“ In the dynamic world of marketing, an effective solution to satisfying customer needs does not have longevity”. Gibbs
Corporate performance is influenced by a combination of internal and external factors. Analyzing the internal resource base and the strength and weaknesses within the business will determine which market opportunities are viable foe the business to pursue. Organizations therefore depend on successful analysis of customers, the marketing environment, competition and internal capabilities.
Porter suggests that the collective strengths of five forces determine the state of competition and therefore the ultimate profit potential within an industry. Below is an analysis on M&S using these forces.
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Porters Value Chain Model, pg42, Strategic Management & Information Systems.
Porter suggests that since “Value added – Cost = Margin”, the organization can asses whether Information systems can increase value adding as well as reduce costs. Value chains target competitive advantage.
“Ford attribute 70% of a products added value to the design process and less than 10% to the Production Process.” Lecture notes, J Douglas.
The value chain is no longer physically paced and the physical product has become less important than the logic product. The development of particular techniques has helped businesses improve the value chain process. Such techniques include:
- Advanced manufacturing technology (AMT) has opened up new possibilities for adding value; the use of CAD (computer Aided Design) has helped reduce design costs.
- Benchmarking has raised industrial standards and made firms more aware of techniques used in industry.
- Development of Total Quality Management Systems (TQM) and Just In Time Systems
M&S is launching the rollout of Radio Frequency Identification (RFID) tagging. This will be the largest supply chain application of the technology in the world.
RFID is a new technology, which enables remote accessing and editing of information, without the need to replace the label or look up data on a central database. In retail terms, it will provide detailed information on stock and allow staff and suppliers to read that information upto six times faster, leading to reduced wastage, extended production time and even later despatch times.
James Stafford, Technical executive, Intellectual Property at M&S commented: “this is a continuation of a long-term drive for excellence within food logistics. The end result of RFID tagging for the customer is even fresher food in their baskets and we have found that this a key concern for our customers”.
With an understanding of the market place, a business must then develop a marketing strategy. Even mighty global organisations choose not to offer a product for every type of consumer or consumer need. Instead they target market segments. In deciding which segments to target an organisation must be clear about it’s positioning. The business should endeavour to serve those customers it targets in a manner that gives it an edge over its competitors.
“ Knowing how to group customers sensibly into homogenous market segments, determining which to ultimately target, selecting a suitable positioning platform and seeking superiority over rivals are the core elements of marketing strategy”. Gibbs.
M&S has had to become more ‘customer facing’ to create a platform for improved profitability. M&S has one of the most extensive customer databases available to any retailer. There are more than 3m active M&S charge card accounts, and on average more than 10m transactions are made each week. Steven bonds comments “ For years we were sitting on a gold mine that went unexploited because we were already successful. Now we appreciate the immense value of this data”.
By applying analytical techniques such as Cluster and discriminant analysis and data mining M&S has identified 11 core customer segments (which are further subdivided). The analysis helps in a variety of way from corporate branding through to operational decision-making.
Careful analysis of customer behaviour also facilitates more effective marketing activity. By identifying who shops and when, for example older customers tend to shop early to avoid the crowds, whiles younger men leave things last minute, M&S can align their marketing activity and product availability accordingly.
Traditional gravity analysis ad spatial modelling, which fuses SAS and GIS functionality, have long supported decisions about when and where to refurbish, redesign or replace stores to attract higher volumes of sales. Footprint analysis enables M&S to predict the catchments area and any sales volume for any planned stores.
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Porter, M.E. (1980) Competitive Strategy: Techniques for Analysing Industries & Competitors, New York: Free Press
Robson, W. (1994) Strategic Management & Information Systems, Pitman Publishing
Brooks, I. Weatherston, J. (2000) The Business Environment, Challenges & Changes, Financial Times, Prentice Hall
Hamel, G. Prahald, C.K. (1994) Competing for the Future, Harvard Business Press
Mansfield, E (1994) Applied Microeconomics, New York: Norton
Burda, M. Wyplosz, C. (1997) Macroeconomics: A European Text, 2nd Ed. Oxford University Press
Also used were Lecture notes supplied Teachers.
