Case Study: Marks and Spencer
Case Study: Marks and Spencer, Ltd. (A) Marks and Spencer has a reputation of greatness and quality in the U. K. Their five tenets of operating principals are the cornerstone of the company’s strength in the industry. They fostered strong human relations with its customers, suppliers, and staff through offering selective range of high-quality merchandise at reasonable prices, encouraging suppliers to use top-notch modern technology, growth, and cooperation to enforce the highest standard of quality.
Breaking down Porter’s Five Forces identifies the competitive forces in Mark and Spencer: 1) Suppliers: M&S is not dependent on suppliers as other stores are, due to M&S producing and selling its own branded products. Raw products are supplied, which is an advantage for its margins. They have an astounding and long (some relationships dating back to 40 years) reputation with their suppliers, which allows for discounts. 2) Buyers: Buyers have a substantial influence by shopping around, forcing M&S to continue in supplying high quality garments and food products at reasonable prices. ) Threat of Entry: Even though M&S has a very loyal customer base, online shopping was just at the early stages in the early 1990’s along with other super markets establishing a one-stop shop for all customers’ needs. 4) Substitutes: Threat of substitutes is high due to buyers’ looking for cheaper alternatives in other competitive outlets. Also, because M&S focused on essential clothing, and less on fads or trendy lines, competitors were quicker to react in offering more trendy clothing lines. ) Competitive Rivalry: M&S has fierce competition from other food, clothing, and home wares retailers; such as supermarkets Tesco, Asda, and J. Sainsbury. Due to M&S commanding market strength in the U. K. , M&S expanded overseas. They had shared success in other countries, but also were also presented with challenges. For instance, France viewed M&S brand as old-fashioned. Looking at Exhibit 13, the market share of clothing and footwear by age group were as followed: 15-24 age group (5. 9%), 25-44 age group (13. 9%), 45-64 (21. 3%), and 65+ (23. 6%).
M&S focused on getting more of those younger buyers into the stores where they see first-hand the service they provide; but if M&S focused less on fad and trends (which is attractive to the younger demographic) the efforts in marketing are wasted. Out of the five locations in France, only Paris was showing promising performance. With M&S strong performance in U. K. , it can’t expect its brand presence in U. K. to spill over to other countries. As noted, M&S never reached its full potential even though it acquired/purchased interests of other department stores.
What if M&S invested more into marketing and “perusing the public to buy” instead of just relying on the products to sell itself? What if M&S invested more into clothing lines that follow trends and fads, to tap into the younger demographic? For instance, take chains such as H&M or Forever 21: offering affordable trendy clothing that cater to younger buyers. M&S can still offer well-designed and quality clothing lines, but now attract the younger and older buyers that are into trendy fashions; but it is very crucial they don’t abandon their loyal customer base.
What if M&S closed stores that had small market share and minimal profit (some territories in Austria and West Europe), and invested more into extending the market share in other countries? Also, during the 90’s, the world-wide web came into existence along with online shopping, allowing M&S to extend its services and marketing (which I was surprised there was no mention of it in the case). Source: Marks and Spencer, Ltd. (A) (1994). HBR 9-391-089, by Cynthia A. Montgomery