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The Impact Of Advertising On Retail Brands - Tesco Stores Ltd Case Study

01 Jun 2011

Compiled by Pedro de Gouveia of Salient Strategic Advertising and Design

How 'Every Little Helps' Advertising Helped Tesco's Brand Image in the 1990's

Part 1

The Turnaround of Tesco

The radical transformation of Tesco's fortunes from slumbering number two to Britain's largest supermarket chain, has been well documented in the UK. 

Between 1990 and 1999, Tesco's turnover increased from 8 billion to 17 billion Pounds and its share rose from 9.1% to 15.4%, overtaking Sainsbury's to become market leader in 1995. (Institute of Grocery Distribution, Grocery Market Shares: Dec 1989 to June 1999)

Whilst loyalty had risen in recent years, Tesco's ability to attract new shoppers was been essential to its success. Just over 2 million more households chose to shop at Tesco over this 9 year period. (TGI based on female housewives)

Tesco

But what convinced them to shop at Tesco?
Tesco did in fact make radical structural changes to its operation. However, 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.

The Transformation of Tesco's Brand Image
In the early 90's Tesco still had its unappealing reputation of pile it high, sell it cheap and watch it fly reputation. A legacy of its shrewd and bargain driven founder Jack Cohen.

Incredulity would have met the suggestion that people might buy gourmet meals and fine French wines from Tesco or entrust this brand with their savings. From a company with declining credibility, Tesco today one of the UK's most trusted brands, securing significant gains across a range of image criteria.

The Role of Advertising in Transforming Tesco's Brand Image
Tesco's brief to its ad agency Lowe Lintas in 1989 was "We are looking to smash away preconceptions about our business with advertising o develop an image campaign which will lift us out of the mould in our particular sector."

Over time, advertising had been a consistent but relatively minor part of Tesco's total brand investment. However, strong evidence shows it has played a crucial role in transforming consumer's perceptions of Tesco. Particularly those consumers who could not experience Tesco's in-store transformation (because, at the time, they did not shop there). 

Through its impact on Tesco's image, the advertising has encouraged more people to shop at Tesco and, more recently, to stay loyal to it. Thus, it has made a significant financial contribution to Tesco's business. Moreover, its transformed image has allowed Tesco to expand into a wide range of non-grocery sectors, where brand credibility is a critical.

The advertising has also helped improve Tesco's image in the minds of three further audiences:

  1. Tesco store staff whose competent delivery of Tesco's initiatives was vital.

  2. The Marketing community, which is an important source of new talent to drive Tesco's development.

  3. City analysts who directly influence it's share price.

In 1997, its Chairman, Lord MacLaurin said that it's image change was helped enormously by Lowe Lintas, which thrived on the account, under the astute leadership of a as yet unknighted, yet highly talented Frank Lowe.
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A Tricky Task:
How do you measure the impact of advertising on the fortunes of an organisation with over 160,000 employees in more than 600 stores, each with around 20,000 lines, which regularly introduces new products and initiatives?

The task is made more difficult by specific evaluation difficulties: 

  1. In many cases, the advertising worked hand in glove with Tesco's operational changes.

  2. Tesco advertises nationwide and operates predominantly in the UK.

  3. As soon as someone sets foot into Tesco, the instore experience will obviously affect their perceptions of the brand.

Nonetheless, the evidence which exists clearly shows the effect of the advertising on image, behaviour and, ultimately, sales. Econometric modeling is a key component of this evidence. Unusually, in this case it has been used to understand the effect of advertising on image as well as sales.

There are two phases to Tesco's transformation:

  1. Pursuing and achieving market leadership (1990 to 1995).

  2. Consolidating this position (1995 onwards).

There are interesting conclusions about the role of advertising during phase one, though the bulk of available evidence covers the period from 1995 onwards.

For simplicity, the study is concentrated on the effects of TV brand advertising only.

Part 2

The Pursuit of Market Leadership (1990 to1995)

In the early 1980s, Tesco was perceived to be basic groceries that bore no comparison with the sophisticated ranges that the market leader, Sainsbury's, stocked.

Yet Tesco had set their sights on market leadership. They launched a major programme to counteract their key weakness in terms of quality. This was Sainsbury's strength. From around 1983, Tesco started to upgrade their stores and the quality and range of what it put onto its shelves.

Yet even by 1990, they 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. The problem was that it is not perceived as such, and thus it had a major 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 amongst 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 their 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 the changes at Tesco in a way that would build a more positive identity for the brand as classless, confident, bright and innovative, in order for it to rise out of the of the mould in it's 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, discovering other surprisingly high quality products to add to 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 (the white wine the Italians drink), Scottish salmon and tiramisu
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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. A far more competitive and positive personality had emerged, of which advertising had been part of.

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 their competitors was making serious attempts to improve the whole shopping experience.

Discounted Brands

Tesco capitalized 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 it's soon to be famous loyalty Clubcard.

The new strategy required new advertising, as Dudley was purely associated the products sold by Tesco.

Whilst publicising the new initiatives, Tesco 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 were doing their best to make at least one aspect of the shopping experience a little easier. Although each of the 20 commercials that were made focused on one particular initiative, a new 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 them 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 their business between 1990 and 1995, not least of which was the increase in their 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 publicized 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.

Part 3

Consolidating Leadership (Mid 1995 Onwards)

From 1995 onwards, the links between advertising and various business measures became more definitive.

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 and 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.

Tesco Stores

So Tesco turned the tables. Instead of focusing on Tesco's attitude to their 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 regards each of Tesco's initiatives as an opportunity to put the store to the test.

She did this 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 the Dotty Campaign and the Every Little Helps Philosophy:
Over the last five years, the flexibility of this idea had 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 has seamlessly integrated this message because lowering prices for the consumer is 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 reaches 88% of housewives at 6.2 OTS.

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 strengthened its brand image vs Sainsbury's considerably. 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.

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
A single failure such as the bad attitude of a lone till cashier can destroy carefully built customer loyalty. It has also been well documented that a failure on the part of advertising to meet the approval of staff can also have a dire effect on their loyalty.

Job opportunities picture

Tesco has 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. Truly engaged employees are key to the future growth of any business.
Companies have to engage people behind the brand promise because people are the face of the brand, particularly in the retail environment.

Since Every Little Helps was introduced in 1993, the advertising has been a very public statement of the kind of experience Tesco will deliver in store. The strategy can only be successful in securing loyalty (and satisfying new customers) if consumers see it in action.

Hence, it is essential that staff believe in the advertising and deliver accordingly.

The advertising is also used as a more motivating way to train staff in the Every Little Helps philosophy than a memo or motivational talk from a store manager.

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 have run on a loop in staff canteens and they are regularly featured in further First Class Service training videos and the First Class Success service bulletins that are issued to staff.

This is an efficient way for Tesco to train their staff, since the advertising is effectively a free training tool. The alternative of investing in separate video material for training can cost anything between 50,000 and 250,000 per film.

Using advertising to train staff is not only efficient, but also effective. Staff feel this way, and consumers see the results for themselves.

Here are two examples of positive customer feedback received:

"After Sainsbury's had refused to slice cheese from the deli counter, Rita at Tesco's cheese counter did it without hesitation. Now that's service. And by now most of Partridge Green and Horshams WI and a few others know about it. As your slogan says, Every Little Helps and it does."

"Nigel on the fish counter told my son and his friend all about fish when they were doing a project on the subject. The inspiration he has given the boys is unbelievable and that's why I'm writing. When I see that Tesco advert "Every Little Helps" I really do believe it."

Tesco employees found the campaign to be highly enjoyable. A campaign they could be proud of. It highlighted how hard their job is [and] showed how far Tesco would go to please customers. Staff were particularly pleased with the portrayal of themselves in the campaign. Real people trying to do their job well, not adland simpletons found in Asda and Morrisons advertising.

It gave them a sense of worth in relation to Tesco, acknowledged them as being important to Tesco's success and has gave them responsibility to pursue this. positive about Tesco.

The Value of Advertising in Attracting Better Quality Marketers to Tesco
Recruiters agree that a company's image is important in attracting the best people and that advertising is one of the factors which influences this.

Public image plays a key role in attracting potential employees. This is affected by all forms of communication, including consumer advertising.

Great marketing has been instrumental in Tesco's success and it is essential that they continue to attract the best marketing talent around. Yet retailing is not regarded as a particularly attractive or lucrative sector in which to work. There is no denying there is a lack of talent in UK retail at the moment. The few good retailers there are do not want to leave their posts to take on what might be an impossible task

However, Tesco's positive public image has helped it shrug off the limited attractions of retail, enabling it to attract new talent easily. The advertising has been instrumental in transforming this image. It also directly affects the way marketers feel about Tesco as a potential employer. Last year, for the second year running, Tesco was voted Britain's most admired company by its peers ahead of such marketing dominated companies as Cadburys and Unilever.

Tesco Price Check

The Advertising Pays Back

Direct Payback
Using econometric modeling, it wade calculated that the Dotty campaign delivered an incremental 2.206bn 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 130m. 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 they are able to operate more successfully in grocery categories such as wine and gourmet food (via the launch of their premium range, Finest), where brand affinity is particularly important.

This transformation in Tesco's credibility enabled them to expand into new non grocery categories (such as financial services, children's educational toys, cosmetics, medicines and computers). Again, the thought of entrusting your life savings (or even your face) to a brand that piled it high and sold it cheap would have been unimaginable a few years earlier.

The Tesco brand can now be used to sell almost anything. From wine through to DVDs, home, pet and car insurance, cell phones, petrol and banking. Tesco has moved into one sector after another.

To illustrate: Tesco has nearly 8% of the CD market; 1 million people have opened personal finance accounts with them. It issues on average 20% of all credit card accounts per year.

It is the fourth biggest supplier in Britain's petrol market.

Tesco's share of the healthcare market has increased from 5% to 11.5% over the last ten years. It is now the biggest online grocery retailer in the world. Eleven percent of people even say they would trust Tesco to fix or service their car without ripping them off despite the fact that Tesco has no experience or credentials in car maintenance.

It is not implausible to suggest that the long term financial contribution of advertising to Tesco's ability to extend its brand offering,

increase its non foods business and grow its overall turnover is significant.

In conclusion, it would seem that Every Little Helps has indeed been a big help to Tesco.


About Salient Strategic Advertising and Design (Pty) Ltd

Salient Strategic Advertising and Design (Pty) Ltd opened its doors in March 2006. The agency boasts more than 80 years of accumulated management experience, acquired from within the South African advertising and marketing industry.With over 50 staff, the agency currently bills over R350 million in media spend per annum. Clients include - Red Security, Shoprite, Caturra, Hungry Lion, Boss Paving, International Academy of Health and Skin Care and OFRA Cosmetics (USA).