Marks and Spencer’s Potential Entry to Kenyan Market

Marks and Spencer’s Potential Entry to Kenyan Market
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Marks and Spencer’s Potential Entry to Kenyan Market
Marks and Spencer, a British multinational retailer, is considering entering the Kenyan market to expand its global reach. With over 130 years of experience in the retail industry, Marks and Spencer is well-known for its high-quality products and commitment to sustainability (Marks and Spencer, 2022). Kenya, located in East Africa, is a rapidly growing market with a population of over 50 million people, making it an attractive destination for international retailers. However, entering a new market comes with significant challenges, including cultural differences, regulatory hurdles, and competition from local retailers. This essay will analyse the external environmental factors affecting the Kenyan market and carry out a segmentation, targeting, and positioning analysis to determine how Marks and Spencer can successfully enter and grow in the Kenyan market. Finally, this essay will provide recommendations for designing an effective marketing mix that will enable Marks and Spencer to sustain a competitive advantage in the Kenyan market.
Organisation Overview
Marks and Spencer (M&S) are a UK-based multinational retailer that has been in operation since 1884 (Marks and Spencer, 2022). M&S offers a wide range of products, including clothing, home products, and food. The company has a strong reputation for quality and sustainability and operates in over 50 countries worldwide. The company markets its various products through an established network of 1487 stores and 98 websites (Marks and Spencer, 2022). The company employs 65,000 people in its various support centres, stores, and warehouses, who play a key role in enabling the company to serve more than 30 million customers every year (Marks and Spencer, 2022).
M&S has experienced a financial challenge decline in its financial performance in recent years due to the pandemic. However, the company improved its performance in the financial year 2020/2021 reporting group revenues of £10.9 billion, enabling the company to post a before-tax profit of £391.7 million translating to a basic earning of 15.7 p for every share (Marks and Spencer, 2022). The earning was a 6.9 increase in revenues compared to the previous year and a 482.9 percent increase in the profit before tax.
In terms of strengths, M&S has a strong brand reputation and a loyal customer base. The company's commitment to sustainability and ethical sourcing practices has also resonated with customers. M&S has also invested in digital transformation and omnichannel capabilities, which have enabled the company to adapt to changing consumer behaviour and preferences. On the other hand, M&S has struggled to compete with fast-fashion retailers, particularly in the clothing segment (Marks and Spencer, 2022). The company's product range has also been criticized for being outdated and lacking in innovation. M&S has also faced challenges in expanding its international presence, with some overseas ventures not performing as well as expected. In summary, while M&S has a strong brand reputation and a commitment to sustainability, the company has experienced financial challenges and struggles to compete with fast-fashion retailers.
International Market Research
International marketing involves varying the marketing approach based on the uniqueness of the target country. This approach involves managing a wide range of variables, including culture, market, information, politics, economies, finance, stakeholders, and business control (Baack, Czarnecka, & Baack, 2019). Consequently, the market selection process involves considerations beyond the domestic border (Doole & Lowe, 2012). International marketing requires in-depth knowledge of target markets and high levels of adaptability to ensure survival in international markets. Thus, it is essential to conduct international marketing research to gather data about foreign markets and help a business make informed decisions about expanding into a given market. The most common approach to international marketing research involves identifying research objectives, determining data sources, collecting, and analysing data, identifying patterns and trends, drawing conclusions, making recommendations, and monitoring and evaluating results to help businesses make informed decisions about expanding into foreign markets (Doole, Lowe, & Kenyon, 2019).
To ensure the success of international market research, businesses must conduct an environmental analysis to understand the foreign market's unique characteristics. The SLEPT model is a useful tool for conducting an environmental analysis. It considers the social, legal, economic, political, and technological factors that influence the foreign market's success. A sustainability factor is also added to facilitate the analysis. By analysing these factors, businesses can identify potential opportunities and challenges in the foreign market and develop strategies to address them. Through effective international market research, businesses can successfully expand into foreign markets and achieve sustainable growth and profitability.
Overview of Kenya
Kenya is a country located in East Africa with a population of over 50 million people. It is the largest economy in the region and has a well-diversified economy, with agriculture, manufacturing, and services sectors being the largest contributors to its GDP (O’Neill, 2021). The country has a growing middle class and a youthful population, which makes it an attractive target market for Marks & Spencer. One of the potential opportunities for M&S in Kenya is the growing demand for quality products among the middle class. Kenya has a growing middle class that is increasingly adopting Western lifestyles and preferences. As such, there is an increasing demand for high-quality products like those offered by M&S. The company can leverage its reputation for quality to tap into this market and establish itself as a premium brand. Another opportunity for M&S is the growing e-commerce industry in Kenya. With the rise of the internet and mobile technology, e-commerce has become a popular way of shopping in Kenya. M&S can leverage this trend to expand its online presence and reach more customers.
However, M&S must consider that Kenya has a competitive retail industry. Kenya has a well-developed retail industry with both local and international brands competing for market share. M&S will have to develop a strong value proposition and differentiation strategy to compete effectively in this market. Another challenge that M&S may face is the high cost of doing business in Kenya. The country has a high cost of living, and the cost of doing business is also high. M&S will have to find ways to manage its costs effectively to remain competitive in the market. Further, Kenya has a complex regulatory environment that businesses must navigate. M&S will have to comply with various regulations and obtain necessary permits to operate in the country.
Nonetheless, Kenya presents a significant opportunity for M&S to expand its operations into a new and growing market. The country's growing middle class and youthful population make it an attractive target market for foreign businesses. However, the company will have to navigate the challenges of the competitive retail industry, the high cost of doing business, and the complex regulatory environment. By conducting thorough market research and developing a strong value proposition and differentiation strategy, M&S can successfully enter the Kenyan market and achieve sustainable growth and profitability.
External Environmental Analysis
Social Factors
Kenya's social factors present both opportunities and challenges for M&S. Kenya has a youthful population, with over 70% of the population aged below 30 years. The median age in the country is 19.4 years, which is significantly lower than that of the UK (World Data, 2023). This means that the target market for M&S in Kenya is likely to be younger than the target market in the UK. In terms of hierarchical social structure, the country has a small wealthy elite at the top and a large poor population at the bottom. The middle class is growing but is still relatively small compared to the UK. The income distribution in Kenya is highly unequal, with a Gini coefficient of 0.42. This presents both opportunities and challenges for M&S, as the company will have to develop a pricing strategy that caters to the diverse income levels in the country.
Kenya has made significant progress in improving its health and education sectors in recent years. However, there are still significant gaps in access to quality healthcare and education, particularly in rural areas. The literacy rate in Kenya is around 80%, which is lower than that of the UK. Nonetheless, the country is a rapidly changing society, with a growing middle class and a rapidly urbanizing population (Otiso & Owusu, 2008). The pace of change is faster than in the UK, and this presents opportunities for M&S to adapt and cater to the changing tastes and preferences of the population (Jeannet & Hennessey, 2006).
Overall, the country's youthful population, growing middle class, and rapidly urbanizing society present growth opportunities. However, the unequal income distribution, gaps in access to quality healthcare and education, and complex social structures present challenges for the company. M&S will need to develop a targeted marketing strategy that caters to the unique social factors in Kenya to achieve success in the market.
Cultural Factors
Kenya has a rich and diverse culture with significant features that need to be considered when entering the market. The country is home to over 40 different ethnic groups with different languages, customs, and traditions. However, the most significant cultural factor is the dominant influence of the Bantu and Nilotic ethnic groups (United Nation Population Fund, 2013). The two ethnic groups are known for their shared values, beliefs, and behaviours. In terms of shared cultural factors with the UK, English is the official language in Kenya and is widely spoken, making communication easier for M&S (Hall, 1997). Additionally, Kenya has a diverse and growing middle class with Western-style consumption patterns, which may align with the target market of M&S.
However, there are also areas of divergence from the UK. One of the most significant differences is the importance of family and community in Kenyan culture. Family relationships are highly valued, and extended families often live together, making decision-making a collective process. The individualistic culture of the UK may not resonate with Kenyan consumers, and M&S may need to adjust its marketing approach accordingly. Furthermore, Kenya has a high Power-distance index (PDI) in Hofstede's cultural dimensions, meaning that hierarchy and social status are highly respected (Hofstede, 2003). M&S may need to consider this factor when targeting different market segments and adjust its marketing approach accordingly. Another cultural factor to consider is religion, with Christianity being the dominant religion in Kenya. This may impact the types of products and marketing messages that are appropriate for the market.
Legal Factors
While there may be some similarities between the legal environments of Kenya and the UK, there are also significant differences that M&S will need to be aware of to ensure that they are complying with all laws and regulations and operating legally and ethically in the market. The legal system in Kenya is based on a mix of common law, customary law, and Islamic law, with the Kenyan constitution serving as the supreme law of the land. One of the most significant differences between the legal environments of Kenya and the UK is the level of corruption. Kenya has struggled with corruption in its legal system, which can pose challenges for businesses operating in the country. Bribery and other forms of corruption are common, and M&S may need to take extra precautions to ensure that they are complying with all laws and regulations (Shipley, 2018).
Another area of difference is the regulatory environment. While both Kenya and the UK have regulations in place to protect consumers and businesses, the specific regulations and enforcement mechanisms can differ. For example, in Kenya, there are specific laws related to consumer protection and competition that M&S will need to be aware of when entering the market. Additionally, labour laws in Kenya differ from those in the UK. In Kenya, employers must provide certain benefits to employees, such as sick leave and maternity leave, and there are specific regulations related to minimum wage and working hours. M&S will need to ensure that they are complying with all labour laws to avoid any legal issues.
Economic Factors
Kenya is considered an emerging market with significant economic potential. Its economy is driven by a range of industries, including agriculture, manufacturing, and services. However, there are significant economic factors that M&S will need to consider when entering the Kenyan market. One significant economic factor to consider is currency risk. Kenya's currency, the Kenyan shilling, can be volatile and subjec...