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Unit 19 Marketing Planning Assignment Marks Spencer
Diploma in Business (Marketing)
Unit Number and Title
Unit 19 Marketing Planning Marks Spencer
Marketing planning marks spencer report argues about the strategic analysis of Marks and Spencer in UK. The strategic analysis of the company is the framework that helps the company to analyze internal and external factors as well as the industrial factors that affects the business of the same. Report also includes some of the international facts as the company is operating in many foreign countries. The report initiates with the discussion of the porter’s five forces models, as it is the base for the strategic analysis of the company. Further, it focuses on the brief introduction of the company following with the SWOT and PESTEL analysis of the company. SWOT analysis gives the idea of internal strength and weakness of the company and provides information about the external threats and opportunities prevailing in the industry. PESTEL analysis provides an idea regarding the political, economical, social, technological, environmental and legal factors that affect the functioning of M&S. later, the report discusses about the application of porter’s five forces model in M&S. this discussion results in providing information about the industry in which the company operates and help the company to formulate the strategies accordingly.
Strategic analysis of Marks and Spenser:
Strategic analysis of the organisation involves an issue. Here the issue that has been in context with M&S is the effect of application of Porter’s five forces model in the organisation. The analysis of the company starts with the description of the Porter’s five forces model following with SWOT and PESTEL analysis of the company and ends with the discussion of application of these forces in the company. (Friesl and Kwon, 2016)
Porter’s five forces model:
This model facilitates the organisation to analyze the competition prevailing in the industry for the same. It is a framework that provides the organisation with the knowledge of its position and standing in the industry in relation with the other companies from the same industry. It is not the analysis of the company but it is the analysis of the whole industry. This industrial analysis results in some of the threats to the company and these results can be used to formulate the strategies that can help the organisation to compete in the industry. This also determines the level of competition and hence allows the company to prioritize the issues and resolve them accordingly. Identification of the attractiveness of industry is also the element that has been majorly discussed through this model. Attractiveness of the industry refers to the opportunities available for the companies in that particular industry. (Islam, 2016)
Porter named these five forces as follows:
- Threat of substitute
- Threat of new entrant
- Threat of competitors
- Bargaining power of buyer
- Bargaining power of supplier
Threat of substitute: A substitute in general refers to as alternative. In a product-based company, substitutes are the products that can replace other products of the same king. Suppose, if the prices of tea rises than people can easily shift to coffee. In this example, coffee is the replacement product for tea. This suggests that not only the organizations that manufacture the same kind of products but the organisations producing substitutes are also the threat for the companies. (Jeyarathnam, 2008)
Threat of new entrant: As the name suggests, new entrants are the new businesses entering into the industry. If the initial investment required entering, any industry is low than the threat of new entrants is very high for the companies in that industry. These new entrants increase the competition in the industry as well as lowers down the attractiveness and growth of the industry by making it saturated.
Threat of competitors: Competitors are the rival organisation present in the same industry. If an industry is saturated by so many organizations behaviour, people have many choices to make and these results in high competition in the industry. Very high competition sometimes leads to wrong practices by the organisation to compete with others.
Bargaining power of buyer: Bargaining refers to negotiation. Buyers can enjoy this power when they are in less number and suppliers are in high number. If there are some many suppliers for a product and buyers is less in accordance with the number of suppliers than buyers have the power to bargain on the prices as they have other choices.
Bargaining power of supplier: Bargaining power of suppliers also follows the same concept as above. Less number of suppliers in the industry creates a monopoly of these suppliers and hence they have the bargaining power in their hands. Buyers cannot negotiate as supplier can move to other buyer if he is not ready with the deal. (Lynch and Lynch, 2008)
The company was founded by two partners, Michael Marks and Thomas Spencer in 1884. It is a public limited company falls under the category of retail industry. Headquarters of the company is in London, UK and serves the customers worldwide. Today, it is one of the leading multinational retail stores in UK and other parts of the world. The company owns around 1382 stores all over the globe with 468 stores located at Eurasia and Middle East. M&S served the customers with many product lines including clothing, food products, home products etc. M&S offers its products to the customers in offline stores as well as at online sites. As far as UK market is considered, M&S is one of the leading clothing brands for men and women. The biggest business strategy that has supported the company to build its image was Plan ‘A’. This plan focuses on meeting the requirements of social, ethical and environmental business commitments. (Corporate.marksandspencer.com, 2016)
Pestel analysis of M&S:
PESTEL analysis allows the company to investigate the external non-controllable factors that have their impact o the business of the organisation.
- Political factors: European commission’s free trade agreements support the companies like M&S to imports the products freely with decrease in the source cost. Due to global uncertainties in 2005, growth of M&S have ceased in international business that leads to decreased profitability in the new markets and closing of twelve stores in 2016. Some of the factors like geopolitical instability, fluctuations in the local currency and decrease in the customer demand also affects the business of the company in Middle East, Russia and Ukraine.
- Economical factors: At the time of financial crisis in 2008, M&S adopted the strategy of providing quality and value to the people whereas its competitors like Aldi, Asos or Tesco were using the approach of discounting prices. The strategy of M&S gives short term loses to the company but results in log term profits by earning British customer’s confidence and loyalty. The continuation of uncertainty in the economy results in adoption of discounting strategy by M&S.
- Social factors: Shift of consumer’s choices, preferences, and green consumerism results in considering the ethical and social aspects by the businesses. M&S have adopted plan ‘A’ concerning about the social and ethical aspects of the society. This plan is about creating sustainable strategies and building relationship with the people. ‘Communityshop’ and ‘spark something good’ are some of the programs conducted by the company for community and charity purposes. (Subba Rao, 2010)
- Technological factors: M&S have always been updated with the ongoing technology of online selling and use of social media for marketing. The company is slow in adopting the technologies. In 204, company has shifted to its own web store after launching its products with Amazon earlier. Company is running digital lab team of around 150 in-house software engineers to be updated with all the new technologies available.
- Environmental factors: Increase in concern of environment and strict regulations regarding the same at European and international level forces the companies to adopt sustainable policies of business. Plan ‘A’ of M&S focuses on practices like reducing waste and helping stakeholder’s community. These practices by M&S make it a company that considers environment sustainability in its business.
- Legal factors: Every company needs to focus on maintaining the legal issues of the country, wherever it works. M&S needs to ensure that they do not obstruct any laws or rules of home market as well as of international market. (Williams, 2009)
Swot analysis of M&S:
SWOT analysis of the company focuses on investigating the strength, weakness, opportunities and threats for the company. Identification of the above four elements determine the position of the business and helps the management to formulate the strategies in order to make improvements.
- Worldwide expansion: The international expansion of the company is the competitive advantage for M&S as there is no other rival company has so muchexpanded business worldwide like M&S. the company is currently operating in around 59 territories of Europe, Middle east and Asia with its retail stores and online stores as well. The geographical diversification of the company allows the company to distribute its potential risk and hence supports the business.
- Brand name: Introduction of many companies in the same sector did not affected the brand of M&S. this is still in the top 10 retailer companies of UK and serving the customers with brand loyalty. The company’s investment in innovation and brand building has not gone in vein as the quality and value of the products is still maintained by them.
- Consumer focused strategy: Shift from product to consumer focus strategy have proved to be a beneficial decision by the company. M&S is providing the customers with the great experience of shopping at offline as well as online stores. (Williams, 2009)
- Multiple product lines: Introduction of multiple product lines has sometimes proved to have negative impact on the company sales. The addition of new clothing brands leads to decline in the sales of clothing as company s unable to balance between so many businesses.
- Slow pace of technology adaption: The company has stepped into digital world in 2010 and launched its own online site in 2014. These practices provide advancement of technology to the company; however, the entry of the company in digital world is so late as compared to the competitors.
- Reduction of human resources: It has been observed that the company is losing its key employees and these employees have been recruited by its competitors. It is very necessary for the company to invest in recruitment, hiring and training of the employees.(Friesl and Kwon, 2016)
- Opportunities: Expansion in E-business The website of M&S is serving around 6 million customers and still has the opportunity to serve more. The company should focus on the 14 million customers who are still shopping on the high street stores to shop online. The introduction of the online members club named Spark has been expected to enhance the online business of the company.
- Clothing industry: M&S has been facing the issue of falling sales in their clothing sector. This sector has the opportunity to enhance the business of the company by coming up with the designer clothes rather than standardized formal clothes.
- Banking: M&S has recently come up with the account facility with no monthly fee. This initiative by the company has been praised by the customers and provides opportunity for the company to enhance its business in this sector also.
- Competitors: The Company was the biggest clothing store at times has now shifted at third position in UK after the competitors ASDA and Primark. The company is still at first position in terms of sales by value but is failed to register its first place in terms of sales by volume. This leads to the shift of the company’s focus from clothing to food sector.
- Economic instability: Economic and political instability in the places like; Europe, Ukraine and Middle East affect the international business of the company. It develops a threat to the franchisees as well as to the overall business of the company. (Islam, 2016)
Financial analysis of M&S:
The above figure suggests that the company has stagnated and flat results in recent years. The figure signifies that the revenue of the company is slightly rising but dividend has no rise since many years.
The company has invested around pound 6bn into capital assets but the amount is very high in accordance with the amount this company has earned. This suggests that the retail industry is capital-intensive business and requires a large amount of working capital to be invested by the companies if they want to survive and grow. (Corporate.marksandspencer.com, 2016)
Industry life cycle of the company:
This figure shows the current phase of the company. This suggests that company has crossed its maturity stage and positioned at the declining stage due to high competition and saturated industry in retail market. Company has to come up with new strategies in order to rise in the industry.
Application of Porter’s five models in M&S:
Threat of new entrants: Threat of new entrants for M&S in low. This is because this industry is high capital intensive and requires large amount of capital to enter into this industry. Maturity of market, customer’s loyalty towards the brand and high investment act as the barriers for the entry of the new companies. George and Matalan are some of the brand that enter the market under the shade of ASDA and affects the loyalty of the customers towards M&S by providing products at low prices. On the other hand, ZARA, H&M and GAP are some of the brands that are affecting the clothing sector of the company.(ScubaRae, 2010)
Threat of competitors: This industry of retail stores is very much prone to competition. This is because this industry covers a large number of businesses under same roof. All the companies of different businesses like food chains, clothing stores etc act as the competitors for M&S. supermarkets such as Sainsbury and Tesco and clothing chains such as ZARA, H&M, John Lewis brings the competition for M&S.Porter suggests that companies have to achieve the competitive advantage by opting for low cost, differentiation and hybrid practices. M&S opted for differentiation by providing the customers with the quality and value products. Afterwards, M&S tries to come up with the new approach of “all things to all people”. Some of the online shopping stores and catalogue shopping has also acted as the competitors for M&S.
Threat of substitutes: Threat of substitute is very high as clothing and food products can easily be imitated by any of the manufacturers. The decline in the sales of the M&S clothing is due to the collaboration of the competitors with the foreign importers that provide products at cheap rates and hence the competitors imitate the designs and sell it at lower prices than M&S. Change in the customer preferences from quality to low prices has also been threat for M&S business. Customers might prefer to buy the things with similar labels with lower prices. (Jeyarathnam, 2008)
Bargaining power of suppliers: Earlier when the company was very dependent on the British supplier, the bargaining power of the suppliers were high as they have the monopoly in the market. After 1990, when foreign suppliers came into picture, M&S shifted its dependency on those suppliers and hence the bargaining power of the British supplier lowers down. Currently, the bargaining power of supplier is low in case of M&S.
Bargaining power of buyer: In the industry of retail stores, bargaining power of the customers is very high. This is because this industry is saturated. M&S have to opt for the low cost approach because of the strategies of its competitors who are providing same kind of products at very competitive prices. To sustain in the industry and to compete with the competitors in terms of value sales, companies have to handover the power of bargaining in the hands of customers. The switching cost of the products in this industry is also very low and the customers are available with many choices at low prices, so they can easily move to the different brand. (Lynch and Lynch, 2008)
After analyzing all the factors and aspects of the Marks and Spencer, it has been observed that the company is at its declining stage after attaining the maturity. This is the alarming state and M&S needs to wake up work according to the industry.
- M&S needs to implement new marketing plan to enhance its business worldwide and to attain the competitive advantage.
- It needs to review its “plan A” in order to come up with new sustainable strategies that can help the company attain that brand value again.
M&S is one of the leading retailer brands in UK. The company was founded by two partners, Michael Marks and Thomas Spencer in 1884. It is a public limited company falls under the category of retail industry. Headquarters of the company is in London, UK and serves the customers worldwide. The strategic analysis of the company suggests that M&S is at alarming stage of declining and needs to implement some of the changes in order to gain that brand value back. Company is facing high competition with the brands like ASDA, Sainsbury etc. many economical and political issues have been affecting the company’s business. Recession during 2008 has lead to decline in the sales of the clothing sector of the company. The company was the biggest clothing store at times has now shifted at third position in UK after the competitors ASDA and Primark. Some of the actions like introducing bank accounts for the customers have been observed as the good practice and praised by analysts. It has been recommended to the company to revise its plan A of sustainable business and to come up with the new strategies to get back that brand value and to sustain in this competitive industry. (Lynch and Lynch, 2008)
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Lynch, R. and Lynch, R. (2008). Strategic management. Harlow: Financial Times Prentice Hall.
Subba Rao, P. (2010). Strategic management. Mumbai [India]: Himalaya Pub. House.
Williams, K. (2009). Strategic management. New York, N.Y: DK Pub.
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Islam, K. (2016). Can Ethical Business Strategy Influence Consumers’ Buying Behavior and Loyalty: Marks and Spencer PLC?. CSBM, 3(1), p.38.
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Corporate.marksandspencer.com. (2016). Plan A. [online] Available at: https://corporate.marksandspencer.com/plan-a [Accessed 18 Oct. 2016].