Analysis of Marks and Spencers Marketing Mix Executive Summary

Analysis of mark and Spencers work mix in Executive Summarytag Spencer is virtuoso of the close to historied and oldest retailers of Britain. It was put in 1894 through the brotherly functionnership of Michael tag and Thomas Spencer. The outset barge in was opened in Manchester and the come with was based on prime appraises emphasizing on high quality, value for m unrivaledy, service, innovation, and trust.Due to these corollaries, the agreement experienced a great conquest which led to national and humanness(a) expansions. Today, it is unrivalled of the largest clothes retailers with 895 stores in to a greater extent than 40 countries just near the world. Its withal listed on the London stock Exchange and FTSE 100 index.The federations current briny products take clothes roll out, home w be and forage products with a release undulate of a function of more(prenominal) than than than 2000 suppliers glob anyy.Nevertheless, the company started facing pro blems collectible to the various reasons such(prenominal)(prenominal) as outdated dash products that were non on par with the mood trends. This was primarily due to the fact that it lost focalisation on their primeval business by introducing a wide range of products that were not congruous with their core competencies. This led rivals to steal the mart sh are.In order to take on these issues MS immovable to move into the Chinese market where they saw reveal and wider opportunities.Why Chinese market?mainland mainland chinaware is the worlds third largest economy (behind the ground forces and Japan in US$ terms) and the country has the largest population of 1.3 billion (in 2008) qualification it hotshot of the fastest growing economies.When the recession hit the worlds economy and the stellar(a) retail markets care US and Europe the companies were odouring for opportunities to expand and beam the risk. China was integrity of these markets that were not affected by the stinting downturn. In 2009 its retail sales hit 12.5 trillion ($1.8 trillion), an sum up of 15.5% from the previous year. This was due to the continuous rise in the akin(p) year of the per capita disposable income which summationed to 17,175 ($2,515). http//chinabusinessre run crosswise.net/ man/1005/lu.htmlIn 2008, MS opened its flagship store in Nanjing Road, Shanghai. However, the outcome of this approximate was not as roaring as expected due to nigh(prenominal) problems ranging from product incompatibilities to superstitious beliefs.The jump section of the paper highlights the current monetary assoiling out of the company. This is fol disordereded by an exploration of the problematic marketing mix that contri stilled to the hardship of the firm in China. After which, recommendations volition be provided for MS to riding habit as a turn around strategy.othman monetary highlightsThe fiscal and avocation performance is the measurement of the directs of a firms policies and operations in monetary terms. These go a appearances are reflected in the firms return on giftment, debt to equity ratio and many a(prenominal) early(a) ratios (Dictionary, 2010). A ratio is one value divided by both(prenominal) other. The resolving power is representative of the value of one quantity in term of another (Ross, Westerfield, Jordan, 2006). During this section the light provide be put on the fiscal aspect of label and Spencers business to assess whether its financial situation is capable or if thither is any loopholes that the company might have to hire in the hereafter(a). For a matter of better downstairsstanding, the financial headstone performance indicators will be compared to TESCOs ratios.IncomeFrom these figures, it screw be seen that tag and Spencer has be stepwise increasing its net revenues. However, even if they increased, its net income and earnings per share decreased. This tidy sum be explained by the investments that ha ve been carried out by the company to shed light on its internationalization strategy. Not totally of these investments have been successful as some did not succeed like in France for instance where the company decided to close all its stores and exit the market. thusly, they abandoned their opportunity to expand in France but the cost to exist was relatively expensive mainly beca social occasion of the grok force protection by the French Government ( world-wide Oneness, 2010).Revenue by regionStock performanceRatiosIn short term solvency, it move be utter that the company is managing normally its activities in an in effectual way. Indeed, if it was to expect its short term debt immediately, the company would just be able to cope around 80% of them. If Tesco is taken as an example, its current ratio is 345% (Yahoo Finance, 2010) which federal agency that Tesco is more secure financially than tag and Spencer. Thus, investors would be willing to invest more in Tesco. This sit uation overly sp need bad human activity for the company in its financial circle which bottom of the inning have the movement of decrease the investing power of the company.Regarding the long term situation, the level of Asset-to-equity and Debt-to-equity ratios bod that the company have a large part of its assets financed by Debt. Consequently, it highlights a high level of financial leverage, approximately 64% which is supported more by the debt ratio.Problematic areas of Businessnafisa selling mix PorductClothingIt is pivotal in forge industry to take out the product right. In the onetime(prenominal) decade, MS had downturns of business and shop image relate to its apparel acquire old fashioned. Although analysts say they have recovered, they seem repeating product mistakes in Chinese market as well. Experts in fashion, have identified key issues that whitethorn lead a fashion product to fail. agree to capital of Mississippi and Shaw (2009), here are the common r easons why fashion products fail brusque or outdated design wretched sizing or cash in ones chipsunfashionable or irrelevant styles/prints/ coloringspoor positioning or in-store presentationpoor value or un private-enterprise(a) pricepoor or non-existent consumer awareness of the product and/or its availabilityhyper strong competitive offers elsewhere.Researches and analyses on the MS expansion to Chinese market indicate that all above points were relevant to their products.4.1.2 SizingEach clothing retail brand has its basic pattern block that probably has been made after study tar rent groups measurements and taking the average from that. label Spencers typical apparel client is a woman after 40s who prefers comfortable fit and quality. This has affected MS fashion and sizing as well. Customers complain MS habit and underclothing are larger compared to the same sized item from another shops.In mass production of several thousands of pieces of garments, shrinking the measure ment in to un detectable 1 cm may get ahead noticeable reduction in cost. Therefore fashion is created according to feasibility, cost effectiveness of the designs and it is influencing the way change state fit and the sizing as well. The reason why MS clothes seem greater compared to cheaper rivals is actually can be explained by the philosophy of not compromising on quality.Average size in Chinese apparel industry is smaller than European size in all(prenominal) dimensions. It is shorter sleeves are 2 inches shorter, sizes up to 16-18. In Europe it is up to 26. When a fashion retailer enters a new market, it is important to research consumers sizes, personify structure, and culture. Because these things influence nations fashion tastes and clothing culture.Style and FashionIn the Chinese market, MS offering large size garments that pleased expatriates who struggle to pass their size in shops, which target average Chinese women. However, Chinese customers showed in truth low interest, as the clothes are in addition big and overly simple.MS is a department store that tries to meet the needs of all age groups with divers(prenominal) needs. Where as competitors try to focus on one segment and one fashion concept and thitherfore perform effectively. The brands affliction of drawing young Chinese mickles trouble could be due the chastisement of E trulything for all positioning in general. Fast fashion requires the retailer to focus on certain, preferable well-specified segment (like Zaras, classy chic over 20s). may be it is time for MS to give in-house brands independence and expose number of different brands, keeping MS just a store name.diversify products result in bigger and slower supply chain. Because competitors are adopting efficient and quick product turnover, smaller and faster batches, MS clothes, when arrived to stores cannot stand the competition. Costumers take a chance them out of fashion.Brand value is a key for success in fashion industry. Fast pitiable, better-positioned and low price competitors are jeopardizing brand value of once famous clothing retailer with heritage. Celebrating its 125 birthday, MS resembles old generation fashion and in store brands and young celebrities utilise as brand ambassadors not lot to attract 20-25 year olds although they are helping to retain more customers whod switch to competitors otherwise. concord to research by Datamonitor, more than 75% of shoppers in the food halls of MS, are over 45. In the fashion department the problem is worse 65% of its main clothing shoppers were older over 55, as were those who accounted for 48% of spending on MS clothing finish year. (http//www.guardian.co.uk/business/2009/nov/22/bolland-marks-spencer-problems )hassanFoodLimited range and dour action food products mark and Spencer has been criticized by its Chinese customers that the food products in shelves were produced a long time ago from the date of purchase. So there is only a small portion of fresh products and withal the range and variety is limited. Majority of products are approaching towards expiry date. The food items keep preservatives that effect taste of products.Further research shows that a large amount of products were destroyed due to expiry, spoilage and bad conditions.Almost all products are made in UK so this leads to customers perception of Marks Spencer as a British store.Research shows that the main reason for above mentioned problems is that Marks and Spencer imports its products from UK. It takes a significant time in shipment of niftys from UK to China due to overdone supply chain cycle involved. A portion of products is deteriorated due to inefficiencies in handling, storing and transfer of training procedures.Branding issueMarks and Spencer brands all its products under its switch over name MS. this brand name appear strange to Chinese concourse and they have translated it into a Chinese term. Also this brand name has no d irect linkage with products.This is due to company policy towards branding and trends in UK market as much of retailers such as Tesco brands their products under their trade name.4.2.3 Packaging issueMarks Spencer customers are finding product packs misidentify and misleading. Research reveals a customer complains that he bought a packet expect it to be biscuits but when he opened it were snacks.The above problem is a result of standardized strategy towards packaging and labeling. The labeling misss Chinese description and overly rich in text and without product images.othman foodstuffing Mix footingWhen setting the price of a product, the company must understand short its cost and the customer value perception for the product (Armstrong, Harker, Kotler, Brennan, 2009).Marks and Spencer did for sure understand these points when operating in UK and in other successful countries but not when it came to China as the company failed to set the price correctly. Normally, the pri ce the company charges will fall somewhere amidst one that is in like manner high to produce any demand and one that is too low to generate any revenue (Armstrong, Harker, Kotler, Brennan, 2009). These are the extremes and Marks and Spencer leaned far too much to the high price end. As a result, the company install it very hard to sell its product and generate profit for a viable business in China.One example would be the cashmere scarves that Marks and Spencer was selling or pretending to sell, as no one bought them, at 50 where it was possible to get them for far less at close stores (Moore, 2009).However, in some cases the prices of products were convenient but the customers nonoperational did not spoil them. The reason is primarily that Marks and Spencer did come late. Indeed, Wal-Mart and Carrefour were there originally and had more than enough time to impose their respective brands and enjoy the lions part (Crabbe, 2010).Marketing Mix PlaceWhen entering a new market, one of the crucial decision that a company has to make is choosing the right fix to open in. indeed, the stance is one of the key factors to a business success first basely due to of being the least flexible of the strategic retail issues and secondly, because the location set the geographical boundaries of the trading area from which the store draws its customers (William Ferrell, 2010). As a result, in the chase paragraph will discuss the problems cogitate to the Marks and Spencer stores in China.Marks and Spencer has opened since 2008 two stores in China, one in Huaihai Road in Shanghai, the equivalent of Londons Oxford Street (City Focus, 2010). And the other one is in Yuyuan Garden, Shanghai major attraction and commercial hub (City in pulse, 2010). These stored, peculiarly the first one, has suffered poor trading in the last months. This was due to many factors but the discussion will only focus on location related issues.The first issue concerning the location was the first store opened. Marks and Spencer had chosen one of the most popular streets in Shanghai because it cute to show its brand reputation and refined stores. But at the same time, the company wanted to expand quickly and as a result the store was not ready to welcome the new Chinese customers. Indeed the walls were scuffed and the paint job was poor (Moore, 2009). As the old adage confirm, the first impression is the last impression and by failing to make a good one in the Grand opening of its first store, Marks and Spencer condemned itself of having a bad image in China.The second issue was that the company underestimated the differences in operating in China and Hong Kong, therefore using the same strategy to find the store location in China. Indeed, Sir Stuart Rose admitted to the Financial Times during his visit to the Shanghai store that Marks and Spencer did misunderstood the Chinese mainland market, assuming that its experience in Hong Kong could be directly transferred to t his market (News, 2009).vaishaliMarketing Mix PromotionBrand awarenessOne of the major problems with Marks and Spencers (MS) venture into China is the fact that many topical anaesthetic masses were not aware of the brand. In fact, one of the articles regarding MS in China talks somewhat topical anesthetic men saying weve never heard of this company. many another(prenominal) female shoppers in addition claimed to be unfamiliar with the brand. Although it is a well- cognise British company with many outlets overseas, it is fairly unknown amongst Chinas local everyday. This means that there is a lack of brand awareness and advertising as the locals do not have much knowledge of its history. As a result of this, many customers would not be instantly drawn to it as they do not recognize it. Lack of familiarity discourages large number to enter the stores which will inherently affect sales.Other issuestejaSupply chainGlobal supply chain management is an important area for MS in its expansion to China. Global supply chain management involves the companys worldwide interests. In Chinas expansion it is noticeable that the supply chain related issues are based on the following areas.TimingProper timing in approaching a market gives advantages for a company. For example first movers in a market evermore have advantages in gaining profits.Chinas retail industry has grown rapidly during the new-made history. The move of MS to China was taken during the recession.Even though China was less affected by recession due to its closed financial system, the worldwide demand for Chinese exports were decreasing. It was a time when cash strapped consumers were moving away from expensive ready cooked meals and trusting around buying the cheaper substitutes or else of the expensive.Luxury ready prepared meal that is the mainstay of Marks and Spencers offering.Marks and Spencer dont have enough flexibility to movetheir offerings at the time of abject to China. The result is loss of customers to competitors and it will become difficult to recover them when economic generation get better.Institutional Factors increase bids, government regulations, tariffs affects supply chains.When MS initially started the business in China the company had lots of difficulties in getting products into the country. Chinese custom officials blocked MS goods. This situation created discharge shelves in the food department of the store. (http//www.jddchina.com, 2010)Corruption and government bureaucracy sojourn a major issue in China. Business activities and financial related activities can take a lot more time than analyse with UK and the administration costs remain extremely high.The higher(prenominal) amount of control in the economy by the government creates policy uncertainty. This uncertainty exists as a major challenge for businesses operating in China.IntegrationAccording to the experience of successful international businesses in China such as Sara, HM and Tesco, it is necessary to take a long view in China. Existing products should not be transplanted into Chinese markets without making them localized.In the localization principle process it is necessary to have a proper integration with the local talents that can create better customer links.NileshSuperstitious beliefsAlthough China is one of the big and a great country in all the aspects of the world but still they have lots of superstitious beliefs. Marks and Spencer in china has suffered from these genials of beliefs.China has a main impact of Feng Shui. Feng Shui is widely used to orient buildings.According to the retail competitors of Marks Spencer the main store is at a cursed location of the city. This superstitious gossip was because just at the four days of opening of the Chinas main MS store there was a death of one of the man named Harshit Shah. He got killed accidently while trend over the side of escalator (The Telegraph, 2010).As MS is in China we cant neglect these things that could have been one of the reasons of the failure for Marks Spencer in China.Most of the Chinese people have some traditional beliefs about the numbers. They consider no. 4 is associated with the death so most of the times they dont even buy products that price starting or ending by number 4. They consider number 8 for prosperity and good luck. They in any case skip the 4th pedestal in many of the buildings. Different styles forms of the Feng Shui are often used to block or reduce the negative energies that occur.According to some believers of the Feng Shui the structure of the Marks Spencers store was wrong and that led think of superstitions as one of the problems for MS in China.RecommendationsnafisaMarketing Mix ProductClothingResearches show Chinese consumers are not familiar with MS brand. This gives an opportunity of positioning the brand differently than it is positioned in home country.The complex body part of store image, comprising both tangible and i mpalpable dimensions, compounds problems of moving into international markets as consumers in the host environment are less familiar with the intangible dimensions of image, which have been built up over time with exposure to the retail company. Retail companies therefore need to fully understand the importance of image in competitive positioning and the components of store image before attempting to echo this image and positioning overseas.Repositioning the brand can give a chance to reach the desired customer, 25-35 year old Chinese consumer with higher disposable income. With current strategy MS cannot be as successful in china as in the UK. Because older generation in China do not have high disposable income dissimilar their European peers. BCG researches indicated that Chinese consumer is very young.Although fashion has become global already, it still needs localization when entering a new market. Jessica Lo, of the China Market Research Group warns that occidental brands s hould not bank on Chinese consumers directly paralleling European and American shoppers when it comes to taste and aesthetic appetites. Many western companies forget to localise both their styles as well as advertising. They use celebrities and images that work in the UK and Europe, but that dont resonate with Chinese consumers. It is critical that companies get the right product selection and style and advertising image. (http//www.nzherald.co.nz/lifestyle/ tidings/article.cfm?c_id=6objectid=10650170 )Marks Spencer can increase its Petite range products and bring it to Chinese market with different, localized brand. When petite sizes are average, its better to replace the name, because it may sound offensive rather than just size attribute. It is recommended that MS researches fashion preferences, consumer behaviour of Chinese people and then create an in-house brand customized for Chinese market. Similar brand should be created for menswear as well.hassanFoodLimited range and lo ng life productsChinese people are very assured about their food selection because they link it directly to their good health and long life. So we recommend the following actions to be taken and implemented.Marks and Spencer should develop local production facilities so that products are produced and processed in china than importing from UK. So as a result people will get fresh products at best taste. This will to a fault change its image from a British retailer to a local manufacturer.Develop methods and improve conditions so the preservatives are not added in the products. This can be achieved by improving packaging, storage conditions and efficient supply chain and product replacement cycle.Re-engineer the import process so the inefficiencies in handling, packaging, storing and transportation are removed to ensure minimum wastage.The freshness and pureness (no preservatives) marks will be used for promotion of products as it is a successful recitation now days used by high p rofile food manufacturers. The company executives can perceive local production as a costly operation when comparing to demand but it will increase demand in long term by bettering product image. We can also export our made in china products to other faithful locations like India and other markets. It will also lower the cost and will drive prices in a competitive range.PackagingThe packaging is a core area of concern as it acts in a sixfold way by communicating product information and brand character. It is the first point of contact of product with customer so it should be loving in terms of design and colour. The Chinese link longness to long life so package should be designed in long shapes and the colour are also important. As they will be attracted towards red packs which is a symbol of prosperity and avoid using black colour as it is for bad luck.( http//chinasearch.co.uk/buy/marks-and-spencer/)Package should be functional and clear so it shows the true picture and nature of product. It should be convenient for Chinese people to open as they avoid cutting things with scissors and knives.Package should be well labeled about product, brand and all relevant information. Marks and spencer should label products using a bilingual approach. Using both Chinese language and English so it will be useful for customers to read all information they need. The label can be made more attractive and functional by adding Chinese recipes.othmanMarketing Mix costTo make the prices of products more affordable and competitive, one solution would be that Marks and Spencer improves its supply chain to reduce costFirst, by exploiting the technology in its stores by introducing hand held communicators to track clothes from the distribution to the sales floor which helps to know exactly what is in the stores. The result would be a more efficient and cost effective delivery systemSecond, by introducing a technology that consists of counting the number of items change by kind mechanically when the transaction is handled For clothes especially to know what items are better sold and what are the ones that have to be removed. other suggestion would be to carry out a consumer shopping experience research to know what kind of design Chinese prefer, and what products should go together in order to get rid of unwanted products and consequently reducing the cost of unsold goodsThe last but not least is to make enough space between clothes and food so that the stores looks more attractive thus reducing the concern about price.Marketing Mix PlaceAs it was said at the beginning, the location is the less flexible asset. Consequently the suggested solution will focus more on upcoming stores. The ideal location for these future stores would be places that people can access more easily, also MS should think about starting to open small stores to catch also the low volume buyers as this type of potential customers are willing to become loyal clients but are not going to bollix up time in a supermarket just to buy few items. For future stores, Marks and Spencer should approximate the relative ease if movement to and from the site, including factors such as pedestrian and vehicular traffic, parking and transportation (William Ferrell, 2010). The company should also evaluate the characteristics if the site itself types of stores in the area and the visibility of the lot under term (William Ferrell, 2010). One last thing to do is to look for compatibility with neighboring stores merely because stores that complement one another draw more customers for everyone (William Ferrell, 2010).vaishaliMarketing Mix PromotionRe-branding and Corporate Social Responsibility (CSR)Due to the fact that the company has been battling with bad press and negative public views due to several reasons such as offering products that do not cater the needs of the market, lack of products, providing wrong sizes and superstitions due to the occurrence of a death during the opening week, MS needs to re-brand itself in order to move away from the negative connotations, rescind the past image and start afresh. This can be done by changing the store look and layout. It should have colours and products that exude sonority and freshness. The MS logo should be re-designed in order to bring a sense of novelty. The focal signboard outside the store should grab caution and be vibrant. It can be designed with neon lights and a different shade of green, together with black in order to make it look noticeable. The window displays should also be creatively designed with mannequins dressed up in vibrant colours and innovative designs. The arrangement should grab cast off of the passerbys interest, especially the female youth- which will be MSs new target market. Although this is an advertising technique, it primarily falls under re-branding the store and giving the brand a new image. All these efforts should be concentrated towards recreating a store that d oes not remind the customers of the old store or their views of it- it should feel new to the customers and help develop positive impressions.Another way of erasing bad memories and creating a positive image in the minds of the public is by engaging in CSR (corporate social responsibilities) activities. MS should consider taking up a project that can prove to be full for Shanghai and its people. One such way is by engaging in charitable causes that help raise funds to help out some of Shanghais poor population. Such activities should have proper news coverage so as to disseminate the message amongst the people about MSs good, unselfish deed. This will help change the minds of at least some of the people and help develop an optimistic view of the brand.Increasing brand awarenessDue to the fact that many people were unfamiliar with the brand, MS should engage in heavy advertising. It can include various mediums, some suggestions for MS are as follows Television This is the most succe ssful way of reaching mass-market, especially in China where it is very popular. MS should consider buying slot times during programs that have the highest viewership. For example, the China Central Television (CCTV) claims to have 600 million viewers for its daily evening news- making it the most watched news program in the world. Adverts can also be shown during the running of popular programs like the Spring Festival runaway (one of the highest rated show in China), Fashion China (on Gungxi TV, which shows the highlight from fashion shows around the world- also one of the top-rated shows) or during famous soap operas like Wo Ju. MS should create eye-catching ads with catchy tunes and cool graphics and also make use of famous local celebrities like Yao Ming, Zhang Ziyi and Jay Chou to establish a connection with the local people. Famous international celebrities, like David Beckham or vocalizer Rihanna, can also be used for TV ads to catch the attention of the expats, and these ads will still manage to get the attention of the Chinese people who also like and recognise them (celebrity branding). Print advertising Newspapers are also Chinas most popular advertising medium. Papers like Jiefang Ribao (Liberation Daily) and Jingji Ribao (Economic Daily) have high readership rates- nevertheless, these are mainly read by the on the job(p) class people. In order to reach out to the youth market, MS can advertise in the popular Chinese Youth clipping known as Zhongguo Qing Nian Bao.Popular female magazines like Elle China or Harpers Bazaar China can also disport MS adverts and it will help reach out to middle-upper class women elicit in fashion.Also, television-based brochures also have high circulation rates. MS can feature its ads in the Shanghai Weekly Radio Broadcasting and TV known as Meizhou Guangbo Dianshi, which has a circulation of 2.8 million in Shanghai. Online advertising This is the usage of the knowledge base Wide Web in order to get the messag e across and build interest for your brand. In China, 1/3 of the population is found online, this makes it the second largest internet community in the world. Internet is a good way of reaching out to young people, and this is important to note as they will be MSs target market for the clothing department. In China, Facebook is not as popular as websites called QQ and 360 Quan (Chinas largest social networking sites). Whereby companies today are creating facebook pages to reach out to the youth market (e.g. Burberry), MS should try and join the aforementioned sites to create awareness, inform the youth about the brand and its products and encourage them to buy them. This is also a good way to connect with the