Mark and Spencer Case Study

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A case study on Marks and Spencer which includes: The company at present,
Background of the Study, Case Background, Problem, SWOT Analysis, Alternative
Courses of Action, Recommendation, Conclusion.
A Case Study on Marks and Spencer
The Company at Present
Marks and Spencer has over 450 stores located throughout the UK, this includes
the largest store at Marble Arch, London.
In addition, the Company has 150 stores worldwide, including over 130 franchise
businesses, operating in 30 countries.
Background of the Company * Marks and Spencer (M&S) of Britain (often referred to as
Marks & Sparks by locals) is a general retailer that sells clothes, gifts, home furnishings,
and foods under the St. Michael trademark in the UK, Europe, the Americas and Far
East. * The company also operates financial services segment, which accounted for
about 3% of the company’s 1998 profits (Dow Jones Industrial 1999) * Marks & Spencer
started as a stall in 1884 by Michael Marks in the Leads market using an L5 loan from a
wholesaler * Its philosophy is to sell durable merchandise at a moderate price. It has
merchandise made to its specifications. * By 1901, the company acquired 35 Outlets as
well as a new partner, Tom Spencer * By 1949 all the company’s stores carried mostly
private label (St. Michael) products produced by British suppliers (De Nardi-Cole 1998).
Case Background * Britain has often been called a country of shopkeepers, and Marks &
Spencer (M&S) is undoubtedly the shop keeping leader * With nearly 300 stores in the
United Kingdom, M&S is the country’s largest retailer : it holds 17 percent of the UK
clothing market * Its marble arch store in London is in the Guinness Book of World
Records as the store that takes in more revenue per square foot than any other in the
world * Soft goods (clothes and household textiles) account for about 58 percent of the
company’s sales and food lines account for about 42 percent * The goods are perceived
as having excellent value, quality, so there is a little need to discount prices for sales *
Because M & S is so well known, it spends little on advertising, decorates its stores
austerely, offers very little personal service and provides no dressing rooms or public
bathrooms * M & S has been successful in appealing to the nationalism of its British
clientele by promoting heavily the fact that nearly all the clothing it sells originates in the
United Kingdom * But the company admits that the percentage has slipped to about four-
fifths and will likely fall further as its British suppliers move more of their production
abroad * Being so already dominant, M&S would have to add new products or appeal to
new market segments to maintain its growth rate * Its attempt to move into higher-priced
clothing into a more fashion-conscious market has not been very successful
Problem
How would Marks and Spencer become successful in the international arena? Statement
of Objective * Being so dominant in the United Kingdom, M&S would appeal to new
market segments * To be successful not only in the United Kingdom but also overseas
SWOT Analysis
Strengths
* M&S were renowned for their attention to detail in terms of supplier control,
merchandise and store layout * The success of M&S under Simon Marks was often
attributed his understanding of customer preferences and trends * Provide highest
standards of quality * Suppliers use the most modern and efficient production techniques
Weaknesses
* Stocked generic clothing range with wide appeal to the public: buyers often had to make
choices, which would outlast the fashion and trends seen in other high street retailers *
This lagging behind in case of introducing up-to-dated fashionable clothing to keep pace
with the environment actually made them vulnerable to their competitors * They always
used British suppliers believing that it would give them highest quality with low costs but
actually sometimes made them weak to challenge its competitors * Some competitors are
using overseas suppliers to keep the costs down
Opportunities
To survive in today’s world globalization is important. M&S have a wide opportunity to go
more global to improve and expand its business.
They also have the opportunity to consider more overseas supplier which will actually
give them cost advantage, rather than suppliers available on a local level.
They also have the opportunity to maximize the use of available technology to improve
their functioning and to gain competitive advantage.
Threats
They are in strong competition with Gap, Oasis and Next, who are offering similarly priced
products yet more fashionable.
M&S is also in competition from discount stores like Matalan, and “George” range at
Asda.
M&S is also in threat from Tesco and Seinsbury’s who moved into offering added value
foods, which had been pioneered by M&S.
Alternative Courses Of Action
1. Substantial research before operations and correct interpretation of the information
derived from the research.
Advantages
To identify the target market segment
To identify the demand
To identify the particular products needed in the market
To identify the necessary promotional needs
To identify the process of distribution of the goods
Disadvantages
The company will spend much for the research
Research takes time
Research may not always be reliable as there might have sudden changes in the
environment
2. Ability of the company to adjust with the new environment.
Advantages
Flexibility of the business to cater more market and demand, thus more sales and profit
Disadvantages
To be flexible is sometimes costly for the company as it will adjust to the environment
3. Substantial research before operations and correct interpretation of the information
derived from the research. Then, when it’s already operational, adjust with the new
environment.
Advantages
Flexibility of the business to cater more market and demand, thus more sales and profit
To identify the target market segment
To identify the demand
To identify the particular products needed in the market
To identify the necessary promotional needs
To identify the process of distribution of the goods
Disadvantages
To be flexible is sometimes costly for the company as it will adjust to the environment
The company will spend much for the research
Research takes time
Research may not always be reliable as there might have sudden changes in the
environment
Recommendation
Substantial research before operations and correct interpretation of the information
derived from the research. Then, when it’s already operational, adjust with the new
environment.
Conclusion
The M&S case points out the problems that a company may face internationally. Despite
a substantial research before beginning international operations, M&S still faced
unexpected problems that inhibited rapid sales growth.
Domestic and international marketing principles are the same however, environmental
differences often cause managers either to overlook important variables to misinterpret
information.
M&S made mistakes regarding important marketing variables such as the target market
segment, the merchandise mix, promotional needs, the degree to which products would
need to be altered for the markets, and distributional differences.
However, M&S has altered operations based on its experience and is now doing well in
most of the foreign locations in which it operates.

SWOT Analysis for Marks and Spencer

EXECUTIVE SUMMARY
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 11th September 2001 accident in USA has caused many companies to face
the recessions in North America and European countries.
The 11th 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.

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