Marks & Spencer Marketing Audit: Semester 2 Report

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Introduction To Marketing
Marketing Audit of M&S
2019

Table of Contents
Executive Summary....................................................................................................................3
SWOT Analysis............................................................................................................................4
PESTLE Analysis.......................................................................................................................... 8
Porters Five Forces Model........................................................................................................11
Market Analysis........................................................................................................................14
Identification of Potential Market Segments...........................................................................17
Market Research...................................................................................................................... 20
Conclusion................................................................................................................................24
Reference List...........................................................................................................................25
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Executive Summary
Marks and Spencer have been steadily increasing its revenues since the last four years but the
overall market share of the company is declining (Marks and Spencer, 2019). This is due to the
other retail competitors enhancing their market shares by carving out the Marks and Spencer
Market Share. The report focuses on analysing the current marketing strategy by conducting a
Marketing Audit. It will also consider the internal and external factors that influence the market
performance of the company. Another aspect being considered by the report will be the market
segmentation and target market of the company along with the market positioning of the
Brand Marks and Spencer. The report will explore the potential customer groups that can be
targeted for enhanced group sales by analysing the market and consumer behaviour.
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SWOT Analysis
The SWOT Analysis of Marks and Spencer will identify the internal and external factors that
affect the company's performance. The internal factors are strength and weaknesses while the
external factors are opportunities and threats. The strength and weaknesses aspects indicate
the organisational strengths and weaknesses of Marks and Spencer while the opportunities and
threats are the factors that can affect its overall performance.
STRENGTH
These can be considered as an asset of Marks and Spencer that can help it gain a competitive
advantage over its rivals. The following are the core strengths of Marks and Spencer
The Brand reputation and recognition - The customer's perception of Marks and Spencer as a
brand is clear in terms of the product range and offering. It's known for premium and good
quality product such as its fashion products that are a mix of sophisticated with modern and
stylish (Sminia, 2017).
The product range - Marks and Spencer offer a variety of products at its stores such as
vegetables, grocery, clothes etc. The company has a range of suppliers that supply the quality
products to Marks and Spencer stores that are then offered to customers after stringent quality
tests. The product range available at M&S allows its customers to complete their shopping
requirements in one go (Sminia, 2017).
The Private and Known Labels - Marks and Spencer are known for its branded offering. The
company sells products of a number of well known and popular brands such as Versace, Loius
Vuitton, etc. The company also has its own private labels that are equally popular and
recognisable. Some of the designer brands being sold at Marks and Spencer stores are North
Coast, Autograph, Indigo Collection, and Blue Harbour etc.
Large Physical Presence - Marks and Spencer have 1463 stores out of which 1035 are in the UK
and 428 are international stores. The company has a presence in 56 international territories.
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Such a large presence not only enforces the brand strength and recognition of the company but
it also allows it access to a larger customer base (Marks and Spencer, 2019).
Cultural Diversity And Efficient Employees - The Company employs over 80000 people of
various ethnicities that feel committed to the company due to organisational policies like equal
opportunity employment and training programs to make them efficient in their work. The
culturally diverse internal environment promotes sensitivity in the employs and makes them
more understanding and accommodating to the customers that improve customer satisfaction
levels (Marks and Spencer, 2019).
Multichannel Presence - Along with the stores the company also operates through online and
franchising mediums. This allows the company access to a wider customer base (Marks and
Spencer, 2019).
WEAKNESSES
This parameter identifies areas in the Marks and Spencer operations that need improvement
for better performance. These include the following
Weaker International Market Penetration Levels- Although the company has successfully
established an international presence in 56 territories still an inability to incorporate the local
requirements within its product line has restricted the market penetration levels of the
company (Marks and Spencer, 2019).
Ineffective Customer Service - The absence of customer services practices that are nowadays
common in all the retail brands has made the customer experience within the store as well as
after sales experience such as returns dissatisfactory. This has led to lower customer
satisfaction levels that could lead to weaker brand loyalty and brand switching instances
(Sminia, 2017).
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The Scalability Of The Supply Chain - The poor scalability restricts the ability of the company to
a number of global locations in spite of having an online shopping model. This affects the
efficiency of overall organisational sales and performance (Sminia, 2017).
Rigidness Towards New Approaches - This is another weakness of Marks and Spencer that
arises due to their inherent tendency of choosing the older ways instead of innovative and
newer ways of doing thing such as incorporating technologically proficient warehousing,
communication, logistic solutions etc. The inclination of the company toward the use of manual
labour instead of technological alternatives leads to reduced work quality and effectiveness
along with efficiency (Sminia, 2017).
OPPORTUNITIES
New segments - Segmentation can be defined as categorising and dividing the customers into
groups defined by interests, needs and satisfaction specific marketing practices. The product
segments offered by the company can be expanded to include newer and popular segments to
cater to different customer segments while the company can also focus on identifying different
market segments and targeting them to enhance its market penetration levels (Marks and
Spencer, 2019).
Multichannel Expansion - The popularity of the digital medium of shopping has made it a
lucrative segment. The company can focus on strengthening its online presence and improving
the existing distribution network to cater to a wider customer base and area (Marks and
Spencer, 2019).
THREATS
BREXIT - The withdrawal of Britain from the European Union can be a threat to the
organisational performance of Marks and Spencer. It may restrict the freedom of trade the
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company enjoys within the EU if preventive or corrective measures are not taken (Marks and
Spencer, 2019).
Competition Levels - The retail industry is fiercely competitive. The primary competitors to
Marks and Spencer are Tesco, Sainsbury, Asda, etc. (Marks and Spencer, 2019)
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PESTLE Analysis
The macro environmental factors and their impact on the performance and operations of
Marks and Spencer can be analysed by using the PESTLE analysis that addresses the external
factors like Political, Economic, Sociological, Technological, Legal and Environmental factors
(Bocken, 2017).
POLITICAL FACTORS
The global nature of the operations of Marks and Spencer makes it susceptible to political
decisions taken by the leadership of its host countries (Chaplin and TJ O’Rourke, 2014). An
example of such a decision is BREXIT. Prior to the UK's decision of withdrawing from the
organisations like Marks and Spencer operating in the UK were governed and protected by the
trade-related laws of both UK and EU. The UK laws were also influenced by the overall EU
policies. Now, the confusion arising out of this decision and availability any concrete policy
decision has made the trade environment unstable. If the UK and EU don't reach a favourable
trade agreement, the Marks and Spencer's UK and EU operations will see a setback. Also, there
will be a major impact on procurement from the EU (Chaplin and TJ O’Rourke, 2014).
ECONOMIC FACTORS
The retail sector has a higher susceptibility towards interest rate variation, inflation rate
changes and economic recession. Weakening Pound prices have adversely affected the
company. The post BREXIT announcement business environment has led to the enhancement
of the company's conflict with local players over rising in product prices as a result of a
weakening currency and enhanced interest rates (Bocken, 2017).
SOCIOLOGICAL FACTORS
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The change in the internal policy of Marks and Spencer has allowed it to benefit from the
Sociological factors. The gradual implementation of plan A of the company based enhanced
organisational transparency and focus on activities that favour the community has helped in
reducing internal costs. The customer perception of the company as being a non-trendy store
has negatively affected the organisational performance and sales. The organisational focus on
promoting cultural diversity within the organisation has helped Marks and Spencer to handle
the local cultural requirements of its host countries that helped in facilitating its trade (Chaplin
and TJ O’Rourke, 2014).
TECHNOLOGICAL FACTORS
The availability of advanced technological solution and methods relevant to effective business
operations, management and performance of the retail sector has facilitated many of the
competitors of Marks and Spencer. The slow uptake and incorporation of technological
advances or changing technologies have made Marks and Spencer lag behind its competitors.
Though the incorporation of digital practices like online shopping model has supported the
overall business of the company and promoted its customer reach and profitability (Bocken,
2017).
LEGAL FACTORS
A majority of the Marks and Spencer operation is in the UK. So, the unionisation and
employment laws of Britain have a major impact on the company. The UK has a stringent set of
laws like minimum wages, anti-discrimination, worker safety laws that govern the employee
interests within the country. These are regulatory in nature and the company is required to
follow them to operate within the country (Chaplin and TJ O’Rourke, 2014). In addition, many
of the stores being operated by Marks and Spencer are on leased properties that can lead to
legal issues such as the case of dispute with the Frascati landlord.
ENVIRONMENTAL FACTORS
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The new business operations strategy being implemented by the company is focused on the
environmental concerns of the company. Plan A focuses on reducing the wastage completely in
coming years while focusing on environment-friendly and green policies within the
organisation. These can be beneficial in the long run and can be employed as marketing tools
due to the enhanced inclination of customer towards organisations that incorporate an
environment-friendly outlook (Bocken, 2017).
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Porters Five Forces Model
Porter's Five Forces is an ideal tool for analysing the profitability levels and competition levels
for Marks and Spencer’s as a way of determining the competitive intensity and market
attractiveness. Porter's Five Forces model considers five factors that are Buyer Threat, Supplier
Threat, Threat of New Entrant, The Threat of Substitution and The Competition Intensity of a
market (Wilson, 2015).
THE THREAT OF BARGAINING POWER OF SUPPLIERS
Marks and Spencer have a global presence and global operation along with the sourcing of
material on a global scale. Due to this reason, the dependability of the company on suppliers
from a specific locale is limited. Hence the bargaining power of suppliers is low (Buckley, 2016).
Figure 1: Porter's Five Forces Analysis of Marks and Spencer
THE THREAT OF BARGAINING POWER OF BUYERS
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The retail market of which Marks and Spencer’s is a part is totally buyer oriented. Hence the
threat of buyer bargaining power is very high (Wilson, 2015). This means that the product and
marketing strategy of Marks and Spencer should especially focus on buyer requirements and
buyer behaviour to survive and grow in this market. Due to this reason, the buyer perception of
the company as being non-trendy is damaging to the overall performance of the company. Also,
being a late entrant in the global landscape it’s paramount for the company to focus on buyer
behaviours and segmentation as a source of its marketing strategy (Buckley, 2016).
THE THREAT OF NEW ENTRANT
The threat of new entry is low due to the capital required to establish a new sustainable
business along with the frequent changes in customer expectation and the role of customer
perception in the success of an organisation (Buckley, 2016). Another barrier to new entry is the
presence of strong brands like Marks and Spencer that have been in the market for a long time
and have established their reputations and brands. The emergence of low-cost manufactures
poses a threat to Marks and Spencer due to their ability to make available low-cost products
and the competitor’s interest in such product line (Wilson, 2015).
THE THREAT OF SUBSTITUTES
The threat of substitutes is comparatively very high in the retail sector. This is due to the
presence of a number of players within the retail sector with a similar product range and the
ability to replicate a product within a minimal time frame allowing customers alternatives to
choose from. This is a matter of concern for Marks and Spencer (Buckley, 2016).
COMPETITION INTENSITY
The retail industry is prone to severe competition intensity. The major retail player like Tesco
can indulge in competitive pricing and outclass Marks and Spencer in terms of presence and
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