Introduction
Marks & Spenser is a well-establish brand known worldwide. It is one of the largest retailers in the UK with a revenue of over 10bn and net income of 486.50m (Marks and Spencer Group PLC 2016). The company is facing certain constraints as it lost more than 7% of net income, and it is struggling to retain its position in the market (Marks and Spencer Group PLC 2016). This paper provides a brief analysis of the company’s strategic objectives and competitive advantage.
The Approach to Be Used
Companies are trying to develop proper strategic plans to remain competitive in the market and achieve their goals. The majority of organizations chose a simple but effective approach to set their aims and methods to reach them. The first step in this process is strategic marketing planning that involves the development of a framework of resources and strategies to achieve the goals set in a particular market (Dibb & Simkin 2013). The analysis of all the aspects of the business (its environment, opportunities, threats and so on) enables companies to come up with the marketing strategy that highlights major priorities, goals, methods. The marketing plan is a detailed outline of specific measures to undertake to implement the marketing strategy. This approach will be used in this paper when analyzing the two components of Marks & Spenser.
Strategic Market Planning
First, it is necessary to take a closer look at the company’s environment and briefly outline the strategic market planning for M&S. Organizations are affected by political, legal, regulatory, technological and societal forces (Dibb & Simkin 2013). It is possible to note that political, legal and regulatory forces have remained unchanged. Therefore, the organization does not have to shape its strategic plans in this sphere. However, the technological, economic and societal forces have evolved and created significant challenges to M&S. As for technology, the development of online selling resources has become a convenient alternative for potential buyers.
Butler (2016) notes that the online sales of M&S are expected to grow by third, and the trend is apparent in the company’s competitors. The development of technology shaped some societal trends. At present, people prefer shopping online or shop in shopping areas where they can pick up the things they brought online (Bowers 2016). Clearly, having vast shopping areas becomes hardly profitable, and competitors who have acknowledged the new trends are improving their performance. The competition in the sphere of GM is becoming rather intense, and M&S with its focus on the upper middle sector is losing its position. As has been mentioned above, the company established particular goals to address the challenges it is facing.
Marketing Strategy and Strategic Objectives
A brief analysis of the company’s opportunities and capabilities helps in developing the marketing strategy (Dibb & Simkin 2013). It is possible to apply Ansoff’s tool to identify these opportunities (Dibb & Simkin 2013). Market penetration is the strategy that implies the increase in sales in existing markets through the sale of existing products. Using this strategy, M&S can try to increase their sales with the help of an intense advertising campaign. The focus will be traditionally made on the brand, its quality, and its history. However, the company already advertises its products and brands heavily with little effect on sales, especially when it comes to the GM sector (Bilal 2014). Therefore, this strategy is unlikely to be cost-effective.
Market development is another strategy commonly used in the business world. It presupposes the expansion to new markets while selling existing products. The company has more than 450 international stores in different European countries (Marks and Spencer Group PLC 2016). It can be a successful approach to establish the store in North America as well as the markets of BRICS countries. However, these markets are highly competitive, and the company will have a lot of challenges. Clearly, this will require significant investment. In some areas, it can be beneficial to sell GM products only. Some areas may be favorable for retail units with a large space given to cafes or convenience food departments, as well as spaces for picking up goods purchased online since these are the most recent trends. Modern people often choose convenience foods and dining out, which should be considered when developing retail areas (Butler 2016).
Product development is another strategy many companies utilize to increase their sales. According to the annual report issued, M&S develop their own products, especially when it comes to GM (Strategic report and supplementary information 2015). However, the drop in sales of clothes shows that the introduction of new garments is not efficient enough. At the same time, the company could consider providing a new service through the introduction of larger spaces for cafes, restaurants, and facilities to pick up online purchases.
Finally, diversification is regarded as an effective marketing strategy. Many firms try to diversify their operations to minimize risks. As far as Marks & Spencer is concerned, the company operates in such segments as retail, banking, business, energy, outlet, and TV. This has proved to be an efficient approach as the losses in the MG sector were associated with the increased food gross margin (Bilal 2014). The brief analysis of available approaches helps to identify the strategic objectives.
The organization’s primary goals are consolidating their “position as a leading international, multi-channel retailer” through the growth of food sales, GM gross margin and performance improvement, strong cash generation (Strategic report and supplementary information 2015, p. 7). The company’s officials claim that there will be no massive restructuring of retailing spaces of M7S stores, but new units will be slightly different as less space will be given to GM (Butler 2016). Thus, market development and product development approaches will be instrumental in achieving the strategic goals set.
Marketing Plan and Competitive Advantage
The development of a marketing plan is the final stage of the process. When developing the marketing plan, it is important to identify the company’s competitive advantage, and it is beneficial to apply Porter’s Five Forces model and 5 P’s model. Porter’s Five Forces include supplier power, buyer power, competitive rivalry, threat of substitution and threat of new entry. The supplier power is rather high as Marks & Spencer has more than 3,000 suppliers of products and raw materials (Strategic report and supplementary information 2015). This means that the company does not depend on its suppliers as the network of partners is very wide, and M&S can switch to different firms in case of an emergency.
The buyer power has a significant power on the retailer. However, contemporary buyers are ready to spend considerable amounts of money when buying foods or even GM products. However, there is a trend showing people’s desire to switch to online purchases that are more convenient and often cheaper. Hence, M&S should consider the influence of this force. The competition is rather intense in the sector, and the company should come up with new strategies and ideas to attract customers. Such retailers as Tesco, Morrisons, Next, and Debenhams, as well as such fashion chains as Zara and H&M, are popular among people (Butler 2016).
The threat of substitution is rather implied, especially when it comes to foods. People still prefer going shopping, and such well-established brands as M&S will be still popular in the nearest future. When it comes to clothing, this threat is more explicit as there is a particular tendency to buy online. As for the threat of new entry, it is also rather implied since retailing is quite a costly business that needs significant investment. Such brands as M&S have a secure position in the market due to its history and image.
It is possible to utilize Porter’s generic route as well as the five P’s model to outline the competitive advantage of Marks & Spenser. Cost leadership, differentiation, and focus are three dimensions that companies should take into account to achieve a competitive advantage (Dibb & Simkin 2013). The cost leadership dimension involves the development of a low-cost basis. Thus, firms try to minimize their costs to achieve a competitive advantage. However, this strategy can be difficult to use for a retailer. The change of the place strategy can be beneficial for M&S. It is possible to consider having smaller facilities. Store space restructuring (increase the food sales and café/restaurants as well as online purchases facilities) can help M&S to reduce some costs.
Differentiation involves offering different products and services (Dibb & Simkin 2013). One of the five P’s is concerned with products. The development of new and often innovative products can be beneficial for the development of a competitive advantage. As has been mentioned above, M&S offers diverse products, but it can also improve its position through the introduction of spaces for picking up online purchases and increasing areas for cafes and restaurants. This is the place where another P (promotion) comes into play.
M&S has to make sure that people know about the changes that will take place to fit their needs and wants. It has been acknowledged that it is hard to employ all the three strategies, but successful companies are firms that use at least two of the strategies mentioned above. M&S can be regarded as one of these organizations as it is (and can be) successful in such dimensions as differentiation and cost leadership. Focus is the dimension most appropriate for small firms that can maintain focus on particular products or services.
Conclusion
On balance, it is possible to note that M&S is one of the leaders in the retail segment, and the company has high chances to keep its leading position through the use of the proper marketing strategy. The organization should focus on cost reduction and differentiation, which can be achieved through the restructuring of the retail spaces. Less space should be devoted to clothing, and more space can be given to cafes and restaurants while some areas should also be appropriate for picking up online purchases.
Reference List
Bilal, N 2014, Extensive marketing campaigns do little to improve Marks and Spencer’s sales, Web.
Bowers, S 2016, ‘High street retailers feel the pinch as shoppers stay at home’, The Guardian, Web.
Butler, S 2016, ‘Marks & Spenser to trial larger food halls’, The Guardian, Web.
Dibb, S & Simkin, L 2013, Marketing essentials, Cengage Learning, Andover.
Marks and Spencer Group PLC 2016, Web.
Strategic report and supplementary information 2015, Web.
