Strategic-Marketing-Management. This report is a study of principles of Strategic marketing management by considering Marks and Spencers Clothing business. In this report the Marketing Planning Process has been discussed and the MPP has been applied to

University Degree Business and Administrative studies

Table of Contents

Introduction & Background -------------------------------------------------------------------------------- 3

Strategic marketing planning process --------------------------------------------------------------------4

Assessment of marketing planning ----------------------------------------------------------------4-5

Marketing Planning process-------------------------------------------------------------------------5 -8

External Marketing environment and marketing audit------------------------------------------------8

External marketing audit -----------------------------------------------------------------------------9-16

Internal marketing audit----------------------------------------------------------------------------- 17 -24

Possible strategic marketing options------------------------------------------------------------24-27

Option1_Market penetration technique---------------------------------------------------27-28

Option2_Niche Technique-----------------------------------------------------------------------29

Recommendation -------------------------------------------------------------------------------------30

References ---------------------------------------------------------------------- -------------------30-31

Introduction and Background

This report is a study of principles of Strategic marketing management by considering Marks and Spencer’s Clothing business. In this report the Marketing Planning Process has been discussed and the MPP has been applied to assess the possible Strategic marketing strategies to improve the business of Clothing division of Marks and Spencer. Here, we have studied the External and the Internal environment of the Marks and Spencer with the help of available market data and have done Marketing audit with the help of different techniques and analysis Models.

Marks and Spencer is one of the leading retailers of UK, with over every 21 million people visiting Stores every week. Company offers high quality, stylish, great value home and clothing products. M&S employs around 75,000 people and have above 600 stores in UK and expanding number of stores worldwide.

M&S is number one provider of women’s wear and lingerie in the UK, and are having growing market share in menswear, kids wear and home, due in part to their growing online business. Overall, company’s clothing and home ware sales account for 49% of our business.

2. Strategic Marketing Planning Process

Marketing planning process is the planned application of marketing resources to achieve marketing objectives. It is generally a logical sequence and series of activities leading to the setting of marketing objectives and the formulation of plans for achieving them. Marketing Planning is essential in today’s economic scenario because of increasingly hostile and complex environment in which companies operates. There could be various external or the internal factors which can impact the ability of organisation to achieve its goals.

2.1 Assessment of Marketing Planning

There are numerous advantages of adopting a marketing planning process by an organisation. The various stages involved in the marketing planning not only helps organisation to focus on its weakness to achieve the desired objectives but it also devises a proper strategy to achieve it. By setting a mission in the marketing planning process, the organisation not only sets its long terms goal, but it also gives a direction to the management for the future. A well defined and accepted mission always becomes a tool of motivation for the employees. While, marketing audit helps organisation to find its current position, strengths and weakness, the external factors and the organisation’s preparedness to achieve the set the objectives. Marketing assumptions has its importance, as it defines those factors which are not in control but needs to be considered while doing the planning. Forecasting expected results helps organisation to understand the result it should set target at and it can achieve. While in the alternative plans helps organisation to have contingency plans in case of any failure or deviation from expected outcomes. While the budgeting process helps organisation to plan its finances in advance to start the process. Some of the advantages of following marketing planning by Malcolm Macdonald are:

better co-ordination of and increased confidence in business activities;
identification of expected developments;
increased organizational preparedness to change and explore new markets;
minimization of non-rational responses to the unexpected;
reduction of conflicts about where the company should be going;
improved communications and a common framework for decision-making;
management is encouraged to think ahead systematically;
available resources can be better matched to opportunities;
provides a framework for the continuing review and monitoring of operations;
a systematic approach to strategy formulation leads to a higher return on investment and real competitive advantage.

If an organisation has not taken marketing planning process while devising their new business strategies, then it can have serious impact. The organisation will never be in position to devise a proper and well planned strategy without following the marketing planning processes. Some of the key disadvantages of not following the marketing planning process are:

Faulty marketing decisions based on improperly analyzed data
Confusion and communications between the top management and the employees in absence of corporate objectives
Creation of unrealistic financial projections due to incorrect interpretation of data
Without alternative plan, there’s a high risk of failure
Finance will always remain issue for executing the plans
Organisation will not be in a position to know the threats and the competition it is having
Organisation may not know the customers and market segment it need to target

2.2 Marketing Planning Process

Malcolm McDonald gave ten stages Marketing Planning Process, which has been widely accepted model in the business environment. MPP is more realistic and takes into account the organization’s existing competitive position, its capabilities and the competitive environment it faces. Smith’s PhD (2003) proved that there’s a direct link between organizational success and the marketing strategies. The Marketing planning process contains following stages:

Table: Stages of MPP

The next table explains the activities involved at different stages of MPP and the justifications for performing those activities. We have outlined these activities and justifications briefly.

Table: Activities involved in MPP

3. The External Marketing Environment and the Marketing Audit

A marketing audit is a structured review of organisation’s current marketing activities. It is a fundamental part of the marketing planning process. Marketing audit enables oragnisations to anlayse its current performance as well as past performance which helps the organisation to identify the next steps forward. As the business environment is constantly changing, the marketing audit should be used as a reference tool, with constant updates reflecting changes in the external environment and organisation’s own internal business experiences.

Philip Kotler defined marketing audit as a comprehensive, systematic, independent and ...

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3. The External Marketing Environment and the Marketing Audit

Philip Kotler defined marketing audit as a comprehensive, systematic, independent and periodic examination of activities and resources in order to find problem areas and opportunities and to recommend a plan of action. Marketing audit can help organisation to refine its business processes and improve its productivity and profitability. Marketing audit has been broadly categorized into internal audit and External Audit. There are various tools and methods available to carry out these audits.

The external environment of an organisation can be broadly categorized into:

Economic environment (consisting of political, economic, social / cultural, technological, environmental and legal changes)
Competitive environment(threat of new competitors/new entrants to the business and how could it threaten the current market share)
The market environment (Total market size growth and trends, products, prices, physical distribution channels, industry practices.

Various tools are available, each one providing a means of structuring analysis, like STEEPLE, PESTLE and PEST analysis. We will be using PEST analysis, to assess the external environment impacting the business of Marks and Spencer.

3.1 External Marketing Audit

To conduct the external audit of the M&S, we have considered the available market data through various sources which can be a major deciding factor while planning the strategic planning decisions. Here, we have used PEST and the Porter’s five forces analysis, to analyse and evaluate the external environment.

Market Data

Figure 1: UK: Concern over job prospects, 18-25s, February 2008-June 2009

Base: 1,000/2,000 adults

Source: Mintel

Youth unemployment (18-24-year-olds) has risen from 17.2% in Q2 2009, compared to 12.5% in the same period of 2008, and this figure will continue to rise in the short term.

Figure 2: The items adults are cutting back on in the recession, February 2009

Base: 1,440 adults aged 16+ who have cut their expenditure in the recession

Source: Mintel

As seen here in the graph, clothing has been hit maximum, where maximum adults decided to do the cut downs.

Figure 3: UK: Population forecasts, age group, 2003-13

Source: Mintel

The UK’s ageing Population poses a challenge to clothing retailers who need to adapt to facilitate a more mature customer. The growth of the 45-54s will benefit the retailers where they already shop, but will also put pressure on other organisations to attract these customers.

PEST Analysis

PEST Analysis stands for Political, Social, Economic and Technological analysis and provides a framework of external environmental factors influencing the organization’s strategies.

Table: PEST Analysis

Porter’s Five Forces

Porter’s five forces model helps the organisation to set a realistic objectives by assessing the external influences on the firm’s behavior. Porter explains that there are five forces inherent in a market, which will jointly determine the intensity of competition and profitability of M&S.

Diagram: Porter’s five forces

Table: Porters five forces

Figure 3: Selected retailers where the 18-25s buy clothes, May 2008 and July 2009

(% point difference vs all respondents)

Base: 1,986 adults

Source: Mintel

The companies like Primark have been able to increase their momentum in the economy by strategically planning their pricing.

Summary of the external Audit

The economic recession has not only made the clothing market more competitive but has also exerted pressure through various other factors to change the market trends and the social factors affecting the economy. Because of recession, the government policies are resulting into more job losses. There’s a sharp increase in unemployment and the inflation is steadily moving up. All these factors have resulted in cut down of expenses by the consumers and clothing is hit maximum. As discussed under the PEST analysis, the Political, Social and Economical factors have made the clothing business very challenging. While the Porter’s five forces further strengthened this notion by assessing the competition .As shown in figure 3,companies like Primark has been able to increase their momentum of sales because of their pricing, which in turn making the market more competitive in terms of pricing .

3.2 Internal Marketing Audit

Internal marketing audit is a process of evaluating and assessing the internal factors of the organisation. It not only helps to identify the strengths and weaknesses of the organisation but also determines its competitive advantages. Internal audit focuses on some of the key areas which includes: current state of new product development ,evaluation of profitability of product portfolio, effectiveness of customer relationship management, effectiveness of customer facing processes, effectiveness and efficiency of distribution and finances are to name a few. Here, we have assessed the product life cycle and the product portfolio through PLC and BCG matrix. We have also used Porter’s value chain analysis to audit the internal environment of the organization, because of difficulty in finding the accurate data; we have made assumptions as well. And in the end we have done the SWOT analysis to determine the strength, weakness, opportunity and threats.

Market Data

Figure 5. Marks and Spencer’s Revenue and Share price

Source:

As seen in the chart, 2005-2006 saw the drop in revenues of the company. While, in 2007 onwards company consolidated its position and picked up the growth in revenues and reached £ 9.26 m.

Figure 6.

Source:

Marks and Spencer had consolidated its share in the online merchandise sales and is steadily growing. However, it has tough competition from established players in the market like Amazon.

Michael E. Porter’s Value Chain Analysis

Michael Porter used ‘Value chain’ term in his book ‘’Competitive Advantage: Creating and sustaining superior Performance’’ (1985).Value chain analysis basically determines the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization. In his value chain analysis, Porter has considered the organisation’s activities in tow segments: Support activities and Primary activities. Primary activities are directly related with the creation and delivery of goods or services. It can be grouped in five main areas: Inbound Logistics, Operations, outbound Logistics, Marketing & Sales and Services. These Primary activities are connected with the Support activities to improve the efficiency of work. The four main areas of Support activities are: Infrastructure, Human Resource Management, Technology Development and Procurement.

Diagram: The model of Porter’s Value Chain Analysis is as follows:

Source:

Application of Porter’s Value Chain Analysis on Marks & Spencer

Primary Activities

Inbound Logistics: M&S has outsourced its inbound activities to third party vendor. The vendor takes care of all the activities involved in transporting the shipments to various stores.
Operations: Marks and Spencer has huge employee strength. Company regularly invests on the employee’s development and training activities. Company has been investing to improve its infrastructure and the stores to further improve the company operations.
Outbound Logistics: Marks and Spencer has not focused much on the distribution of merchandise to the consumers. They have not formulated policy for the outbound logistics and this is a department, where company should focus to improve the customer services.
Marketing & Sales: M&S has always run advertisements in newspapers and magazines. It is highly aggressive in marketing. M&S has achieved a big consumer base and name because of its marketing and sales policies. They have heavily invested on print media and online advertisements.
Service: Company has 76,000 employees at it’s around 700 stores in UK and they have been able to maintain its service standards to a level. M&S maintains the quality of staff and the services it provides to the customers.

Support Activities

Procurement: The fundamental principle of M&S procurement policy is flexibility and integrity. Company has its list of preferred contractors to carry out the construction project. They assess the suppliers routinely for the quality of the products and condition of the employees engaged in the work.
Human Resource and Management: As per the 2010 report, M&S employs 76000 people. M&S has one of the lowest turnover rates in UK retail 14%.Around 46% of the employees are with M&S from past five years and 27% employees for more than 10 years. They offer competitive salaries, retirement plans in-store and online discounts, share save options and bonuses. M&S provides regular training to its employees and gives them opportunities for future career developments. Company also organizes regular seminars for its employees to help them plan their finances and explain the pay structure.
Infrastructure: M&S has around 600 stores in UK and 300 stores worldwide operating in 40 territories.
Technology Development: M&S has incorporated latest technologies to improve its business. It is one of the highly environment friendly organisation. As per the reports published in year 2010,by incorporating various technologies and techniques they have cut down their carbon emission by 8% and have reduced the waste send to landfill by 33%.Through their innovative techniques and technologies they have managed to achieve 19% energy efficiency at all their stores this year.

Figure 4: Markets share

Product Life Cycle Model

Product life cycle model helps to analyze the maturity stages of products and industries. This term was used for the first time by Theodore Levitt in 1965.Product life cycle model has significant impact on the oragnisations strategies and performances. It identifies the different stages affecting the sales of product from the time of introduction till retirement.

Source: www.12manage.com

Applying the Product Life Cycle Analysis model to the Marks and Spencer’s Clothing business, we can conclude that the Clothing business is still in the growth stage. Referring to the available data in figure 4 , the Clothing Business is further segregated in different sub sectors: Men’s outerwear, Women’s outerwear, children’s wear, clothing accessories, underwear and nightwear and socks, stockings and tights. Though many of these subsectors are leading in the market but they still have lots of scope to grow. For example men’s outerwear was no 1, in the market but it still had market share of only 8.34%. While if we see the other subsectors, they are still competiting with other companies to gain the number one position like children’s wear and clothing accessories which has market share of less than 5% for the former and less than 3% for the later.

Boston Consulting Group Matrix

Boston consulting group matrix was created by Bruce Henderson for the Boston Consulting Group in 1968 to help organisations to analyse their product line. It helps the company to allocate resources and is used as an analytical tool in product management and portfolio analysis. Boston Consulting Group matrix has two dimensions: Market share and Market growth. This method tells that bigger the market share is or the fastest the market growth of product is the better it is for the organisation.

Source:

As seen in the figure 4, Underwear and nightwear products have a high market share of 19.4% and comfortable enjoys number one slot in its segments. The profits and cash generations from this product is quite high and it does not need high investment. While, Men’s outerwear, Women’s outerwear and Socks, stockings and tights have around 9% of market share but they are leading the segment and have shown good market growth. But the products Children’s wear and clothing accessories have very low market share and they are at fourth spot.

Placing these products into BCG matrix, the Marks and Spencer’s Product portfolio is as follows:

Cash Cows: Underwear and nightwear products, as these enjoy high market share and is bringing high revenues to the organisation without any requirement of extra investment.
Stars: Men’ outerwear, Women’s outerwear and Socks, Stockings and tights are the star products of the company, as they are leading the segment with a promising market growth rate.
Dogs: Children’s Wear and Clothing accessories have low market share and have been poor performers with respect to other products of M&S’s portfolio.

After Conducting the PEST Analysis, And Porter’s five forces we analyzed the external environment, which can impact the business of the Marks and Spencer. While by using the Porter’s value chain model we evaluated the internal environment.

SWOT Analysis

SWOT analysis is a tool for auditing an organisation and its environment. It helps to determine the core strengths of the organisation and the weaknesses it has which needs to be focused upon .It is the first stage of planning and helps the management to focus on the key areas. The SWOT stands for: Strength, Weakness, Opportunities and Threats. The Strength and weakness of the organisation are determined by the internal audit while the threats and opportunities are related with the external environment.

Summary of Internal Audit

The clothing industry is Mature but not yet saturated. And so in the PLC analysis, the product has been put in the Growth stage. The Marks and Spencer is a leading retailer and because of its brand name and established infrastructure. The area where they need to focus more on is to follow the fashion trends in more aggressive manner and devise strategic marketing and sales technique to achieve the set objectives.

4. Possible Strategic Marketing Options

Strategy Development Model (Ansoff matrix)

Igor Ansoff created the Product/Market diagram in 1957 as a technique to classify the options for business expansion. Ansoff matrix helps oragnisations in analysing and planning the marketing strategies to meet the customer needs and expectations. It allows management to consider strategies to expand the business via current and/or new products, in current and/or new markets - there are four possible product/market combinations. This matrix helps oragnisations decide what course of action should be taken in given current performance.

Source:

Following the current economic scenario, the strategies which should be undertaken by Marks and Spencer management to outline the alternative methods to achieve the growth , are:

Market Penetration: Focusing on the existing products in the existing market and consolidating its sales and growth within the present market. The various penetration strategies which should be considered are:

Attract the new customers who are occasional buyers and are just ‘testing waters’. These customers should be targeted.
Attacking Competitors Sales, as clothing market is mature and highly competitive. To increase the sales, company will have to target the competitor’s customers. This strategy can be achieved by adjustment of marketing mix, by altering one or more elements like, price or promotion techniques.
Increasing the consumption by current Customers, this strategy can be achieved by devising some policy to give special benefits and discounts to the regular customers.

Market Development: Marks and Spencer is already present in the global market. It has around 300 stores in 40 different locations. By locating new markets where the customers can have chose from the existing products of the company. M&S can not focus only on one market to survive in the business. it will have to look for new regions and markets where it can sell its existing products to further consolidate its position in the market.
Diversification: M&S needs to diversify its business strategies by entering into new markets with new products. The new products should be as per the local market it has entered to do the business. Company can’t survive in new market by focusing only on its existing products. It needs to customize and develop new products as per the requirements of the new customers. For example when McDonalds entered into developing countries it customized its burgers as per the local tastes. It wasn’t selling the burgers which it sold in western countries.
Product Development: By bringing new range of clothing targeting the existing customers, profitability can surely be increased. The one area where M&S really needs to work upon on this step. It needs to have clothing ranges and should be with current fashion trends.

Porter’s Generic Strategies

Porter explained a category scheme which consists of three general types of strategies that are often used by businesses to achieve and maintain competitive advantage. These three generic strategies are defined along two dimensions: strategic scope and strategic strength. Strategic scope is a demand-side dimension and looks at the size and composition of the market organisation intend to focus. While, Strategic strength is a supply-side dimension and looks at the strength or core competency of the organisation. Porter identified two competencies that he felt were most important: product differentiation and product cost.

Figure: Porter generic strategies

Considering porter’s generic strategies in Marks and Spencer’s case, the following options are concluded:

Differentiation Strategy: Marks and Spencer needs to focus on sustaining its edge competitive edge over other competitors by maintaining its quality and improving the services. Company should focus on providing the best services t its customers. For example having enough change rooms and fitting sections, having different ranges and variety of products with the best quality to meet the need of all the customers. By having fashion stylists and specialists for different section of merchandise, who can suggest and guide the customers, who in turn will make the customers experience better. By having enough number of well trained and motivated staffs at the store, M&S will be able to serve customers in better way and will maintain its edge over other competitors. Uniqueness competency should not only be maintained in product quality but should also be maintained in the services and store infrastructure and the overall experience which customers get at company’s stores.

Segmentation Strategy: M&S needs to formulate segmentation strategy to target on specific group of customers, based on culture and age group. Company has been seen more as stores for mature and people in the age group of 35 -54, with its prominent grey and black shades of merchandise. Company should start focusing on its marketing and sales strategies to target youths. With globalization and because of free society in UK, the non British populations forms a major part of customers, which is still being untapped by the company. M&S should target this segment based on different cultures and countries.

Cost Leadership: Having cost competency is always fruitful in increasing the market share of the company, but it can’t be taken as a long term strategy. It may reap fruits in short term but it will further decrease either profit margin or the competitive edge of the organisation. Marks and Spencer should not fail because of cost of its products as it does play a role, but it should also maintain the quality and competitive edge over its competitors.

Option 1 _Market Penetration Strategy

Table 1: Market Penetration Strategy

Option 2_Niche Strategy

Table 2: Niche Strategy

5. Recommendation

On evaluating the probable strategies ,by considering the Ansoff Model,Porter generic strategy,Penetration Strategy and Niche strategy, we can suggest that the best suitable strategy for Marks and Spencer would be to maintain its Comptetive edge and focus on the Market penetration strategy.Being a brand name, it is already well known in the market so, it is not facing new customers, hence it is easier for the company to focus on this market as it already has a presence and it knows well about the trends and culture prevalent in the market.While, keeping the experience of recession and the maturity of clothing industry of uk ,marks and spencer should also need to venture into the gorwing economies like India,Brazil and China.Company should consolidatde its position as these are countries with fastest growing economies and the buying capacity of consumers have increased .They are also the countries with the largets customer base.To conclude, the recommended marketing strategie for Marks and spencer for the next three years should be Penetration Strategy and the Diversification Strategy.

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