Identify Marks and Spencers Market Position and Determine Why They Nearly Collapsed

Identify Marks and Spencers market position and determine why they nearly collapsed

Introduction

Marks & Spencer is one of the UK's foremost retailers of clothing, foods, homeware and financial services, boasting a weekly customer base of 10 million in over 300 UK stores. Marks & Spencer operate in 30 countries worldwide, and has a group turnover in excess of Ј8 billion. It has specific values, missions and visions. It's main vision is 'to be the standard against which all others are measured', it's main mission is 'to make aspirational quality accessible to all', and it's main values are quality, service, innovation and trust. (www.marksandspencer.co.uk).

By the end of 1998 though, there was evidence of a crisis occurring. Customers and media pulled together to assist senior management partake in an internal audit to identify the problems and see if they could come to a solution. The purpose of this assignment is to construct a SWOT analysis, highlighting each of the strengths, weaknesses, opportunities and threats that were highlighted in the internal audit. The SWOT analysis is contained within the marketing plan and is the third step in the marketing planning process, coming after the Marketing audit and before any assumptions. (Joisce, Ted (2002), Marketing Planning Lecture Notes - 14/10/02, Mission, Objectives, Strategy, Tactics)

Conclusions will be drawn from the SWOT analysis, which will attempt to review the company's position and identify the marketing priorities. Also, Marks & Spencer's recent marketing activities will be critically analysed in order to ascertain what improvements have been made since 1998.

This assignment will attempt to determine why Marks & Spencer nearly collapsed and what they have achieved in terms of success and failure as part of their recovery programme.

Strategic wear-out occurs when an organisation no longer meets customer needs and the pursued strategy is surpassed by competitors. (Drummond and Ensor, Strategic Marketing Management, p. 149, Butterworth Heinemann)

Marks & Spencer is a perfect example of a company that had a successful strategy but failed to adapt to the changing environment and have therefore suffered from 'strategic wear-out.'

Evidence to support this quote comes in the form of Marks and Spencer sending very little on marketing communications and being overtaken by their competitors, but this will be explained later in the assignment.

As Figure 2 shows, strategic wear-out refers to the lack of fit between an organizations strategy and the needs of the marketplace. This was clearly evident with Marks and Spencer when they became complacent about their customer service standards and thought their customers understood what Marks and Spencer stood for without marketing when all along they didn't.

Strengths

".................. the crisis caused a shake up at the top of the organisation and Peter Salsbury took over as chief executive. He said, "We lost touch with our customers and forgot about the competition."

Salsbury immediately recognised the importance of customer service and how important it is to Marks & Spencer. Piercy states that, "The first step in market-led strategic change is very simple - lets just see if the people in our company know why customer satisfaction is supposed to be the most important thing to our business and lets see if they really believe it. (Piercy, N 1997, 2nd Ed. Market-Led Strategic Change - Transforming the Process of going to Market, p. 27, Butterworth Heinemann, Oxford)

This quote from Piercy is significant for Marks & Spencer because with the takeover and installation of a new chief executive came a responsibility to do what was right for the loyal customers. In recognising this, Peter Salsbury immediately came out with the above quote and stated his intention to recognise the needs of the customer and this is why it is seen as a strength. Ensuring the customers recognise that Marks and Spencer are determined to identify with them once more, things will start to look brighter not only for profits and sales, but also for Marks and Spencer on the whole.

".................. in January 1999, M & S created it's first ever marketing department and started to look at it's communication strategy in response to it's crisis."

"The communications strategy will derive from a brands marketing objectives and strategies. It is one of the means for achieving brand objectives."

(Davidson, H 1997, 1st Ed, Even More Offensive Marketing, Penguin Books, St Ives.)

Davidson exclaims here that to achieve brand objectives, a communications strategy is a must. For Marks and Spencer this meant redefining their Brand Positioning Statement, a starting point for the communications strategy. A clear, distinctive communications strategy is more likely to increase sales than an exciting campaign with no strategy. Recently they have introduced the 'DB07' childrenswear range, modelled by Manchester United football star and England Captain David Beckham. The sole intent of this campaign is to communicate to the younger audience by using a modern day icon for children to look up to.

Weaknesses

".................. It was spending very little on marketing communication."

Marketing communications provides the means by which brands and organisations are presented to their audience with the goal of simulating a dialogue leading to a succession of purchases. (Fill, C, 2002 Marketing Communications - Contents, Concepts and Strategies, Prentice Hall)

As Marks and Spencer spent very little on marketing communication, they bypassed a whole sector of importance both internal and external to the organisation. Yes, the communications process was still there, but it did not have maximum impact, as it could have done had more money been spent on the process. Therefore, this allowed rival organisations spending up to Ј30 million more on marketing communications, thus creating a larger awareness and outshining that of Marks and Spencer. By competing with it's main rivals, spend wise, Marks and Spencer could have taken advantage of the market and made their brand more simulating to the audience, leading to higher purchases. This did not happen and they suffered as a result.

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