to straddle generations of fashion buyers in its new collection - middle-aged customers alienated by M&S pandering to teenage fashion while offering them less choice, while the young were unattracted by the M&S image and name.
* M&S formula is wrong and out of date. The old look is outmoded and the new one has not sold. Furthermore, the fact that middle-aged customers alienated by M&S pandering to teenage fashion while offering them less choice, while the young were unattracted by the M&S image and name.
* Confused corporate image.
* No corporate or marketing planning or strategy formulating unit.
* Wrong decisions and wrong persons in the wrong positions at the wrong time.
* No solutions.
* Cultural issue. Too many internal changes that cause conflicts and problems.
* Low morale of the staff of the company.
* Collapse of sales, profits and share value.
* Obsolescence of a business design.
3.2.9 External opportunities
* Growth in the clothing, furnishing, food and financial services markets.
* Return to more traditional M&S styles.
* Product extension and modification for further market segments.
* Geographical markets.
3.2.10 External threats
* Increased competition.
* The customers demand continuous product improvement and development.
* Exchange rate fluctuations could harm export sales.
* Trading partnerships could increase competitors' strengths and market share.
* Price war (discounting).
3.3 Marketing Objectives
3.3.1 Objectives
* To increase the market value of the company from £10 billion which was in the beginning of 1999 to £25 billion in the following five years.
* To have a 40% market share in UK clothing market by 2006.
* To have 6% market share in UK food market by 2006.
* To have a 6% market share in furnishing and financial services market by 2006.
* To increase yearly group sales from £7 billion in 1999 (decrease by 13% from the previous years) to £10 billion in the following five years.
* To have a group pre-tax profit £1,5 billion in the financial year of 2006 (M&S had a pre-tax profit of 1,168 in the 1998 financial year).
* To have an in-depth understanding of the women's, men's and children's clothing, home furnishings, food and financial services markets.
* To achieve marketing orientated culture with quality standard recognition.
3.4 Assumptions
* We assume that M&S is a market challenger.
* The whole population is 7 billions people, the population of Great Britain is 57 millions, the female working in Great Britain are 10 millions and the male 12 millions people.
3.5 Marketing Strategy
3.5.1 Ansoff Matrix
Current products
New products
Current
Markets
MARKET PENETRATION STRATEGY
. More purchase and usage by existing customers
2. Gain customers from competitors
3. Convert non-users into users (where both are in the same market)
1
PRODUCT DEVELOPMENT STRATEGY
. Product modification with new features
2. Different quality levels
3. New product
2
Risk level
New
Markets
MARKET DEVELOPMENT STRATEGY
. New markets
2. New distribution channels
3. New geographical areas - exports
3
DIVERSIFICATION STRATEGY
. Vertical integration
2. Horizontal integration
3. Concentric integration
4. Conglomerate integration
4
Low = 1
High = 4
3.5.2 Strategies
We can say that M&S is now a market challenger, and as a market challenger it has to follow market-challenger strategies.
In order to gain ground or even overtook the leader, M&S has to set high aspirations and leveraged their smaller resources while the market leaders ran their business as usual.
In order to become a market leader, M&S has to follow either the Ansoff matrix that is mentioned above or the below market-challenger strategies.
> Defining the Strategic Objective and Opponent(s)
M&S must define its strategic objective. Most aim to increase market share. The company must decide whom to attack:
* It can attack the market leader. 1 This is a high-risk but potentially high-payoff strategy and makes good sense if the leader is not serving the market well. The alternative strategy is to out-innovate the leader across the whole segment.
* M&S can attack firms of its own size that are not doing the job and are under financed. 2 These firms have aging products, are charging excessive prices, or are not satisfying customers in other ways.
* It can attack small local and regional firms. 3
> Choosing a General Attack Strategy
a. Frontal
b. Flank
c. Encirclement
d. Guerrilla attacks
* In a pure frontal attack4, M&S has to match its opponent's product, advertising, price, and distribution and to offer something different, something over and above all its competitors.
* A modified frontal attack5, can work if the market leader does not retaliate and if M&S convinces the market that its product is equal to the leader's.
* A flank attack 6 can be directed along two strategic dimensions. Geographical and segmental. If M&S will follow the geographical attack, it will have to spot areas where the opponent is under performing. The other flanking strategy is to serve uncovered market needs.
* The company can use the encirclement maneuver in order to capture a wide slice of the enemy's territory through a "blitz". 7
* According to Kotler, guerilla warfare consists of waging small, intermittent attacks to harass and demoralize the opponent and eventually secure permanent footholds. If the company will use this strategy, it will have to use both conventional and unconventional means of attack. These include selective price cuts, intense promotional blitzes, and occasional legal actions. 8
3.6 Action Programme
M&S must go beyond the above broad strategies and develop more specific strategies.
3.6.1 Pricing
* Adopt a premium pricing policy to enhance the brand image
* Price-discount. M&S can offer a comparable product at a lower price. This is the strategy of discount retailers.
* Cheaper goods. M&S can offer an average or low quality product at a much lower price.
3.6.2 Prestige goods
* M&S can launch a higher-quality product and charge a higher price than the leader.
3.6.3 Product proliferation
* M&S can attack the leader by launching a larger product variety, thus giving buyers more choice.
3.6.4 Product innovation
* M&S can pursue product innovation. The company can enter new markets by introducing a product improvement or breakthrough. Also, it can return to more traditional M&S styles, which were successful at the past.
3.6.5 Improved services
* The company can offer new or better and faster services to customers.
3.6.6 Distribution innovation
* M&S must develop a new channel of distribution.
3.6.7 Manufacturing cost reduction
* The company might achieve lower manufacturing costs than its competitors through more efficient purchasing, lower labour costs, and / or more modern production equipment.
3.6.8 Brand positioning
* The company needs to highlight its strengths to create a brand image.
a. History/prestige
b. Quality
c. Brand reputation
d. Reliability
3.6.9 Promotion and communication
* Use direct marketing to build the customer base and help develop the MkIS.
* Focus on channel sales, end user support.
* Public relations
a. Internal. Train and inform to move a marketing orientation.
b. External. Establish and shape relationships with trade press.
* Advertising. Assess and select several agencies to pitch for the business in order to obtain a variety of ideas to promote brand strengths and target the correct people/channels.
* Use the Internet to service and inform the dealers/distributors.
3.6.10 People
* M&S must train its people/staff to become customer-orientated.
* Obtain feedback through employee focus groups and regular team meetings.
* Encourage empowerment through offering incentives and reward systems.
* Promote the values of customer service to employees.
3.6.11 Process
* Establish a greater degree of customer contact through the process of building relationships, focusing on the service side of the business.
* Quality systems such as ISO 9000 are necessary for the company in order to maintain quality levels and enhance the reputation of the company with dealers, distributors and customers.
3.6.12 Physical evidence
* Create a good, aesthetic environment that motivates and facilitates work, eg air conditioning.
3.7 Marketing Budget
* Use 10% of its turnover for its people (staff), to train them to become customer-orientated and promote the values of customer service to employees.
* Use 30% of its turnover in the advertisement, promotion (of its products) and communication.
* Use 30% of its turnover for the development and innovation of the company and its products.
* Cut the unnecessary costs. Eg. Reduce the costs of dealing with suppliers by £100 million.
3.8
Control
* Measure against set corporate and marketing objectives.
* Use market data to assess competitors and find strategic opportunities.
* Assess plans, compare with budgets and variances on a monthly basis.
* Feedback from the sales force.
* Use MkIS to assess strategic direction.
Kotler, Philip (2000), "Marketing Management", Prentice Hall, p. 241
2 Kotler, Philip (2000), "Marketing Management", Prentice Hall, p. 241
3 Kotler, Philip (2000), "Marketing Management", Prentice Hall, p. 241
4 Kotler, Philip (2000), "Marketing Management", Prentice Hall, p. 241
5 Kotler, Philip (2000), "Marketing Management", Prentice Hall, p. 241
6 Kotler, Philip (2000), "Marketing Management", Prentice Hall, p. 241
7 Kotler, Philip (2000), "Marketing Management", Prentice Hall, p. 241
8 Kotler, Philip (2000), "Marketing Management", Prentice Hall, p. 241
