All That Glitters is Not Gold

31 May 2012|davinar

“Tesco to invest £1bn into UK”.  Too much too late… Recently Tesco became the latest brand to suffer in the pursuit of brand growth. The news took some by surprise, especially if you consider that Tesco has already ticked off most of Ansoff’s growth strategies to great success. Starting with market penetration: Tick. In 1990 Tesco spotted the opportunity and moved from the high street to out of town superstores to (what felt like) every village street corner. Next? Product development: Tick.  It’s 2005 and Tesco branded products appear from food to clothing to banking, mobile phones and even used cars. Today Tesco accounts for £1 in every eight spent in shops in Britain. And now? Market development: Tick. 2012 sees ambitious global expansion delivering an impressive 22% profit increase in Asia with news of another 45 stores to open in the US.

That all sounds good. So what happened? Analysts suggest that Tesco took its eye off the ball and neglected the core business that made it famous. In doing so it suffered a severe loss of profit, and brand equity.

Tough news from a world leading brand, begging the question “so how do brands protect what made them famous in the pursuit of growth?”

First, start with a strong brand, one that has a core product or service at its heart. It’s what strong brands are famous for, what makes them their profits, it is key to their past as well as their future. Be clear on what this is. Make sure the whole business knows what this is and buys into it. Use it as your brand compass and every decision you make will have a better chance of success.

Secondly, be realistic about your brand strength. Emotion is not enough: Cosmopolitan yoghurt, Virgin Brides, Bic knickers (oh yes..) all overestimated how far their brand benefit could take them. Consider your core product category moving to razors, pens or even knickers? Does it really make sense? Think consumer not brand or production capacity: Is your new launch really adding value? Is it answering a real consumer need in a way that’s different and better than the competition or do you just think it’s a good brand fit or something you can make?

Thirdly, don’t be blinded by the bright lights of success. However successful the new launch, don’t ignore what made you famous. This was Tesco’s failure. Leadership, resources and talent were all directed at the new exciting Eastern market, and away from the UK. Weak and unprotected, the competition pounced. Everything Tesco stood for was taken: Cheapness to Aldi, Family to Sainsbury, and Quality to Waitrose. Tesco was left with little.

And finally, think differently about growth. Try constantly looking for new ways to inspire desire in customers new and old. Innovation and new market expansion while exciting & high impact are not the only ways to catch the customer’s eye and find growth. Investing in the core, keeping it culturally relevant can make strong brands stronger. It’s harder, requires more creativity but the rewards can be huge.

Written by Davina Richards, Director, Added Value UK

If you’d like to have a chat with Davina about your next brand move to find successful growth, drop her a line on enquiries@added-value.com.

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