Principles and Practice of Marketing Assignment Solution

PRINCIPLES & PRACTICE OF
MARKETING

CONTENTS
INTRODUCTION...................................................................................................................................1
TASK – 1.................................................................................................................................................1
Overview of Marks & Spencer............................................................................................................1
Marketing strategy of the company.....................................................................................................1
Pricing strategies of Marks and Spencer..............................................................................................2
TASK – 2.................................................................................................................................................6
Evaluation of the application of sales promotion and discount tactic in M&S and its effectiveness..6
CONCLUSION........................................................................................................................................8
REFERENCES........................................................................................................................................9

TABLE OF FIGURES
Figure 1: Price strategies matrix................................................................................................3

INTRODUCTION
Throwing light towards marketing, it is a crucial part of each and every organization.
It is simple mixture of all the activities that influence the alterations to possession of products
or items. Thus, it can be said that marketing is a complete system of actions related to
business for planning, fixing price, promoting the product and distributing it efficiently. Out
of all these four, pricing elements plays a very important role and the existence of the
business is majorly dependent on this factor (Jobber and Ellis-Chadwick, 2012). Pertaining to
this, the current research study will also discuss different pricing strategies and tactics being
used by a high street clothing retailer. In this regards, Marks & Spencer, a multinational
clothing retailer of UK will be taken into account. As a marketing consultant of the company,
the main aim is to evaluate the pricing and marketing strategy being adopted by the firm. The
later part of the report will apply the theoretical aspect of the pricing policy and will
significantly analyse the effectiveness of tactics.
TASK – 1
Overview of Marks & Spencer
M&S is a British retailer having around 895 stores all across the world. It is one of the
largest clothing retailer in UK. Most of the business of their domestic stores generally sells
clothing as well as food both. The company has also expanded their business into varied areas
like furniture, food, homeware and technology. The success of the company is very much
dependent on its pricing as well as marketing strategies. They have adopted a three aspects
i.e. market orientations, marketing mix and marketing segmentation. M&S always strives for
value and low prices and works for its development (M&S, 2018). In addition to this, the firm
has also acquired around 35 outlets and build partnership with Tom Spencer. The main vision
of the company is to provide quality products to its customers along with better services and
value. Marks & Spencer holds almost 17 percent of the total clothing market of United
Kingdom. The products are of excellent quality. Furthermore, the organization also adheres
to top-down approach towards management and is being watched under the close supervision
of its former chief executive officer.
Marketing strategy of the company
For several years, the major marketing philosophy of the company was clearly
producing high quality products under its well-known brand at reasonable price and
advertising by word-of-mouth. Nevertheless in recent years, M&S suddenly trailing down its
1

competitive stances because of which the marketing philosophy has come under attack. Thus,
to sustain in the market and remain competitive, the company has changed its target market
over the last two years. Now most of their marketing strategies are being aimed towards a
particular markets. Multiple approaches is included in the marketing strategy of the company
such as television and print media advertising (Peter and Olson, 2008). They are also using
internet marketing including pay per click and paid advertising. However, the main strategy
of M&S is word of mouth because of its popularity and large presence in the market all
across the world.
The marketing manager of the firm is of the view that company is dependent on the
way people think about them and the kind of impression it gives to them. This is considered
as one of the best and oldest method of marketing. In the business world, being heard is very
vital and it is possible only when the firm offers quality products and services to its
customers. Then, it is more likely that they will promote the company’s product. The
marketing strategy of M&S helps in development of new and innovative ideas for the
products with best profit making potential. It is created as per the organizational plans and
needs of the customers. Furthermore, for the purpose of promoting the brand inside the store,
the company offers different discount offers to its valuable customers (Marks & Spencer and
Customer Have Some Excellent Pokémon Banter on Twitter, 2019). Because of such
discounted strategy, Marks and Spencer is able to fulfil the objective of the business unit to a
great extent. Other than this, in store slow music is also provided to the customers that offers
amazing experience to them and more and more people are attracted towards the store. Such
kind of music promotional tool helps the firm to augment their sales. They even makes
arrangement for events for new product launch in order to grab the attention of the regular
consumers and impact their intellect significantly.
Pricing strategies of Marks and Spencer
Pricing strategy matrix
Talking in relation with the marketing mix, it can be said that pricing is the least
attractive element. Rather, companies who are planning to market themselves should pay
attention in generating a high margin with their best potential. Consequently, it can be
attributed that the marketing manager should alter their product, place and promotion in some
or the other way prior resorting to reducing the prices. Price is being regarded as the versatile
element of the marketing mix (Moore and Carpenter, 2006). Speaking in volume about the
pricing strategy matrix, it is a method that helps in determining the optimum pricing for the
2

product or services of the company. The matrix defines the four most common strategies
through mapping price against the quality. The quadrant of the matrix clearly depicts
economy, penetration and skimming and premium pricing strategy.
Figure 1: Price strategies matrix
(M&S, 2018).
 Penetration Pricing – The very first strategy to be discussed is the penetration pricing.
In this strategy, the prices being charged for the products and services is set
artificially low during the initial days for the purpose of gaining market share. Once
the share is achieved in the market, the prices are increased by the company. Many
business giants makes use of this technique. For making the strategy worth their
while, the firms are required to grab large number of people. In this regards,
companies offer discounts for getting large people to step-in in their stores (Grewal
and et.al, 2008).
 Economy Pricing – The next strategy is economy pricing wherein the cost related to
marketing as well as promoting the product is kept low. Such type of strategy is
generally being used by the supermarkets for their economy brands. Even the budget
airlines also makes use of such kind of strategy in order to keep their overheads
minimum and giving a relatively lower price to fill an aircraft. At the time of
recession in the economy, this type of pricing strategy helps in bringing more sales.
 Price Skimming – This is being referred as the strategy in which the firm charges
higher prices because they have a competitive advantage over the other firms
operating in the market. But, the benefit of this strategy does not tends to be
sustainable. Because of the higher prices, it will attract many new competitors as well
3

into the market and unavoidably the prices of the firm will fall down with a view to
increase the supply.
 Premium pricing – In this pricing strategy, high prices are used where the brand is
quite unique in nature. Such type of strategy is helpful in the scenario where there is
substantial competitive edge of the company in the market (Bolton, Shankar, and
Montoya, 2010). Additionally, the marketer is also safe in the knowledge that as they
are innovative and unique they can charge higher prices for their products and
services.
Talking in relation with the Marks & Spencer, the company follows premium policy
in its marketing mix for its product portfolio. This is being used by the company as their
product costs is generally high and they offer a unique and prestigious product to the
customers which appeals mostly the image conscious and aspirational buyers. With this
strategy in place, the company have several advantages (Lohse, Bellman and Johnson, 2010).
The very first benefit is that the product comes at a premium and thus, possess a potential to
attain higher profit margins. Furthermore, it also helps M&S to augment their brand identity
and simply adds aspirational quality of the product.
Importance of pricing strategy in M&S
Often it is a tendency of the marketers of the companies to pay attention on the
activities such as development of product, promotion as well as market research at the time of
prioritizing their responsibilities. All these aspects are generally considered as vital and more
interesting in the marketing mix. But, the pricing element also needs to be given attention as
it can influence the rest of the activities of the company. Marks & Spencer also considers
there pricing strategy as one of the most crucial element because of some of following
reasons and these are as follows:
 Pricing is a flexible variable – Marks & Spencer considers this view that changes in
the prices can be done quickly and there is not lead time required if there is a need of
some product positioning alteration within the business or there is some counter to the
activities of the competitors. On the other hand, an alteration in the product as well as
distribution channel will definitely consume more time and cost inputs (Jobber and
Lancaster, 2006). In the same manner, promotion decisions also needs added financial
inputs consequently, it is vital to plan for changes in the pricing strategy and its
influence on the brand as well as product perception.
4

 Defining the right pricing – For the purpose of undertaking any pricing decision,
M&S carries out effective research as well as evaluates the objectives of the business
and product as well. If the decision is not undertaken with this process, the result can
be loss of revenue to the firm. Furthermore, a price being charged below the perceived
value might results into loss of revenue as well as target audience that makes the
judgement of quality of the brand by its prices. Moreover, of the prices are increased
later on, the customers will feel that they are unfairly burdened and misleaded by the
firm (Nagle and Hogan, 2010). Therefore, the prices of the products in M&S is being
fixed and decided by a team of experts who spend time on carrying out research in
which various variables of the market and brand are being considered.
 Pricing as an important tool for sales promotion – Throwing light in relation with the
sales promotion, it is generally known as a short time price based offering like
percentage reduction, buy one and get to offering to the customers. M&S makes use
of such schemes for attracting large number of people towards their stores.
Furthermore, these are being meant for generating interest in the product or utilizing
special occasion and event. The company makes use of this tool effectively and
wisely which results into increased sales and profits of the firm (M&S on how its
success at ‘rewiring people’s brains’ for food porn ads could help save its ailing
clothing business, 2016).
Pricing objective of M&S
The pricing decisions of Marks & Spencer are being made in accordance with the
objectives or goals to be achieved through pricing. Some of the objectives of the company are
being defined underneath:
 Maximising the profits – Considering revenue and costs in intellect, M&S desire to
enhance their profits level. The objective of maximizing the profits of the company is
long term and does not emphasize on short term.
 Increasing the revenue – The firm also desire to increase their revenue for the purpose
of increasing their share in the market. They desire to lower down their cost in longer
period of time (Epstein and Schneider, 2007).
 Maximizing the quantity – One of the vital objective of pricing of M&S is to sell a
particular amount of quantity.
5

 Becoming the quality leader – Many a time, company want to use its pricing strategy
as a signal of high quality and established themselves as a leader of quality in the
market.
 Status Quo – Sometimes company want to avoid price wars with their rivalries and
thus, they maintains a stable price that continues to give them stable amount of
profits.
6

Pricing strategy adopted by M&S
Speaking in volume about the Marks & Spencer, the company has its own brand of
apparels which tailors to the needs of both upper and upper-middle class section of the
society. The products of the firm are being considered as value for money as it has a
diversified range, higher quality and convenience as well. In addition to this M&S also has its
own in-house brand for apparels which are exclusively meant for children, men and women.
All the products are of premium quality however the firm has decided to keep the prices amid
medium to high range (Global data retail intelligence centre, 2018). The company faces too
much competition in the market which signifies that there is limited amount of share in the
market. Thus, for the purpose of increasing their mass-market consumption, the company has
followed a competitive pricing strategy for years. This strategy is being adopted because the
customers now has numerous options to select the best due to the high level of competition.
Other than this, M&S also faced stiff competition from online retailers as well. Pertaining to
this, the firm makes use of dynamic pricing policy at the seasonal time. They offer discounts
on most of the products so as to have large pool of customers and usually old stock is put for
sale at lower prices in comparison with the newly arrived stock. Because of dynamic pricing
policy, company gets two way benefits i.e. they are able to clear their old stock and at the
same time they gets higher sales (Avlonitis and Indounas, 2006).
TASK – 2
Evaluation of the application of sales promotion and discount tactic in M&S and its
effectiveness
Articulating about the sales promotion techniques, they are being referred as the
instruments that helps in increasing the sales of the products of the company generally in
short time period. This happens because they act in the intellects of the consumers that it is a
benefit for them and create consumer behaviour. Marks & Spencer is the UK’s retail giant
and has used both traditional as well as modern media for promoting its products like
television, newspaper, magazines, internet etc. In the earlier years, the sales promotion
strategies of the company was failing majorly because the existing products of the firm are
not able to attract large base of customers. Further, the brand’s new clothing launch was also
not successful because very little efforts were being made by the marketing team towards
convincing the customers. Thus, to increase their sales and profit margins, M&S adopted a
new strategies and started focusing on enhancing the customer engagement (Belch and Belch,
2013). They have utilized social media and online contests for engaging customers with the
7

brand. They have made use of contest promotion strategy in such a manner that it does not
involve any kind of purchase as well. As per Teunter, the effectiveness of the sales promotion
can be viewed at the time of presenting the segment numbers. Further, he said that around 20
percent sales of the products occurs because of the sales promotion. M&S has adopted
contest promotion strategy and from the very first day of its launch, the firm has noticed
increased in the percentage participation of the people as they need not required to make any
purchase. The main idea behind this kind of a strategy was to view the engagement of
customer towards the brand and not just to earn money by way of direct selling. After some
time, M&S observed that people are showing positive signs towards participating in any kind
of contest and winning prizes for the same. Even they does not win but they still want to
participate and enjoy the moment (Blattberg and Neslin, 2010).
Underpinning the discussion further, M&S has used another strategy of giving free
samples or product giveaways as a part of their sales promotion technique. Many new
products were launched by the firm in their organic food category. Marks and Spencer
offered sample to their regular customers for having a free trial. In the initial days, the
company faced the burden of extra costs but since the campaign had been started, the sales
for that particular product have also increased a lot. This method was proved to be very
effective as many a times it happens that people falter to make purchase of any new product
in the situation when they are unaware about its outcomes.
On the other hand, the company is also making use of multiple and effective
promotional strategies for attracting customer as well as generating their interest. They are
making use of discount which is being regarded as the most common types of sales
promotion in consumer discounts and trade discounts (Hellman, 2015). The valuable
customers of M&S are bombarded with numerous discount offers each and every day. The
company offers many discounts on its different product lines such as 10 percent discount on
men’s apparel, 20 percent flat discount on kids section, big summer sale, up to 70 percent off,
buy two get two and many more. This technique is quite effective in attracting and retaining
customers, increasing the sales of the company all across the board, boosts the reputation of
the brand, helps in meeting out the sales goals, free up room in the store for new products and
saving money through cash discounts. Giving pay off prices means reduction in the regular
prices of the company. As per Blair and London, the main reason behind the use of such
tactic by M&S is that such strategy will help them to have readily apparent value to shoppers
particularly in the situation where they have reference price point for the brand. Because of
this, customers can recognize the value of the discount. Furthermore, as per Martinez-Ruiz,
8

discount or reduction in the retail price helps in increasing the sales of the company and
consumers are more likely to pay attention on the price pay off promotions. However, it can
be seen that sometimes discounts or lower prices of the products are associated with lower
quality by most of the people in the situation when the brand name is not familiar (Marks and
Spencer Black Friday 2018 deadls: Furniture, wine and clothing up to 50% off, 2018). This
increases the chance that the product of M&S might be considered as lower in quality.
Further, sometimes retailers increase the prices of the products and then offer discounts on
that enhanced prices. Because of this, it is more likely that company might lose its hard
earned share in the market.
Thus, it can be said that Marks and Spencer is making use of social media contest,
discounts and free samples of new products for attracting large number of customers. One of
the major demerit of free sample and contests is involvement of higher amount of costs.
However, brand can avail the opportunity of earning higher profits in longer period of time.
Furthermore, the contest as well as free samples will help M&S to keep their customers
engaged because they are offering value with no costs being involved (Gilbert and Jackaria,
2012). Both these promotional strategies are being developed by M&S around the needs,
demands, wants and habits of the consumers. Sales promotion as well as discounts are both
considered as the most effective and vita communication vehicle for retail giant like Marks &
Spencer. These strategies of promotional activity will support the firm in enhancing its paths
for accomplishing its final objectives and goals. Furthermore, these tactics can be referred as
a free guide as well as method for building and increasing the sales of the clothing
manufacture. The firm has significantly selected its market to be targeted and for reaching out
the mass market, use of sales promotion and discounts are considered as the major step. In
addition to this, these techniques also helps in encouraging people to purchase more and more
(Mahmud, Mohammad and Sultan, 2014).
CONCLUSION
Thus, from the above discussion it can be said that marketing is considered as
essential aspects for achieving the per-determined goals and objectives. For achieving success
and higher market share, effective implementation of pricing strategies and tactics is pre-
requisite. The report also originated that pricing plays a major role in the success of any firm
and helps the business to fulfil its objective to a great extent.
9

10

REFERENCES
Books and journals
Avlonitis, G. and Indounas, K.A., 2006. Pricing practices of service organizations. Journal of
Service Marketing, 20(5), pp.346–356.
Belch, G.E. and Belch, M.A., 2013. Advertising and promotion: An integrated marketing
communications perspective. The McGraw− Hill.
Blattberg, R.C. and Neslin, S.A., 2010. Sales Promotion: Concepts, Methods, and Strategies.
Englewood Cliffs, NJ. Prentice-Hall.
Bolton, R.N., Shankar, V., and
Montoya, D.Y. (2010)
Bolton, R.N., Shankar, V., and Montoya, D.Y., 2010. Recent Trends and Emerging Practices
in Retailer Pricing. Retailing in the 21st Century. Pearson education.
Epstein and Schneider. 2007. Harnessing the power of your pricing. 2nded. New York.
McGraw Hill.
Gilbert, D.C. and Jackaria, N., 2012. The Efficacy of Sales Promotions in U.K. Retail stores:
a Consumer View. International Journal of Retail and Distribution Management, 30,
pp.315-332.
Grewal, D., Krishnan, R., Baker, J. and Borin, N., 2008. The Effect of Store Name, Brand
Name and Price Discounts on Consumers’ Evaluations and Purchase Intentions.
Journal of Retailing, 74, pp.331-352.
Hellman, K., 2015. Strategy-driven B2B Promotion. Journal of Business & Industrial
Marketing, 20, pp.4-11.
Jobber, D. and Ellis-Chadwick, F., 2012. Principles and practice of marketing. 7thed.
McGraw-Hill Higher Education.
Jobber, D. and Lancaster, G., 2006. Selling and sales management. 7thed. Harlow: Pearson
Education.
Lohse, G.L., Bellman, S. and Johnson, E.J., 2010. Consumer buying behaviour on the
Internet: Findings from panel data. Journal of interactive Marketing, 2(1), pp.34-45.
Mahmud, I.N., Mohammad, S.A. and Sultan, F., 2014. The Impact of Promotional Mix
Elements on Consumers Purchasing Decisions. International” Business and
Management, 8, pp.143-151.
Moore, M. and Carpenter, J., 2006. The Effect of Price as a Marketplace Cue on Retail
Patronage. Journal of Product and Brand Management, 15, pp.265-271.
11

Nagle, T.T. and Hogan, J.E. (2010)
The Strategy and
Nagle, T.T. and Hogan, J.E., 2010. The Strategy and Tactics of Pricing. 4thed. New Jersey:
Pearson Education, Inc.
New Jersey
Peter, P. and Olson, J., 2008. Consumer behaviour and marketing strategy. 8thed. McGraw
Hill. Singapore.
Pricing. Retailing in the 21st Century,
245 –259.
Recent Trends and Emerging
Practices in Retailer
Tactics of Pricing, 4th edn, Pearson
Education, Inc.,
Online references
Global data retail intelligence centre. 2018. [Online]. Available through:
<https://www.globaldata.com/ms-lose-decades-long-status-number-one-clothing-
retailer-primark/>. [Accessed on 24thJuly 2019].
M&S on how its success at ‘rewiring people’s brains’ for food porn ads could help save its
ailing clothing business. 2016. [Online]. Available through:
<https://www.thedrum.com/news/2016/04/22/ms-how-its-success-rewiring-people-s-
brains-food-porn-ads-could-help-save-its-ailing>. [Accessed on 24thJuly 2019].
M&S. 2018. [Online]. Available through: <https://www.marksandspencer.com/c/offers>.
[Accessed on 24thJuly 2019].
Marks & Spencer And Customer Have Some Excellent Pokémon Banter On Twitter. 2019.
[Online]. Available through: < http://www.ladbible.com/funny/viral-marks-spencer-
and-customer-have-some-excellent-pokemon-banter-20160812>. [Accessed on 24thJuly
2019].
Marks and Spencer Black Friday 2018 deadls: Furniture, wine and clothing up to 50% off.
2018. [Online]. Available through:
12

<https://www.express.co.uk/life-style/life/1049211/marks-and-spencer-black-friday-
2018-deals-discounts-sale>. [Accessed on 24thJuly 2019].
Pricing Strategies. 2018. [Online]. Available through:
<https://www.marketingteacher.com/pricing-strategies/>. [Accessed on 24thJuly 2019].
13