Brands always seem to want to change. Perhaps best typified by how supermarkets are responding to one another currently, as the Aldi and Lidl value focused business models irrepressibly roll on, the world and his wife are slashing prices to compete on a battlefield ill-suited to their strengths instead of focusing on their core differentiators.
Ask your average consumer what Tesco’s USP is and they say… what’s a USP?
Ask them what sets Tesco apart and they may struggle to tell you. In Tesco’s mind it’s that they are the most helpful supermarket, Tesco’s card data allows them to deliver the most personalised efficient service right? If that’s the case why is almost every marketing communication they distribute focused around price.
Tesco is currently advertising on a platform of Big Name brands for less. What Tesco aren’t considering is how brand equity for the consumer is rapidly falling as the market has more and more quality appearing from ‘no-name’ brands.
This message is also failing to sufficiently differentiate themselves from their low cost competitors. A better platform might be to focus on what Aldi and Lidl don’t currently deliver and Tesco can: convenience and diversity.
Tesco have a huge range of products, locations and home delivery. Aldi and Lidl depend on stocking the essentials and the ranges they can undercut the competition on, whilst focusing on stores in low-cost locations. Rather than embracing these strengths and capitalising on the competition’s weaknesses, Tesco are jeopardising their position to counter their own weakness.
At the other end of the brand diversification spectrum is Lidl. Having emerged from the recession with a reputation for great value for money from their new middle class customer base, they are riding the economic upturn to position themselves as a supermarket with quality products available. They are telling their audience there is no need to look elsewhere when you feel like splashing out and treating yourselves. Something expertly done with their Christmas campaign:
For those unable/unwilling to watch, the advert depicts a healthy, diverse bunch of people from Hertfordshire being treated to a Christmas dinner in what looks like the middle of summer. They praise the quality of the banquet before speculating who the anonymous benefactor might be, Marks and Spencer? Waitrose? The King of Siam? No, it’s Lidl!
There’s no danger the market is going to start assuming Lidl is a premium brand outside of their budget, just like no-one is going to suddenly think Tesco is the best value for money. The difference in their strategies is Lidl’s marketing is diversifying and capitalising on their current market position to capture new revenues. Tesco’s looks like a reactionary move to try and counter its weaknesses instead of leveraging its strengths.
Meanwhile Morrisons who have appointed former Tesco Director David Potts as CEO and charged him to arrest losses of £792m have found themselves caught in the middle. Morrisons used to identify themselves by their market street, offering the best fresh produce and knowledgeable staff. These days they are just another price cutting chain. It will be interesting to see what business strategies are employed to halt the decline.
