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How Tesco Beat Sainsbury - 3

3.6 Brand Building & Advertising (As a Strategy Enabler)

  • Tesco stayed faithful to one slogan - "Every Little Helps" – for a long time. And its adverts featuring Prunella Scales - also of Fawlty Towers fame - had gone down relatively well, appealing to a Mass Middle-class market.
  • Mike Pearce, then chairman of marketing agency TSM, summed it up: "Tesco has done to Sainsbury's what New Labour did to the Tories. It has hijacked its ideas, added some value and stolen the hearts of Middle England."
  • Although Tesco made radical structural changes to its operation, a fundamental turnaround in Tesco's brand image was key in making these changes meaningful to consumers and other stakeholders alike. This was in sharp contrast to Tesco's key competitor, Sainsbury's, whose image declined over the same period.
  • In the early 90s, Tesco had an unappealing reputation of “pile it high, sell it cheap, and watch it fly”. This was a legacy of its shrewd and bargain-driven founder Jack Cohen.
    Tesco's brief to its ad agency Lowe Lintas in 1989 was, "We are looking to smash away preconceptions about our business with advertising to develop an image campaign which will lift us out of the mould in our particular sector."

Advertising helped improve Tesco's image in the minds of 3 audiences:
1. Tesco Store Staff, whose competent delivery of Tesco's initiatives was vital.
2. Marketing Community, an important source of talent to drive its development.
3. City Analysts, who directly influence its share price.

There are 2 phases to Tesco's Transformation:
1. Pursuing and Achieving Market Leadership (1990 to 1995).
2. Consolidating this Position (1995 onwards).

3.6.1 The Pursuit of Market Leadership (1990 to1995)

  • In the early 1980s, Tesco was perceived to be a basic groceries store that bore no comparison to the sophisticated ranges stocked by market leader, Sainsbury's.
    Yet Tesco had set its sights on market leadership. It launched a major programme to counteract its key weakness in terms of quality. This was Sainsbury's strength.
  • From around 1983, Tesco started to upgrade its stores and the quality and range of what it put onto its shelves. By 1990, it had failed to dent Sainsbury's dominance. Although the changes in store were evident to existing customers, they had not affected Tesco's image amongst non-shoppers.
  • By now Tesco was as good, if not better, than its competitors. But it had an image problem. The UK supermarket price wars of the 1970s were more closely associated with Tesco than any other retailer and were still top of mind for consumers.
  • Non Tesco shoppers had a significantly more positive image of Sainsbury's than they did of Tesco since many of them shopped at Sainsbury's. But the fact that people who did not shop at Tesco had a much worse view of Tesco than people who did not shop at Sainsbury's did of Sainsbury's, is testament to Tesco's image problem at the time.
  • By 1990, non shoppers did not appreciate the quality improvements that Tesco had made. Consequently, only a few new shoppers had been persuaded to give Tesco a try between the beginning of the Quality Programme (1982) to the launch of its new campaign in 1990.

The Opportunity for Advertising:

  • The opportunity for advertising was to persuade non shoppers to consider Tesco by presenting it as a credible alternative to Sainsbury's. Everything they could find at Sainsbury's they could buy at Tesco and the quality would be as good.
  • In addition, people had to want to shop there on an emotional level to be comfortable carrying a Tesco carrier bag. Tesco needed to present its changes in a way that would build a more positive identity for the brand as classless, confident, bright and innovative, in order for it to change perceptions in its particular business sector.

The Quest for Quality: (May 1990 to Dec 1992)

  • The first campaign, the Quest for Quality, ran from 1990 to 1992. In total, 18 TV commercials flighted, with 400 ARs being the typical burst weight.
  • The campaign adopted a deliberately (and, at the time, unusually) lighthearted approach. It starred Dudley Moore as a Tesco buyer who scoured the world in pursuit of an elusive flock of French free range chickens. En route, he discovered other surprisingly high quality products in the Tesco's range.
  • Products were obviously chosen to demonstrate Tesco's newfound quality. The idea that it would stock free range chickens was astonishing at the time.
  • But there was nothing too exotic. Each product needed to appeal to the aspirant taste buds of the average Brit. They included French camembert, Colli Albani (Italian white wine), Scottish salmon and tiramisu.
  • The campaign was highly impactful, peaking at 89% awareness. Non shoppers even remembered the campaign more than they remembered advertising for the competitor stores they shopped at. The key message was understood and started convincing people that Tesco was improving its quality.
  • Importantly, they enjoyed the advertising more so even than Sainsbury's Recipes campaign and this began to affect the way they felt about Tesco.
  • The main message consumers took out of the campaign was that Tesco strived to provide the customer with the best quality and most interesting variety of products.

Every Little Helps (Nov 1993 - March 1995)

  • In 1993, having made major improvements to product and store quality, Tesco embarked on a newer and bigger strategy. The retailer understood that the act of shopping was much more than just the products bought.
  • The company realised that none of its competitors was making serious attempts to improve the whole shopping experience.
  • Tesco capitalised on this key insight by launching 114 new initiatives which included mother and baby changing facilities, the removal of sweets from till points, the One in Front till opening system, a new value range and a loyalty Clubcard.
  • The new strategy required new advertising, as Dudley was associated purely with the products sold by Tesco. Whilst publicising the new initiatives, it needed to continue to build affinity with shoppers who had not experienced the new Tesco for themselves.
  • The advertising idea was that whilst not everything in life goes perfectly, Tesco was doing its best to make at least one aspect of the shopping experience a little easier.
  • Each of the 20 commercials focused on a different initiative, but the payoff line, "Every Little Helps", was used across all advertising and communications tools to encapsulate Tesco's new consumer-oriented philosophy of always doing right by the customer.
  • Awareness of the new campaign peaked at 64%. It successfully communicated each new initiative to shoppers and non shoppers, with high proportions claiming their awareness was a result of the advertising.
  • These included One in Front, and, importantly, Clubcard (which helped attract the final tranche of new shoppers that secured market leadership).
  • At the same time it helped to build a more positive overall impression of Tesco among shoppers and non shoppers. What happened?
  • Tesco's turnover increased by 38%, enabling it to overtake Sainsbury's in early 1995.
    In contrast to the period before 1990 when Tesco's instore changes had not affected non shoppers' image of Tesco or their willingness to shop there, 1.3 million extra households were now persuaded to choose Tesco between 1990 and 1995.
  • Significantly, this penetration growth is not simply the result of more stores and increased floor space. Tesco's floor space grew by over 4 million square feet during the Dudley and Every Little Helps advertising.
  • Nonetheless, the penetration gained per additional square foot was significantly higher during the latter than in the initial years of Tesco's expansion programme.
  • The belief is therefore that the advertising was instrumental in the improvement of Tesco's fortunes between 1990 and 1995. Tesco made massive changes to its business between 1990 and 1995, not least of which was the increase in its sales area. However, attracting new customers was fundamental to achieving market leadership.
  • It seems reasonable to suggest that without the benefit of advertising which not only publicised Tesco's new approach to shoppers and non shoppers, but also helped them like the brand, Tesco may not have attracted so many additional new shoppers. Tesco certainly believed this was the case.

3.6.2 Consolidating Leadership (Mid 1995 onwards)
A New Campaign

  • By 1995, as intended, "Every Little Helps" had become the driving philosophy that steered every initiative that Tesco made.
  • Whilst Tesco continued to develop these initiatives, the advertising needed a change.
    Britain had come out of recession. The advertising could now try to mirror the public's increased confidence. But for the consumer-oriented strategy to succeed, it was important that the public still believed Tesco was on their side. Alienating customers was more of a risk as top dog than as Number 2.
  • So Tesco turned the tables. Instead of focusing on Tesco's attitude to its customers, it concentrated on customers attitudes to Tesco. And this was no ordinary customer.
    The new campaign centred on the mother of all shoppers, Dotty Turnbull, who regarded each of Tesco's initiatives as an opportunity to put the store to the test.
  • She did it in 25 commercials that kept her one frustrating step ahead of her long suffering daughter, Kate. In testing it to the limit, Dotty gave Tesco and, importantly, its staff, the opportunity to shine.
  • The flexibility of this idea allowed Tesco to communicate service, quality, range, value for money and Clubcard, yet remain faithful to the core "Every Little Helps" philosophy.
    Whilst Sainsbury's has very publicly experienced the difficulties of injecting value into its quality-based positioning, Tesco had seamlessly integrated this message because lowering prices for the consumer was as relevant to "Every Little Helps" as offering better service.

Media Strategy: Making Dotty Popular

  • The Dotty campaign was designed to have a populist, yet quality appeal and the media strategy complemented this. The campaign was deliberately mainstream.
    An average execution typically reached 88% of housewives at 6.2 OTS (opportunities to see). The quality and relevance of each OTS was maximised by the following strategy:
    1) More top programmes were on the schedule in order to maximise attentiveness.
    2) The campaign was skewed towards populist programmes where Dotty fitted in most naturally as a commercial break.
    3) More centrebreaks were bought than by its competitors, again, to reach the captive audience in the middle of a programme they enjoyed.
    4) More spots were first in and last out of each break for the same reason.
    What happened?
    Over the period of the Dotty campaign, Tesco considerably strengthened its brand image versus Sainsbury's.
  • This was reflected in its widening share advantage over Sainsbury's. The growth was principally because more people were encouraged to shop at Tesco and, in contrast to the previous five years (where loyalty was static), those who did shop there also became more loyal.

3.6.3 Advertising and its Effect beyond Customers
Since the beginning of the 1990s, Tesco's advertising helped change the image of Tesco for the better in the minds of two other important audiences, i.e.: the staff and professional marketers.
The impact of Tesco's Advertising on Store Staff:

  • Tesco had close to 200,000 employees. The effect of the advertising on them was fundamental to the success of the Every Little Helps strategy and to securing their loyalty and support. The advertising helped ensure that staff lived up to the promise of Every Little Helps.
  • Since Every Little Helps was introduced in 1993, the advertising had been a very public statement of the kind of experience Tesco will deliver in store.
  • The new customer-oriented strategy was launched to the staff in a video which used the advertising to demonstrate what was meant by the new strategy. Ads were run on a loop in staff canteens and they were regularly featured in further First Class Service training videos and the First Class Success service bulletins that were issued to staff.
  • It was an efficient way for Tesco to train its staff, since the advertising is effectively a free training tool. Using advertising to train staff was not only efficient, but also effective.

The value of advertising in attracting better quality Marketers to Tesco:

  • Great marketing has been instrumental in Tesco's success and it was essential that it continued to attract the best marketing talent around. Yet retailing was not regarded as a particularly attractive or lucrative sector in which to work.
  • However, Tesco's positive public image had helped it shrug off the limited attractions of retail, enabling it to attract new talent easily. The advertising had been instrumental in transforming this image.

3.6.4 The Advertising Payback

  • Using econometric modelling, it was calculated that the Dotty campaign delivered an incremental £2.206-billion of turnover (excl. VAT) across fiscal years 1995 to 1999.
    Using Tesco's average operating margin over that same period of 5.9%, the campaign delivered an incremental operating profit of £130-million.
    So every pound spent on advertising generated an incremental 38 pounds of turnover and 2.25 pounds of operating profit.
  • Thus the campaign paid for itself more than twice over, delivering a 225% return on investment. This is a significant payback to operating profit, given the Dotty campaign accounted for less than 1% of Tesco's operating costs over fiscal years 1995-1999.
  • Expansion in non-staple categories is essential to Tesco's continued growth. The advertising has helped transform Tesco's brand image to the point that it is able to operate more successfully in grocery categories such as wine and gourmet food (via the launch of its premium range, Finest), where brand affinity is particularly important.
  • This transformation in Tesco's credibility enabled it to expand into new non grocery categories (such as financial services, children's educational toys, cosmetics, medicines and computers).
  • The Tesco brand could now be used to sell almost anything. From wine through to DVDs, home, pet and car insurance, cellphones, petrol and banking. Tesco has moved into one sector after another.

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