Marketing Society Forum: Tesco's discount range

Marketing Society
Marketing Society

LONDON - This week Marketing has asked four members of the Marketing Society the question: 'Is Tesco's latest Discount Brands range a step too far?'

The supermarket has added 350 discount lines to sit between its Value and own-label ranges. Is it a worthy attempt to add choice, or a confusing and opportunistic move downmarket?

 No

Sidonie Kingsmill, Food marketing director, Tesco

Customers are often much smarter than some theorists believe they are, particularly when it comes to spotting a bargain. Our Discount Brands range is centred on increased choice just where customers need it - at the cheaper end.

But the real proof is in the fantastic response - almost one in every three shoppers goes home with a product from this range each week. Customers understand, thanks to high-impact marketing, that the brands are another way to save money on their shopping bill without having to shop elsewhere.

As for Tesco own brands - Value, Standard and Finest - these are well established and we're confident they will not be undermined.

I'm not going to argue that these are the most perfectly designed brands in the world, but the products are good, and the packaging is confident and it's clear customers get the concept.

In these uncertain times, it's those customers who are looking to us for help and Tesco is offering these brands to stay close to them and to show that they can have it all with us.

 

No

David Goudge, Managing director, The Brand Development Business

If you take the traditionalist's view of branding, you would have to decry Tesco's launch of price-fighter brands. True brands are built by consistent and compelling delivery of relevant values to consumers over time.

The only possible rationale for Discount Brands is as a recessionary option for cash-strapped consumers who simply can't bring themselves to trade down to Tesco Value.

However, I'm a huge believer in the creative use of branding in the interest of the broader business challenge.

While Tesco might have fared better long term by 'doing a Skoda' on its existing Value offering, I feel that the genius of its discounter initiative lies not in branding but positioning.

The launch of discounter-style brands allows Tesco to clearly communicate to potential Aldi or Netto defectors that Tesco too is aggressively in the discounting business - in a way that price cuts never could.

Discount Brands may have little impact on the bottom line, but they do have a big effect on the value perception of the Tesco business overall.

 

No

Rebecca Morgan, Managing partner, strategy, Lowe London

Someone once said we are a nation of shopkeepers. I beg to differ. Over the past decade we have clearly become a nation of shoppers - shoppers who expect choice, quality and best price, and who are increasingly sophisticated at navigating retail options. We may be in a downturn and on a budget, but shoppers don't want to spend precious time schlepping around different shops. Or have their choice limited to own label. Or have to noticeably sacrifice quality. Old habits die hard.

In this context, it seems to me that Tesco's Discount Brands range is a smart response. I also don't believe the range confuses shoppers - having shopped it, it feels simple enough. I can now have a 'proper' brand at the low-end price point. That feels good. So long as the product delivers, happy days.

My only beef is that the Discount Brands name sounds like retailer-speak. This is unusual for Tesco, a brand that has always used complicit consumer language to great effect.

 

Maybe

Sue Nelson, Marketing director, North West Fine Foods

Tesco has spent 20 years positioning itself as an acceptable place for the middle classes to shop. This strategy has created a highly profitable business. With almost everyone becoming more price-conscious, the challenge is to appear as a consumer champion, rather than a bargain-basement supermarket.

The Discount Brands tactic is intriguing. The word 'discount' has a 'bin end' feel, which is not synonymous with 'value', something Tesco has been renowned for. The advertising is curious, too. Directly showing brands such as Warburtons' bread as 40p more expensive than Tesco's own does little to create goodwill.

Finally, giving the Discount Brands their own aisles will surely make middle-class shoppers uncomfortably visible while trying to save money. Perhaps this will increase the take-up of Tesco online - after all, no one can see you penny-pinching in cyberspace.

 

Discussion

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