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How Tesco refreshed their marketing strategy to get back on track

Author's avatar By Expert commentator 10 Oct, 2017
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A case study showing how marketing helped this global retail brand move from struggling to surviving and prospering

Even the most successful brands occasionally face choppy waters. One wrong move, or more likely, a succession of poor moves as competitors 'up their game' can lead to decline. When this happens, not only is the brand's reputation threatened, but its bottom line as well.

The Tesco brand is synonymous with shopping in the UK. After questionable investment decisions and multiple scandals rocked the business in 2013 and 2014, the company began facing unprecedented quarterly losses. Consumer confidence in the brand plummeted and sales began to reflect that new reality.

Yet the commerce giant managed to turn things around and has been posting financial gains over the past year. How did it manage to do this? As it turns out, a lot of it had to do with improved marketing. Let's review one of the best case studies out there for salvaging brand reputation.



Tapping into relevant humour

The Tesco brand has historically had a very stable, recognizable, but corporate marketing strategy known by it's 'every little helps' strapline. It's success meant stagnation in engagement and lack of agility to deviate from the formula in previous years. This fear – due to the fact that Tesco's super-power status didn't really justify any changes – became quite obsolete.

In the wake of the horse meat and accounting scandals that plagued Tesco's reputation in 2013-14, changes had to occur. The company then began to try out a new form of marketing – humour – in its Christmas commercial campaigns. By using previous commercial actors in a new setting, the business was able to keep a familiar spirit around a new concept.

The head of marketing at Tesco, Robin Terrell, noted that many lessons in humour were learned from the campaign. The biggest of all – that humour is a medium not everybody appreciates – helped the business adapt its future plans. Many companies prefer to avoid humour in profitable times, due to it being a risky gambit that doesn't resonate with everybody.

"We are trying to approach things in a very different way. If you look at the market generally there’s a lot of sameness out there. Even in terms of media mix, execution, style, tone, it’s all the same."

Tesco's marketing gamble helped pay off in the end, by and large.

Creating new product lines

Reviewing the marketing mix was also required and one of the steps Tesco took was to launch a new line of new farm brand products. This dramatic rebranding of products such as beef, fish, pork and fruit allowed the company to appeal to cost-conscious consumers who didn't previously value Tesco's offerings. Prior to the rebranding, Tesco's basket of farm-style products was about 15% more expensive.

The brand understood the need to compete in this category and prices were reduced. The result was a dramatic increase in farm and fish sales at the new price point.

Shifting toward digital marketing

A tried and true mega-business in any market would be expected to invest billions in marketing. Many businesses that enjoy the market share that Tesco has, invest heavily in TV, press, radio and cinema. Tesco realized, however, that changes in this particular marketing strategy had to occur.

In 2013, Tesco spent approximately £110 million on marketing efforts in traditional outlets. By 2014, that number had declined by about 10 percent. In 2015, Tesco's ad spend declined sharply to less than £80 million, marking a huge shift compared to just two years prior.

While specific figures are not available, it is reported that a 1:1 shift in ad spend from traditional marketing tactics to digital marketing efforts has occurred. This means that the company is now spending at least  30% of its marketing revenue on digital marketing. This allows the business to reach highly-targeted individuals in methods that traditional marketing simply cannot provide.

Overhauling product packaging

Another huge shift at the grocery giant involved repackaging many of its high-quality offerings in higher-quality packaging. Much like what the brand did with its farm and fish products, the company took a good look at its sales and preferred items. From there, it determined which items were suffering the most from consumer drop-offs in demand and which were performing just fine.

With this information, Tesco was able to devise new packaging designs and branding campaigns for items in need of assistance. Many of these new rebranding efforts revolve around connections to farms, ranches and other elements that elicit imagery of home-grown atmospheres. Because of the challenges the brand faced, giving shoppers a more organic and locally-sourced feel in products was a smart move.

Competing with smaller chains

In years past, Tesco didn't have to worry much about competing with smaller chains. Today, however, those worries are a necessity. With chains such as Aldi now encroaching more and more on market share, Tesco has been left with no other choice than to fight back.

One of the biggest challenges of the past few years has been to stabilize market share. Fortunately for Tesco, its market share stabilised in 2016 – the first time following the scandals of 2013-14. The company's shift from traditional marketing to a digital marketing effort across all channels has made this possible.

Chains such as Aldi continue to compete on social media and beyond, Tesco has found a way to promote and attract customers from outside its realm. With new value items and advertisements featuring substantial deals, the giant is once again luring shoppers back into its stores.

Customising media

The brand sees a huge need for focusing on “the individual experience” in its resurgence. Tesco's marketing team has come up with a variety of great marketing ideas for this approach. From deep discounts delivered by email on birthdays to print campaigns delivered directly to the door, customization is key in the new world of marketing.

Marketers with the company report that instead of maintaining a big, generic image, its goal is to hyper-target specific shoppers and earn their trust. Much of this will be done through direct customised marketing approaches that appeal to specific shoppers' desires.

The reinvigoration of Tesco's strategies – and subsequent financial rebound – is a testament to the power of marketing. As businesses continue to feel the strain of competition both domestically and internationally, these entities will need a response plan.

In the wake of multiple scandals and plenty of competition, Tesco has managed to deliver both to its shareholders and shoppers. This truly successful and innovative resurgence is a far cry from such a horrible slump that haunted the company just a few years prior.

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