The question
You are the marketing manager of Marks and Spencer. Assess the situation which you face and prepare a report to the board outlining your analysis and recommendations.
TO: Chairman of the Board
FROM: John G Morton, Marketing Director
SUBJECT: The Marketing Problem with Marks and Spencer's
As you are probably all too aware, there has been a great deal of publicity surrounding our company and its present financial situation. However nobody can deny that we are leaders in our market with a 13% market share. With over 100 years' experience in running our high street stores, I feel that I am justified to say that we have by far the most experienced staff. Our employees are very capable of turning round our fortunes. The sheer number of high street stores is a major strength to us. We have a fabulous food department with a multitude of award winning products in our extensive and indeed, increasingly growing range.
However as the Marketing Director, I recognise that we have an 'old-fashioned' image. People perceive us as being 'behind the times' so we have to bring our image in line with the 21st Century in order to win back the customers we have lost to the likes of Gap, Next and USC. According to our recent customer surveys, people believe that we have no specific market. People have commented on the fact that they cannot identify with the store because, we do not target a specific group of people. This is evident in our stores, because it is often the case that different clothes ranges are displayed next to each other so people do not feel that the store is designed specifically for their needs.
We have to strive to look ahead, anticipate what is going to be fashionable in six months time. Rather than following other stores, we also want to re-establish ourselves as a company that shows innovation and we want to create the fashion of the future. I see this as a major opportunity for us, I plan to work closely with the design team over the next few months in an effort to improve our image especially with the under 40s. Within our high street stores, so much can be done to enhance the shopping experience for our customers. At present, the vast majority of our stores are bland in the sense that the colour scheme is drab and dingy. We need to improve the quality of the lighting at every one of our stores nation wide. If we display our product in a more pleasing light then it is likely that our sales will go up. The public appreciate items that are well displayed and eye catching.
Recent market research brought to our attention that people like individuality when they are shopping. An example of this is, if somebody is wanting to go to the teenagers' clothes, the teenager does not want to have to walk through 60+ clothes to get to their department. For that reason I would suggest to the board that we should make our stores more segregated. This is an opportunity for us that I believe would be very beneficial. One could establish partitions within the store and each section of the store could be given it’s own unique characteristics. For example, the teenagers section could have the latest ‘chart topping’music playing in it whilst the department aimed at the over 50s for example could be catered more to their needs by not playing music. This can be very easily achieved by using the latest high-technology speaker system. It would mean a great deal of initial investment, however after consultation with our financial team I believe that it is a risk that is worth taking. As Marketing Director, it is essential for me to have 100% confidence in the products that I have to sell. I do have confidence in the products, but what needs to be improved upon in my opinion is the actual fabric of the stores nation-wide. If we can make shopping a more pleasurable experience then more people will return through our doors. If we make the store appear more upmarket then people may be more willing to shop there. Recent trials at our Oxford Street store have proved successful. The improved lighting, brighter colours and better displays have increased sales. By modernising our stores we aim to attract new customers. It is crucial that once we have attracted new customers we retain them. I believe that if we make our stores aesthetically pleasing then there will be higher customer satisfaction. If we gain higher customer satisfaction then the image, which has dogged us in recent years, may be dispelled.
Whilst we do have many opportunities, we must be very aware of the threats that we face from competitors. We must watch our falling share price, if our share price falls too low then people are going to be very nervous about investing substantial amounts of money in our shares. We live in a world of ‘take-overs’ and it is critical that we do not become vulnerable to one. If we were to become the subject of a take-over bid the publicity generated would be less than favourable because it sends out a message to our customers that we are doing badly.
At the present time, I believe that we are not ‘hitting’ any market and, we need to find a way of boosting our market share without compromising the quality of our clothing or any other aspect of our business. There needs to be a certain amount of strategic vision within the organisation in order to increase our share of the market. At one time I would have been able to say that our product was a ‘star’ in terms of the ‘Boston Box.’ However, the market is not growing at such a rate as it once was, and furthermore our market share has declined. I would therefore say that the product we offer is now viewed as somewhere between a ‘Cash Cow’ and a ‘Problem Child.’ I therefore think that in the business as a whole, not just the clothing side but also the food department, we should aim to increase our market share. At present our market share is 13%, if we could increase this to 16% within the next 6 months then I believe that we could, after a period of time, regain our original market share.
Marks and Spencer’s wants to be at the forefront of fashion, we need to lose the image that we are given by fashion magazines and newspapers. For us to achieve this, a period of radical change has got to be implemented not only within our stores but also within the whole management operation.
The market that we are in is segmented by age, as a business we need to create a plan that will satisfy every section of the fashion market. The only way that we can get there, is to decide on the key factors that influence people of different ages when they are buying clothes. The problem that we face at the moment is that people are going to shop at places that are targeted at a specific age range. For example the under 40s are visiting clothes stores such as Gap and Next. This is because their product range is viewed as being fashionable and it is targeted at a specific age range. Due to the fact that the market is segmented by age, we need to decide if we are going to concentrate on a particular market and do very well or a wider group and perhaps not to succeed as well. It would be difficult for Marks and Spencer’s to completely change the type of market that we target at present. I have faith in the staff and the product – however it is clear from recent sales figures that customers are losing faith in the store. The products that are on our shelves and hangers across the country are of a high quality, what we need to do is make them attractive to prospective customers.
If the business is to succeed, then we will have to start to accept credit cards. Many people now possess a card and some customers may be put off visiting the stores because they know that they cannot put their purchase on their card and pay for it when the bill for the card arrives. Furthermore, we are one of the only major retailers in the country that does not offer any form of ‘Rewards’ or ‘Points’ system. If we introduce such a system then we may find that we have increased customer loyalty because more people want to earn reward points. As a result, customers will want to spend more in an effort to earn points. This system has worked very well for supermarkets such as Sainsbury, Safeway and Tesco.
In conclusion, I recommend to the board that we need to radically modernise our image by making the clothes more fashionable and to refurbish our high street stores. We need to anticipate fashion and be prepared to make striking statements. Benetton have for many years adopted a striking advertising campaign, they have grabbed the headlines. Unfortunately for us, we have grabbed the headlines for our falling share price and falling market share. We have to improve our image by proving to our shareholders and our customers that we have changed, adapted and above all modernised. If we can be viewed as a good alternative to other high street names then that is a good start. However, what I would like to be able to say to the board in six months time is that we are better than the competition. If we can lose the label that we have been given then we have won half the battle.
Another Example
To: Chairman of the Board, Marks & Spencer PLC.
From: Shaughan Rick, Marketing Director
Subject: The Marketing problem with Marks & Spencer’s
Executive Summary
Marks & Spencer PLC cannot afford to continue to lose our substantial market share. With our vast assets we are a tempting target for takeover if we allow ourselves to continue to fall like this. I believe that in order to correct this a set of targets must be put in place. One of them should almost certainly be the increase in our market share within two years of the plan being implemented. This is the most effective way of judging our success (or failure) on a macro-business scale. Certain internal goals should also be set such as increased efficiency and better supplier relations, however such things will need to be modified around an official plan that takes all the information into account.
Introduction
Marks & Spencer PLC have long been an established firm in the UK and more recently abroad; we have maintained a high standard of excellence on all our products.
However sales figures show we are no longer having the same impact on the market as we have had and in the last few years profits have been in decline. Whilst it would be possible to attribute this to external sources, it is difficult considering the boom the economy has been experiencing since 1996.
Competition from smaller chain stores has become considerably more intense; stores such as GAP and Topshop which are able to target specific market segments with greater ease than we can. Our problem is more deep rooted than simple over stretching though; our entire image has become clouded and we are no longer viewed by the younger generations as a source of excellent quality clothing and food, but as a relic of a bygone era.
Analysis
First I can identify a number of basic Strengths, Weaknesses, Opportunities and Threats that we have to consider.
Strengths first, Primarily I believe one of our major strengths are our assets. Many of our outlets were purchased when land inside metropolitan areas was not at a premium; as a result the value of these outlets has skyrocketed. Secondarily one of our key strengths is our image (also a weakness that I shall arrive at later) and our brand name, St.Michael. Finally another strength is our market share (currently static at 13%).
Our Weaknesses are, as I’ve mentioned already, the image and brand name. This is mainly because our target market is split into a number of segments, the most easily identifiable being: School Clothes; pre-teens; teens – 30; 30’s – 40’s; 50+. This diverse coverage means that we lack the Marketing Economies of Scale with which to target and cater for each of these specifically. In addition to this there is a certain amount of product association that occurs, in the same way Lexus is attached to Toyota, we can’t shake the image of a post-war retailer from the minds of the younger people that we’re targeting.
On a more worrying level it is my belief that their detraction from us is also precipitated by teen rebellious instincts. Their parents trust us, so they shop with us, but the children want a choice of their own so they reject the clothes given to them. Whilst such generalizations are not the stuff to base marketing strategies on, they are certainly something to be taken into consideration.
Opportunities are present in our ability to reshape the firm. With the main segments of the market identified I believe positive steps could be taken to capitalize on this discovery. We can use this information to re-brand certain areas to make them more focused on the individual segments rather than trying to nurture a “One product suits all” ethos. We cultivate a new strategy that makes us more individual.
Threats to us still remain the use of Marketing Economies by our competitors. There is no way we can get these simply because of the range that our products are targeting. Other weaknesses include our recent bad press regarding treatment of suppliers which is magnified by our previously thought reliability as a top retailer. The stock market is a threat to us, mainly because our falling share price leads to less people being interested in purchasing our shares.
Using the Boston Matrix to analyse the situation as far as our products are concerned is also a useful tool. Identifying a dog or a star might be difficult; this is mainly because almost all our products lie in the middle somewhere, with none being new and popular and none being old and unpopular.
I can identify within the food hall our range of ‘Banquet’ meals as Cash Cows. These meals include our Indian banquet and Chinese banquet that have been around for a long time and continue to be very popular.
With the Market Segments identified it is important to understand what they want. If we look at the female section of the market for now we can get a pretty good idea of the area that different age groups have in mind.
- Typically young women, i.e. teenagers to mid to late twenties, will prefer more radical and outrageous clothing. In all likelihood they will not have as much of a disposable income as the other segments and so will want to pay a decent price for the clothes, however they are not as focused on quality as a main feature of the product.
- Middle aged women, i.e. thirties to late forties early fifties, prefer higher quality and better cut products. Whilst they obviously do not want to pay a fortune for their clothes, they will have more money at their disposal so they do not mind paying for that quality.
- Elderly women, i.e. mid-fifties plus, have in all likelihood lost their figure and do not want tight fitting or curvaceous clothes. They would prefer something more conservative and probably prefer neutral colours.
These preferences combined with a certain stigma that the younger people attach to our product means that if we wish to achieve feasible goals then we must alter our techniques.
Recommendations
Firstly I believe we need to re-launch some of our products to be more specialised. The trouble that our brand name carries with it is one held by the younger generations who see us as the personification of everything that they do not like in their parents.
Our store colour scheme is unappealing as is the lettering of the St.Michael brand. Something considerably more radical would not be out of place and I would recommend that we don’t simply rework the design of some of the clothes, but also the design of some of the stores and the label, if only to detach the stigma.
Our current marketing strategy for the middle-aged women is good. The campaign includes images of what ‘normal’ is according to our most popular women’s sizes and features a model who is not straight from Paris and a size 8. A continuation of this campaign would prove beneficial.
Because of the importance of ambience in a store, I believe separating the different departments might not be enough to stop the usually loud music that young people listen to from interfering with the other areas of the shop. A network of parabolic speakers that transmit sound in straight lines rather than cones may be called for, however these are expensive and would add to capital cost.
This page is: Edinburgh Academy / curriculum / business / gallery.htm
