Consumers may be tightening their belts, but Marks & Spencer has doubled down on premium positioning to gain market share – and it’s working.
Their 2024 Christmas collection, particularly their illuminated musical biscuit tins, offers a masterclass in leveraging behavioural economics to drive growth.
The Counter-Intuitive Strategy
While competitors like Waitrose have expanded their discount ranges in response to the cost-of-living crisis, M&S has taken the opposite approach.
They’ve recognised that their core middle class demographic still has disposable income – they’re just being more selective about where they spend it.
To win share-of-wallet, M&S have tapped into Price-Quality signalling.
Price isn’t just a number – it’s a shortcut for decision-making. Consumers rely on price to help them assess unknowns, especially in competitive markets like food where information is overwhelming.
A higher price acts as a heuristic for quality and trust: “They wouldn’t charge that much if it wasn’t better.”
Instead of slashing prices or upping the presence of discount ranges on shelf and devaluing their brand, M&S has doubled down on why people shop there and introduced even more premium options that reflect the brand’s core USP.
The Power of Strategic Packaging
At the heart of M&S’s success is their approach to packaging – the only touchpoint guaranteed to reach 100% of customers.
Their 2024 Christmas collection features illuminated biscuit and confectionery tins that double as musical Christmas village pieces, with price points between £10-£15.
This pricing (£2-£4 per 100g) might seem ambitious for biscuits, but M&S has masterfully shifted the comparison set. These keepsake biscuit tins aren’t competing with other confectionery; they’re competing with Lemax Christmas village decorations that retail for upwards of £100. Suddenly, £15 feels like a bargain.
The Behavioural Economics at Play
1. Value Perception Through Multiple Dimensions
The brilliance of M&S’s strategy lies in its layered value proposition. At its most basic level, consumers receive premium biscuits – already a desirable commodity, and the “excuse” for the purchase. But the real psychological multiplier comes from the additional dimensions of value.
These tins serve as festive decorations, bringing light and music to homes during the Christmas season.
They transform into collectible keepsakes, pieces that can be treasured and displayed year after year.
The sensory experience – from the visual appeal of the illuminated scenes to the charm of the musical elements – creates a multi-dimensional product that transcends its original purpose.
This layering of value creates a psychological multiplier effect that thoroughly justifies the premium pricing.
2. The Psychology of Collections
M&S has masterfully leveraged the psychology of collecting to extend customer lifetime value and drive annual repeat purchases.
M&S has designed these pieces to work together, forming a cohesive Christmas village when displayed as a set. This collectible aspect taps into “task completion motivation” – our deep-seated drive to complete unfinished tasks or sets.
The expansion of their range this year signals both commitment and future potential to consumers. This isn’t a one-off novelty – it’s the beginning of a collection, with the implicit promise of more to come.
Each individual tin becomes more than just a standalone purchase; it’s transformed into a piece of a larger, more meaningful whole that begs to be completed over successive holiday seasons.
3. Extended Brand Engagement and Emotional Resonance
Unlike regular packaging that’s discarded immediately, these keepsake tins create lasting brand touchpoints in consumers’ homes. Every time they see it, they’re reminded of the brand – marketing without effort.
The timing is particularly clever: as customers unpack their Christmas decorations each year, they rediscover their M&S pieces, triggering consideration for new additions to their collection.
The branding strategy shows equally careful consideration. Each tin features the M&S mark subtly enough to maintain its primary identity as a premium decorative piece, yet prominently enough to serve as a quiet reminder of its source. This delicate balance ensures the pieces retain their aesthetic appeal while quietly prompting future purchases.
4. Scarcity and FOMO
The seasonal nature of the “limited edition” collection creates natural scarcity, while the collectible aspect triggers loss aversion – the fear of missing a piece in the set.
Commercial Implications for FMCG Brands
1. Premium Positioning in a Cost-Conscious Market
Long-term success lies not in racing to the bottom but in creating compelling value propositions that justify premium pricing.
2. Packaging as a Strategic Asset
Rather than viewing packaging as a cost centre, treat it as a critical component of your value proposition and brand strategy.
3. Engineer Long-term Consumer Relationships
Look for opportunities to transform single purchases into recurring revenue streams. The goal is to shift from transactional relationships to enduring engagement that drives repeated sales.
The Proof is in the Results
When engineering these touchpoints, consider both the commercial and emotional journey. M&S isn’t just selling more products – they’re becoming part of their customers’ traditions. This deeper integration into consumers’ lives creates a powerful competitive moat that’s hard to replicate with price alone.
It’s creating a lasting brand relationship – transforming a commodity purchase into an emotional investment, proving that even in challenging economic times, there’s room for premium positioning when it delivers genuine value.
The effectiveness of this strategy is reflected in M&S’s recent market performance. Instead of diluting its premium identity, M&S maintained its focus on quality, indulgence, and special moments – hallmarks of its brand equity. Subtly introducing value options without compromising their quality-focused USP allowed them to resonate with a wider audience without alienating core customers.
The result? They held their 4.03% share of the grocery market (up from 3.76% in the same period last year).
Waitrose, on the other hand, leaned harder into value messaging – but at the cost of their high-end customer experience. This move arguably blurred their premium positioning, a critical misstep in retail branding. As a result, their market share slipped to 3.91%, down from 4.02% a year ago.
This is the first time ever that M&S food has overtaken Waitrose for market share.
In a challenging economic environment, the path to growth lies not in compromising premium positioning, but in finding innovative ways to deliver and communicate value to consumers.
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