London School of Commerce

8/3/2019 London School of Commerce

1/78

The role and importance ofadvertising in retail industry

LONDON SCHOOL OF COMMERCE

DISSERTATION ON THE ROLE AND

IMPORTANCE OF ADVERTISING IN RETAIL

INDUSTRY

MAXON EVANS NYIRENDA: B0504DADA1110

INSTRUCTOR: DR DMITRIOS

KOUOPOULOSDN

Presented as part of the requirement for the award of MA/Med/MSc/MBA Degree

In Marketing

within the Postgraduate Modular Scheme at

1B0504DADA1110


2/78


University of Gloucestershire

October, 2011

DECLARATION

I declare that no content of the material referred in my dissertation has been affiliated with

another individuals work from another academic institution as this is purely my own effort

from the beginning to the end unless referenced or in the bibliography.

Signature............................. Date........................

2B0504DADA1110


3/78


AN ABSTRACT

The retail industry has gone under significant changes in the past years providing ongoing

challenges to retailer such as Marks and Spencer to change their business models now and

then which includes modernisation and difficult economy. Most of these changes have

brought competition affecting the nature and performance of various retailers in the country

as well as abroad; the media inspired by technology has changed the nature in which retailers

reach consumers with developments such as advertising products and services on internet.

Changes in economy as well as society lifestyle where by consumers demand and expect

more from the sellers force retailers to further improve the quality of their respective products

and services even better ways of communicating with these consumers so they can respond

quick and buy their stuff amid of the highly competitive tensed retail environment.

Retailers are aiming and striving to adopt the large scale model with wide distribution and

sell to consumers on fair prices through the persuasion of effective advertising. There has

also been an alternation between branding and consumers choice when purchasing products

making brands an important aspect in business firms when reaching out to consumers. Most

retailers have utilised advertising and come up with a sustainable competitive advantage forthe firm to differentiate their products and services form that of their retail rivals while

attempting to meet the demand and needs of consumers at the same time. It has been noted

that Marks and Spencer can benefit from having strong brand which influences consumers

choice hence sales and profits will soar and increase its market share.

Advertising has the potential to increase consumers awareness through information making

them acknowledge product offerings as well as other important updates that will be beneficial

to the public. However, this will largely depend on strategies used in advertising which

determine the rate upon which the consumers or the public will respond, meaning if done

poorly, it will be costly and lead to losses instead of financial gains arising increasing sales

and profits that can be inspired with the influence of advertising.

The literature review and questionnaires played a vital role in gathering necessary

information to find out how Marks and Spencer will benefit from its advertising campaign as

well as the cost, constraints and responses from participants.

3B0504DADA1110


4/78


ACKNOWLEDGMENTS

Many thanks to Dr. Dimitrios Koufopoulus, my supervisor for the guidance and support

provided throughout the dissertation research and writing period.

My sister Dr Maggie Nyirenda Nyangwa and late brother Mike Isaac Nyirenda for always

being there for me while encouraging and supporting me throughout my entire academic

career. If it was not for my family, Miriam, Queen and Maggie, Ben-Thomas, Sam, Owen,

Twikale, Tony, Karen, Anita, Regina, MacMillan, Veronica,Ngakhe, Sangwani, Peter,

Malunjes, Viwisi, Yamikani, Norah, Kondani, David, Mrs Mkwezalamba and Alindine,

Chifundo, Angelica, Thokozani, Janet, Mayamiko, James, Gondwes, Ngwiras and the

Katangwe family, Christopher, this would not be possible at all as it hard to carry on when no

one is showing love and support which is important in our everyday lives.

My lecturers at London School of Commerce and previous academic institutions, I really

appreciate the manner in which your lectures were administered as this played a crucial role

in guiding and inspiring me to reach this level and I take nothing for granted.

Lastly, I would also like to thank all the respondents to my questionnaires as without you, theresearch would not have been possible.

4B0504DADA1110


5/78


DEDICATION

I dedicate my dissertation to my late younger brother Mike Isaac Nyirenda, who passed away

last year, December 6 on a fatal car accident and achieved his BA and MBA at London

School of Commerce, a good soul and inspiration to my academic success with vision for the

future and memory today is part of history. He was the one who recommended London

School of Commerce an initiative; I will always live to appreciate for the rest of my life.

5B0504DADA1110


6/78


Table of contents

DECLARATION............................................................................................. 2

ABSTRACT...................................................................................................... 3

ACKNOWLEDGEMENTS.............................................................................. 4

DEDICATION.................................................................................................. 5

CHAPTER 1: INTRODUCTION...................................................................... 9

1.0Problem field .............................................................................................. 9

1.1Reason for the research .............................................................................. 9

1.1.1 Economies of scale................................................................................... 10

1.1.2 Strong brand relationship ...................................................................... 10

1.1.3 Profits ....................................................................................................... 11

1.14 Image.......................................................................................................... 12

1.1.5 Demand .................................................................................................... 12

1.1.6 Brand name.............................................................................................. 12

1.1.7 Market share............................................................................................ 13

1.1.8 Cost............................................................................................................ 13

1.1 Introduction and background ................................................................... 13

1.2 Research and background ......................................................................... 15

CHAPTER 2: CRITICAL LITERATURE REVIEW......................................... 16

2.1 Aim and important of advertising to Marks and Spencer....................... 22

2.1.1 Awareness.................................................................................................. 23

2.1.2 Communication......................................................................................... 24

6B0504DADA1110


7/78


2.1.3 Preference

2.1.4 Market share .......................................................................................28

2.1.5 Communication and information ..................................................... 32

2.1.6 Competition......................................................................................... 35

2.1.7 Differentiation .................................................................................... 39

2.1.8 Demand and sales ............................................................................... 41

2.1.9 Educative.............................................................................................. 42

2.2 Strategic implementation....................................................................... 42

2.2.1 Billboards............................................................................................. 43

2.2.2 Newspapers.......................................................................................... 47

2.2.3 Magazines............................................................................................. 48

2.2.4 Television.............................................................................................. 49

2.2.5 Radio..................................................................................................... 49

CHAPTER 3: RESEARCH METHODOLOGY........................................... 52

3.0.1 Research goals ..................................................................................... 53

3.1.0 Data collection ..................................................................................... 53

3.1.1 Questionnaires .................................................................................... 53

3.1.2 Reliability of questionnaires ............................................................... 53

3.1.3 Validity of questionnaires ................................................................... 54

3.2.0 Sampling ............................................................................................... 55

3.2.1 Sampling methods ............................................................................... 55

3.3.0 Reliability, validity and limitations of sampling ............................... 56

3.3.1 Reliability .............................................................................................. 56

7B0504DADA1110


8/78


3.3.2 Validity .................................................................................................. 56

3.3.3 Limitations of sampling .................................................................... 56

3.3.4 Ethical considerations ....................................................................... 56

CHAPTER 4: FINDINGS AND DATA ANALYSIS ................................. 57

4.0 Findings ................................................................................................. 57

4.0.1 Data analysis ...................................................................................... 57

4.1.1 Microsoft excel data .......................................................................... 57

CHAPTER 5: RECOMMENDATIONS AND CONCLUSION ..................65

5.0 Recommendations ..................................................................................65

5.1.1 Customer needs .................................................................................. 65

5.1.2 Information ......................................................................................... 65

5.1.3 Competition ......................................................................................... 65

5.1.4 Technology ........................................................................................... 66

5.2.0 Conclusion ............................................................................................ 66

CHAPTER 6: APENDICES .......................................................................... 69

Appendix 1: The questionnaires ..................................................................... 69-71

Appendix 2: Economies of scale graph ...........................................................72

Appendix 3: Marks and Spencer profits (July-August 2011) ..........................73

Appendix 4: Growth of retail industry ............................................................ 74

Appendix 5: Media advertising chart ...............................................................75

Appendix 6: List of marks and Spencer rivals in retail industry ......................76

CHAPTER 7: REFERENCES ......................................................................... 77

CHAPTER 8: BIBLIOGRAPHY .................................................................... 80

8B0504DADA1110


9/78


CHAPTER 1: INTRODUCTION

1.0Problem field

This dissertation topic has been selected regarding the importance of advertising in modern day

businesses as the trend is directly linked to marketing as this has a huge effect on consumers

perception regarding the organisations products and services. Good advertising is vital to any

business success as it helps a business grow bigger and generate a certain type of public enthusiasm

relating to the products and services offered. This topic has been inspired by Marks and Spencer

investing in massive advertising to boost its declining sales, profits in recent years as well as overall

image and reputation.

According to (Kotler P, 2009, p. 691) Advertising is any form of paid non-personal presentation and

promotion of goods, services and ideas by an identified individual or business firm. Kotler further

stressed that advertising is crucial in business prospects as geographical wise it is able to reach

dispersed buyers and build a long-term image for products and services while ensuring quick sales are

achieved.

According to (Harrell D, 2000, p. 441) Advertising is described as a form of non-personal paid

communication from a known party using mass media to influence and persuade the public or rather

audience to catch their attention. The author considered advertising as a mass communication as the

message in advertising is conveyed to reach the targeted audience and the rest of the market; he stated

positioning of a product as a main objective of advertising.

According to (Cartwright R, 2002, p. 213) Advertising is mentioned as a non-personal communication

of information directed at target audiences via various media in order to present products, services and

other offers which are persuasive in nature. He further pointed out that mutual understanding of

consumers potential, needs and wants, verified personal advertising information can be sent to

specific individuals.

According to (Brassington F et al, 2006, p. 13) Advertising is rather seen as a long-term image

building tool rather than as a short-term sales booster which is viewed as negative as this might not

have direct link to sales. I totally agree with Brassington because if advertising is carried out to boost

sales only for a short period of time then the business firm will eventually lose its relationship with

the customers who will in turn go for other brands; advertising should contain information to ensure

long-term relationship with the consumers. Marks and Spencer objective in prolonged advertisement

campaign is to keep hold of their respective customers as well as spreading information quickly to alot of people about new products and services as means of generating early sales.

9B0504DADA1110


10/78


1.1 REASON FOR DOING THIS RESEARCH

The whole purpose of Marks and Spencer to pursue on advertising campaigns is to enhance its

performance relating to sales, profits, good image and reputation worldwide. The performance is

important in any business firm because accomplishments of a given tasks are measured throughstandards, accuracy, completeness, cost and efficiency set by policies of the firm. Assessing business

performance is crucial for a giant retailer like Marks and Spencer as every year the firm has to

produce an annual report presenting the outcome or rather results of their performance to its

respective shareholders and stakeholders. This is challenging for a global business firm like Marks

and Spencer as people do invest their hard-earned money and have the right to know the outcome

occurred from the efforts by the firm. Performance results are crucial in telling whether the business is

moving forward or trailing.

Generally, a business performance appraisal focuses on business strengths and capabilities, as well as

on current performance. The results can be assessed by how organisation activities are suiting and

responding to environmental factors such as political, economical, social and technological factors. In

terms of marks and Spencer which is in retail business, its strengths will reflect on how its customers

are consuming its products as well as services in a certain period of time. Performance on this context

can be summarised through such factors such as economies of scale, strong established relationships,

profits, image, demand, brand name, market share and costs (Aaker D, 2005, p. 290)

1.1.1 Economies of scale

Economies of scale are a good way to assess performance because when more units of a good or

service is produced on a larger scale with less input costs then the firm can be proud to declare

economies of scales have been achieved. In theory, economic growth for big businesses such as

Marks and Spencer may be credited only if economies of scales are realised. This is crucial to Marks

and Spencer as it can benefit from selling more output and easier to even sell more while reaping the

benefits of large-scale production (Bridgewater S, 2005, p. 87)

Marks and Spencer can take advantage of this theory by increasing its advertising and marketing

budget to great effect based on favourable prices and gain competitive advantage in the market place.

The graph on appendix 2 shows how economies of scales work and its impact on increasing

performance in terms of sales and profits;

1.1.2 Strong brand relationship

Starting from the fact that there are critical issues that should drive brand success in the UK retailing

sector as it is a well known factor that strong brands do accelerate a business performance and help

push companies various products and services to a better consuming position in their respective

10B0504DADA1110


11/78


market places. I strongly believe strong branding can help organisations to attract and retain

customers easier because if your companys brand sticks into consumers mind then they will always

come back to you every time they want or need something; brand recognition and personal connection

goes hand in hand (Papasolomou I, 2006, p. 14)

This is another challenging business aspect for Marks and Spencer as it is management interest and

responsibility to practise and enhance its corporate brand to make it more appealing to the public.

Below is a diagram of popular brands that achieved success because of their appeals and

attractiveness;

As stated earlier, brand is a very powerful component in business and this can be proven by the four

logos above whose respective firms are successful worldwide due to their recognised brands

worldwide and this must apply to marks and Spencer if they are to expand their empire even further in

the future and experience greener pastures. Coca cola which can arguably be recognised as one of thestrongest brands on earth has been able to gain ground ever since due to its popular brand and the way

it is written in red, a colour which is attractive and easier for customer to notify.

McDonalds is a leading brand as far as the fast food business is concerned and one of the reasons

being is its brand image inspired by the large M which appears in an arch form for easy identification

of the public.

Tesco is another well known rival and retailer to Marks and Spencer in the UK and well known for its

flag containing red and blue colours, this largely contributed to the awareness of the brand by

consumers.

Burger king is one of the biggest fast food brand in the world with a logo containing a lion

symbolising power and dominance hence attract consumers as well.

1.1.3 Profits

Advertising is engaged by the retailer to improve performances in areas of finance such as profits of

the organisation; advertising can be one of the most effective ways to improve profits. It was revealedthrough research that advertising has a strong impact on boosting the business firms profitability in

11B0504DADA1110


12/78


the long run. The profits generated by Marks and Spencer will enable the retailer to spend on

equipment that will assist them perform better in their job role and other business activities so the

business can run more effectively and efficiently.

1.1.4 Image

Advertising is used as a very useful tool in polishing an organisations image to the public as the

content in advertising is viewed by masses who in return judge the business firm upon the message

displayed in the advertisement. However, when it comes to how advertising can improve the firms

image and reputation with the public largely depends on what type of advertisement is used. I have

realised that the form used when advertising your products and services definitely has an effect on the

public community; a form of advertisement used by the firm can either do good or bad to the image of

the business. It is advisable for business firms to conduct a research before carrying out an advertising

procedure as some information is illegal to the authorities who might in turn lead to legal issues as

well as tarnishing the organisations image altogether (Paul A et al, 2002, p. 68)

Although advertising can play a huge role in improving the business firms image in a very short

period of time and produce positive results, it may lead to negative consequences while destroying a

business image if not used properly.

1.1.5 Demand

An effective advertisement campaign will for sure increase the level of quantity demanded for Marks

and Spencers products, services and other offers; this will not only increase the rate of demand but

decrease the demand of competing goods and services of its rival; I maintain advertisement act as a

form of persuasion leading consumers to buy a companys product while fighting off competition.

Strong and repeatedly advertisements can enhance the level of demand and establish brand

acknowledgement among consumers. However, I expect an effective advertisement to be creative and

catchy to create consumers awareness and the information should be able to explain the benefits of

the products and services to the consumers (Wolburg I, 2008, p.47)

1.1.6 Brand name

A great brand name is one of the most powerful aspects targeted by the trend of advertising in

business; your brand name should be easily identified, different and one that can easily be recognised

by the audience. I would suggest that a good brand name is the one that should be all in one and in

few words for simple and easier pronunciation. It is very important that your brand name used in

advertisement should stick to consumers minds and hearts; in short term, the brand name should be

straightforward. For instance, Marks and Spencer has a good brand name in form of M&S which is

easier to pronounce and cannot create any problems to the audience.

12B0504DADA1110


13/78


1.1.7 Market share

Increasing market share takes effort and is hard due to the growing competition as well as

deteriorating economy due to recession in the past four years. However, increasing marketing share

will definitely involve constant changes and improvements regarding the customers needs anddesires. For a well established retailer like marks and Spencer, it is important to examine its efforts in

areas where the firm is coming short and make instant changes. However, despite investing in

advertising to increase market share, it is recommendable for Marks and Spencer to conduct a

research and survey on the wants and needs of people before advertising. Marks and Spencer

experienced a decline in market share in the few past years due to recession and competition, and this

is a perfect time to diversify its advertising means. The advertisements should portray the products

and services in a manner appealing to current customers as well as generating room for new

customers; exploring new locations is another means of increasing and expanding the marketing share

(Vatti R, 2009, p.1)

1.0. 8 Cost

There are several benefits to implementing an expense reduction program and this is tricky as

advertisement generally needs more money than most firms activities. In my opinion, I would state

that advertisement will help Marks and Spencer experience higher margins by advertising lower cost

products. When the business firm offer affordable prices, it will eventually get a larger share as well

as organisational financial stability. The cost reduction mechanism reduces layoffs and increase

consumers morale (Immordino G, 2009, Article 10)

1.1 INTRODUCTION AND BACKGROUND

Marks and Spencer is one of the largest and well known UK based retailers that specialises in food,

clothes, kitchen items, flowers, beverages, technology, furniture and other monetary services

providing the public with a wide range of consuming choices. One of the reasons marks and Spencer

managed to last longer in the retail industry is because of its food that is regarded as fresh, natural and

healthy by consumers. The retailer operates a chain of 156 stores providing food that can be found in

railway stations, high streets, airports and shopping malls. It has another advantage and upper edge in

the retailing business as it leads as one of the leading clothing retailer in the United Kingdom

(guardian.co.uk)

The retailer has 600 stores in the UK and 200 in 40 other countries, Marks and Spencer is

recommended for its quality especially in clothes and food compared to that found in other

supermarkets even though it is a little bit expensive; it is fair enough to renown the retailer as a

phenomenon and best in business.

13B0504DADA1110


14/78


Background

It was in 1884 that Marks and Spencer was founded by Michael Marks at Leeds Kirgate market and

after this outlet became successful, he quickly thought to expand his enterprise. After experiencing

success at Leeds Kirgate market, he decided to open up a shop at 20 Cheetham Hill Road inManchester partnering Tom Spencer and the latter later became known as Marks and Spencer. The

two business moguls died later on but their legacy continued as their successors made the retailer even

bigger under Michael Spencers son Simon who became a chairman and in the following years the

business was renowned as a public limited company. Simon Marks should be recognised for growing

the business into a retail empire, acquiring a number of chain stores across the country. It was during

this era that Marks and Spencer with guidance and direction of Simon Spencer started selling textiles

in 1926 and later food in 1931 and onwards. The retailer influenced a number of innovations and

policies that attracted potential employment candidates to come and work for the company. There

were a number of synthetic materials introduced on a market that Marks and Spencer took advantage

of and become the first retailer to open up its own scientific research laboratory to develop and test

new fabrics.

The company took advantage of economical crisis during Second World War by producing and

offering cheap, hygienic and nutritious mass catering in their cafe bars that attracted a lot of

customers. This showed how opportunistic the company is when it comes to searching for new ways

to produce food and clothing that would easily fit during such a difficult wartime but still retain itsstandards.

It was not long before the retailer started selling wines for the first time, Chinese and Indian food

followed later which still exists until this very day.

In the 1980s, the retailer experienced a very profitable period and introduced furniture in their stores,

Marks and Spencer made history by becoming the very first British retailer to come up with a pre tax

profit of 1 billion and increased its ventures by establishing themselves in Hong Kong. It was after

experiencing success in Hong Kong; the company conquered other countries in business terms and

became a household name in Europe. The growth and maturity of domestic market prompt the board

of directors to initiate its expansion and diverse further in Europe, North America and Far East

fulfilling its ambition of operating worldwide. By the mid of 1996, Marks and Spencer PLC group

had a total of 628 outlets world-wide. However, all was not well after the latter fail to breakthrough

into North America market and was considered a failure. The failure was blamed due to lack of

research by the management as every market has different characteristics.

Recently, it has been reported that Marks and Spencer plan to invest in existing franchise partnership

to facilitate a faster pace of growth and greater operating efficiency; it is predicted that this plan is

14B0504DADA1110


15/78


intends to expand internationally for companys business to grow from 15-20% of Marks and

Spencers revenue within the next five years (Jackson P, 2005, p.21)

1.2 RESEARCH AND OBJECTIVES

The dissertation will briefly reveal and attempt to find out to which extent Marks and Spencer can

benefit from increasing its advertising while improving its performances to revamp its deteriorating

sales, new markets as well as its once tarnished image and reputation?

OBJECTIVES

The major objective of this dissertation is to address Marks and Spencer decision to invest in

advertising and the reasons will be explained in detailed manner to examine whether;

Is it necessary for Marks and Spencer to invest and rely in advertising for future growth and

success?

Whether its image and reputation can be polished by effective advertising

How advertising can increase awareness of retails products and services?

Whether advertising can help reduce competition?

To find out if advertisement can boost sales and profits?

The role of advertising in consumer awareness

If advertisement can be used as an educative element

15B0504DADA1110


16/78


CHAPTER 2: CRITICAL LITERATURE REVIEW

2.0 INTRODUCTION TO THE CHAPTER

In this chapter, I will explain the position of Marks and Spencer in the retail industry, as

stated in the research methodology, various books, journals, articles and various sources used

for analysis. The literature review will also take into account a number of studies directly and

indirectly using a number of economical approaches such as SWOT analysis, porters five forces and

the most important of all pestal analysis in building ways on how advertising can be carried out to

tackle Marks and Spencer internal and external challenges.

SWOT analysis

Developing new business and managing operations for Marks and Spencer will require an in-depthanalysis and knowledge of modern business practices and conditions. One of the popular and

important tools vital for Marks and Spencers mission to analyse its strengths as well as shortcoming

is the SWOT analysis. I could not ignore SWOT analysis in this context as it consists of a general

technique with suitable applications that provide business organisations with a proper marketing

strategy to achieve its goals (Helms M, 1991, p. 10)

I prefer SWOT analysis as the model involves the generation and recording of the strengths,

weaknesses, opportunities and threats affecting various tasks within the organisation;

Why SWOT analysis?

The following factors influenced me to recommend the model to Marks and Spencer in exploring its

capabilities and shortcomings in the retail industry;

it acts a framework to identify strengths and weaknesses, opportunities and threats.

analyse the situation very well and helps in developing suitable strategies and tactics.

act as an element for an organisation to adapt to culture

helps the company gain experience from day to day activities.

However, despite the advantages, the model has its own weaknesses as most models used in

economics, below are some weaknesses;

It takes long to analyse

Need highly expertise to describe events and situation rather than analysis

16B0504DADA1110


17/78


Lack of priority

Economic critics state the model is not good for planning and implementation process (Rathbone L,

1998, P 110)

Diagram of SWOT analysis

Below is a diagram of SWOT analysis presenting a four box matrix with internal strengths and

weaknesses being listed in the top two boxes and external opportunities and threats being listed in the

lower two boxes;

As seen from the diagram, it is evident that the analysis in the model is a basic and

straightforward tool providing directions while serving as a basis for the development of

marketing plans. Simplicity is one reason I opted for the model as it makes life easier for business

people to use and does not contain any complicated materials. The diagram is designated in a way

that one can simply separate the internal requirements and needs from those of the outside which

is crucial for an organisation to accomplish its objectives and easily indicate an obstacle that must

be dealt with or minimize to achieve desired results.

Strengths

17B0504DADA1110


18/78


First and foremost, Marks and Spencer strength lies on the fact that it is one of the largest

retailers in the United Kingdom in terms of sales and diverse range of products that include food,

clothing, financial products, furniture, wine and other home accessories. From the annual report,

it was also evident that the company has the strong cash flow position with increased turn over

and trading profits.

the company strong point also lies in its potential and capability to turn resources into other

form of opportunities and new products.

Innovation prowess and mission to go global is one area the company, the ability to diverse and

develop overseas supply chain make the latter to grow and expand even further.

Weaknesses

Consumers perception of Marks and Spencer charging higher prices to that of other retailers in

the country leading to customer disinterest which may be costly in this deteriorating economy.

Extremely high competition experienced by the company due to other powerful retailers in the

industries as well as new comers making competition harder than ever.

Vulnerable to substitute products and other technological threats.

Economic recession is one factor leading to decreasing sales and profits affecting the

organisations financial performance.

Opportunities

Marks and Spencer marketing team are promoting new products and services that are energy

oriented in advertisements to suit the global plan of eliminating carbon emissions that pollute air

forcing manufacturers to favour solar energy in their respective production means. The plan to

invest in solar energy was addressed by the companys Director of Plan A Richard Gillies in

assuring the stakeholders of the organisations respect for business ethics and social

responsibility; the green growth market offers the organisation with opportunities as right ethics

are critical to future business success (Carbon Trust)

The company has invested a lot in technological advertisement which is a key to modern

business, the retailer is trying to take advantage of technology linked to communication,

entertainment and gadgetry; Marks and Spencer is now affiliated with some of the biggest brands

such as Panasonic, Apple and Nintendo..

The company is planning to improve through installation of technology by upgrading its in-storeordering system that will be using a single integrated order platform across all channels of stores

18B0504DADA1110


19/78


via telephones and online, I support the move as this will make business transaction faster hence

generating more income (Williams L, Gartner Summits, 2007)

Threats

Marks and Spencer acknowledges countless threats especially competition from rivals such as

Debenhams, Selfridge, Next and other firms including other business factors such as market

saturation, mounting operating costs, logistic demands and continuously evolving marketplace.

These threats can be contained through correct and accurate information which is critical in

decision making; if the company ignores research then they will not be able to evaluate the threats

and dictate the performance.

Porter 5 forces

Porter five forces was introduced and founded by Michael Porter to assisting business

organisations to realise the extent to which the overall basis of competition seems to be much

wider than thought to the established competitors in a particular market; he further illustrates how

firms face the prospect of competition from new entrants and substitutes (Baker M et al, 2008, p.

59)

I preferred Porter five forces as Marks and Spencer is facing stiff competition from fierce rivals

such as Next, Tesco, Asda, Waitrose and other retail outlets who offer same products making

competition even tighter for the giant retailer; profit potential of an organisation can also be

assessed. Below is figure of Porter five force diagram that illustrate how each force works and

help the company to battle competition;

19B0504DADA1110


20/78


The objective of this model is to address the most important dimensions of each of the five forces

depending on the situation the business organisation is facing and how critical they are to the

performance of the organisation;

1.Barriers to entry

This is important to Marks and Spencer due to the fact that there are a lot of new competitors in

the industry. This has more to do with economies of scale in terms of volume, capital

requirements and other related costs that a corporate business such as Marks and Spencer has to

consider due to these new entries.

2. Intensity of rivalry

The degree of competition is very important as it determines how much effort needs to be

employed to deal with such a challenge in a certain period of time and Marks and Spencer cannot

afford to slow down in a highly intensive competitive environment such as the UK and other

European countries it is operating. In mostindustries where there are only few competitors,

competition will not be as intense while aggressive competition will be experienced in industries

where there are too many competitors, industry growth, high fixed costs and lack ofdifferentiation (Arons H, 1998, P.3)

20B0504DADA1110


21/78


3. Substitutes

There are always products or solutions that serve as alternatives and can perform the same

function in the industry like that of major players. For Marks and Spencer, there are many outlets

such as off license and markets some people would prefer to purchase products and other servicedue to the price and location factors. However, this will also depend on the level of abstraction

and other means.

4.Power of buyers

Buyers are the most important stakeholders in every business and have the power to determine the

direction upon which the business should be run. This has the impact on both Marks and Spencer

and its rivals, the bargaining power of buyers can force both parties to either raise or lower their

respective prices or even improve their performances in areas of high quality products and better

services.

5.Power of suppliers

It is no question that suppliers have as strong impact on every business as they have the power to

exert their bargaining power over businesses by raising their prices. The main concern with the

suppliers relies on the fact that there are switching costs between the supplier and the business.

This model is crucial in Marks and Spencers prospects in analysing the nature of competitionwithin it and how it can use its advertisement campaigns to tackles the competitive challenges.

However, the management has to understand these dynamics relating to the industry and markets

in order to compete effectively in the marketplace.

Pestel analysis

Pest analysis is another model that occurs in form of political, economic, social and technological

that act as variables in shaping a market place for any business; Marks and Spencer has to ensure

its advertising campaign is flowing in line with the nature and requirements of these four factors.

Legal constraints are also included in the model as illegal advertising will lead to legal issues that

have a negative impact and costly in financial terms. There are certain laws that should be

carefully be monitored by the Marks and Spencer before advertising both nationally and

internationally (Albaum G, 2008, P. 364)

This is how the model can be illustrated relating to Marks and Spencer current position in the

industry;

Political

21B0504DADA1110


22/78


Politically, Marks and Spencer has benefitted due to European integration and free trade

agreements in the main land Europe, this has allowed British retailers to trade in the regions such

as Eastern Europe. This has also seen Marks and Spencers rival Tesco increase its empire by

having 60 hyper supermarkets in Hungary. However, Marks and Spencer can capitalise on this by

increasing advertising its products across the European boarders.

Marks and Spencer is bothered by the increasing taxes set by the new government which has been

increased on all corporate organisations making it harder for businesses to advertise more than

before.

Economic

It is hard for Marks and Spencer on economical terms as the whole retail sector is vulnerable to

the recession leading to sensitive changes in the interest rates. It was since the credit crunch that

saw stocks being plummeted and prices at all times low. However, there are promising sign

flourishing as consumers are optimistic and the retail industry is once again booming and taking

shape.

Social

Advertisements are crucial in dictating social preferences, consumer taste and lifestyles now and

then which can act as both opportunities as well as threats to the objectives of Marks and Spencer

as a business organisation. There have also been concerns for the consumption of alcohol leading

unacceptable behaviour and social uncertainty making the selling of alcohol under serious threat.

Technology

Changes in technology has proved to be one of the challenging factors in the retail industry;

technological methods such as internet business in selling various items such as clothes on

internet has become a common place in retailing industry. Internet business transaction has

proved to be a fast and convenient means in business dealings worldwide making Marks and

Spencer feel under pressure and convince consumers through technological means about their

offers.

Environmental

The environmental rules has dramatically changed in the past few years as means of production

occur in form of renewable source of resources are practised to create a healthy and safe society.

There has been campaign to reduce the emissions of carbon by the government meaning business

organisation are supposed to use production methods that do not produce carbon which in turn

22B0504DADA1110


23/78


lead to pollution of the air. Marks and Spencer will have to promote carbon reduction in its

advertising campaigns to be in good terms with environment.

Legal

It is important for every business to avoid legal issues when running their respective businesses

and this can be achieved by following the right procedures and criteria when advertising products

and services; some of the things to be avoided must be copyright and information that will

provoke the public.

The aim of this literature review is to get an understanding of the existing disclosure in the problem

field. The understanding will help ensure that the research is founded upon accepted and validated

views relating to the topic from different scholarly materials, journals and other various sources.

Prolonged information gathered in the literature review should be that the research should be able to

add value to the existing body of knowledge to create a better understanding of what advertisement

can do to the organisation.

Relevant literature has been found in the main topic which this project is covering and includes

advertisement and its effects on the organisations products and services; relevant literature was

written by academics including practitioners. Most relevant sources has been thoroughly researched

and properly referenced throughout the report. The literature review will be structured based on the

research questions.

It is definitely essential for Marks and Spencer to apply advertisement as a weapon to get closer with

consumers in the retailing business as this will benefit them at all costs for its business to grow and

flourish. In 2010, Marks and Spencer decided to launch a new advertisement and marketing campaign

as a way of diversion and growing as means of directing its efforts for the companys brand on

international level. The literature review will explain why advertisement is required as well as range

of methods to be used. The company turned its attention on advertisement after non-convincing

performance on the market in the past three years compared to other retailers that nearly drove the

retailer into the brink of disaster. The firm engaged in advertisement campaigns to win back its loyal

customers who had recently fallen out with the brand and lost trust in their business dealings and end

up opting for other brands (Hall J, The Telegraph Business Journal, 2011)

2.1 What is the aim and importance of advertising to Marks and Spencer?

Advertising for a very long time has been considered as a useful marketing trend and capitalised by

most successful brands globally, Marks and Spencer should consider the possible benefits of

23B0504DADA1110


24/78


advertising if the retailer is to reign in the retail industry; proper designated advertisements can help to

form a healthy first impression from the audience. Advertising and retail business goes hand in hand

as retailers usually have more geographically concentrated target markets than manufacturers; this

gives them advantage as they can adapt better to local needs, habits as well as individual preferences.

However, not all retailers take advantage of this when marketing their goods and services (Berman B,

2007, p. 570)

As mentioned earlier in the introduction, Marks and Spencer is not just using advertisement as a

merely element of business expense, rather an investment in building the firms lacklustre sales and

building a strong image and brand recognition altogether. The future of marks and Spencer as a retail

brand and business organisation will partly be influenced by the firms marketing ability to plan and

execute an effective advertising program.

However, there are a number of factors Marks and Spencer should carefully consider in its

advertisement campaign because if the advertising trend is not properly planned and executed then it

will lead to nothing but financial losses. Advertising normally expect the image, information or

message contained in the article to be persuasive in nature to capture attention of the public. However,

Marks and Spencer should not expect short-term success in terms of sales as the impact of

advertisement to sales is viewed over a long period of time. The concept of how advertisement can

differentiate products and services will be assessed later under the methods used in advertising.

Cost can be considered and described as the greatest setback when it comes to advertising because it

is very expensive to continuously advertise a product or service in the long run especially as the

outcome is not always favourable. I would state that the trend is expensive in nature and prolonged

spending is required for such as big retailer simply because it will take more than one attempt rather

an exposure for a prospective client to notice your product or service; but this will not be such a big

problem for Marks and Spencer as the retailer is financially stable. It can also be tricky on a merely

fact that certain individuals happen to notice your products and services on the advertisement but does

not necessarily mean they will purchase the product or are willing to do business with you.

Credibility and clutter are other two disadvantages associated with the trend because sometimes

consumers become increasing suspicious about excessive advertising messages and tend to resent and

ignore. The following are the reasons Marks and Spencer should pursue in advertising to maintain its

status as one of the leading retailers;

2.1. 1. Awareness

As used in marketing research (Churchill G, 2002, p. 263) awareness has been described as something

respondents do and do not know about some object or phenomenon. One measure of the business

24B0504DADA1110


25/78


performance in retail business can be the measuring of effectiveness of product awareness generated

by the advertisement; this has a strong impact on organisations short-term success as well as failure.

The most important thing in increasing awareness is how the advertisement is designed to ensure the

content displayed plant everlasting memory in a consumers head.

One of the most important things that retail advertising can do for Marks and Spencer is to make the

public aware of its existence as well as the products and services they offer. I believe many businesses

have potential but cannot pick up and reach their full profit potential due to the fact that many

individuals are not aware that the business exists, or what they offer to a large potential customer

hence detrimental to both the growth and profitability of the business. In simple explanation, let me

just clarify that effective advertisement by Marks and Spencer will make it possible for individuals in

areas surrounding its businesses to be fully aware of the products and services offered.

Good retail advertisement is crucial and instrumental in providing the organisations potential

customers with information regarding factors such as location, new products and services, updates

hence forming a bond with stakeholders. This is very important due to the fact that customers are

more likely to patronize businesses in which they have detailed information and aware of what they

are going to get in advance which is vital in retail business thereby increasing customer base.

2.1.2. Communication

Advertisement is communication from the advertiser targeted to the consumer. I would state thatadvertising and communication goes hand in hand due to the fact that the whole purpose of

advertising is to communicate a message to the public about your business offers; advertisement

literary sends a specific message for people to relate and respond. In other words, the objectives of

advertisements are usually the communication tasks expecting to reach specific customers that the

company is trying to reach during a particular time frame. If advertisement is carried out in a way that

there is a better communication between the business firm and consumers then reduction of overall

costs are inevitable (Jobber D, 2000, P.77)

Advertising can said to be benefitting in communication terms as long as it can be able to execute its

tasks of leading the consumer form one level of another in the communication field. In essence, it can

be said that the objectives of advertising are expressed and fulfilled via right criteria of

communication spectrum making the choice of communication medium vital when selecting an

advertising tool. It is a responsibility of Marks and Spencer marketing team to ensure messages in its

advertisements are flowing around the right communication process for easy understanding of the

public; this is very important as effective communications tasks inspired by advertisements helps to

build up brand alertness, altering consumer thoughts, ideas, and information as well as product

dimensions.

25B0504DADA1110


26/78


The challenge lies on the fact that the advertiser has to make sure the message passed through the

clutter and be received by the consumer, the four factors should carefully be taken into account to

inspire a successful communication process;

Cognizance

The advertising material and its prospect must be well informed about the subsistence of the Marks

and Spencer brand in the market as awareness is the bare minimum objective of advertising.

Cognizance cannot be ignored on a bare fact that the process of purchasing items simply starts as soon

as the seller inform the consumer about the product or service.

Conception

The message should give the consumer an idea of the product potential which other retailers do not

offer to create a competitive advantage over rivals. This is very important as marks and Spencer may

offer good items but get poor conception due to poor communication means making consumers lose

interest or trust with the brand.

Conviction

The prospect must be psychologically convincing to stick in the mind of the consumers or to buy the

brand or product; this is crucial in increasing consumer preference and future sales.

Action

The prospect should always take meaningful action; it should always be designed to provoke a

purchasing action from the consumers.

2.1.3. Preference

The competitive landscape in the retail industry is fairly differentiated, but the way the retailer is

advertising its products and service can make a big difference in consumer preference hence

advantage over other rival retailers; products are becoming more similar making consumers to be

more aware in the design of efficient brands. Consumer preferences have played a huge role while

shaping many markets over the last decade dictating either success or failure and perceptions are

extremely very sensitive in this era where marketing is dominated by advertising. Endorsing of

effective advertisement can do nothing but build a fast brand recognition which in return helps

consumers understands functions and characteristics of a product or service (Dr Hsinkuang, 2005, p.3)

However, the method used in advertising plays a crucial role in catching consumers preference and

influences their buying decision which is very important to business advertisers. Consumerpreferences help business advertisers to find out the reasons for the choices people make when

26B0504DADA1110


27/78


selecting products and services; it is by analysing these factors that Marks and Spencer can really take

advantage in determining consumer preferences while targeting their products and services towards

specific consumer groups. I think by using advertisements in finding out about consumer preferences,

the firm can develop new products and be able to identify which products and services are important

or not; this is very important in creating demand. The diagram below evaluates how Marks and

Spencer can benefit from consumer preference derived from advertising;

The role of brand in affecting consumer choice

Brand effects

issues

Information

research

Evaluation 1

Establishing theconsideration

Evaluation II

Purchase decision

Post-purchase

behavior/evaluation

Indicator of

search attributes

Reduce

information

acquisition

Inclusion

criterion

Indicator of use

attributes

Inclusion

criterion

Risk reducer via

attribution

indication

Indicator of

credence

attributes

Risk reducer via

attribution indication

Brand

loyalty/inertia

Reduce

information

acquisition

effort

Decision

simplification

Decision

simplification and

risk reduction

Brand as a

valued attribute

Inclusion

criterion

Decision criterion Satisfaction/Prestige

Source: Teas & Grapentine 1996.

As consumer preferences become a dominant and recognizable force in evaluating the wants and

needs of the public, then Marks and Spencer should arrange its advertisements in a manner that will

influence those preferences.

2.1. 4. Market share

Increase a market share takes too much effort in every business regardless of the brand because of

new entries in the market as well as changing nature of the economy in the last decade. Marks andSpencer need to be proactive if they are to increase their market share as this will require constant

27B0504DADA1110


28/78


changes and improvements, I insist the retail giant to first examine areas where they are coming short

and make necessary changes with the help of research. It is in those areas where Marks and Spencer is

coming short that needs effective advertising to restore the faith and trust of the consumers so they

can once again turn their attention to the firm.

Survey would be a suitable and recommendable means of achieving this mission and I would advise

the marketing team to recruit survey experts to assist the firm in conducting a research or survey. It is

through the information gathered from the research and survey that should determine changes and

advertise even more in those areas to bring in more business (Madura J, 2007, p.46)

The advertising campaign launched by the board of Marks and Spencer is partly to save the firms

market share which is declining for a number of factors making the company even more cautious and

diversify through offering of new products and services. However, increasing the market share will

not only require generating new customers or new interest from old customers but also diversifying

the advertising campaign by using more improved media and methods.

The other important outcome of advertising in increasing market share is the fact that market share is

affiliated with profitability and this is vital for Marks and Spencer as the firm is definitely seeking to

increase its sales relative to competitors. Below are some of the reasons Marks and Spencer are

seeking to increase its market share;

Economies of scale

Marks and Spencer board realised the importance of economies of scale and assembled a team of

experts that will enable the firm to shorten up installation and maintenance times providing significant

savings. The theory of increasing returns to scales, or scale economies would definitely give a large

retailer like Marks and Spencer an upper hand in achieving productivity advantages due to greater

opportunities of division of labour. For example, Marks and Spencer can follow Wal-Mart which is

the largest retailer in the world by following this model as it has been proved to be a success. This is

crucial for Marks and Spencer as an organisation striving to expand even further so it can adapt to the

global economy which has changed dramatically and consumer demand is shifted.

Sales growth

As stated earlier that Marks and Spencer will benefit from advertising and boost its sales which were

declining during the economic downturn, not only do advertising inspire an increase in market share

but the bigger the market share the better the sales. Essentially, the sales growth occurring from a

bigger market share causes a chain reaction that boost the firms economic status where the product or

service advertisement is. Market share is often related to sales growth hence profitability, this can also

save Marks and Spencer from fierce competition because in this difficult economic times, Marks and

28B0504DADA1110


29/78


Spencer can take advantage and increase its market share to grow its sales by taking sales from its

competitors and in doing so increase its market share at the same time (Baker et al, 2008, p. 168.2)

However, this will need time and financial investment for Marks and Spencer because sales growth

derived market share will be considered in the context of sustainable growth because market share isrecommended for increasing sales for the bare fact that the retailer definitely has to increase its assets

on a wide scope to achieve this sales growth status.

Reputation

There are many retailers that are conscious and understand the concept and importance of advertising

in selling brands before products to enhance the reputation of the firm, business success, or survival in

a crisis, depends largely on reputation. Market share can also benefit Marks and Spencer in terms of

reputation in those areas the firm is increasing its share through advertising program via both internal

and external communication. The management team should ensure Marks and Spencers advertising

program should have the power to persuade collective opinion of the general public when increasing

its market share. The image of marks and Spencer may reflect or rather determine the popularity of

the firm in the long run among its stakeholders and have significance influence on decisions regarding

its products and services. Market share effect depending on advertising will definitely have a huge

impact on the organisations stakeholders perception on the marks and Spencers brand. For instance,

investors will analyse the firms overall reputation depending on its market share. I would simply say

that it takes a long time to build the firms image and reputation and a very short time to be destroyed

depending on how your brand is being portrayed when advertising its products and services. I believe

reputation is the most important asset as well as a form of investment Marks and Spencer can bank in

its business development and success.

Increased bargain power

Marks and Spencer possess a favourable market share in the retail industry proven by its vast number

of stores dispersed in different areas across Britain. This gives the firm an advantage on increasing its

bargain power through continuation and capability of growing its food sector while increasing space

contribution from hypermarkets that will allow Marks and Spencer to also drive towards a higher

share in non food sector; this means Marks and Spencer has to ensure that more products that are

standardised or undifferentiated the lower the costs hence more power is yielded to the buyers (Fill C,

2002, p. 576-577)

The secret to increase this bargaining power on consumer in the market share lies on effective

advertising that will sharpen the Marks and Spencer brand to successfully retain its customers which

is vital for the profitability of Marks and Spencers business.

29B0504DADA1110


30/78


2.1. 5. Communication and Information

Advertising as communication tool has always been considered as an integral part of marketing.

According to (Fisher J et al, 2002, p. 212) he referred to communication as the dialogue that unfolds

between the site and its users. He further stressed clear that good communication require highperformance on the part of the sender which in this case Marks and Spencer has to be highly creative

in sending its messages when informing it various customers via advertisements.

Advertisements used by Marks and Spencer should be able inform consumers of the functional

capabilities of the brand with symbols and relevant message to the consumers. Communication is the

most important part as far as advertisement is involved because the buyers perception hugely

depends on the amount and type of information they receive as well as the reaction to that

information. However, Marks and Spencer need to ensure the right communication procedure is

followed when creating its advertisements and some of the things to be considered include message

creation, selection of communication channel and assurance of feedback. The importance of the

relationship between the firm and the consumer can easily be illustrated by the diagram below;

According to Lancaster G (Marketing lecturers) he emphasized that there must be a good flow of

information in communication between the seller and buyer to enhance the positive decision making

30B0504DADA1110


31/78


on a purchasers point of view. However, I would also add that Marks and Spencer should design its

advertisements in such a way that it should also allow feedback from the consumer to the seller. The

advertising source also plays a huge role because the receivers of the message are more likely to be

influenced by the nature of the medium used to advertise the products or services. If the message or

symbols used in the advertisements are attractive then the audience will also definitely be tempted to

buy your staff.

For Marks and Spencer to be successful dynamic and fast paced business environment, its

advertisement campaign must contain advanced skills and expertise in areas of graphics, production

and art direction because other rival retailers are also coming up with newly innovative means of

reaching to the public, so the need for highly structured advertisements is required. Information found

in the advertisement content can help the firm influence following factors;

Price

Price is the most important thing on both the firm and consumers point of view as it determines the

difference or value of the item being advertised. As much as Marks and Spencer will be promoting its

brand as well as displaying its products and services in its advertisement campaign, it is a well known

factor that consumers would not bother to be paying a high price on the items being advertised .

Marks and Spencer can use its advertisement campaign to also convince the public on how their

prices are favourable comparing to that of its rivals relating to the brand; the firm should always make

sure the public is aware every time it reduces its prices. This can convince and persuade the consumer

to opt for the offers made by the firm through favourable prices (Berman B, 2010, P. 471)

Place

Information that displayed in the advertisement can also help the retailer to inform the public on the

locations where the retailer is sited and where its goods can be found, this is convenient on the

consumers point of view as he or she does not need to be searching about the location which can be

costly or waste of time.

Marks and Spencers marketing department should carefully consider the audience which is received

the information because various people depending on culture or social traits will eventually respond

differently, so knowledge is required before launching the advertisements.

Sales

Advertisement can communicate information about your product, service and business philosophy

which in the end may lead up to fluctuating overall sales of the organisation. In this bad economy,

consumers are concerned about the quality as well as prices of the commodities meaning if the firm

31B0504DADA1110


32/78


display information of hope and comfort on consumers behalf then its overall sales will eventually go

up. In order for Marks and Spencer to achieve sales promotion more effectively, it must ensure

information contained in its advertisements is established in such a manner that will prompt or

attempt consumers to take quick action and buy its staff.

2.1. 6. Competition

Recently, the retail industry globally has been very competitive, where by every retailer is trying hard

to utilize every available opportunity to capture as much consumers as possible; the modes of

marketing have also been improved tremendously. This has affected Marks and Spencer which has

experienced a stiff competition from rivals retailers recently leading to a drop in its sales, this may be

even hard for Marks and Spencer if the firm does not play its cards right in its advertisement

campaign because other giant retailers in the industry have also come up with effective and efficient

to be ensured of adequate positions in the retail market.

On the other hand, it is fair enough to credit the role of advertisements as a key factor in determining

success of any retailer in the business. The marketing team at Marks and Spencer involved in

advertising should be familiar and understand the nature of competition in the retail industry.

However, to succeed in doing so, Marks and Spencer need to analyse the strengths and weaknesses of

its competitors. If Marks and Spencer are to topple the retail industry then they must be able to beat

off competition in the first place to drive up its sales.

Brands generally compete in a competitive context and Marks and Spencers marketing team must be

aware that the firms advertisement budget is set within an eye to match the actions of that of its

competitors. This is crucial on the respective view that advertising your brand in this modern era to

fight competition should aim at recalling consumers (Shimp T, 1997, P. 244)

Advertising is the key secret when facing competition in the retail industry for Marks and Spencer as

the firm will maintain brand loyalty which inspires huge sales and capture a market share. I would

urge marks and Spence r to take advantage of the advertising campaign to expose indirectly

weaknesses or areas where its rivals are coming short to add extra advantage. For instance, marks and

Spencer do offer clothes of high quality compared to that of Primark, so it can use its advertisement to

prove how their products and services are superior to that of the rival in its advertisement pictures.

Competition in the retail industry has affected Marks and Spencer in many ways both internally and

externally, there are a number of business factors that have severely affected due to marks and

Spencer incapability to strive in the modern day competition prompting advertisement as a key

alternatives, below are some of the areas where competition inflicted concerns for Marks and Spencer

as far as business is concerned;

32B0504DADA1110


33/78


Sales

The retail industry is definitely one of the very dynamic and fast changing sectors economically in

terms of transactions and turnovers; as a consequence, it turns out to be very competitive and

sophiscated affecting the sales of the players including Marks and Spencer at times. Marks andSpencer has constantly experienced changes in its sales in recent years and that is why a massive

advertisement campaign is required to restore the old glory when the firm had no concern regarding

sales. This kept the firm on alert to constantly monitor the market and identify new trends on a timely

basis via advertising efforts. I believe to get in touch to the customers; advertisements can be used as

a reminder to what the retailer is offering on a frequent basis to keep up with the customers ever

increasing expectations as well as tastes (The British Retail Consortium)

Sales problems occur to the fact that it is becoming more difficult and challenging by the day to keep

customers satisfied so they can buy your staff all the time. Competition has granted the consumers

with more freedom of choice and this makes it hard for retailers to persuade these consumers to retain

brand loyalty for their respective firms. The other problem arising from competition for Marks and

Spencer is the alternatives rather several substitutes of equally goods and services that are found on

the market; it was reported in 2004 that Marks and Spencer lost momentum in terms of market share

and sales. The blame for this was based by categorised on internal and external factors which can best

seen in the diagram box below (Marks&Spencer 2004 Annual Report)

External Internal

-Fast changing market and tough tradingconditions

-Poor management - failure to recognize and reactto changing market trends

-Consumers change of taste -Decentralised marketing function: inconsistentbrand image

-War in Iraq - slower economy

-The versus the Euro - imports/exports

-Increased competition locally and from foreigncompanies

33B0504DADA1110


34/78


Even since this era, Marks and Spencer has struggled to respond quickly and take actions to match

consumers changing needs and preferences which generally drives up sales; this allowed retail rivals

to take note and catch up quickly capitalising on the firms shortcomings. However, with the ever

rapid changing trends, tastes and preferences in the retail industry, marks and Spencer should make

sure it comes up with advertisements promoting new and fresh products or ideas to help boost the

sales of this once ruler in the retail industry.

The advertisement campaign is encouraged as it will definitely help recover poor sales through

creative methods that will distinguish Marks and Spencer to its retail rivals. I would advise the

marketing team to come up with unique advertisements which can be a secret weapon in attracting

more attention hence landscape for more sales.

Profits

Profits are a driving factor in all big businesses as well as smaller one because they are used as

indicators to measure how the business is managed or the overall performance of the firm. In this

case, Marks and Spencer can make as much profits, but it is on the same level with other retailers

(Powell R, 2003, Module 5)

As it was in the past where by Marks and Spencer has always had a healthy profit making run until

experiencing a high level of fierce competition in recent years. I would partly blame the low profit

margin on the past poor managerial period where by marks and Spencer was highly successful andcompetitive for so long that they become complacent leading to loss of profits, this gave opportunity

for other retail rivals to overtake basing on lack of Marks and Spencer underlying problems. Ad

advertisement campaign implementation will open a new chapter upon which the firm will revamp

and restore its past success and profitability which is another area of concern as far as the

management team is concerned.

Advertisements can help beat competition by inc4reasing the demand rate for Marks and Spencer

which will eventually lead to overall increased gross profits. However, this is quite a challenge on the

same breath because the advertisement campaign will end up costing Marks and Spencer more money

in the process; I am still encouraging the firm to adopt the advertising strategy at the end of the day,

the trend is the key and vital in increasing profits even though it may be on Marks and Spencers

interest to overspend on advertising which can eventually hurt the firms overall profit making

potential( See appendix 3 that illustrates how Marks and Spencers profits have fallen in a month

period from July to Aug (2011)

Brand Image

34B0504DADA1110


35/78


As for Marks and Spencer, it is no question that in the modern retail industry with increased

competitive environment, it is very important for the firm to use advertising in amid of

competition to create a healthy and strong brand image development so as to influence

consumers opinions and preferences. An advertisement campaign will definitely help and

play a crucial role for Marks and Spencer to inform and remind its respective customers and

consumers in general of its potential and capabilities of its brand. This is very important in

this intense competitive environment where retail brands determine the success of the firm.

In todays market environment, consumers tend to associate products or service with the

brand image when purchasing various goods, it can be said that during this competitive era,

brand image is an integral part of the product or service being offered. Nowadays, it is not

just about getting products and services because the provider determines the purchasing

decision which is crucial for Marks and Spencers brand image and overall business

performance. If the firms brand image is not recognizable in this present day competitive

era, then the business firm is in big trouble because the vast majority on the market have

brand images associated with the parent manufacturer or producer making it crucial for all

retailers to step up their game in brand image advertisement. Similarly, brand image

utilisation has benefitted automobile giants such as Mercedes Benz and BMW, credit cards

specialists such as American Express and clothing companies like Tommy Hilfiger whose

brands are more attractive triggering the higher level of purchase in this competitive era

(Francis C, Positives brand image, Rockbridge)

Below are brand symbols of the business companies mentioned and how they are creatively

designed to attract consumers attention;

I have been tempted and still buy Tommy Hilfiger clothes and cologne because of itsattractive symbol and the same with Mercedes Benz and BMW which are my two dream cars

35B0504DADA1110


36/78


partly because of the brand image. Marks and Spencer are completely in a different industry

but can still learn from these successful brands with so much influence on the global market.

In a marketplace inspired by products and services that are highly designated to perfection, it

is very important for Marks and Spencer to use this advertising campaign in creating a brand

image that will differentiate the firm form competitors while assuring integrity, customer

retention and loyalty.

2.1. 7. Differentiation

It is typically tough in retail industry as the difference between the retailers is generally

minimal and Marks and Spencer can take this as an advantage and determine through

advertisements how the firm is different from other retailers. In this case, Marks and Spencer

can use its advertising campaign to inform and show consumers that its products and services

have more potential and effective to that of its rivals.

I feel it is even more difficult to sell products and services in the retail business where by

most food products and even clothes are identical making Marks and Spencer to be even

more cautious when advertising to convince the consumers their items are totally different.

The role of advertising in differentiation simply is based on the simple fact that consumers

will be able to differentiate you and competitors and choose who offers can be the best buy.

The information displayed on the advertisements can hand marks and Spencer a competitive

edge by comparing the prices of the firm to that of its rivals for consumers to determine a

difference which is favourable; consumers are always sensitive to prices hence offering them

fair prices through advertisements is a good strategy. However I would recommend this

differentiation shown or displayed in the advertisements to be based on quality or added

value so that they can be able to charge a premium price (Sanders L, 2011, p. 32)

However, to accomplish this mission of coming up with differentiated products and services,

it is very important for Marks and Spencer to do a research and find out what its customers or

consumers in the retail industry want and need. Differentiation will not only help marks and

Spencer in battling competition but in other crucial areas as well. However, the following

things have to be adopted to make this differentiation trend work well during advertisements;

Product features

36B0504DADA1110


37/78


The features of products and services have to be designed in an attractive manner which

should be appealing that consumers should be able to make a difference with those of the

other retailers; this is a crucial factor in differentiation as visual characters definitely catch an

attention of a consumer. The manner in which a product is portrayed in an advertisement can

actually increase the sales as well as profits or can lead to declining sales (Creusen EH et al,

2005, p. 64)

Function

The message displayed in an advertisement should be able to explain how the product works

or function in such a way that your rivals do not. Slogans used in advertisements also plays

an integral part as far as differentiation is applied and concerned, for example, one of Marks

and Spencer rivals, Tesco has a better and catchy slogan every little helps in its

advertisements and that makes a difference to a consumers point of view. Although Marks

and Spencer do not have to necessarily use slogans but can communicate some specific

benefits associated with its products and services in differentiating them to other retailers

offers.

LocationLocation can also be a justified differentiation in a retail business and Marks and Spencer has

to ensure it is advertising its products and services in locations near its desired customers or

easy access to the consumers. Marks and Spencer should pick up ideal locations when

advertising as this will convenient not only for customers but for suppliers as well. For

example, bus stops or train station can give the firm an advantage in getting access to more

consumers (Pioch E, 1994, p.222)

2.1. 8. Demand and sales

Analysing demand in every business is very important as demand for ones product indicate

the performance level or progress in effort applied, the higher the demand the better hence

profitab

London School of Commerce

Documents

Transcript of London School of Commerce