Marks And Spencer Essay

The sample essay on Marks And Spencer Essay deals with a framework of research-based facts, approaches and arguments concerning this theme. To see the essay’s introduction, body paragraphs and conclusion, read on.

This assignment will examine how Marks & Spencer’s strategies have changed in the past 10 years, from 1998 to 2008. These strategies include management strategy, corporate social responsibility, advertising strategy, competitive strategy, and green strategy. However, the most important strategy must be the recovery plan of these ten years.

Marks & Spencer is the largest clothing retailer in the UK.

It is also an international retailer which operates around 760 stores in more than 20 countries around the world. The company provided quality products with affordable prices and they offer a board range of products, such as womenswear, menswear, childrenswear, babywear, and homewares. [Mintel, Retail Review – March, 2008]

In 1998, the company was hit by falling sales and loss of market share. They suffered 23% decrease in profits, and by 2001 Marks and Spencer was no longer even in the Financial Times list of the top 500 global companies.

It was even in danger of being taken over by another company. The reasons of decreasing sales include the failure of the changing needs of its core consumers, boring design and styling and fashionable competitors, such as Gap and Zara. Since then, the company used different strategies to recover the company lost. By the end of 2002, the market share of the clothing market raised up sharply to 14.8%. Marks and Spencer were able to bring back the customers temperately.

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However, they experienced another rapid drop in market share again in the 2 following years, which was between 2003 and 2004. Fortunately, the company picked up the market share in 2006 with strong performances from menswear, womenswear and childrenwear. The Christmas sales even rose up by 9.2% in 2007, which was officially recovered. Therefore, the question about how the company went down, how it recovered and the presence strategy will be discovered.

Marks And Spencer Growth Strategies

[Marks & Spencer annual report, mintel 2002]

First of all, management strategy is involved during these ten years. Marks & Spencer has been changed their director board many times since1998. For example, Luc Vandevelde recruited as a chairman in 2000 and now, Stuart Rose is the current executive chairman since 2008.

The organisational structure has been changed to be flatter over these ten years They company has been cut down some layers of management since 1998. This would enable their employees at the remaining levels to be more responsible and have more accountability than before. Quicker decision could be made by this strategy which means that the employee has to be ready to give good reason for the decisions that they make. In 2001, Marks & Spencer made attention on implementing the changes about adding highly talented retail specialists to the company. Started from 2000, the company have put in place a strong leadership team, which has developed a very good progress in its implementation. They were trying to improve the value of the core market.

[Marks & Spencer annual report, mintel 2002]

From 2003 to 2007, the number of Marks & Spencer stores in the UK and Republic of Ireland has increased from 335 to 472, which is a strategy of market penetration, as Marks & Spencer marketed the same products to its exciting consumers that are in the UK and Republic of Ireland for increase sales. In addition, launching loyalty card is another activity of market penetration. (Ridder, K.,2003 , Mintel, 2007)

Many of Marks and Spencer’s strategies can be defined by using Ansoff’s matrix, which is one of the most useful planning aid. This helps identifying alternative strategies based on products and markets. There are four main growth strategies of possible combinations for products and markets. They are market perpetration, market development, product development and diversification. [Ansoff’s Matrix, 2008]

Product development is the process that involved the development of new products for current customers. For instance, the David Beckham range of childrenswear, DB07 was launched in 2004.

“A brand is an empty vessel you imbue with value”.(Wally Olins, 1988)

This quote relates to Marks and Spencer, because of it was an opportunity of adding value, quality and leadership by having ‘David Beckham’ to be one of their ranges, ‘DB07’. This helped the company to attract new customers in the new market, which is another example of Diversification.

Market Development means the process of developing new markets for existing products. Targeting new segments or expanding new geographical markets can achieve the company growth. However, Marks & Spencer did not enter any new geographical markets, since the sale of Brooks Brothers in 2000 and King Super Markets in 2006 for their recovery plan. The company tried to focus on Europe, because the company mainly owned stores in the UK, Republic of Ireland and franchises in Continental Europe. The numbers of stores in the Continental European countries are even expanded from 82 to 131 in total between July 2004 and July 2007.

Online shopping is one another activity of market development. Marks & Spencer started launching online retailing in 1999. By the end of the year 2000, they had expanded 3,000 products on their website. Then, they kept developing their online shopping through partnerships with different companies, such as MSN in 2000 and Amazon in 2005. (mintel, fashion online 2006)

Diversification is the most risky strategies in the Ansoff matrix, as it means the company markets new products to new customers, which may not be relevant. For instance, Marks & Spencer had a great idea of hiring a famous football player, David Beckhamd and granting him his own clothing range. Their marketing focus is on their clothing range which is probably the right idea due to competitors such as Sainsbury’s were introducing their own clothing range. The company had incorporated their own style and image which their competitors could not comprehend to. Therefore, it was a big step in the right direction for the company. [Marks & Spencer annual report 1999]

The recovery plan on 2000/01 was focusing on UK retail business, cutting down cost and businesses and improving capital structure. The strategy of focusing on the UK retail business which included expanding the growing businesses, such as food, home and beauty, but also concentrating on clothing business, accelerate of store renewal programme for more intensive use of space, and getting closer to the consumer, in terms of better marketing communication. The cutting down unprofitable strategy were involved selling the business in Hong Kong to become a franchise, closing down some unprofitable overseas business and the unprofitable clothes catalogue and reducing cost of goods that by using foreign supplier in Asia, which enabled to reduce sales price and to raise profit. After the recovered of the company, the company was planning to drive their core business, such as product, service, environment and brand stretch. Also, they wanted to develop their international business. On the strategy of improving capital structure, the company tried to reduce the investment in inventories by 10%, which helped for a reduction of £90million.

Competitions with other retailers, such as Gap and Zara, Marks & Spencer has been changed from managing their business as a whole, rather than alone product lines, to

Marks & Spencer started focusing on the UK market and its core clothing business in 2001. The same year, George David, who is the founder of Next appointed to create a new women’s fashion collection for Marks & Spencer in February, which called Per Una. This product lines reflected the original Marks & Spencer’s values of quality, value and innovation as well as the modern requirements for fashion. In 2004, the company suggested to change it direction of its clothing. They wanted to attract younger customers and the company bought Per Una from George Davies for £125m in September. [Marks & Spencer annual report, 2001and 2004]

Marks & Spencer have changed a lot in their childrenswear department in 2002. They have been using high technology of health and safety testing on their ranges of childrenswear, which gave a better quality to their products. As mintel report suggested that the biggest threat to the retail scene at that moment (2002) was Marks and Spencer. Marks and Spencer was very interesting, as they have suffered for period but they were more of a threat if they get their act together and get things right in children’s clothing they could make a huge difference – much bigger than any foreign retailers entering the marketplace. [Mintel report, 2002]

In addition, since Marks and Spencer believed that children-wear should involved more personalities and style, in February of 2002, they decided to sign David Beckham to help with their boy-wear range. In September of 2002, Marks and Spencer introduced their new cloth-wear ‘DB07’ which gave a boost to with stronger ranges by expanding and introducing a fast fashion element to its Limited Collection range in 2006/07.

[mintel, Retail Review – UK – March 2008]

Since the dramatic sales drop, Marks & Spencer started spending a huge amount of money on their advertising strategy. In 1999, they spent around £2 million on the advertising campaign which included television commercial. In 2001, the company’s Christmas advertising was launched on the national television. Some of the celebrities were featured saying what Christmas means to them and some of the Christmas gift, products were featured either. In 2004, text marketing was firstly used by Marks and Spencer, which means sending the company brand name to target customers. Also, David Beckham was featured for the collaborated collection, DB07 at the same year, which showed a family men image for the brand and suits the image of Marks & Spencer In 2005, an advertising campaign ‘Not just Food’ was launched in April and the advertising campaign for clothing which Twiggy featured in was also launched in October. In 2006, they launched of ‘Get This Party Started’ Christmas campaign featuring Shirley Bassey. Marks & Spencer has been using different celebrities, media, images and idea to advertise their brands and products.

[Barrett, S., 8 Dec 1999]

Nowadays, Marks & Spencer is more concerned about green and ethical issues than it used to. They were trying to become the most environmentally friendly retailer in the world. In 2006, Marks & Spencer has launched a new ethical image, called ‘Look behind the label’ campaign. The company has been started selling 100% fair-trade cotton since then. In the early 2007, the company planned to spend £200 million on green strategy in the following 5 years, which included climate change, waste, sustainable raw material. The name of the plan, called ‘Plan A’, with a tag line ‘Because there is no Plan B’.

The implementation of paying 5p for standard sized vest carrier bag when purchasing is one of the commitments of ‘Plan A’ in 2008.

[Marks & Spencer.,,Annual report, 2006,2007 and 2008]

In conclusion, Marks & Spencer has been experienced a period of decreasing sales and had acknowledged numerous issues for their recovery strategy, which mainly on their clothing range with pricing quality, fit, segmentation, product appeal and availability. Then, the company was aiming to offer something for everyone with better price, better quality of products and deliver quicker. For example, the Zip, Blue Harbour and Classics range of clothing, they have a big range of clothing lines to offer new and current customers.

Marks & Spencer is doing well at the moment and officially has been recovered already. The sales of these two years have been increased. However, the market and consumer behaviour is always changing rapidly. The company should not be too proud of their sales profits. It is recommended for Marks & Spencer continues to concentrate on their marketing communication to build up a long term relationship with their customers and to regain more competitive advantages such as online or telephone delivery for food in the future. Moreover, hopefully more creative designs with a cultural based can be seen in Marks & Spencer soon which to match their demanding consumers. Finally, the green strategy would help Marks & Spencer into another stage by not just offering us better products, but also improving a better world.