Marks & Spencer’s International Marketing Activities
Category : Marketing Papers
Marks & Spencer’s International Marketing Activities
Background of the Company
Marks and Spencer plc is considered as the larges retailer in the UK. It has 300 Marks & Spencer or M&S company-owned stores in its mother market. All of the said stores sell clothing, footwear, gifts, home furnishing as well as food. Many of the said products are being sold under the company’s private label St Michael brand (Funding Universe n.d.).
The company also owns and operates about 100 M&S stores in different part of the globe such as in Europe, Hong Kong as well as in Canada. There are about 85 franchise stores of the company that are located in Europe, the Far East, Australia, the Middle East, the Bahamas as well as Bermuda (Funding Universe n.d.).
The company also owns the Brooks Brother; it is a chain of store of men’s clothing that has more than 170 units in Japan and the United States. The company also owns 20 stores of the King Super Markets grocery store chain in New Jersey (Funding Universe n.d.).
Due to the said growth, the company’s Financial Services units also offer their customers the credit cards, personal loans, life insurance, savings, investment as well as pension plans. The 17% of the company’s revenues are all generated outside the United States (Funding Universe n.d.).
Marks and Spencer emerged as one of the world’s largest retail companies in the world. It had become a limited company during 1903 in Manchester, Britain. The company already employed their 68,000 people and had over 286 stores as well as a number of factories that produces for the stores in Britain, at the end of the 20th century. Furthermore, the company is already serving their 13 million shoppers with their different products such as clothing, shoes, underwear, furniture as well as different homeware items and foods. The company is selling 85 million of their sandwiches in a week during 2000 (Berend 2006, p. 249).
The business started when Michael Marks, the son of a Jewish tailor in Grodno had escaped from the Russian pogroms during 1881. He arrived in England in 1882 and became and peddler around Leeds, with the use of his borrowed £5. After a few years, Michael Marks had opened his first M. Marks Penny Bazaar and had become successful in putting up 12 market stalls in Lancashire and Yorkshire (Berend 2006, p. 249).
In order for him to expand his business, he had decided to look for a partner that will help him to gather more capital. Tom Spencer invested his £300 into the business and became the co-owner of the company. The first Marks and Spencer Penny Bazaar store was opened in Manchester. By 1903, the company went to public and had owned 36 market bazaars and shops, including the three stores in London. Tom Spencer had retired in 1908, while Marks dies at the age of 47 (Berend 2006, p. 249).
After the retirement and death of the two owners, Simon Marks, had joined the family business. Simon found his new partner in the business, Israel Sieff. Simon bought up all of the shares that are available in the market and then begun to run the business as a joint managing director together with his friend (Berend 2006, p. 249).
After the war, Simon decided to move to London and then began to establish his huge network of their stores. In 1927, the company has already established its 135 stores with 10,000 employees. In 1928, the company had introduced its St. Michael trademark that was used as the end of the century (Berend 2006, p. 249).
Between 1929 and 1939, the company had been able to increase it sales as well as to enlarge its size by establishing and expanding 160 stores. In general, the company had a total of 17,000 employees.
The company also opened its trademark shop at the corner of London’s Oxford and the Orchard Streets. During the 1930s the company had introduced its fruit and food department (Berend 2006, p. 249).
One of the key principles of the company is their Care of the Individual. The said aspect of the company focuses on the needs and demands of their employees. It also focus o the occupational health (Miller & Lipsedge 2002, p. 62).
The staffs of the company typically give long services to the business as well as develop and maintain their long-term relationships with the suppliers. But the company belongs to the retailing industry where in the details are all important. There are many constant changes that are driven by different seasonal as well as competitive factors. The main focus of the said program is to improve the 5% of the procedures that are not going well. That is why the standards as well as the expectations are high (Miller & Lipsedge 2002, p. 62).
The company is also following the procedure of consultation. The company is implementing their need for consultation, and it is done widely before doing any initiative. This is due to the fact that if the idea of an individual is not consult in advance, the idea will be rejected by the management (Miller & Lipsedge 2002, p. 62).
Furthermore, the company is also an empirical business. It tests as well as evaluates, then carried out different trials of its goods as well as services. It also has a model stores and gauges the reaction of the customer in regular basis. The management of the company focuses its way of works in the principle of measure it to manage it (Miller & Lipsedge 2002, p. 62).
The systems that are being implemented by the company is highly centralized as well as controlled by the management of the mother company. It means that the central branch of the company is the one that determines in details about what stores will sell and at what price (Goffee & Scase 1995, p. 122).
Furthermore, the senior managers act as quickly, decisively with unquestionable personal authority within their defined spheres. The speed of the reaction is also one of the most critical and important factor in the company. The senior directors, especially the Chairman has the strongest influence on the different decisions of all levels. All of the decision will undergo several formal activities such as Board meetings; departmental reviews etc (Goffee & Scase 1995, p. 122).
But more often than not, decision are being made as the result of a chance meeting as well as visit from a small directorial statement or from some event that happens when the senior come to attention. That is why anything about the company is liable to become political at any moment. That is why the distinction between the strategic as well as operations is quiet difficult to maintain (cited from Goffee & Scase 1995, p. 122).
The managerial style that is being used by the company enables the employees to be encouraged, not just the managers but the whole human resource of the company. The employees will then serve as the eyes, the ears as well as the brains of the organizations. All the sales staff has a part in playing in watching the behavior of the customers, at the store level. They are also into testing the different merchandise as well as helping to anticipate different trends (Goffee & Scase 1995, p. 122).
The also visits the stores in order to probe in details about the sales movement as well as the quality of the products, and used the details that have been gathered in order to report about their observations (Goffee & Scase 1995, p. 121).
Marks & Spencer has entered India with an exclusive 7,000 sqft franchise outlet at the Crossroads, the leading mall in Mumbai. The company also established its outlet at the up market of Ansal Plaza a shopping mall in New Delhi. The main objective of the company in establishing and expanding in India is to participate in the growing retail business as the retail sector of India has been witness in the significant change. The garment collection of the company in the said country is designed in order to build an everyday wardrobe as well as the garments that will serve as a source from all over the world (Ministry of External Affair, India n.d.).
The company is also planning to establish their 50 new stores in India in order to take advantage of the fast-growing Indian market. The company has agreed for £29 million joint venture with the Indian retailer Reliance Retailer in order to establish its name as the major Indian brand (Breaking New.ie 2008).
The main reason of the company in expanding in India is due to the fact that according to the prediction of analyst, the Indian market will become the fifth largest consumer market in the year 2025. The management consultant McKinsey also stated that India will be having its 350 million consumers by 2015. The said number is considered as a huge increase in terms of the sales of the country (Breaking New.ie 2008).
The company will own the 51% of the joint venture with the Reliance that will handle the different stores that will sell different clothing lines as well as homeware. The said retailer has already 14 stores in India that are under the franchise arrangement but its present will move up a gear in order to follow the tie-up (Breaking New.ie 2008).
Porter’s Five Forces
Figure 1 Internal Analysis of Indian Expansion of Marks & Spencer
Figure 1 shows the internal analysis of the international expansion strategy of the company in India. The Five Competitive Forces was developed by Michael Porter and published in his book Competitive Strategy: Techniques for Analyzing Industries and Competitors during 1980. It had become one of the most important tools that are used in analyzing the industry structure of a given organization in their strategic processes (Recklies 2007)
The model focuses on the possible events that might happen and that will help the company to shape their corporate strategy in order to meet the different opportunities as well as threats in the outside environment (Recklies 2007). It will also help the company to know more about the possible changes that they might encounter and might be manage in order to use the opportunities to the fullest.
India is considered as a very exciting opportunity for the company because the company has a very high potential to become the major retailer brand (Breaking New.ie 2008).
Threat of New Entry
There is a big chance for the company to have their competitors in the industry of retailing in India. That is due to the fact that huge companies from different part of the globe that are into the same sector or industry of Marks & Spencer such as clothing, homeware as well as food, will be able to take advantage of the increasing popularity as well as increasing demand of the Indian market.
One of the major advantages of the company is that it had already established its name in the world market. It means that due to the fact that during its operations for a long time, it had been able to show its quality as well as relationship with their customers that had enabled them to gain the trust as well as loyalty of their customers.
The company is also using their different machines as well as innovations that will help them to maintain the quality of their product and maintain their good relationship with their customers.
Just like any country, India is also implementing their different policies as well as procedures in order for the foreign company to follow. There are different entry strategies that can be used by the foreign investors in order to enter to the market of India. It can be a wholly owned or the joint venture. The rules and policies that the Indian government is implementing can serve as an advantage of the company due to the fact that it can limit and prevent the entrance of other companies in the country in the same industry.
The culture, tradition as well as the preferences of the customers in India can affect the different strategies and marketing activities that can be done by the company. This is due to the fact that it can affect the impact of the brand to the consumer that will later on affect their brand name as well as their overall performance in the country.
The consumers or the market in India can be considered as price sensitive. The desire of the customer for a certain brand is being affected by his or her reluctance to pay the premium price which the brand is asking for. The said behavior of the Indian customers can be seen by the switching attitude of the customers when a certain promo had been posed by the competitor of a certain brand. The said situation is most specially observed in the middle class consumer of the country (Titus 2007).
Most of the consumers are feeling no doubts or uncertainties to switch from one brand to another, if they will be guided by the increased value perception, and it can be offered by the different discounted brand (Titus 2007).
Furthermore, the culture of the Indian people can also affect the strategy of the company when it comes to the designs of their clothing as well as fashion. India is considered as the land of culture as well as heritage. Different people have their different tastes that are the result of the different likes as well as dislikes in their fashion sense and references. The fashion sense of India is being influenced by the background or history as well as the culture of its people. In addition to that, the said country is also well known in the world as the one that shows their classic fashion styles (cited in MSN Life & Style).
In terms of competitive rivalry, due to the fact that the country is one of the most promising market for the retailing industry in the world. That is why there are many companies that are planning to invest in the said country as part of their international expansion strategies.
Another important thing is that, the product that the company is offering is also being offered by other retailing companies or stores in the said country. The primary edge of Marks & Spencer is that it had already built its name in the international market.
The customer can switch from the brand of the company to another; again this is affected by the culture and behavior of the customers with regards to their sensitivity towards the price of the product. The buyer has the full power to switch to other product due to the fact that the product that the company is offering is just like the other.
Due to the fact that the company had been in the industry for a long time, the company had already established its strong relationship with the suppliers. Due to the fact that the company has different suppliers from different part of the globe, their supplier of the company is not that high that can affect the performance of the company. In addition to that, the company can switch from to another supplier.
Threat of Substitution
In terms of the clothing aspect of the company, it can be affected by the textile industry. It can be affected by the increase as well as decrease in the price of yarn, cotton and textiles in the world.
A garment firm cannot set the price of its products or garments until it is not sure about the price that the textile firm would change over its products or textiles. This is due to the fact that the textiles are the inputs of the garment firms (Gupta 2004, p. 325).
There are many issues that are incorporated in the strategy of the company in their strategies in their marketing as well as management. In terms of management, the management style that is being used by the company is applicable in order to maintain the relationship between the company and the customers. Another important thing is that it also enables a strong relationship between the management and human resource that is considered as the most important aspect of the company because it serves as a link between the brand and the customers.
The centralization process of the company is important due to the fact, that it enables the company to work according to the general standard of the company that can help them to maintain the quality of their product. The primary disadvantage of the said process is that the company is forgetting about the impact of the differences of the culture, preferences as well as taste of different customers from their different stores in different countries. The centralization of the company can affect the performance of individual store that will eventually reflect the overall performance of the company in the world market.
In terms of the plan of the company in their expansion in India, there are many factors that must be considered by the company in implementing their different strategies in terms of management and marketing.
The company can take advantage of their brand status in the global market. Due to the fact that the company had already built a strong and famous name in the global market, it can create a great impact to the customers in India. Unfortunately, the company is facing different socio-cultural factors that might affect its brand. First is the price sensitivity of the Indian market. Marks & Spencer is known in other countries such as Philippines as one of the most expensive line of clothing or fashion brand. The said strategy is a turn off for the Indian market that is why the company must consider the said behavior in order for them to give their customers a high quality product but at reasonable price.
The company can always make use of different discount strategies in order to catch the attention of their target or prospect customers. They can also implement different marketing strategies such as point card that will keep their customers coming back to their store.
Most of the foreign players and investors in the market of India had already understood the importance of becoming an aspirational brand as well as becoming of the brand that understand the needs and demand of the consumers for low price (Titus 2007).
The company can also offer their loyal customers some discount that can help the company gain more customers. In addition to that, it can also help the company to prevent switching from happening.
Another important aspect that must be focused by the company is the different culture of Indian people that might affect their preferences and taste for fashion. The company must not only focus on the needs of the women in terms of clothing aspect. The company must also make sure that they are giving attention to the demands and needs of their male customer. This is due to the fact that male customers are also into shopping and clothing in India. It is important for the company to consider the cultural background of Indian people when it comes to clothing, the company can apply the said culture in order to create their own line of clothing or fashion that is somewhat European but the touch of the culture of India will stay.
The said strategy will help the company to be more connected to their local customers by making them feel that the company is considering their preferences, tastes and culture.
The company must also continue its R&D process as well as innovation processes in order to make sure that the company will be able to offer their customers something new in often manner. The said activity can help the company to maintain their position in the market as well as build a strong brand loyalty towards their customers. The said activity can also help for the development and improvement activities of the company in terms of helping their services and customer relation to progress.
The company must also focus in their marketing strategies by joining and sponsoring different events in the said country. This is to extend their effort in linking their brand to their customers. It can also add to the popularity of the company in the said country.
Marks & Spencer can also add their corporate social responsibility. They can continue their effort for environment friendly processes and transaction as their help in maintaining the life of the environment. The said strategy can help the marketing processes and activities of the company. It can serve as a strong marketing strategy for the company in order to gain the attention as well as the loyalty of their customers. Furthermore, the company can also establish different social awareness organization that will help those Indians who are in need.
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