Marks and Spencers
Understanding customer wants, needs or requirements, an up-to-date idea of the latest trend within the market, a definite awareness of the current rules and regulations guiding the business are some of the reasons why a business should observe its environment. Something that will surely be a distinguishing factor for any business within its industry is its ceaseless cognizance to both its internal and external environment. Think about top businesses in the world such as Apple, Ford, Exxon mobil and the likes, and consider what makes them stand out, sustain and shine even under the fiercest of competitions. It's not only about starting their corporations with huge sums of money; it's mostly about being proactive rather than reactive to changes within their business. Now compare such companies to ones like Nokia and Blackberry, why couldn't they maintain their market share and status as two of the best telecommunications company in the world?
The analogy is not difficult; there are two ways of doing business as far as change is concerned: proactive and reactive, without any in-betweens. A company is reactive if only situations forces it to change (Lawson and Price, 2003), by which time it is usually too late, no anticipation of impending changes to the environment, no research into what could be the future needs of customers, and that is exactly the answer to the earlier asked question; Blackberry and Nokia were reactive rather than being proactive, which led to the former Lost Its Status as the Enterprise Mobile Gold Standard (Rash, 2014). Being proactive however means an improvement in performance is ensured through a keen analysis of the environment in which the business operates, it involves a meticulous and methodical market research to determine any potential shifts in customer demand and employee requirements (Schultz, 2011). This automatically empowers the organization to be way ahead of its competitors, hence the sustainability of Apple, Ford, and Exxon mobil. The mode a business adopts for conducting its business has a direct impact on its marketing strategies. How constantly does a company change its market position in the minds of its customers? How much research is made before products are launched? Marks and Spencer should aim to rely on a proactive approach because of the earlier stated advantages associated with it. Expanding the reach of a business into previously unknown territories has its pros and corns, ups and downs just as any other adventure in life, and as Marks and Spencer aim to attain this expansion and launch its products into European markets, more particularly Iceland, the little islandic country between the North Atlantic and the Arctic Ocean with a population of just 332,529 inhabitants. Factors such as the external factors, including the laws practiced in the destined region that could aid the success over there, among other factors such as the technological advancement will be discussed in this essay. The importance of this essay is not limited to the external environment alone as that on its own do not dictate the outcome. The internal environment must also be properly analyzed to enable an ideal marketing strategy.
The internal environment of a business has mainly to do with the way people in a business associate to facilitate the realization of the organization's strategic goals. To efficiently analyze the internal environment of a business, especially in the context of reaching into new markets as it is Marks and Spencer's case case, a SWOT analysis is required to measure the strengths and weaknesses against the potential opportunities and threats (external) waiting for the company upon the expansion into this region, see what outweighs the other, and deduce a marketing plan based on this outcome.
As a reputable household company operating in the retail sector in the UK, widely known for the quality it offers in its clothing range for men, women and children, and with well over 800 stores in the UK, Marks and Spencer's reputation precedes into the intended market. M&S's products are perceives as “value for money” due to quality, convenience and wide range of products. Also, the flexibility in the company's target market social classes which ranges from upper level to middle class should be an added advantage for the enterprise in ensuring adequate sales.
The cost of setting up, advertising, and trying to gain market share in a new country could be overwhelming even for a business as successful as Marks and Spencer. Cost of communicating with far-flung customers, employee wages, paper works and legal requirements amongst others represents some of the barrier in the waiting to the success of this foray.
There are obvious opportunities to be derived from the international expansion of a business, most of which the company will benefit from. The UK is known as one of the most expensive countries in the world in terms of operating a business in comparison to most other European countries, meaning this proposed expansion should imply lower cost of establishing and running abroad, which should in turn increase revenue due to a higher return on capital. Additionally, unforeseen circumstances may prevail and there could be a need to balance the loss of a business up with the gain from another. This is a luxury that will become affordable if this venture becomes a success.
Just as illustrated by Lewin's force field analysis, there's always resistance to change which is usually borne out of rigidity or sentiments, but most often the fear of the unknown. Dangling into a new market requires a lot of effort, there's the threat of competition from already well-established, well-known companies that already serves the market, there's the threat of over-stretching resources and losing ground in the UK, though these threats can be neutralized by a solid, well prepared and documented marketing strategy.
According to a report by BBC on the countries with the highest tax rate, Carter (2014), reported that Italians take the least money from their earnings than most countries of the world. Italians, according to the BBC, take home 50.59% of their rightful earnings (takes home $202,360 out of $400,000 salary). On the other hand, Indians take 54.90% of their earnings, French people 58.10, and Russians pocket a staggering 87%. The implication of this is not far-fetched; there is less disposable income for inhabitants of Italy than other countries. A threat to the business due to the limited buying power of the people.
As opposed to the UK rules where the minimum wage is clearly stioulated by the government as follows: 18-20-year-old employees earn £6.70 an hour, under 18s £5.30, and apprentices £3.87 (Gov.UK), no such rules is applicable in Italy. ‘'There is no national set minimum wage for employees in Italy. Each employee's hourly wage or annual salary is set forth in the employee's employment contract or collective bargaining agreement'' (Caldwell, 2013). This presents an opportunity to Marks and Spencer as it can set employee terms based on factors such as experience level, and employee importance rather than a following fixed set of rules. This can help the business to cut cost on employee salaries
Italy, a company drowning in debt with a whopping €2.2 trillion in December 2015 (The Local, 2016). That is a figure that currently places them only second behind the perilous Greek economy in the EU. The tax rate levied against its citizens which was earlier mentioned is a means to recover this debt according to The Local (2015), but it clearly isn't working. One of the causes of this seemingly imminent meltdown is, according to The Local (2016) the dismal record the country has of productivity- which means the amount of value a worker creates over time, which is a crucial element of a thriving economy. Gone are the glory days of the 1970s when the country blossomed in the production aspect. A growth that was amputated no thanks to lousy governance that followed afterwards, and low-quality workforce. Effect of these economic factors in Italy is a threat for Marks and Spencer because it shows that there is less money for the people of the country to spend.
‘'Italian fashion trends influence fashion worldwide. Fashionistas wait with bated breath every season to see the forthcoming trends previewed in Italy because these trends will most likely become the top fashion trends for the season all over the world. There are two things about Italy one can't ignore- Italian food and Italian fashion. Italy is the land of pasta and also the land of Prada'' (Valecha, 2013). These sayings illustrate how fashion-crazy Italians are, presenting an opportunity for Marks and Spencer to make great profit being rest assured that people will buy its products.
“We are very close to the threshold of non-renewal where the people dying are not replaced by new-borns. That means we are a dying country. “This situation has enormous implications for every sector: the economy, society, health, pensions, just to give a few examples,” (Lorenzin, 2015). Definitely a threat because this means there are less people to buy from Marks and Spencer in Italy compared to if it were to open in a country like . ………………….
Thanks to technology, customer databases can now be created. Adopting this helps companies to use business intelligence to make answer questions such as who buys what? This will be an opportunity for Marks and Spencer in Italy as the information stored will make for better service to customers, which can generate word-of-mouth marketing.
Attracting and keeping new customers is our aim as we expand into new territories. Enticing new customers doesn't end with providing affordable products of good quality, corporate social responsibility, involvement in charitable causes will enhance the business reputation, make employees feel better and make employee recruitment smoother as more people will want to work for such a business. Being ethical is something we are already known for as has been previously demonstrated in our "Look Behind the Label", "Plan A" advertisements. Our culture of being constantly involved in charitable work should continue abroad.
The EU lawmakers continue to lay down definite rules regarding false or misleading advertisements, in an attempt to ‘' protect traders against misleading advertising and its consequences''. In a strategy presented by vice president Reding on 27th November 2012, clearly laid out laws were specified regarding comparative advertising - compare "like with like" - goods and services meeting same needs or intended for the same purpose, objectively compare important features of the products or services concerned. These are some of the legal requirements that must be strictly adhered to in this venture.
Marks and Spencer is a traditional, top UK retailer committed to delivering sustainable value for shareholders and enhancing lives every day through the high quality, own brand food, clothing and home products offered in every single one of the 857 stores, and even online in the UK with its headquarter in Waterside House, London (Wikipedia, 2016). A business already serving 33 million customers and has two divisions to it; Food which accounts for 57% of its turnover, and General Merchandise, which accounts for the remaining 43% with market leading position in Womenswear, Lingerie, and Menswear ()
Having successfully established the business as a powerhouse retail company within the UK, the mission is to develop beyond this region by launching into Italy.
- Create awareness by announcing arrival in the Italian market in the first year of expansion
- Record a reasonable 10% return on investment by the end of second year
- 40% profit on investment by the end of third year
- Become a market leader within the EU retailing sector by the fifth year
As the objectives of this proposed expansion has been clearly defined, a detailed marketing plan is essential for the materialization of these objectives describing the models and strategy that will be employed.
Variety - selling a range of products from menswear to womenswear, and kids wear drinks means there will be, as has been over the years in the UK, customer responsiveness.
Customer service - the idea that customers are always right
Accessibility – Access to Marks and Spencer's stores with short waiting times and long opening hours
Good value for money
Stern, if not undefeatable competition is what Marks and Spencer should be foreseeing. Italy is home to some of the greatest clothing brands in the world. Top competitors will be, among others:
1 Gucci: An Italian fashion and leather goods house which was founded quite a long time ago in 1921 in Florence. It is at the moment worth $8 billion, revenue that has consistently been on the up in the 21st century. Standing gigantically as one of the most sophisticated luxury brands of the modern day. (Khan, 2015)
2 Armani: This is a company that was founded by Giorgio Armani and Sergio Galeotti in the year 1975. It has since then grown international with its wide range of products, from haute couture to ready-made wears. An extremely expensive label whose range of products of menswear, womenswear, and kids wear coincides with Marks and Spencer's. (Khan, 2015)
3 According to (Rayment, 2015), this business started as a coat-making one in the 1930s. the Milan-based business is now focused, and positioned on the mind of its customers as formalwear specialist. (Khan, 2015)
Starting out as a coat-making business back in the 1930s, Milan-based label Corneliani has come a very long way. This market positioning and niche tendency makes this company a direct competition for Marks and Spencer.
Marks and Spencer's product line includes, but not exclusively the following;
- children's skiwear
- School uniform, belts and bags.
- Children's fancy dress
- Children's cartoon heros' story books, merchandise and character clothing (like Dora the Explorer and Thomas the Tank Engine), etc
- Suits, trousers, shirts, ties and blazers. Lingerie and hosiery for men.
- Posh hats, bags and scarves for women.
(All Marks and Spencer's products copied from Wikipedia)
Upper class, and upper middle class men and women.
4 p's of marketing
For a country where fashion is embraced to the maximum, with a lot of anticipated competition awaiting Marks and Spencer in Italy, product quality has to be to the optimum. Luckily for Marks and Spencer, the company is known for reliably providing customers with quality clothing. Although Marks and Spencer is known for quality, the fashion design behind their dresses still leaves a lot to be desired. ‘'Wandering through Marks & Spencer's flagship Marble Arch store, I am, in fact, looking for any of the clothes in the M&S autumn collection, which was promoted so widely last week. In my hand is a torn-out, double-page advertisement featuring Dame Helen Mirren, Tracy Emin, Grace Coddington (the flame-haired creative director of American Vogue) and other “Leading Ladies” posing for the renowned photographer Annie Leibovitz, who has shot portraits of the Queen. The message from the ad – timed to coincide with London Fashion Week – is designed to reassert M&S's quality and style credentials. It is classy, classy, classy. But just as the fashion press was being generous with its plaudits, the smile was wiped off Marks & Spencer's face by its high-street rival, John Lewis. The department store chain, where sales have been soaring in recent years as it continues to up its fashion game, is now on course to overtake M&S's annual UK takings for the first time'' (Bevan, 2013).
Market analysis and growth
Potential customers Growth 2016 2017 2018 2020
High -class 2% 800000 960000 115200 138240
Middle-class 2% 10000000 12000000 14400000 17280000
Lower class 2% 500000 600000 72000 86400
Total 2300000 13560000 14587200 17504640
Table 1 projected market analysis
Foreseeably formidable competition awaits this expansion, companies like C & A (founded by brothers Clemens and August Brenninkmeijer), in 1981, currently with over 34000 employees and revenue in excess of 8.4 billion US dollars and an outreach of almost the entire continental Europe will be a big hurdle. Some of the businesses Marks and Spencer are likely to be competing with for market share and revenue are Inditex, H&M, Espirit, Benetton.
...(download the rest of the essay above)