Marketing Analysis Case Study John Lewis

John Lewis Partnership was founded by John Spedan Lewis and its operation began in the early
1900s. The Partnership consists of John Lewis and Waitrose and is a unique form of partnership
as the employees are the co-owners of the business, owning 39 John Lewis shops, 390 Waitrose
supermarkets and its website (www.johnlewis.com). The company highly values the happiness of
its employees and customers and this is stated in their financial report where it is certified as one
of Britains Top Employers in March 2012. This indicates that rather than solely pursuing profit
maximisation like other shareholder-owned companies, John Lewis can focus on building the
companys long term success by engaging its partners and customers. This essay will look into
the success of John Lewis, focusing on the following factors: the relationships between John
Lewis and its customers, its communications, services, and multi-channel strategy. This essay
will explain how these factors contribute towards the success of the brand by building up its
reputation of being a trustable organisation.
The bonds between John Lewis with its partners and customers are vital to John Lewis success.
It is not only the marketing mix factors that have an impact on customers purchasing decisions,
but also the relationship between the customers and John Lewis. Morgan and Hunt (1984) point
out that both commitment and trust can lead to cooperative behaviour, which would contribute to
the success of relationship marketing. They also defined relationship marketing as activities
directed toward establishing, developing, and maintaining successful relational exchanges.
Similarly, there is a correlation between customer retention and profit (Reichheld and Sasser,
1990 in Baines, Fill & Page, 2011, p.567). Therefore, it is crucial to build customer loyalty to
enhance long term relationship in order to raise profits by increasing the value of a product
(Ravald and Gronroos, 1996). John Lewis does this by ensuring the quality of its products and
services to improve customer satisfaction. One way of achieving this is through its Never
Knowingly Undersold policy where they ensure that they sell at highly competitive prices
(www.johnlewis.com) by checking their prices against other high street department stores.
In order to maintain a strong relationship, the committed partner has to be willing to put an effort
(Morgan and Hunt, 1984). This is seen when John Lewis indicates their commitment to their
brand value, Never Knowingly Undersold. Despite a plummet in operating profit in 2011/2012
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by 20.4%, John Lewis continues to pursue their price promotions, competing with other high
street retail stores (John Lewis annual report, 2012). Additionally, John Lewis launched its
Partnership credit card that allows customers to accumulate points after making a purchase,
which can be exchanged for gift vouchers. This is known as Customer Relationship Management
(CRM), the development and maintenance of long-term, mutually beneficial relationships with
strategically significant custom (Buttler, 2001 in Payne and Frow, 2005). A physiological study
indicated that people are motivated by rewards (Latham and Lock, 1991 in Verhoef, 2003).
The level of trust placed in John Lewis is further reinforced by its communications with its
customers. One of the key ways John Lewis achieved this is through the use of digital or social
media to interact with its target market. Social media communication is the interaction between
the company and its customers by allowing them to share their experiences and opinions of the
brand (Baines et al, 2011, p.320). This interaction with consumers not only acts as the public
relations for John Lewis, but also allows them to see how consumers perceive the brand and gain
feedback. This is because social media allows John Lewis marketing campaigns to reach a wider
audience, allowing it to raise the profile of its brand (Baines et al, 2010, p.416).
However, there is a risk that social media communications can backfire since advertisers have
no control over what is being said about their brands (Baines et al, 2011, p.418). One example
of this occurring was when John Lewis created the Waitrose hashtag on Twitter, encouraging
tweeters to complete the sentence I shop at Waitrose because . This resulted in several
tweeters ridiculing Waitrose for its posh image (Smithers R, 2012). Although this may be
initially interpreted as a failed social media campaign, there may be some benefits. Firstly the
comments would allow John Lewis to have identified the consumers attitudes to Waitroses
brand image and adapt it so it appeals to them more. Moreover, it can also be argued that it
would remain in the minds of consumers indicating that there is no such thing as bad publicity
(Smithers R, 2012).
On the other hand, some of John Lewis advertising have been well-received by the public,
gaining a reputation for creating memorable advertisements. For instance, the John Lewis
Christmas advertisement 2012, A Journey received 4.32 million views (as of November 2012)
on YouTube (Wallop H, 2012). The success of the campaign was such that it led to a sales
increase of 26.5% from 2011 (John Lewis weekly sales figures 2012). John Lewis Never
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Knowingly Undersold advertisements, where the companys brand values are conveyed to its
target market, are another example of successful communication. The success of the
advertisements, despite the lack of focus on the company itself has made it a very interesting
marketing case study. This is because the advertisements connect on an emotional level with its
audience in reminding them of what the brand represents.
Service marketing is another leading factor in John Lewis success. The service-dominant logic
indicates that service plays a vital role when products alone cannot satisfy consumers in retail
stores (Baines et al, 2011, p.495). Staff represents the service and should deliver the service
consistently to a level that matches the desired positioning and service blueprint (Baines et al,
2011, p.494). Therefore, it is imperative that the staff be rewarded if their services match the
organization standards. John Lewis determination to empower their employees has lead to their
services being of a higher quality. Every employee is considered a Partner and receives the same
percentage payout at the end of the year, irrespective of their positions in the company (Wood Z.,
2011). As they feel they play a significant role in the running of the business, they are
accountable for the performance of the company.
Comparatively, even though John Lewis sales staff received the same salary as those in rival
competitors such as Tesco, Marks & Spencer and Sainsburys, they earn extra bonus at the end of
each year, whereas the directors are paid substantially less than competitors in the same industry
(Wood Z, 2012). According to Chairman Charlie Mayfield, 2011, the average bonus payment for
the last five years (2007-2011) is 15% but has fallen in 2012 to as low as 4% in 1954 (Wood Z,
2012).
John Lewis aims to maintain its brand promise by adding value to their services through the
provision of expert advice and high quality after-sales service in their stores. The motivation of
the staff ensures that high quality services are provided in order to ensure high customer
satisfaction. This may have contributed to John Lewis success against other competitors in the
different industries. For instance, in the retailing sector, John Lewis department stores achieved a
like-for-like sales increase of 10% as opposed to Debenhams, which faced a 0.3% fall in like-forlike sales between 2010 and 2011. Waitrose achieved an operating profit increase of 3% between
2010 and 2011.

Moreover, promotion plays a vital role in success. Baines et al (2011, p.494) indicates that the
purpose of services-based promotional activity is to reduce perceived uncertainty associated with
the intangibility of a service. Thus, promotion helps people easily recognise the brand identity
that the organization is aiming to build up. With respect to John Lewis, its Never knowingly
undersold policy has been used since 1925 and has been successful in building up the reputation.
John Lewis multi-channel strategy is another important factor contributing to its success.
Nowadays, it is quite common for consumers to use different distribution channels when making
consumption decisions and the multi-channel strategy is used to reach this market segment. Not
merely does John Lewis have numerous physical retail stores around Britain; they have also
extended to the internet through online services (Click and Collect) and social media (YouTube,
Facebook, Twitter) along with releasing applications on smartphones. Multichannel marketing
enables firms to build lasting consumer relationship by simultaneously offering their customers
information, products, services through two or more synchronized channels (Rangaswamy,
Bruggen, 2005). According to graph 1 and 2 (Source: Brand-New-World, AOL, 2012), online
resources such as search engines; company websites are considered more popular than sales
people in retailers. Personal recommendations aside, which the retailer has no control over,
consumers tend to rely on online resources for price comparison. This includes websites of wellknown retailers and search engine results. Therefore, it can be concluded that firms would want
to place an emphasis on online marketing, especially since John Lewis online trade performed
positively with a 24.2% increase against the market growth of 13.5% (John Lewis annual report,
2012).

Graph 1

Graph 2

Specifically, the free Click and Collect initiative has becoming increasingly popular and grew by
114% compared to 2011 (John Lewis annual report, 2012). This is due to the fact that it merges
the advantages of online sales, which provide information and comparison for consumers, with
the convenience of collecting the products directly from the store. Furthermore, John Lewis
offers the customers vouchers while collecting their purchases to encourage in-store sales.
Mobile campaigns have become a quick and easy-access point for the organisations broader
campaign with the increasing use of Smartphones (Blyth, 2010, p.141). It also makes it easier for
shoppers to research products or stores information at their convenience anywhere. Since
December 2011, John Lewis included the use of Smartphone applications, allowing shoppers to
scan products to access further details (including the provision of a link to mobile site if products
are out of stock at local shop, and to find the nearest store).
Adopting the multi-channel strategy was necessary for John Lewis to become competitive
against major competitors such as Debenhams who are also a leading multi-channel brand.
Hence, it may be similar to competitors and thus, not be considered to have a revolutionary
impact on consumers as its advertising campaigns. However, a range of innovative techniques
such as adding wifi to their stores make them stand out against competitors. Moreover, the focus
on multi-channel strategy has made a huge contribution to the John Lewis Partnership,
accounting for 24% of sales in the first half of its financial year (Johnson B, 2012).
All these factors increase the customers trust and confidence leading to brand loyalty towards
John Lewis. This is evident in the recent 2011 awards where John Lewis won the Most Trusted
Organisation and Most Reliable Organisation (John Lewis annual report, 2011). Although the
retailer saw a fall in operating profit of over 54% earlier in 2012 (Wachman R, 2012), sales
during the week leading up to Christmas rose by 20.4% from last-minute Christmas shopping.
The emotional Christmas advertisement may have played a role in stimulating sales figures as it
reinforced an emotional loyalty within consumers towards the brand.
Each factor has contributed to the success of the organisation in different ways. In terms of
building up a powerful brand image, its advertising strategy has been the most effective
technique in its ability to garner loyalty from its customers. Its advertisements are often used as
marketing case studies, inspiring copy-cat ads (Spanier G, 2012) from competitors, indicating
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that John Lewis has set a standard in advertising. The use of social media provides a wider
audience, reinforcing the success of the advertising. On the other hand, the multi-channel
strategy has provided John Lewis with the support needed to survive the recession by boosting
overall sales figures. Finally, the use of high quality services achieved through Never
Knowingly Undersold and motivated staff contributed to making the organisation reliable so it
maintains the trust that its customers place in the brand.

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