Tesco Club Card

I Background • Established in 1924 • UK largest retailer with around 31% market share • Third-largest retailer in the world next to Wal-Mart, Carrefour • Sales of £37 billion, pre-tax profit of £2 billion in Feb. 2005 • 2,365 stores worldwide with 367,000 employees I Store Type • Extra, Superstore, Metro, Express, Tesco.com, Homeplus I Product & Service • Food / Non-food retail • Financial service / Internet service / Petrol station / Telecoms 1960 1970 1980 1990 2000 Tesco Brand Value Strong brand image based on effective strategy [ Creating value Creating value for customers, for customers, to earn their lifetime to earn their lifetime loyality loyality ]] • “Pile it high, sell it cheap”model ► Poor & negative image (70-80s) Clubcard - a loyalty scheme (1995) • Customer focused strategy • Improving customer service & customer shopping experience Good value for money Innovative Local Populist Dynamic Source: www. Wolff Olins.com AIM In relation to Tesco own brand products and services, how is design used Questions Q1. How effective is the business at using design across own label products and services? Explanation of key questions •Own label products account for •50% of Tesco sales •The perception, communication and interpretation is vital to the success of the brand •Where Tesco is going with design is •key to the longevity of the brand •Change in consumer habits •requires strategic design response Q2. Are own label brands communicated clearly to consumers? Q3. Does design have a clear presence in own label products? Q4. How focused and forward thinking is their use of design in own label products? Q5. How is design used to give the customer something extra? Triangulation of findings Q1. How effective is the business at using design across own label products and services? “Tesco is very good at using design across their own label, especially strategically. Tesco is often used as one of the best examples of own brand label in the retail industry.” Primary research. Marlous Kelder, Ex-Tesco Design Design is used to: • Rationalize the whole design process - Reducing design costs and using same language for all own products. • Differentiate own products from its competitors - Win together rather than struggle individually • Create an infrastructure for its own labelled products - Shelf advantage for its products in stores • Balance low prices of own products - High prices don’t mean high quality. So, low prices don’t mean poor quality. Q2. Are own label brands communicated clearly to consumers? Primary Research - Questionnaires Show: Organic Healthy Living Finest Tesco Standard Basics 0% 10% 20% 30% 40% 50% 60% 70% “The constancy of the colours and style of packaging make it very simple for • Majority of consumers buy the basic Tesco brand as it is cheap and good value for money • Are the brand values being portrayed through each of the Tesco brands? • The use of Tesco logo is consistent in each of the products design customers to recognise the Value and Finest ranges. I don't think the standard range is that good – I couldn't tell you what its design essence would be in this range.” Marlous Kelder – Ex Tesco Design Basic shows a value price in its design – simple Less successfully communicated ranges: Organic Healthy living - showing health concerns for its customers Standard range Standard - good value for money, simplicity added colour. Finest and Organic are the most expensive, but good value. • Brand values of Tesco are portrayed successfully throughout Tesco own brand ranges demonstrated through experience and way finding system. Q3. Does design have a clear presence in own label products? • Own brand products accounts for 50% of Tesco’s sales • Design heavily used in the Value and Finest ranges • Design used to draw associations from high quality products Good use of design Consistency – Positive use of Tesco trademark • Visual approach • Wording on the packages • Typography Diversity • Easy identification • Types of products “... yes in value and finest packaging definitely also ranges as kids range, organics, free from.. have had clear design executions and presence in store through store design. standard range i don't think has such a strong presence.” Marlous Kelder, Ex-Tesco Design “Own-labels are growing up fast; they have evolved over time from ‘me-too’ imitators of brands to being brands in their own right. No longer content with industry-matching, retailers are now industry-leading.” “Many of these consumers will be retired, living on a pension, and living alone, so own-label suppliers must consider the needs of the singleperson household on a tight budget when putting together product ranges.” Mintel, Own Label Food and Drink, March 2005 Q4. How focused and forward thinking is their use of design in own label products? • Consistent design strategy. • Other brands in the store are even segmented through Good - Better – Best • Internet services – increase of 25% online sales • Services such as Music download as a rival to Apple’s i-tunes • Improving services - such as self–service Checkouts Best “The strategy of Good, Better, Best (Value, Standard and Finest) is a very successful model and has been copied around the world.” Marlous Kelder, Ex-Tesco Design Better Good Q5. How is design used to give the customer something extra? “Design or Innovation is used by adding new services, new product ranges and updating and modernising the stores. It is also used to reduce cost of building stores and making packaging this way allow product to be cheaper or have more points on your cards.” Marlous Kelder, ex-Tesco Design • Tesco uses design to give something back to customers for shopping at Tesco (see images) • As competition is so intense retailers such as Tesco use design to differentiate from the competitors • Direct-mail to bring customers into the store when traditional methods such as bulk buying are redundant and convenience and ready meals are dominating factors • Physical manifestations as well as design thinking • To create a social structure - building value and incentive through community projects Sources: Mintel www.tesco.com • Innovation through Clubcard size and convenience, e.g. the key ring version • Attractive for all members of the family • Using loyalty cards to attract customers to extra services such as petrol • Targeted promotion from information they have gathered through Clubcard membership. • Design is used to appeal to different market segments • Labelling on brands as the awareness of health implications has increased. It taps into the perceived benefits over pure cost. • Seasonal promotion of high-end (Finest) range. Design is used to promote the treat-like qualities. • Using advertising to communicate the width of the range as well as the value – “Every little helps” Tesco Own Label Design - SWOT Strengths Strategy – Good - Better - Best Differentiate their products from competitors Good value for money Gives something back to their customers – Club card Introducing new products & services Tesco online Weaknesses Tesco Standard Range Store Environment – Needs further attention Some still perceive Tesco brand as a cheap brand Strategy for services are not as strong as for products Opportunities Expand overseas Expand Non -food retail Improve existing ranges – Standard Range and high end ranges Threats Competitors might catch on Cultural changes may affect design – Need to be up to date accordingly Recommendations Use the strong identities of the Value and Finest ranges to transfer across the store to create a better customer experience. Opportunities; To improve; To expand on the following; •Quality of brand appearance Free from •Develop current ranges that have not reached their market potential •Improve brand identity of Standard Range and Organic ranges Organic range Expand Overseas Value range identity Do you think that Tesco’s own label products can stand alone outside Tesco stores? Bibliography http://www.wolff-olins.com/files/TescoCaseStudyWeb.pdf Datamonitor business information centre – tesco plc company profile http://www.tescocorporate.com/food.htm http://www.tesco.com/clubcard/clubcard/index1.htm http://www.creativephotographs.co.uk/mesmerize/MSc/Management%20Research%20Project .pdf http://business.kingston.ac.uk/papers/opres29.pdf http://www.loyalty.vg/pages/CRM/case_study_14_Tesco.htm Burton-Jones, Alan, Knowledge Capitalism www.austin-rover.co.uk https://owa1.brunel.ac.uk/exchange/im05ttv/Inbox/tesco%20products.EML/TescoCaseStudyW eb.pdf/C58EA28C-18C0-4a97-9AF2-036E93DDAFB3/TescoCaseStudyWeb.pdf?attach=1 Mintel: Own-label Food and Drink - UK – March 2005 http://reports.mintel.com/sinatra/reports/search_results/show&&type=RCItem&page=0&noacc ess_page=0/display/id=114623 http://reports.mintel.com/sinatra/reports/search_results/show&&type=RCItem&page=0&noacc ess_page=0/display/id=4216 http://reports.mintel.com/sinatra/reports/search_results/show&&type=RCItem&page=0&noacc ess_page=0/display/id=125763/display/id=169458§ion#hit1 Tesco Case study- Pictures Taken Marlous Kelder, Ex Tesco Design – Primary Research