Marketing Strategy of an Organization and its Effectiveness: Case Study Marks and Spencer

 

Title: Marketing Strategy of an Organization and its Effectiveness: Case Study Marks and Spencer

 

Marks and Spencer’s Case in International Retailing

In 2000, the British retailer giant Marks and Spencer’s (M&S) opened its doors into international retailing as part of reinventing its marketing strategy after subsequent downturns in its stock earnings and company profits which was affirmed to have begun in 1998, after its annual earnings financial report in 1999.

The company started its retail business in 1884 and showcased a business success which achieved a popular ‘St. Michael’ label in all its retail operations across Britain and which earned it a reputation of a leading retailer in the whole of United Kingdom. It registered an impressive growth in its business cycle in 1994 wherein it was able to dominate the UK retail market with an overall share of 18% in the market category, “33% of women’s undergarment market, and 20% of men’s suit market, 40% of the nation’s underwear market, 14% of the clothing market – only retailer in Europe to have double-digit market share and, 4.3% food market share (Alon, 2001).” Unfortunately, this accomplishment did not last long as the company’s stock started falling from 2008. By the end of 2009, company sales have dropped, overseas profits have declined sharply and stock prices and market capitalization have collapsed to significant levels, and overseas profits have declined. A published report compares the 2000 market capital and revenue of Wal-Mart, the current leader in retailing business, with 4 million and 4 million, respectively, to that of M&S’ with   million and million, respectively.  This scenario prompted M&S management to form a more proactive and market-driven marketing strategy which was expected to respond to the losses it incurred. (Alon, 2001)

 

M&S Market Philosophy

Old Philosophy

The old marketing philosophy of M&S was simple: “produce high quality products under a recognized brand name at affordable (but not cheap) prices, and advertise through word-of-mouth.” This has proved to be effective during its first decades of business. This emphasis on manufacturing and production, however, proved to lose its competitive advantage as the management became too relaxed on discerning current market trends.

New Philosophy

The company management charged the losses on stocks and profits over the loss of confidence of consumers to the retail products offered by M&S. The design, style, scope of the products and the lousy business environment seemed to lose effectiveness. On the other hand, stock analysts and researchers have put the blame on M&S management “for dull merchandising, poor inventory control, and lagged response time to competitive environmental conditions (Alon, 2001)” set by emerging retail businesses such as  Top Shop, Kookai, Miss Selfridge, Jigsaw, Oasis, Warehouse and the Gap who at that time went on fashion and label trends. Likewise, its comparative advantage in other business areas was lost to competition with companies who responded with the demands. Perhaps, the biggest and sole reason for this loss of comparative advantage was that M&S focused too much on UK as its market. Thus, the new philosophy of M&S was reinvented into internationalization.

 

Problems of the Market Strategy of Internationalization

Alon (2001) posits that the challenges that M&S is faced with regarding its internationalization could be attributed to its “over-reliance on the British market, top management’s international orientation and corporate culture.” M&S market share is 85% and profit share is 94% as of 1998. Top management is composed of members who are members of the family of owners and executives who have been too long in the board.  In addition, the corporate profile was vertical in structure, meaning decisions over prices, products, colors, and even designs were approved by the top management and customers’ demands were not listened at.  

 

Analysis of the New Marketing Strategy

The strategy of M&S to be more focused on regional retailing is very important because the company is not only giving direction to distribute its market and profit potentials to the international market but it also sweeps away its over-reliance in the British market. Facts show that it is not capable to regain its leadership in retailing business in UK due to the presence of more proactive retail businesses aside from the current leader, Wal-Mart. With its direction to provide diverse offerings regarding fashion, color, size and design relative to the cultural orientation of the country who acquired franchises in its products and services, its market and income potential would grow. This strategy would also require a reinvented platform on the corporate culture where it may consider customer service centers to provide customers relay a feedback regarding the retails. Customer-company interaction is very substantial because it fosters an atmosphere of friendly coordination which is important in the assessment and modification of an offered service or good.

Reference:

 

Alon, Ilan, 2000. Marks and Spencer: A Case Study in International Retailing. [pdf] New York: Department of Business Administration and Economics. Available at: < http://www.elearning.ulg.ac.be/old_demos/HEC/html/marks.pdf>[Accessed 26 April 2010]. 
 

 

 

 

 

 

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