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A Marketing Analysis of Marks

and Spencer

Module Tutor: Dr. G. Fahad

Module: MKT4000 Managing The Marketing Interfaces
Pei-Sui Sung (Betty Sung)
I-Cheng Chang (Erica Chang)
Yiduo Zhang (Amy Zhang)
Ling Huang (Karen Huang)
Yan Yu (Vivian Yu)

20 November 2002

CONTENT

EXECUTIVE SUMMARY
1 INTRODUCTION
2 MACRO-ENVIRONMENT AND MICRO-ENVIRONMENT
2.1 MACRO-ENVIRONMENT
2.1.1 Political and Legal
2.1.2 Economic
2.1.3 Social
2.1.4 Technological
2.2 MICRO-ENVIRONMENT
2.2.1 Suppliers
2.2.2 Distributors
2.2.3 Customers
2.2.4 Competitors
3 SWOT Analysis
3.1 STRENGTHS
3.1.1 High Quality
3.1.2 Customer Services
3.1.3 Shopping Environement
3.1.4 Manager Training
3.2 WEAKNESS
3.2.1 Clothing Lack Segmentation
3.2.2 Stock Control............................................................................................
3.2.3 Waste Store Spaces
3.3 OPPORTUNITIES
3.3.1 Internet Technology
3.3.2 Healthy Eating
3.3.3 Marketing Extending
3.4 THREATS
3.4.1 Strong Competitors
3.4.2 The Change of Social Environment
3.4.3 Chemical Pollution
4 CONCLUSION
5 RECOMMENDATION
6 BIBLIOGRAPHY
7 APPENDICES

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[1] and ‘Green Tax’2[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

2
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[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.

3
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 sale4[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

4
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 Opportunities
 Internet Technology
 High Quality
 Health Eating
 Customer Services
 Marketing Extending
 Shopping Environement

 Manager Training

Weaknesses Threats
 Strong Competitor
 Clothing Lack
Segmentation  Changeable Social
  Stock Control Environment

 Waste Store Spaces  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. (3rded). London: McGraw-
Hill, p148-150.
○ Kotler, P. and Armstrong, G. (2001). Principles of Marketing. (8thed). 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. (2nd ed). London: Letts
Educational, p5-7.
○ Wilson, R.M.S. and Gilligan, C. (1997). Strategic Marketing Management
Planning, implementation and control. (2nd ed). Oxford: Butterworth-
Heinemann, p204,302.

• Articles
○ Fred, P. (4th February 1998). Changing market structures and the
implications for channel relationship. [online]. Napier University.
Available from:
http://www.eds.napier.ac.uk/flexible/OLF/materials/bs/MARKETING/03co
nt.pdf [Accessed 1st October 2002]. p553.
• Web sites
○ BBC News. (1998). ‘Euro case study: Marks & Spencer’. [online]. 10
November. Available from:
http://news.bbc.co.uk/1/hi/special_report/single_currency/204053.stm
[Accessed 6th October 2002].
○ BBC News. (1999). ‘GM debate refuses to go away’. [online]. 1 June.
Available from: http://news.bbc.co.uk/1/hi/uk/357987.stm [Accessed
12th October 2002].
○ BBC News. (2000). ‘M&S: We'll be good again’. [online]. 19 July.
Available from: http://news.bbc.co.uk/1/hi/business/840624.stm
[Accessed 6th October 2002].
○ BBC News. (2001). ‘How fear will change our shopping habits’.
[online]. 27 September. Available from:
http://news.bbc.co.uk/1/hi/business/1564827.stm [Accessed 6th October
2002].
○ Business in the community. (2002). ‘Winners recognised for keeping
gender on the agenda’. [online]. 14 May. Avalible from:
http://www.opportunitynow.org.uk/opps_pressreleases.html [Accessed
21st October 2002].
○ Christie, M. Marks and Spencer Enhances Customer Service Across
Multiple Channels. [online]. Available from:
http://216.239.33.100/search?
q=cache:dK_kv0pNkfMC:www.siebel.com/downloads/c [Accessed 13th
October 2002].
○ Ciao. (2002). [online]. Available from:
http://www.uk.ciao.com/products/82230.html [Accessed 13th October
2002].
○ Friends of the Earth. (2002). ‘Major retailers pledge to take action on
risky chemicals’. Press Release. [online]. 21 July. Available from:
http://www.foe.co.uk/pubsinfo/infoteam/pressrel/2002/2002072700410
1.html [Accessed 11th October 2002].
○ Leyshon, M. (2002). Eat to good health. [online]. Available from:
http://www.handbag.com/food/healthfoods [Accessed 27th October
2002].
○ Marks & Spencer. (2002a). [online]. Available from:
http://www2.marksandspencer.com/thecompany/ourcommitmenttosoci
ety/environment/info/food/whatarewedoing-food.shtml [Accessed 7th
October 2002].
○ Marks & Spencer. (2002b). [online]. Available from:
http://www2.marksandspencer.com/thecompany/investorrelations/dow
nloads/fin_review.pdf [Accessed 1st October 2002].
○ Marks & Spencer. (2002c). [online]. Available from:
http://www2.marksandspencer.com/thecompany/whoweare/store_locat
ion/index.sht [Accessed 13th October 2002].
○ Marks & Spencer. (2002d). [online]. 1 April. Available from:
http://www2.marksandspencer.com/thecompany/mediacentre/pressrel
eases/com2002-04-01-00.shtml [Accessed 13th October 2002].
○ M&S shuts. (2001). ‘M&S shuts up shop in Spain’. Barcelona Business.
[online]. 4 September. Available from:
http://bcn.qwe.as/discuss/msgReader$39 [Accessed 27th October
2002].
○ Meat & Livestock Australia. (2001). ‘GM feed and the livestock
industry’. [online]. September. Available from: http://www.mla.com.au
[Accessed 12th October 2002].
○ Mike, Y. (2000). ‘Marks & Spencer Global Retailer Streamlines
Collection of POS Data Using BizTalk Server 2000’. Microsoft. [online].
4 February. Available from:
http://www.microsoft.com/servers/evaluation/casestudies/marksspence
r.asp [Accessed 1st October 2002].
○ Ocr. (2002). ‘Store Wars’. [online]. January. Available from:
http://www.ocr.org.uk/develop/gnvq/business/advanced/prm2cs.pdf
[Accessed 26th October 2002].
○ Retail Technology. (1999). ‘Marks & Spencer Trains for 2000’. [online].
December. Available from: http://www.retailtechnology.co.uk/Case
%20Studies/Marks.htm [Accessed 13th October 2002].
○ Robert, G. Moving Mountains at Marks & Spencer. [online]. Available
from: http://students.ou.edu/R/Robert.G.Richey-1.Jr/Channels/example
case one.doc [Accessed 9th October 2002].
○ Zakon, R.H. (1999). ‘The History of Internet’. Hobbes’ Internet
Timeline. [online]. 15 August. Avalible from:
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2002].
○ Rungfapaisarn, K. (2001). ‘Department store: Fresh look for local
Marks & Spencer stores’. Siam Future. [online]. 23 April. Available
 from: http://www.siamfuture.com/ThaiNews/ThNewsTxt.asp?tid=603
[Accessed 13th October 2002].
○ Stewart, A. (2000). Marks and Spencer facing its toughest battle.
[online]. Available from:
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[Accessed 13th October 2002].
○ Textile Outlook International. (2002). ‘Marks and Spencer’. [online].
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[Accessed 9th October 2002].
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
Customer

Products And Services

Improved products And Services

Feedback

Feedback

Needs

Modified Needs

Source: Stokes, 1997: 5

Figure 2.1 Illustrates this process of customer satisfaction.