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Case Study Analysis: Mar ks & Spencer

MKTG 3179: E-Marketing


Dr. Anshu Arora



Reginald G. Walker, Jr.
February 17, 2012


Marks and Spencer Background
Marks and Spencer was founded by a partnership between Michael Marks and Thomas
Spencer in 1884. Marks and Spencer company values are quality, value, service, innovation,
and trust. They are one of the United Kingdoms leading retailers, with over 21 million people
visiting their stores each week. According to Michael House, Marks and Spencer 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 (House, 2012). Today, Marks and Spencer has over
450 stores located throughout the United Kingdom, 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
Marks and Spencer is the number one provider of womens wear and lingerie in the
United Kingdom and M&S is rapidly growing their market share in menswear, kids wear and
home; due in part to their growing online business. Overall, Marks and Spencer clothing and
home ware sales account for 49% of their business (Marks & Spencer, 2011). The other 51% of
their business is in food, where they sell everything from fresh produce and groceries, to partly
prepared meals and ready meals (Marks & Spencer, 2011). In addition, Marks and Spencer is
also known for their green eco plan because of a five-year commitment that includes becoming
carbon neutral and send no waste to landfill.

Cause of Marks and Spencer Problems
Marks and Spencer profits peaked in financial year 1997/1998. At the time, it was seen as
a continuing success story, but in 1999, the company suffered from an economic slowdown, and
the loyalty of its customers decreased. The rising cost of using British suppliers was also a
burden, as rival retailers increasingly imported their goods from low-cost countries (Antelope &
Veryard, 2004). Marks and Spencer's refused switching to overseas suppliers undermined a core
part of its appeal to the public. Another factor was the company's refusal until 2001 to accept any
credit cards except its own charge card. These factors combined to force Marks and Spencer into
an unexpected market decline which took the company, its shareholders, and business journalists
by a sudden surprise.

Marks & Spencer Solution
Due to the economic slowdown, Marks and Spencer implemented several programs that
include security, warehouse management, merchandise receiving, inventory control, speeding up
the supply of fashion garments, and collaborative commerce.
Marks & Spencer launched an online shopping service in 1999. Marks and Spencer
realized that survival in the digital era depends on the use of information technology and
electronic commerce. Electronic commerce is the process of buying, selling, transferring, or
exchanging products, and services, via electronic networks and computers. In 2001, with changes
in its business focus such as accepting credit cards, the introduction of the "Per Una", which is a
type of dress designed by George Davies, profits recovered and Marks and Spencer recovered
some of its market share, however it was evident that problems remained.
Marks and Spencer initiated several EC programs that were stated earlier. M&S
electronic sells consisted of shoppers purchasing their merchandise and paying online, and
receiving the merchandise the next day; some products were at a lower price online than in the
physical store. M&S security system tracks transaction data in real time, looking for fraudulent
events. If any fraudulent events are discovered, the system alerts the store security. M&S
warehouse management system was installed to assist decision making on inventory
replenishment, which was also available to the companys logistics service providers, who run
the warehouse operation and deliveries.
Merchandise receiving became automated which made it faster and free of errors to
process orders and invoices. Information about arriving goods is sheared automatically to both
the warehouse and the stores. Inventory control improved customer relationships because
customers can find what they want because replenishment is done quickly. Marks and Spencer
using special software, merchandisers can access and change allocation plans from any computer
anywhere at any time in response to changing demand patterns. Marks and Spencer collaborative
commerce make more accurate forecast demands to its suppliers for fast delivery of goods, often
directly to the Marks and Spencer retail stores. The new information system enables Marks and
Spencer to work with suppliers to reroute merchandise to different depots and change allocations
to where they are needed.
Similarly, Amazon works hand to hand with Marks & Spencer to provide a better
electronic commerce program. Due to Marks & Spencer being such a mature company, they lack
intelligence of modern day technology and advertising. Subsequently, this is where Amazon
comes into the picture because they are an ecommerce company that focuses precisely on selling,
distributing, transferring and trading goods and services online. Amazon helps Marks & Spencer
to modernize their business strategy and attract todays generation. Amazon actually supports
and operates a variety of retail web sites like Lacoste, the NBA (National Basketball
Association), Bebe Stores, Target, et cetera along with, of course, M&S (Laudon & Traver,
2008).
Some of the benefits Marks and Spencer derive from e-commerce, which are benefits to
company and consumer. Benefits to company includes global reach, cost reduction, supply chain
improvements, extend hours of service availability to customer, rapid-time-to-market, efficient
procurement, improve customer relationship, and up-to-date stock availability in company.
Benefits to consumers include instant delivery, information availability, and cost reduction,
benefits to the public and higher standard of living.
The internet has emerged as a major worldwide distribution channel for goods and
services. Expanding the communication framework to the internet, Marks and Spencer was able
to bring their customers into value chain. If a United Kingdom customer orders their product
through online, they will receive their relevant product within one day. The online shoppers are
instructed to provide the Universal Product Code (UPC) of the relevant product, and then the
company will provide the product to the customer as they seen in the physical store at a lower
price. Through this technique, the company reached the global market very quickly. Marks &
Spencer reach more people rapidly and allow direct marketing facility through internet.

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 was often attributed to understanding 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
Not introducing up-to-dated fashionable clothing to keep pace with the environment
The use of local British suppliers
Some competitors are using overseas suppliers to keep the costs down
Opportunities
Go global to improve and expand its business
Consider more overseas supplier that will actually give them cost advantage, rather than
local suppliers
Maximize the use of available technology to improve their functioning and to gain
competitive advantage.
Threats
Gap, Oasis and Next, who are offering similarly priced products yet more fashionable.
Discount stores like Matalan and George range at Asda.
Tesco and Seinsburys who moved into offering added value foods, which had been
pioneered by M&S.

Conclusion
The Marks and Spencer case points out the problems that a company may face
internationally. Despite a substantial research before beginning international operations, Marks
and Spencer 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 or to misinterpret information. Marks and
Spencer 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. Marks and Spencer has changed
operations based on its experience and is now doing well in most of the foreign locations that it
operates.














References
Antelope, P., & Veryard , P. (2004, April 03). Marks and Spencer. Retrieved from
http://www.users.globalnet.co.uk/~rxv/companies/mks.htm
House, M. (2012, J anuary 07). Marks and Spencer - company profile, information, business
description, history, background information on Marks and Spencer. Retrieved
from http://www.referenceforbusiness.com/history2/68/Marks-and-Spencer-p-l-c.html
Laudon, K.C. & Traver C.G. (2008). E-Commerce: Business, Technology, & Society,
Second Edition (Hardcover). Retrieved from
http://ecommerce-land.com/history_ecommerce.html
Marks & Spencer. (2011, February 12). Marks in time our M&S heritage. Retrieved from
http://marksintime.marksandspencer.com/Welcome?mnSBrand=core