This report critically analyses the impact of external and internal influences on the business strategies of Marks and Spencer (M&S) between 1996 and 2002, evaluates the factors, and modifies its business strategies.

The major finding is that M&S has successful business strategies and marketing plans. However, the company does not maintain these advantages continuously. Indeed, it causes some disadvantages.

The purpose of this report is to evaluate how M&S survives in the changeable market. Moreover, its concludes how macro- and micro-environment affect M&S to make its marketing plans and investigates the strengths, weaknesses, opportunities and threats of M&S. By analysing current business situation, M&S needs to revise its marketing segmentation, divide its products into different target markets, and serve consumers effectively.

1 INTRODUCTION

M&S is an international company, which spreads through Europe, North America and Asia. It sales clothing, footwear, gifts, house appliances, and food (Marks & Spencer, 2002b). This report includes three parts. Firstly, it analyses the macro-environment and micro-environment of M&S. Secondly, it uses the SWOT chart to analyse the four aspects of its business. Finally, it draws a conclusion about the whole analysis and gives the recommendations of M&S’s future.

2 MACRO-ENVIRONMENT AND MICRO-ENVIRONMENT

2.1 Macro-Environment

The broad external factors that indirectly impact upon an organisation are consist of political, legal, economic, social and technological factors. These factors use to analyse how macro-environment affects M&S to make their marketing decesions.

2.1.1 Political and Legal

It is important for companies to follow government policies and global organisation systems, such as World Health Organization, while they make marketing plans. Governments, especially in the developed countries, consider ecological environment and human’s life. Governments set up policies and organisations to monitor firms and their products, such as energy saving policy and genetically modified food control.

The UK government has introduced energy saving organizations, such as ‘Climate Change Levy’[1] and ‘Green Tax’[2] on energy use to reduce CO₂ by 2010 by 20% against 1990 levels, and supplied subsidies to improve its policies (Marks & Spencer, 2002a). M&S has claimed: “[it] launched an incentive scheme where stores can keep the value of 10% of any savings the make over and above [it] budges” (Marks & Spencer, 2002a). This scheme helps M&S saving around 5% of its energy saving (Marks & Spencer, 2002a).

In recent years, gene technologies have increased substantially. Some of these technologies have used to produce food. However, some of these technologies may cause natural environment pollution and endanger human’s health. “Some European supermarkets are moving towards selling only meat from animals produced fed on non-GM feeds. This is building on moves by many retailers in the UK to go non-GM” (Meat & Livestock Australia, 2001). M&S also announced that it supplied all non-GM foods on its shelves (BBC News, 1999).

2.1.2 Economic

Economic factors have affected companies to extend their business or retrench its business, such as close loss-making operations, and sale their non-core business. For example, the 11^th September 2001 accident in USA has caused many companies to face the recessions in North America and European countries.

The 11^th September accident in USA caused economical crisis in North America and other countries. It caused consumers to change their purchasing habits, and retailers were seeing sales decreases (BBC News, 2001). In fact, M&S lost its profits around 8.6 million pounds between 2001 and 2002 from its international retailers (Marks & Spencer,2002b). M&S has closed its loss-making operations in Continental Europea and sold its non-core business in North America (Marks & Spencer, 2002b).

2.1.3 Social

The requirements of consumers are changeable. People want to feel special, modern, and convenient. Hence, people purchase fashionable clothing and use credit cards to satisfy their needs.

M&S keeps with the latest style and colour, although it has high quality goods. M&S does not consider with customer needs, especially in clothing market, it may cause M&S to lose its sale to competitors (Jobber, 1999). Another social factor is that credit card acceptance has increased more than 10% of all trade (BBC News, 2000). M&S has allowed its customers to pay by credit cards from 18 April 2000 to contend with its compatitors who have accepted credit cards for a long time (BBC News, 2000).

2.1.4 Technological

At the present time, information technology changes fast, and most companies has built their own websites, online shops, and databases to help them to increase their sales from online customers. They collect information and analyse their customers to know their customers’ needs and wants. Therefore, M&S has invested its information technology, such as online shop in 1999. In addition, most stores in the UK and Western Europe were running a trial of the EPOS (Electronic Point Of Sale)[3] systems. M&S has also used this system to drive sales, increase customer service, and improve its efficiency (Yorwerth, 2001).

However, M&S did not control its online shop and EPOS system effectively. Actually, its website could not show its stocks immediately. Customers, who use its online shop, still feel inconvenient.

2.2 Micro-Environment

The task of marketing management is to attract customers and establish good relationship with customers by creating the worth and satisfaction of customers. However, marketing managers not only pay attention to the needs of target market, but also need to realize the effect on microenvironment that are suppliers, distributors, customers, and competitors (Kotler and Armstrong, 2001: 78).

2.2.1 Suppliers

M&S has not only established good relationship and reciprocal profit with suppliers but also maintained long-term partnerships to cooperate with suppliers (Wilson and Gilligan, 1997: 204). Suppliers supply necessary resources to companies for producing products or services. Therefore, the development of suppliers may bring enormous influence to the company (Kotler and Armstrong, 2001: 78-79). It is a right policy that M&S values suppliers for maintaining its business. Nevertheless, it may cause suppliers to raise the cost of materials. M&S needs to consider the issue.

M&S has built a good reputation for supplier management. If a supplier refuses to supply materials to M&S, it can turn to another supplier (Robert, 2002). The company has this advantage that can supply it with an unfailing supply of materials. If suppliers can not supply materials to the company immediately, customer loyalty may be reduced by lack of products. M&S has controlled this matter.

2.2.2 Distributors

M&S is the largest and the leading variety store retailer in the UK (Textile Outlook International, 2002). “New brand and product development over the last ten years in fast-moving consumer goods sectors in the UK is that many of the most original and successful initiatives have been taken not by manufacturers but by retailers” (Textile Outlook International, 2002). M&S has changed the marketing structure from manufacturers to retailers and inspired other major retailers to follow. This is a very significant even for retailers’ change. However, M&S does not control the stock on popular selling clothing (Jobber, 2001: 149). Customers cannot purchase products that they really want. This situation needs to be handled and improved.

2.2.3 Customers

M&S believes that customers are the most important element of consideration and understands that customers are very important for its origination (Stokes, 1997: 5-7). Companies should understand that customer satisfaction is more important than product sale[4]. M&S realises this main attribute and provides good services and high quality products to customers for raising the customer loyalty.

M&S believes that precise quality controls must persist forever (Macrae, 1996: 394). In 1999, M&S ensured that all its food products were non-GM foods (Marks & Spencer, 2002a). This company always considers customers’ concern and tries to provide the best quality or services to customers.

Consumers perceive that all St Michael products are in good quality standards (Macrae, 1996:394). Nevertheless, “ ‘own labeling’ of over 30% of stores’ lines is often perceived by consumers as restricting their lifestyles” (Macrae, 1996: 394). Consumers prefer good quality of products, however, they do not want to be confined their lifestyle by ‘own labeling’. M&S realized this matter and tried to avoid this impression.

2.2.4 Competitors

M&S focuses its business on the quality and service. Sainsbury and Tesco that are the competitors for M&S focus its business on the quality, convenience, breadth of range (Wilson and Gilligan, 1997: 302). A company not only satisfies the needs of customers but considers strategies of competitors in the same target market. M&S has some competitive advantages that are over one hundred years in business, recognizable brand name, and good supplier relationship (Robert, 2002). In particular, M&S has its own market testing and exercise tight quality control (Hart and Murphy, 1998: 7). The quality and service can keep customers’ loyalty. M&S has done this great. Unfortunately, Sainsbury and Tesco not only emphasize the quality but establish their stores universally. M&S needs to improve this disadvantage certainly.

3 SWOT Analysis

Figure 3.1 SWOT analysis chart

Internal

External

Strengths

l High Quality

l Customer Services

l Shopping Environement

l Manager Training

Opportunities

l Internet Technology

l Health Eating

l Marketing Extending

Weaknesses

l Clothing Lack Segmentation

l Stock Control

l Waste Store Spaces

Threats

l Strong Competitor

l Changeable Social Environment

l Chemical Pollution

3.1 Strengths

3.1.1 High Quality

High quality is the major strength that makes M&S successful. Customers always find high quality goods such as fresh fruits, vegetables, and other superior goods in M&S’s food hall (Ciao, 2002). With many people turnning to eat vegetarian meals, M&S grasps the consumers’ need. M&S has high quality of products that are the food and other products, such as baby products and women’s underwear.

3.1.2 Customer Services

M&S has high reputation for focusing on customer service. (Christie, 2002). This is one of the most important methods to make a good relationship between customers and M&S. For example, when women want to buy underwears for themselves, the shop assistants will help them to measure sizes and give them good suggestions.

3.1.3 Shopping Environement

M&S tries to make customers feel more convenient and comfortable. It makes stores brighter, and uses modern designs (Rungfapaisarn, 2001). All goods in the shop can be seen immediately. Furthermore, customers do not worry about being drowned in many shelves and avoiding multitudinous people.

3.1.4 Manager Training

One of M&S’s strengths is its strict and excellent manager training system (Retail Technology, 1999). Every manager of M&S must be familiar with duty of every post. In fact, managers of M&S are arranged practice of every post. It helps them to improve both work experiences and management skills.

3.2 Weakness

3.2.1 Clothing Lack Segmentation

The clothing market of M&S has many segments. In fact, the merchanclise, especially ladies outerwear, is outmoded design and cut. In addition, affluent younger consumers prefer purchasing brand-labels, such as Gap, Next and Topshop (Jobber, 2001: 149).

3.2.2 Stock Control

“The non-performance of the home delivery/shopping service even sometimes involves wedding lists. Customers were told that items were out of stock” (Jobber, 2001: 149). Customers complain the defect of e-shooping and delivery services. To some extent, M&S suffers from the unbalance between the stock and Information Technology System.

3.2.3 Waste Store Spaces

Another problem is that M&S has many store spaces. In fact, it has added 75 percent of square footage since the early Eighties, but its market share in clothing has not increased (Stewart, 2000). M&S needs to find some new products to stuff its extra spaces.

3.3 Opportunities

3.3.1 Internet Technology

Internet technology has developed fast, it offers an opportunity to increase the demand for the online products (Zakon, 1999). In terms of this circumstance, buying products online became a new trend. Customers are getting used to accept the model and adapt it to their daily lives, and the demand for this kind of products would be increased in the future.

3.3.2 Healthy Eating

Healthy eating offers an opportunity that the demand of specific food will be increased (Leyshon, 2002). People pay attention to the life quality, they request companies to offer varied products to satisfy their needs. For example, in the food market, M&S does good segmentation in providing the vegetarian, low fat or organic food. This is the advantage that the competitors have not aware of it.

3.3.3 Marketing Extending

The Company owned stores in the Republic of Ireland and Hong Kong and has 131 franchise stores in 28 countries operating through a network of successful partnerships (Marks & Spencer, 2002d). In the future, the company will expand its business beyond the existing area.

3.4 Threats

Although M&S has its own strengths, opportunities and weaknesses, it still occurs some threats from itself and other competitors.

3.4.1 Strong Competitors

Strong competitors are the most threat to M&S. For example, in the food market, there are four main supermarkets, such as Tesco, Asda, Safeway and Sainsbury (Ocr, 2002). They provide not only high quality but also value-added products to build customers’ loyalty. In the clothing market, Gap, Next, Topshop and other fashionable brands may compete with M&S (M&S shuts, 2001).

3.4.2 The Change of Social Environment

Except other competitors, M&S will be influenced by social environment. Since the social environment changes at any time, the customers’ tastes are also changed. For example, people move to other countries, and their culture will affect the local people’s lifestyles, such as eating, and dressing. M&S can adjust its products to satisfy different needs.

3.4.3 Chemical Pollution

Environment pollution is a threat for M&S. An environmental systems manager of M&S claimed, “ Every one of the 30,000 product line that M&S sells is dependent on chemicals” (Friend of the Earth, 2002). Governments are taking measures to protect natural environment and reduce pollution. This potential risk will affect its development of M&S in the future.

4 CONCLUSION

In conclution, M&S is a successful company. In macro-environment, M&S obeys the government’s policies and protects the natural environment. Moreover, M&S is influenced by the factors of ecnomic, social, and technological to make its business strategies. On the other hand, in micro-environment, the M&S has created a good and long-term relationship with the suppliers and customers.

From the SWOT analysis, the most important factor for M&S is to satisfy customers’ needs. The main advatage is its high qualiy that uses to build customers’ loyaty. On the other hand, the main disadvatage is the lack of clothing market segmentation that causes M&S to lose its brand awareness among the existing customers. The significant strategies of M&S are creating potential customers and maintaining the existing customers.

To sum up, the analysis of M&S has found that its business structures follow the trend of society, keep the position in the market, and increase its potential market share.

5 RECOMMENDATION

M&S is a successful multinational corporation. Depending on its high quality, good service, comfortable shopping environment and convenient access, M&S has won a large amount of loyal consumers.

However, due to a wide range product, M&S should revise its marketing segmentation, especially in clothing market. Women do not like M&S’s clothing from design to color and young consumers prefer fashionable design. Facing different target markets, M&S should change its design .For women, change clothing’s style and cut, adding bright color. For young consumers, improve design to show M&S’s own personality. This segmentation may satisfy people’s different needs.

In addition, M&S should enhance stock management. M&S has advanced information technology system, this system can combine with its stock management effectively. It will help M&S find problems immediately and supply products timely.

Except changing its own business strategies, M&S should consider the global economic environment. The recent economic recession causes M&S’s sales delining. M&S should focus its target group on mid-age and mid-class. Their income can afford the high price of M&S. Above all, M&S should develop its strength forces, overcome its weakness forces as well as turn these two factors into opportunities, which will help M&S maintain its market position.

6 BIBLIOGRAPHY

Books
- Hart, S. and Murphy, J. (1998). Brands The New Wealth Creators. England: Palgrave, p7.
- Jobber, D. (2001). Principles & Practice of Marketing. (3^rded). London: McGraw-Hill, p148-150.
- Kotler, P. and Armstrong, G. (2001). Principles of Marketing. (8^thed). Taiwan: Don-Hua, p78-79.
- Macrae, C. (1996). The Brand Chartering Handbook. England: Addison Wesley sssLongman Limited, p394.
- Stokes, D. (1997). Marketing: A Case Study Approach. (2^nded). London: Letts Educational, p5-7.
- Wilson, R.M.S. and Gilligan, C. (1997). Strategic Marketing Management Planning, implementation and control. (2^nd ed). Oxford: Butterworth-Heinemann, p204,302.

Articles
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7 APPENDICES

Appendix A

Climate Change Levy: The Climate Change Levy is a tax on energy. It will be applied to most industrial use of energy from 1st April 2001 (Source: http://www.cclevy.com/).

Appendix B

Green Tax: Shifting taxes away from human initiative and onto monopolization of natural resources, pollution and government-granted privileges instead (Source: http://www.progress.org/banneker/shift.html).

Appendix C

EPOS System: Electronic point of sal system. The Beetle/Reckoning System , and the Re-Scan Bar-coding and EPOS/Stock control systems from LYNX Geosystems(UK) Ltd. Both the above products are can be directly connected to your Sage Line 50 accounting software, further increasing the productivity and accuracy of your accounting (Source: http://www.cadsnet.co.uk/epos_systems.htm).

Appendix D

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