Reviewing

current

business-

level

strategyAnalysis and Recommendations

Content Page:

Executive summary………………………………………….2

Introduction………………………………………………….2

Overview of segments…………………………………………2

Overview of the organisation’s core

offering………………..3

Evaluation …………………………………………………….5

Recommendations……………………………………………..7

Reference……………………………………………………….9

Appendix……………………………………………………….11

1

Executive summary

The purpose of this report is to assess UK’s big retailer

Marks and Spencer’s current business-level strategy and

evaluate whether this strategy is effective. Finding is

that the strategy is largely purposeful and helpful:

above average profit is gained, and target customers’

demand can be largely satisfied. Considering the current

economy, the major recommendation is providing products

to increasingly cost conscious customers without

“cheapening” the firm’s image.

Introduction

Marks & Spencer, one of the UK’s leading retailers with

around 21 million customers visiting their stores every

week, sets their vision as becoming the world’s most

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sustainable retailer by being more efficient and

innovative as well as benefiting society and the

environment. It sells high quality, great value clothing

and home products and outstanding quality food. Business-

level strategy is designed to support this vision. M&S

adopts the business-level strategy of differentiation

which aims at creating a product/service that is

perceived by customers to be unique in some way or meet

the needs of customers better than others (Volberda et

al, 2011). In this report, their business-level strategy

is identified and evaluated in the way of if their

business-level strategy helps them support well their

vision. Overall, this report examines whether a clear and

more sustainable competitive advantage is achieved

through M&S’s business level strategy.

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Overview of segments

The target market of M&S is middle to high class

consumers in major city. From 1914 onwards the company

made a lot of technological advancements and because of

its high quality and medium prices M&S soon associated

with quality and value able by its customers. Until now,

their emphases are still high quality product and

service. Following this purpose, their targeting

customers are those pursue high quality product and would

like to pay more for the premium quality. This kind of

customer has a common demographic feature-most of them

are elder people. Related advertising campaign is

conducted to particularly direct at them. Steven Sharps,

M&S’s marketing director said, “Although we sell to

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everybody-big, small, young, black, white, our absolute

target market is a bit older and is comfortable with

traditional media. They watch terrestrial telly more than

satellite telly, they read newspapers and when they drive

around they look at billborads. They are not spending

hours on the Internet.” To do that they focused their

teams on the classically stylish, core customer. That is

not to say they turned their back on younger shoppers,

but pay more attention to traditional one.

Overview of organisation’s core offerings:

highest quality products, service and shopping

environments.

The company’s mission statement is “Making aspirational

quality accessible to all”. It emphasizes mainly on

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quality, making clear to everybody that quality is most

important priority of the company. The high quality here

means freshness and special food, and convenience service

they provide. As an own-brand retailer their products are

unique and they further differentiate their offer through

exclusive collaborations and a careful selection of the

very best international food brands. Their principle is

that everything from M&S must be distinctive and must

conform to the Company's uniquely high standards.  

In addition, the innovation ability secure and support

this principle, for example, in any season, around 80%

the General Merchandise and 30% of the Food products will

be new. In terms of Food segment, M&S provides something

truly special to customers, especially for important

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occasions. In 2008, all artificial colours and flavouring

removed from M&S food. Their commitment to these values

sets them apart from their competitors, and enables them

to offer our customers something truly special.”

(Volberda et al, 2011) Food: M&S Food is built on a

strong heritage of innovation and quality, with a focus

on freshness and convenience. Customers trusted M&S

quality and turned to them for the most important

occasions, helping them deliver a strong Christmas in

Food.

They continued to differentiate M&S as a specialist food

retailer, introducing authentic deli and bakery counters

and launching 100‘unique to M&S’ international brands.

Their new look Food Halls are helping to enhance our

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position as a high quality specialist food retailer. They

have introduced new fresh deli counters and added more

authentic style bakeries. Stock is now appropriately

tailored to local demographics, which will help attract

new customers and broaden our appeal to those who already

shop with them.

In terms of service, M&S not only provide whatever their

target customers want, but also meet their demand

whenever and wherever they have the need. Customers want

to enjoy their experience and feel inspired, engaged and

valued by retailers when they are shopping. As a result,

service was seen as a key differentiator. In addition,

when in a confusing promotional landscape, customers

really valued the assistance of helpful and knowledgeable

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employees. In terms of the sense of sustainability, Plan

A enables them to run a more efficient business –

reducing waste and energy use. In a competitive

marketplace, Plan A provides a point of difference. M&S

continually engage and involve their people in our plans

to ensure they fully understand the vital role they each

play.

All above increase the loyalty of customers, making them

more willing to pay premium price for their high quality

products and service. In return, the relationship with

customers is well developed, and the above average profit

is gained.

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Evaluation:

Table 1: Value adding activities associated with differentiation strategy.

(source：Volberda et al, 2011).

“The purpose of a business-level strategy is to create

differences between the firm’s position in an industry

and those of its competitors” (Volberda et al, 2011).

Table 1 shows the relative activities that support them

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to make the difference. By offering their core products

and service in a different way, above average margin is

earned and their vision and mission are rationalized

along with these activities. The following states how

their core offering meets their customers’ needs in

detail.

Never out of stock: M&S has a simple philosophy that says

if it sells, restock it quickly and avoid stock-out: if

doesn’t sell, get it off the shelves quickly and replace

it with something which will sell. It uses an automatic

stock ordering system which is called Assisted Stock

Replenishment. As soon as an item has been bought by the

customer through the till point, it automatically

generates an order for that item to be replaced in the

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product. They improve their existing business through a

combination of innovation, an agile response to trends

and a strong promotional agenda.

Multi-shopping channels: More consumers chose to shop

across a combination of shopping channels. This trend was

supported by the dramatic growth of smartphone and tablet

ownership in the UK. Online and mobile channels provided

consumers with a more convenient way to research and buy,

and many saw it as a safer way to shop – reducing the

temptation of store browsing. Customers are increasingly

active online and women aged 45 to 55 spend more time

online than any other age group (M&S Annual Report 2012).

As a result, M&S had provided more engaging content to

help inform their online research and provide reassurance

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that they are making sound purchases. They have also

integrated digital innovation, such as our new Style

Online offer into stores, to add value to customers

shopping experience. With Style Online, they deliver more

choice and inspiration into their stores. They equipped

advisors with iPads to offer more personal assistance to

customers and add value to their in-store experience.

Besides meeting customer meets well, M&S also dedicate in

creating demand and as a guidepost in the customers’

experience of shopping. Since the downturn of 2008,

customers have been affected in the way of consuming. M&S

immediately learnt the condition that customers

increasingly shopped to a planned list and they were not

easily distributed by promotions. In the clothing market,

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limited budgets also meant consumers looked to retailers

for clear fashion direction, wanting the confidence that

they were buying the “right” item to refresh their look

in line with each season’s trends. In reaction to this,

M&S clearly differentiated their sub-brands with the

support of dedicated advertising. By conducting this,

they continue to make it easier for customers to find the

right items for them to refresh their look. M&S’s

improved visual merchandising also helps them show

customers how to wear the latest trends.

M&S not only meet retailing purpose but also involve

customer in sustainability development. In order to

achieve this objective, customs of M&S are encouraged to

return a used garment whenever they buy a new one. These

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returned garments are donated to Oxfam. Also, with the

Plan A, M&S involve customers in a sustainable way of

shopping. 31% of M&S products now have a Plan A quality,

such as Fairtrade, animal welfare recognition or healthy

eating – making it easier for our customers to make

sustainable choices. In a challenging economic

environment,

Because M&S understands well their target customers, the

products they provide meet their needs well, thus

customers of M&S recognized the merits of buying into

higher price tiers. This is what make them willing to pay

relatively high price on their products.

Recommendation

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Challengers to M&S are everywhere. From traditional

rivals such as Next, Debenhams and John Lewis, to the

strengthening cheap and cheerful challengers such as

Primark, and the influx of foreign retailers over the

last decade such as H&M, Uniqlo and the impressive Zara

(The Telegraph, 2012). Customers have more options than

ever before, and they are not afraid to use them. The

risk for their strategy is that customers may consider

the price difference between the differentiator’s product

and the cost leader’s product is too large (Pil and

Cohen, 2006). Thus, customers may turn to cost leader’s

product.

The recommendation is that: Providing customers with an

interest of providing products to increasingly cost

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conscious customers without “cheapening” the firm’s

image. In addition, a differencited product becomes less

valuable if imitation by rivals causes customers to

perceive that competitors offer essentially the same good

or service, but at a lower price (Volberda et al, 2011).

Providing products and service which are not so

“different” may be one useful way to avoid this risk. M&S

is currently on the right way, one typical example is

their development of on-line shopping, although M&S were

largely focused on “traditional customers through

traditional way”, they noticed the trend of digital

shopping which had been conducted much earlier by rivals

like Tesco (The Independent. 2011).

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Reference

F. K. Pil and S. K. Cohen, 2006, “Modularity:

Implications for imitation, innovation, and sustained

advantage”, Academy of Management Review, 31: 995–1011.

Marks & Spencer. 2013. About us [Online]. Available at:

http://corporate.marksandspencer.com/aboutus [Accessed:

12 Feb 2013]

Marks & Spencer. 2012. About us [Online]. Available at:

http://corporate.marksandspencer.com/aboutus/where/intern

ational_stores. [Accessed: 12 Feb 2013]

Marks & Spencer. 2012. Strategy Insight. Available:

http://www.examstutor.com/business/resources/companyprofi

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les/marksandspencer/strategyinsight [Accessed: 15 Feb

2013]

Marks & Spencer - UK Stores M&S website [Online]

Available at:

http://corporate.marksandspencer.com/aboutus/where/uk_sto

res [Accessed: 15 Feb 2013]

Marks & Spencer-How we do business [Online] Available at:

http://corporate.marksandspencer.com/howwedobusiness/

our_policies/quality_and_innovation

Marks & Spencer Annual Report Available at:

http://annualreport.marksandspencer.com/ [Accessed: 8 Feb

2013]

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Marks & Spencer Strategic Review. 2013. Available at:

http://annualreport.marksandspencer.com/strategic-

review/chief-executives-overview/index.html

Peer Papers. (2009). Marks & Spencer Case. Available at

http://www.peerpapers.com/essays/Marks-Spencer-

Caseoperational-Strategy-Location/154464.html

[Accessed: 9 Feb 2013]

Ruddick, G. 2012. Has Britain fallen out of love with Marks & Spencer?

[Online] Available at:

http://www.telegraph.co.uk/finance/newsbysector/epic/

mks/9657677/Has-Britain-fallen-out-of-love-with-Marks-

and-Spencer.html [Accessed: 19 Feb 2013]

The Telegraph. 2006. If it ain't broke: why Marks & Spencer is opting

for an old-fashioned Crimbo Avaliable at:

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http://www.telegraph.co.uk/finance/2950542/If-it-aint-

broke-why-Marks-and-Spencer-is-opting-for-an-old-

fashioned-Crimbo.html [Accessed: 17 Feb 2013].

The Independent. 2011. M&S poaches Tesco's online chief to power

internet sales [Online] Available at:

http://www.independent.co.uk/news/business/news/mamps-

poaches-tescos-online-chief-to-power-internet-sales-

2207587.html [Accessed: 20 Feb 2013].

Volberda et al. 2011. Strategic Management Competitiveness &

Globalization. UK:Cengage.

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Appendix:

Table 2. Source: Marks & Spencer 2013 Annual Report

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