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. And the problem is that they cannot achieve synergy, as the new target is not the sum of the existing targets of both. The new target should be people who are middle class, middle and young ages and prefer fashion and quality experience. The relationship is “and” not “or” (Xie & Baldwin, 2007) which means the number of new targets is less than M&S’s existing target. As a result, the profits from new targets will decline from the existing targets.
Then there are no positive reasons for Arcadia or M&S to take over or sell the share. At a long-term plan for each of them, Arcadia can take the advantage of the abroad M&S’s closing stores such as Brooks Brothers and Kings Super Markets (Vandevelde, 2001). M&S now want to focus on the UK market, which can produce more profits. While, Acadia can expand to abroad of the UK, as the clothing market is fully mature. What Arcadia to do next is research abroad customers and satisfy their needs rather than make efforts on the UK markets. The two opposite strategies will cost double for marketing and managing.
Help M&S become the dominator in the UK is beyond Arcadia Group’s capability, especially when Arcadia is extending its international market. For M&S and Acadia, takeover could not profit each other, even Acadia have some measures to deal with, is not acceptable. At last, Arcadia and M&S cannot get strategic fits in terms of branding, targeting and abroad strategies. It is a tough task for Acadia and M&S to become alliance. Takeover M&S is not suitable, feasible and acceptable. Then, Acadia should not take over M&S and the board of M&S should not sell their shares.
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