Takeover of Marks and Spencer by Arcadia Group
Some time ago, Arcadia attempted to a hostile takeover bid of Marks and Spencer, but it was rejected by the board of M&S. As the two organizations have different position in customers’ minds, customers would feel confused with their brands. In addition, they do not share the same target customers; M&S target middle class, middle ages and they have practical needs (Lun et al. 2011), while Arcadia’s target group belong to young and fashion people (Arcadia, 2011). And Arcadia (2011) would like to extend its international markets which against the closing losing business abroad strategy of M&S (Vandevelde, 2001). They do not have strategic fits.
According to the issues above, after the takeover of M&S, Arcadia would have entered a new market with a new brand, as the brands of both are not suitable. For example, brand M&S is quality, not the fashion brand of Arcadia. Then, when they use the existing brands names, images or value, customers will feel confused with the brand. So, building a new brand is the most effective way to combine the two groups of customers. In order to keep Arcadia’s existing customers’ loyalty and reach the M&S’s customers, emotional branding could work. As Lindstrom (2005) said when customers appeal to more emotional brand value, they are more likely to pay. Although building a new brand can solve the confusion problem, there will be more risks of building a new brand. As the intensive competition in the supermarket and clothing industry, a new brand is difficult to survive. And as a public company, they cannot make up brand stories or messages, then the brand of M&S hard change its brand to a new one and even make customers more confused. As the brand issues, it is not feasible to take over M&S for Arcadia.
As the brand change, the target should change as well. However, they have two groups of target customers and the two groups have little similarities. Facing this, Acadia need to re-segment its customers, and find the most suitable target.
According to the issues above, after the takeover of M&S, Arcadia would have entered a new market with a new brand, as the brands of both are not suitable. For example, brand M&S is quality, not the fashion brand of Arcadia. Then, when they use the existing brands names, images or value, customers will feel confused with the brand. So, building a new brand is the most effective way to combine the two groups of customers. In order to keep Arcadia’s existing customers’ loyalty and reach the M&S’s customers, emotional branding could work. As Lindstrom (2005) said when customers appeal to more emotional brand value, they are more likely to pay. Although building a new brand can solve the confusion problem, there will be more risks of building a new brand. As the intensive competition in the supermarket and clothing industry, a new brand is difficult to survive. And as a public company, they cannot make up brand stories or messages, then the brand of M&S hard change its brand to a new one and even make customers more confused. As the brand issues, it is not feasible to take over M&S for Arcadia.
As the brand change, the target should change as well. However, they have two groups of target customers and the two groups have little similarities. Facing this, Acadia need to re-segment its customers, and find the most suitable target.