Strategy in Practice_Marks & Spencer

1
Strategy in Practice Individual Assignment-Marks & Spencer
Tzu-Wei YEH
Structure-Conduct-Performance (SCP)
External shocks
Technology
Technology intensifies the competition of retail industry, and when product differences are hard to
distinguish, services become more important.
Owing to the progressive technology, such as internet, RFID, and other software system, retailers need to
use technology properly in order to become more effective and efficient in this industry. Technology not
only changes purchasing behaviours, but also the processes of delivering products. Retailers can access
customers’ information far easier through the internet, and those who know how to use it can create
competitive advantages by offering better services.
 Amazon.com uses data analysis to predict customers’ needs before they realize, and ship those products
to the warehouse near customers’ location in order to deliver them more efficient.1
 Retailers use smart phone apps to create a reactive campaign
 ASOS uses a user-friendly checkout process to decrease the cart abandonment rate of online shopping
by 50%.
 Through consumer behaviours survey, ASOS only ask new passwords from new buyers rather than
creating a new account with other personal details, and it progressed over half its new customers to
checkout.2
1Packer, G. (2014) Cheap Words.The New Yorker.[Online]. Available at:
http://www.newyorker.com/reporting/2014/02/17/140217fa_fact_packer?currentPage=all (Accessed: 15 May 2014).
2
https://econsultancy.com/blog/8391-persuasive-checkout-best-practice-from-asos#i.cbrw6gyjdf7at2

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Tastes & lifestyle
Majority of consumer seeks for healthier life especially professionals, and it creates several new market
opportunities and potential threats.
In food industry, health consciousness is rising gradually in the past few years, and this leads to a
strong change on how retailers promote products and even how they produce. Healthier life not only means
choosing organic food and fewer calories, but also considers production processes and where those materials
came from. This change gives some farmer shops, local producers, and wild food market a great chance to
grow, but meanwhile it means lots of threats hit on big retailers. Therefore, it forces some chains adjust their
products and promotion to meet customers’ needs.
 In the 2013 online survey made by Horizon Research, shoppers said that they care about the place of
products produced and what was inside.3
 Organic products market grew by 2.8% in 2013, and especially the dairy sector strongly rose by 4.4%
on average sales in this category.4
 Small stores of Tesco recently followed its competitor Lidl to remove sweets from checkouts, and
avoid promote candies at children’s eye level.5
 Tesco has removed calories from their own products, including soft drinks, ready meals, and
sandwiches, in order to help customers make life healthier.6
 From Nielsen’s report, the amount of reduced-fat cheese products is growing about 11% every year in
the UK market.7
 Education is positively related to uality-consciousness.8
3
http://www.stuff.co.nz/business/better-business/8752043/Ethical-thinking-back-on-shopping-lists
4
http://www.soilassociation.org/marketreport
5
http://news.ca.msn.com/top-stories/uk-supermarket-tesco-removes-candy-from-childs-eye-view
6
http://www.bbc.co.uk/news/uk-27514077
7
http://www.foodbev.com/news/ingredient-trends-in-the-low-calorie-dai#.U39J3CjLpCE

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 NFC, full-time employment and having children are related to time pressure, and higher income is
associated with lower financial limitation and price consciousness.9
 Those people who believe natural products benefit themselves average earn $65,000 (about₤37,930)
and are about 40 years old.10
Women dominate most of spending on shopping, but men are more likely spend more on one item and have
higher loyalty to corporates.
From research, women control over half of spending, but meanwhile they are more price conscious. On
the other hand, male spends less time on search and comparing different products, so they are more likely to
accept higher price, if it is what they want. Moreover, the other male’s characteristic that might benefit to
retailers is loyalty. Overall, it is more worth to invest on male customers than females.
 Women control 65 percent of global spending and more than 80 percent of U.S. spending.11
 By 2014, the World Bank predicts that the global income of women will grow by more than $5
trillion.12
 Globally, they control about $20 trillion in 2009 annual consumer spending, and that figure could climb
as high as $28 trillion in the next five years. Their $13 trillion in total yearly earnings could reach
$18 trillion in the same period.13
8Aiìawadi, K.L., Neslin, S.Ä. and Gedenk, K. (2001) rsuing the Value-Con jmer: Store Brands ional Brand Promc.
Journal of Marketing.
10
http://www.ibtimes.com/heres-who-eats-natural-organic-foods-why-market-research-1437858
11
http://www.fastcodesign.com/1663594/women-dominate-the-global-market-place-here-are-5-keys-to-reaching
-them
12
-them
13
http://hbr.org/2009/09/the-female-economy/ar/1

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 From Melnyk and colleagues’ research (2008)14
, men are more loyal to organizations than women.
 Men are hunters, and they know exactly what they want or at least make decisions very fast.15
 From Kusum and colleagues’ research (2001), when people has higher loyalty to a store, they will have
lower price consciousness to store brands.16
 Women spend more than half of disposable income on clothing, and men spend their majority of
disposable income on socializing and eating out.17
Legislation
There is no relevant element found in legislation.
Structure (industry)
Economics of demand
Owing to the economic recession, market segments have separated to two main parts, those seeking for
cheaper prices or better quality.
Even though the economy started recovering from recession, this is not reflected in customers’
behaviour yet, at least not everyone. Due to the limited disposable income, many customers are seeking
better value for money, and they are willing to wait and search for better deals. In a 2014 research, it shows
that some of them would not shop until70 percent off sales. Nevertheless, from the change of market shares
of UK’s grocers, it can be seen those discount brands and high quality brands both grew from 2012 to 2013
when others fell by 0.1 to 0.3 %. It means there is another group of customers still demand high quality
products even with higher price.
14
http://www.customerinsightgroup.com/loyaltyblog/wp-content/uploads/2009/08/are_women_more_loyal_cus
tomers_than_men1.pdf
15
http://www.psychologytoday.com/blog/out-the-darkness/201402/why-men-dont-shopping-and-most-women-
do
17
http://www.femalefirst.co.uk/lifestyle-fashion/stylenews/Fashion+2012-260436.html

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 In 2012, the UK average disposable income per person per week dropped to the lowest level, ₤273,
since 2003.18
 The market share of upmarket and budget retailers increased in 2013, but middles’ dropped19
.
 From 2008, the economic recession, the limited budget forces consumer choosing discount deals, and
nowadays nearly half of consumers wait patiently for 70 percent off sales20
.
Comparison between UK and global market (data range from 2011-2014)
Segment
UK Growth(year) Global Growth UK Market Size
(USD)
Global Market
Size (USD)
Premium Food and
Grocery
8.5% 12.8%21
7.7 billion22
100 billion
18
http://www.bbc.co.uk/news/business-19060716
19
Anon (n.d.) UK retailers’ milk price war imminent?[Online]. Available at:
http://agritrade.cta.int/Agriculture/Commodities/Dairy/UK-retailers-milk-price-war-imminent (Accessed: 13 May 2014).
20Sakraida, L. (2014) Study shows shoppers won’t buy without 70 percent discount: realistic? Christian Science Monitor.[Online]. Available at:
http://www.csmonitor.com/Business/Saving-Money/2014/0108/Study-shows-shoppers-won-t-buy-without-70-percent-discount-realistic (Accessed: 13 May
2014).
21
http://www.interpack.com/cipp/md_interpack/custom/pub/content,oid,14821/lang,2/ticket,g_u_e_s_t/~/Glob
al_organic_food_and_beverages_market_to_reach_104_billion.html
22
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/315418/foodpocketbook-201
3update-29may14.pdf

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Affordable Food
and Grocery
2.9% 4.4%23
183.7 billion 4.2 trillion
Women Clothing24
4% 2.4%25
35.5 billion 630 billion
Menswear26
3.3% 2.8%27
20 billion 400 billion
Homeware
3%28
0.9%29
18.2 billion30
330 billion31
Furniture
0.8% 0.7%32
20 billion 380 billion33
Economics of supply
In order to satisfy different segments’ demands of product value, retailers start developing their own
brand products.
When the pressure of demanding lower price comes, more and more supermarkets develop their
sub-brand products in order to compete on price and value. Those similar products are separated into
different price range, such as premium, value, and saver. From supply chain perspectives, retailers increase
their bargaining power with their suppliers by greater volume. Through increase sales and reduce cost,
retailers try to capture extra profits.
 Around 7,500 of Sainsbury’s standard own label products are being revamped over the next year to
feature the new “By Sainsbury’s” label.34
23
http://pegasusagritech.com/hydroponics/global-food-market/
24
http://www.slideshare.net/dnzkrgll/uk-fashion-industry-clothing-retailers
25
http://www.reportlinker.com/ci02124/Women-s-Clothing.html
26
http://www.slideshare.net/dnzkrgll/uk-fashion-industry-clothing-retailers
27
http://www.reportlinker.com/ci02122/Men-s-Clothing.html
28
https://uk.finance.yahoo.com/news/uk-homewares-industry-led-john-000000411.html
29
http://www.technavio.com/report/global-homewares-market-2014-2018
30
http://www.retail-week.com/home/infographic-homewares-market-share/5041241.article
31
http://www.companiesandmarkets.com/News/Consumer-Goods/Homewares-market-in-the-UK-led-by-Argos-a
nd-John-Lewis/NI5824
32
http://www.researchmoz.us/global-furniture-market-2012-2016-report.html
33
http://www.prweb.com/releases/furniture_fixtures/office_home_garden/prweb9198664.htm
34
http://www.research-live.com/own-brands-vs-branded-products-%E2%80%93-which-ones-the-finest?/4005052.blog

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 Tesco offers products across its value and finest ranges, and Sainsbury’s pairs its basics range with its
taste of the different products.
 The own-brand market has observed significant growth in recent years, rising by 51.7% since 2007, to
reach £118.13bn in 2011.
 From Key Note’s research, it is shown that nearly 40% of total retail sales in the UK are now
represented by sales of own-label goods. This growth has been driven by investment on the part of
own-brand retailers, as well as new product development. 35
Industry chain economics-
High accessibility of information and rising client bargaining power caused a price war in UK’s retail
industry.
Thanks to technology and internet, customers are able to access lots of information from each retailer.
As the result, it forces retailers drop the price to the same level in order to protect their market share. In most
of competitive market, unit price has dropped since 2013, especially the affordable food market.
 Sainsbury and Co-op decree reduced the price of four pint bottle of milk from ₤1.39 to ₤1 in order to
match Tesco’s price36
.
 After Tesco reduced milk’s price to ₤1, Lidl promoted the same size bottle of milk for 95p.
 Mysupermarket.com website integrates price information of retailers.
 30% of online shopper who had abandoned purchases said because they searched a better deal
elsewhere.37
 UK consumers currently pay around 5% less for their basket of goods than citizens of the Eurozone38
35
https://www.keynote.co.uk/market-intelligence/view/product/10606/own-brands
36
Anon (n.d.) Sainsbury’s and Co-op wade into UK retail milk price war. [Online]. DairyReporter.com. Available at:
http://www.dairyreporter.com/Markets/Sainsbury-s-and-Co-op-wade-into-UK-retail-milk-price-war (Accessed: 13 May 2014).
37
https://econsultancy.com/blog/9692-uk-consumers-spend-25-of-disposable-income-online#i.cbrw6gyjdf7at2
38
http://www.brc.org.uk/ePublications/LGSL/files/assets/downloads/publication.pdf

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Trend of UK’s Unit Price39
Segment Change (%) period
Premium Food -0.02% Feb. 2013-Feb. 2014
Affordable Food -0.6%40
2013-2014
Women Clothing -0.06% Feb. 2013-Feb. 2014
Menswear41
23% Oct. 2013-Jan. 2014
Homeware 0.06% Feb. 2013-Feb. 2014
Furniture 0.06% Feb. 2013-Feb. 2014
(Price of homeware segment might drop because the price war of supermarket. Furniture is sold less in
supermarket, so the price might maintain higher.)
Conduct (competitors)
Marketing
Shopping conveniently and adding value draw attention in marketing mix, and participating in corporate
social responsibility activities becomes a popular method to enhance brand image.
Convenience is not only a trend on ecommerce, but becomes a general requirement of shopping
experiences. Large supermarket chains open smaller stores located in city centre, and they keep improving
delivery network to offer better services. Moreover, because customers increase their environment
39
http://www.ons.gov.uk/ons/dcp171778_354249.pdf
40
http://uk.reuters.com/article/2014/06/17/uk-britain-inflation-idUKKBN0ES0QI20140617
41
http://www.aliexpress.com/menswear-trends_price.html

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consciousness, these related topics become popular options to build the emotional connection with
customers.
 Smaller supermarkets are built in central of cities and busy locations, for example Morrisons Local,
Little Waitrose, and M&S Simply Food.42
 Online shopping systems and smartphone Apps are created by each retailer, for example M&S
multichannel strategy.
 ASDA built the partnership with TfL in 2013, and ASDA, Tesco, and Waitrose started offering
collection service at tube stations.
 ASOS offer free returns, free next day delivery on its website.
 Consumers of UK spend average 25% of disposable income on online shopping.43
 Adding individual’s value: M&S’s new campaign, Leading Ladies, emphasizes diversities of
individuals and the confidence of women.
 Adding life’s value: Waitrose’s TV advertises
 M&S rebranded itself as an ethical retailer, and has introduced the Plan A, including fair trading,
environmentally sustainability, and charity donation, since 2007.
 One of Waitrose Christmas advertisement used “The story of giving something back” to show their
corporate social responsibility, including donating to charities and supporting local community
projects.44
 The M&S’s sales of fair trade products increased over 80% from 2006/07 to 2011/12.
Capacity change
42
Smithers, R. (2012) Store Wars: Little Waitrose and M&S Simply Food. The Guardian. [Online] 16 March. Available at:
http://www.theguardian.com/money/poll/2012/mar/16/store-wars-little-waitrose-ms-simply-food (Accessed: 13 May 2014).
Thompson, J. (n.d.) Waitrose goes big on small stores. [Online].The Evening Standard. Available at:
http://www.standard.co.uk/business/business-news/waitrose-goes-big-on-small-stores-8545657.html (Accessed: 13 May 2014).
43
https://econsultancy.com/blog/9692-uk-consumers-spend-25-of-disposable-income-online#i.cbrw6gyjdf7at2
44
https://www.youtube.com/watch?v=pM960KbUnYk

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The boundaries of competition become vaguer and retailers have used their advantage to expand abroad
market in order to obtain better profitability.
Owing to online shopping and globalization, boundaries between different types of retailers and location
limitation are vague. This creates expansion opportunities for those retailers have special advantages like
effective operation, cost control, or well-known brand. On the other hand, because of UK’s price war, abroad
market might have better attractive environment.
 Amazon.com starts selling daily food including milk and eggs, and has one-day shipping service.
 In 2012 Next’s international sales grew from £33m to £54m.Next’s international online business
contributed £10m to profit with the expectation that their overseas online business will grow to at least
£70m in the coming year.
 The Arcadia group’s franchise business opened 127 new outlets in 2013. Overseas growth is
accelerating with a plan to open a further 161 new stores in 2014, with further markets expansion under
discussion.
 Debenhams international segment’s revenue grew 4.5% in 2013.
 UK consumers currently pay around 5% less for their basket of goods than citizens of the Eurozone45
 The price of food in the UK remains lower than the European average, despite strong cost-push
inflation driven by the sharp depreciation of sterling.
 UK clothing retailers have been more effective in shielding consumers from rising cotton prices than
their European competitors.
Vertical integration
Cooperating with suppliers tightly become assurance of delivering qualified value, and sometimes
acquirement happens for better control.
45
http://www.brc.org.uk/ePublications/LGSL/files/assets/downloads/publication.pdf

11
The intensive competition drives long-term relationship between retailers and suppliers. In order to
reduce potential risk and increase effectiveness, stable supports from suppliers are sessional for retailers. It
still exits limitation of control, so some retailers further acquire their suppliers.
 Iceland Food acquired its biggest supplier Loxton Foods in June 2012, and renamed it as Iceland
Manufacturing Limited in 2013.
 Iceland Food signed a partnership contract with DHL in 2009 in order to outsourcing professional
warehousing system and timely distribution services.46
 M&S improved their engagement with suppliers in the Plan A, including establishing an online
knowledge exchange system, helping suppliers to solve capital finance issues, and setting up ethical
model factories to research how to save costs and increase efficiency.47
Internal efficiency
Multi-channels challenges traditional retailers’ cost structure, but it gives advantages for those online
retailers.
E-commerce creates a different structure of distribution, and many traditional retailers suffer from
balancing quality and cost. Compared to traditional retailers, amazon.com has extreme advantage on
managing its network, and its cost structure gives a direction for those traditional retailers.
46
http://mhlnews.com/global-supply-chain/iceland-foods-ltd-extends-dhl-supply-chain-contract
47
MarketLine (2012) Marks & Spencer: Sustainability as and effective business strategy. Reference Code:
ML00007-024.

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48
Performance
Finance
Revenue has hugely increased from multi-channel and international market, but the total profits dropped.
Generally speaking, the financial performance is not outstanding in 2013. It can be assumed that the
key problem resulting in less profit is intensive competition. When unit price decreased, M&S might raise
the volume to keep revenue. However, the low price did cut its profit and it did not benefit to its market share
either.
(Source: M&S 2013 annual report, p15)
48
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&ved=0CEgQFjAF&url=https%3A%2F%
2Fwww.mckinsey.com%2F~%2Fmedia%2Fmckinsey%2Fdotcom%2Fclient_service%2FRetail%2FArticles%2FFuture_of_
retail_supply_chains.ashx&ei=WMi2U8GHFNP07Aaw14DgBQ&usg=AFQjCNEA4HX3VlKaYWYLc6f3mt8zut3vtw&sig2=o
L-Pwym3x4-78PJYbTrc7w p3

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(Source: M&S 2013 annual report, p15)
Technology objectives
M&S used technology to create two-ways connection between products and customers.
M&S used mobile devices and website to build active connection, such as fashion advices and virtual
maker. Furthermore, it gives many ideas about men’s outfit and special occasion clothing which is many
young men need. It is an attractive point, but M&S does not particularly advertise this information.
 M&S have virtual make over counters both in store and online, and it uses facial recognition
technology to demonstrate the outcome of makeup.
 Younger men are more likely to use designer labels as an indicator or guidance for what to wear, and
older men prefer more casual looks.49
Employment objectives
49
https://www.delineo.com/wp-content/uploads/2013/10/Online-male-shopping-habits.pdf p4

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Plan A successfully improve the employment relationship.
The ethical model factories of the Plan A bring extremely low employee turnover rate, 2.5%, through
increasing employees’ wages, showing respect and fairness, and building identity, and this highly improves
costs control and efficiency.
 The staff turnover rate of ethical model factories reduced from 10% to 2.5%.
 From HayGroup survey, average employee turnover rate in retail industry is between 10% and 25%,
and part-time turnover rate is even over 50% (see the table below50
).
 John Lewis sees their employees as partners and is willing to share benefits with them, but the turnover
rate in 2009 still remained at 17.7%.51
50
http://www.haygroup.com/Downloads/ww/misc/Median_employee_turnover_rates_-_Retail_industry.pdf
51
http://www.retailgazette.co.uk/articles/staff-favour-the-john-lewis-way

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DPM
M&S should manage homeware and furniture for generating maximum cash income; invest a little to
protect menswear and premium food, increase investment on affordable food, and monetise women’s wear.
Overall, homeware and furniture are comparably stable market, and M&S has over average performance
on competitive strengths. There is less future attractiveness in these two markets, so it is not worth to invest
money. However, because M&S still earns certain profits from these two markets, it should manage them as
effective and efficient as possible in order to reduce cost and generate cash.
Regarding to clothing market, women and men’s shopping behaviours differ M&S’s performance.
Women’s strong bargaining power and less loyalty causes M&S to struggle to make profit. Furthermore,
M&S’s performance of integrating multi-channel still need to be improved comparing other competitors.
(The size of the bubble in GE-McKinsey matrix represents the market size of each segment.)
35
40
45
50
55
60
65
70
3035404550
MarketAttractiveness
Competitive Strength
GE-McKinsey matrix
Premium Food
Affordable Food
Womens Clothing
Menswear
Homeware
Furniture

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Marks and Spencer DPM
Market Attractiveness
Criteria
Weighting 5 1 2 4 3 2 4 5 2 3
Segments
Growth
MarketSize
bn(USD)
Boundariesofnewcompetitors
TrendofUnitPrice
FrequencyofPurchase
Score
Responsiblysourced
IntegrationofMultichannel
Affordability
Branding
AbilityofAbroadExpansion
Score
Premium Food 6 1 100 4 3 5 66 3 3 3 3 3 48
Affordable Food 5 6 4200 1 1 6 55 3 3 2 1 2 36
Womens
Clothing
4 5 630 3 2 4 51 3 2 2 2 3 37
Menswear 3 4 400 5 6 3 62 3 2 3 3 3 44
Homeware 2 2 330 2 4 2 38 3 3 2 3 3 43
Furniture 1 3 380 6 5 1 43 3 3 2 2 3 41
Market Attractive
Considering the products characteristics of each segment, all of them are daily necessaries rather than
luxury demands. Therefore, the market size is relative stable across nationalities. Furthermore, E-commerce
and technology eliminating boundaries between different retailers are normal trend in entire industry.
Therefore these two criteria are less important. On the other hand, market size, trend of unit price, and
frequency of purchase will impact on profitability and expanding decision in each segment seriously.
Regarding to scoring, growth and market size are scored basing on both global market and the UK’s
because of international expansion. Boundaries and frequency of purchase are scored according to product
differences, shopping habits, customer loyalty, and personal experience. Finally, the trend of unit price is
scored according the UK based data.

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Competitive Strength
Because of the shopping habits and the recession, reasonable price and convenient services become the
key attracting and keeping customers. Moreover, according the present price war in the UK retail industry,
the expanding ability assures the company further development. Responsibly sourced and branding are
important for certain groups, but most of customers do not have extremely high requirement on them.
Overall, M&S has relatively high performance comparing its top competitor in each segment. However,
with its emphasis on high quality, the price and brand image are not suitable for affordable food market,
which impact on its ability of expansion. The other issue of competitive strengths is its ability of integrating
multi-channel. From its annual report, it did successfully grow in 2013, but comparing to other strong
competitors, such as amazon.com and ASOS, there are still many improvements it should do to satisfy
customers better.
BU Strategy
Competitive- Strategic clocks
In order to satisfy customers’ demands, M&S should posit itself at the hybrid in affordable food market.
To attract customers of affordable food and grocery market, M&S should develop new products with
similar quality and lower price. Developing affordable goods with new sub-brand can distinguish the brand
image of M&S. It avoids damaging to present premium food market, and gives ability to compete in
affordable food market.

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5 Cs and game theory
The best strategies of 5 Cs are capturing the single men segment with quick shopping service and compete in
lower price, and M&S should build more efficient distribution network to support it.
Compete- Reputation with high quality is the M&S’s advantage to compete in food market, but it needs to
drop price to attract affordable food market. In order to avoid damaging the premium food sales, developing
other product lines and brands are needed. Regarding the competitors, it takes time to improve quality and
communicate new image to customers. For those who try to do the same, M&S still can use its brand image
to attract those customers with higher quality-consciousness and lower price consciousness.
 Education is positively related with quality-consciousness.52
 NFC, full-time employment and having children are connected with time pressure, and higher income
is associated with lower financial restrictions and price consciousness.53
 Singles have more brand consciousness than married.54
 Singles have less price consciousness than married people.55
Concentrate-Because of the growth of e-commerce, there are more shipping demands from customers. M&S
has 766 UK and418 international stores, but only one e-commerce distribution centre. From the McKinsey’s
report56
, the amazon.com save 1.5-2.0% of cost on efficient outbound than other multichannel retailers
basing on three reasons, amounts of distribution centre, total volume, and order-management system. If
54
http://bmdynamics.com/issue_pdf/bmd110136_22_32.pdf p5
55
56

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M&S can integrate its stores distribution and e-commerce distribution, it is possible to decrease the cost and
improve just-in-time delivery services.
 Iceland Food signed the outsourcing contract with DHL to obtain a professional warehousing system
and a timely distribution services in 200957
.
 58
Capture-Recently, UK’s affordable food market is in a price war, so it forces most retailers to drop prices in
order to protect their market share. However, from purchasing behaviours research, men are less price
conscious, spend less time comparing products, and have higher loyalty. Therefore, focusing on this segment
is able to maintain better price level of M&S, if it attracts men through quicker services. On the other hand,
most of competitors are more likely to focus on women or family customers, because women dominate more
than half of spending. Two things that should be considered when implementing this strategy are
implementing it before others do and avoiding the influences on shopping preference from family.
 Singles more seek convenient than married people.59
 Women control 65 percent of global spending and more than 80 percent of U.S. spending.60
57
http://mhlnews.com/global-supply-chain/iceland-foods-ltd-extends-dhl-supply-chain-contract
58
59
60
-them

20
, male is more loyal to organizations than female.
 Men are hunters, and they know exactly what they want or at least make decision very fast.62
 From Kusum and colleagues’ research (2001), when people has higher loyalty to a store, they will have
lower price consciousness to store brands.63
Create-Based on personal experience, people in the UK and Europe like to socialize and dine out after work.
Many products, such as beer, ready meals, and nibbles, can possibly satisfy the demands with lower price.
Therefore, this strategy is attracting people purchasing those food and drinks in M&S rather than restaurants
and bars. Through promoting different packages, it is possible to stimulate premium demands. However, it
cost money on marketing and it is relatively easy to be imitated by competitors. Therefore, its outcome of
game theory is negative.
 Women spend more than half of disposable income on clothing, and men spend their majority of
disposable income on socializing and eating out.64
 From personal observation, people living in the UK prefer choosing easy lunch such as sandwich and
take-away, and are more likely to go to restaurants for dinner.
Cooperate- The affordable food market is extremely competitive, so it is less likely to build new cooperation
relationship with others.
61
62
do
64
http://www.femalefirst.co.uk/lifestyle-fashion/stylenews/Fashion+2012-260436.html

21
Total score
Occuring
probability
Benefits of
M&S
Competitors
reaction
Strategic
options (5 Cs)
Market
segment of
M&S
Affordable food
Compete-
drop price
and
maintain
quality
do nothing 1 10% +0.3
do the same 1 55%
maintain price
and increase
quality
-1 35%
Concetrate-
Use stores
as
distribution
centre,
decrease
distribution
cost
do the same 0 20%
Build distribution
centre
-1 10%
Outsource
distributing
fuctions
-1 25%
Capture-
focus on
single men
and offer
quick
shopping
service
do the same -2 15%
focus on single
women
1 30%
focus on family 0 40%
Create-
focus on
working
men offer
friends'
casual
package
do nothing 1 20% -0.2
do the same -1 40%
offer fine dining
promotion
0 40%

22
Marketing philosophy-Go to Market Model
Customer Needs
Both product value and purchasing experiences are crucial for male customers, and predicting accurately
their demands is the key to consolidate the relationship.
What do customers need and why?
Single men need effective and efficient shopping processes, and the requirement of product quality has
positive relationship with education level. From researches, most of men feel anxious when it takes too long
to buy what they want. Because of this characteristic, more and more males prefer online shopping.
 Singles more seek convenient than married people.65
What relationship do customers want with us?
Normally, men know exactly what they want to buy, and they will not spend extra time to search and
compare other products. However, sometimes men would like some guidance when they shop for something
that is not their area of expertise. Therefore, trust relationship is important in order to earn their loyalty.
Basing on their purchasing characteristics, it can be assumed that it is harder to push them to buy something
they do not require. For that reason, M&S should be careful when it plans the marketing strategy.
What is the most actionable customer segmentation?
65
66
do
67
do

23
Based on the age and lifestyle, it can be segmented in under 25 years old, over 25 year-old workers,
over 25 year-old middle class professionals, and over 25 year-old high class professionals. From market
demands, under 25 years old may have limited budgets and less likely to pursue high quality products, and
those over 25 year-old high class professionals are more likely will purchase premium food rather than
affordable food. Therefore, those male workers and professionals who are over 25 years old are more
actionable for M&S.
 NFC, full-time employment and having little children are associated with time pressure, and higher
income is related to lower financial constraints and price consciousness.69
 Those people who believe natural products benefit themselves average earn $65,000 (about₤37,930)
and are about 40 years old.70
Strategic Objectives
M&S should improve customer understanding and speed of purchasing processes to attract middle class
professionals.
Which segments do we want to target and why?
Considering shopping characteristics and other business units, middle class male professionals is the
best target for M&S’s affordable food market. First of all, those people have certain level of disposable
income, and they are less price-conscious and higher quality-conscious. Secondly, this segment matches the
menswear’s target, so it is likely that their loyalty to M&S might benefit to menswear business. Furthermore,
70
http://www.ibtimes.com/heres-who-eats-natural-organic-foods-why-market-research-1437858

24
this group may occasionally have demands of premium food, so it might increase the sales of premium food
market.
 Women who have the highest individual income, ₤248 per week, are between 30 and 34 years old.71
 Men who have the highest individual income, ₤342 per week, are between 35 and 39 years old.72
, male is more loyal to organizations than female.
For these segments, what are our objectives?
There are two main objectives, integrating customers understanding and efficient services. In order to
improve customers understanding, research, analysis and information integration are needed. Following that,
how to deliver the product is an essential objective, and both online and in-store shopping processes should
be reviewed and redesigned in order to attract these targets.
to the warehouse near customers’ location in order to deliver them more efficiently.74
 ASOS uses a user-friendly checkout process to decrease the cart abandonment rate of online shopping
by 50%.
 Through consumer behaviours survey, ASOS only ask new passwords from new buyers rather than
creating a new account with other personal details, and it improved over half of new customers to
checkout.75
How do these fit with our overall business objectives?
71
http://www.dsdni.gov.uk/section_3-5.pdf
72
http://www.dsdni.gov.uk/section_3-5.pdf
73
75
https://econsultancy.com/blog/8391-persuasive-checkout-best-practice-from-asos#i.cbrw6gyjdf7at2

25
E-commerce is a trend for all of the business units, so the improving plan can also be implemented in
other businesses. However, comparing to other online retailers, such as ASOS and Amazon, customer
research is not an advantage for M&S. With the purpose of further growth, it is an important objective for
every business unit.
 M&S 2013 annual report shows multi-channel revenue rise 16.6% to ₤651.8m.
 M&S 2013 annual report shows international revenue rise 4.5% to ₤1.1bn by in stores and
multi-channel approach.
Brand (Robust offer, capability requirements, financial impact)
M&S brand should directly and clearly point out those features and deliver them consistently.
What brand or brand architecture should we use?
The M&S brand should maintain its healthy, environment friendly, and high quality image. However,
in order to attract the target segment, it should emphasise the easy and speedy shopping experience.
 When male shop in familiar stores, they spend less time on finding products than females.77
What offers best meet customer requirements?
The best offers for these middle class males are either basing on their personal purchases history or
current activities. For example, M&S can analyse those online shopping records and offer a high level of
personalisation. On the other hand, it can offer period promotion for sport activities and weekend package,
such as combination of beers and chips. Through these methods, it is possible to pull and capture premium
demands.
77 Reiter, K.R. (2013) Gender Differences in Decision Making When Faced with Multiple Options. [Online]
Available at: http://digitalcommons.csbsju.edu/psychology_students/11/ (Accessed: 1 July 2014).P2

26
How can we make these offers distinctive against the competition?
The keys are contents and timing of these offers. First of all, since these offers are based on customer
insights, if M&S continuously invest on researches focused on this group, it should be able to understand
those customers better than competitors. Following that, M&S should have effective and efficient processes
to implement those ideas before anyone else does and deliver clear messages to this target rather the whole
market.
What capabilities do we need to deliver?
First of all, Integration of multi-channel is one of key capabilities in order to deliver convenient
services. Following that, customer insight allows M&S to predict and satisfy customers’ needs before
competitors do. Finally, consistent image should be delivered through marketing, services, and employees.
How much money will we make?
From the research from the confession of the professions website, it is shown a person who is over 25
years old will spend average ₤2626 (1267+1359) on eating out and takeaways. If speedy services can attract
5 % extra spending from eating out to groceries, then M&S can earn ₤131 more per customer. Furthermore,
from government’s record, there are about 43,000 workers. It assumes that half of them are males and one
third of males are middle class professionals. Considering the age range and marriage status, there are around
3500 persons matched the segment. Therefore, it might create about ₤458,500 extra annual revenue for
M&S.
78 79
78
http://www.confessionsoftheprofessions.com/groceries-vs-eating-out-infographic/

27
Business Design
Setting new goals and through communication bringing everyone on board are keys to support the strategy.
What infrastructure and systems do we need to execute offers effectively?
Intranet integrated information across multi channels and supply chain is needed. Furthermore, delivery
network is important to satisfy high requirements of convince.
to the warehouse near customers’ location in order to deliver them more efficient.80
What organizational features do we need to support the model?
When product differences are hard to distinguish, the services and how to communicate become the key
influences of shopping decisions. Therefore, M&S should have the ability to react to changes quickly, and
every employee should be educated on how to serve these customers.
79
http://data.london.gov.uk/dashboard-summary/jobs

28
What is the most effective implementation approach?
As a result of the Plan A, M&S has lower turnover rate and higher employee engagement, which is an
advantage to implement changes. In order to bring everyone on board, stakeholders and top managers should
develop new vision and goals. After that, communication across departments and business units is essential
to improve the processes more smoothly.
Communication
Using website advertisement brings male customers directly to the online shopping pages, and sponsoring
sport activities delivers the new brand image.
How do we communicate with and attract customers?
Advertisements through mobile devices and internet are easier to attract them to the website directly.
For the purpose of enhancing brand image, sponsoring sporting activities and promote quick services directly
not only reach the segment but also deliver the new image to them.
How do we build relationships with wider audiences?
M&S should build closer and long-term relationships with both suppliers and employees in order to
improve the level of value continuously. Furthermore, regarding to stakeholders, M&S should communicate
a clear vision and ask all top managers and stakeholders deliver the same message in order to operate
efficiently and effectively.
Sub-segment
Middle class male professionals who are single and over 25 years old are the best segment that M&S should
focus on.
Middle class male professionals aged over 25 are chosen because of two main reasons, less price
consciousness and higher quality-consciousness. Moreover, considering women do most of the family
shopping, single men have -more control over their income and shopping decisions. According to present

29
price war of affordable food market and the M&S strengths, this segment is more likely to benefit M&S
affordable food market and even other business units in the future.
Marketing as tactics & control
Informative employees and efficient services support M&S to deliver new products at 25% cheaper price to
target the segment.
To attract male customers and build loyalty, M&S should design its marketing strategy according
men’s shopping characteristics. First of all, the new product range should cover the basic demands of these
targets, but it should be selective rather than give too many choices that might cause anxiety. Moreover,
there should be informative employees and clear direction both in store and online in order to deliver a more
efficient and effective shopping experience. Regarding communicating these changes, a middle class male
model that lets targets reflect themselves should be chosen to represent the new M&S brand image. Finally,
based on the present price level, M&S should make the new products’ price 25 % cheaper than normal prices
in order to compete in the affordable food market.
Product
M&S should develop product range basing on males' preferences, and not offer too many choices.
Benefits High value food All products with relatively high quality and reasonable price
Features
Emphases on males'
preferences
Such as beers and meats rather than salad, but it should follow
the trends and change from time to time
Options
Enough but not too
many
Men do not search and compare extra products, and too many
choices sometimes make them feel anxious.

30
Quality
Relative high, comparing
to other affordable food
products
These educated males have certain level of requirement on
quality.
Design N/A It is not relevant to this strategy.
Branding Simple and speedy
The brand image should make men feel that shopping at M&S
is an easy and enjoyable journey.
Packaging
Minimal and recyclable
materials
The package should still match the M&S brand image, green
and environmentally friendly.
Services
shopping advice and
clear direction both
online and in store
When men purchase something they want, clear signs and
direction are needed. However, they might need some advice
on special demands, and then informative advisers are needed.
Warranties N/A It is not relevant to this strategy.
Price
New product price is 25 % cheaper than M&S normal price to compete in affordable food market.
Price
25 % cheaper than normal
M&S price
Searching for cheese cake prices and M&S's is 0.7/100g, Tesco
is 0.44/100g, and Tesco is 37% cheaper than M&S. Therefore,
25 % cheaper should be reasonable for this group basing on
better quality.

31
Discount
Offer 10% off for male
loyal club members
Attract them joining in the club and help M&S obtaining their
records
Credit terms N/A
Both are not relative to this strategy
Payment period N/A
Incentives
Favourite food free-every
month can get the product
bought most frequently in
that month for free.
Promoting what they need and want rather than push them
Place
Integrating multi-channel services not only delivers better services but also saves cost.
Channels
In store, online, and mobile
app
Integrating order and collection cross multi-channel is essential
services.
Logistics Local logistics network
Shorter distance delivery can save cost for M&S and improve
services.
Inventory
Certain level of inventory for
each area
Using stores as small distribution centre supports speedy
delivery and collection services.
Transport minimal transportation Shorter distance delivery can save cost for M&S and improve

32
basing on local distribution
network
services.
Assortments
Occasional package, such as
world cup package with
beers and crisps
Special packages for certain periods capture premium demands
and increase sales. For example, combining beers and crisps as
a package before three hours of world cup matches stimulates
those people originally only buy beers or crisps to buy both
with discount.
Locations
Quick collecting points in
transport stations and
business locations
Convenient collection attracts them to choose buying food for
consumption at home rather than eating out.
Promotion
Using related image models represent M&S and communicate brand image through different medias.
Advertising
Newspapers, website,
social media, and
transportation
Advertising on daily medias accesses the target segment.
Public relations
Using middle class male
model to represent M&S
brand
Middle class models show they can enjoy life more by shopping
easier at M&S.
Sponsorship Sport activities and Sponsoring those activities men love builds emotional

33
online games connection with M&S.
Sales promotion
Weekly promote top 5
men's favourite food and
drinks
M&S promotes the top five products of men's purchases, and
attracts new customers.
Direct marketing
Send text reminders to
the promote items he
bought before
Through analysing purchase history, M&S can attract them
come back by offering discounts on what they like.
Point-of purchase
Promote male loyal card
and use phone number to
easily register and get
discounts
Using easy registration and getting discounts immediately
attract males giving information.
Exhibitions and
trade fairs
Food festivals to show
they can enjoy the same
quality of food and
drinks and with more
convenient services than
eating out
Participating food festivals to show M&S can offer them better
life styles.
Personal selling
Shopping advisors in
store focus on those who
are not sure what they
want to buy, and lead the
shopping journey.
Giving advice pull the buying behaviour.

34
Interactive
marketing
Invite friends signing in
the vouchers through app
or social media, can get
discount on beers
Men love socialization, and it is an advantage that brings in new
customers for M&S.
7 P's Service
Informative employees and clear signs both in store and online improve convenient shopping experiences.
People
Helpful, friendly and
informative employees
Both in store and online customer services should be able to
response and answer customers' question quickly.
Physical
Environment
Clear signs direct the
location of products, set
an area for male's
favourite products, and
have quick check out
lines.
Special areas to place products men frequently purchase attract
those who want shop more efficiently.
Processes
Convenient and efficient
multi-channel order and
collection options
Integrated processes allow every man to choose the way that
matches his life style best.

35
8 P's E-commerce
Repeat online purchases should be made easier through shopping history.
Personalization
Weekly and monthly
purchase lists developed
on their previous
purchase records
Based on their shopping habits, sending shopping lists to their
e-mail or mobile apps remind them it is the time to shop with
M&S again.
Individualization
N/A, because this group
prefer pull promotion
rather than push.
Push methods is not suitable for this group.

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