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CX Ltd 10.08 0 1 Key trends 2Retail positioning strategies 3M&S brand creation 4Tesco brand evolution 5The ultimate measures.

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Presentation on theme: "CX Ltd 10.08 0 1 Key trends 2Retail positioning strategies 3M&S brand creation 4Tesco brand evolution 5The ultimate measures."— Presentation transcript:

1 CX Ltd 10.08 0 1 Key trends 2Retail positioning strategies 3M&S brand creation 4Tesco brand evolution 5The ultimate measures

2 CX Ltd 10.08 1 Group T/O: €53.7bn UK food T/O: €30.0bn UK Grocery market share: 24.2% Own brand sales value: 48.0% Key tenets Three tier strategy Market led sub-brands Clubcard data used to ensure stores have the correct own brand overlay to a core branded product range Tesco brand evolution 4

3 CX Ltd 10.08 2 Tesco brand evolution 4 % Volume Entry price point yellow packs ‘Me Too’ Branded lines 0 10 20 30 40 50 60 70 1940195019601970198019902000200120022003 ‘Process Development’ 2008

4 CX Ltd 10.08 3 Customers experience our external Brand Values through the behaviours we display BRAND STRATEGY STEP 1 A “brand” is a badge of origin and is the company’s most valuable asset. Tesco brand evolution 4

5 CX Ltd 10.08 4 Tesco brand evolution 4 0 10 20 30 40 50 60 70 1940195019601970198019902000200120022003 Entry price point yellow packs ‘Me Too’ Branded lines H.Eating Natures Choice Green + Food/ Non Food Standard + Value Lines Finest Clear GOOD BETTER BEST % Volume 2008 Sub-brands introduced to reflect customer needs & wants

6 CX Ltd 10.08 5 Breadth of appeal UpmarketMidmarketLess Affluent Finest Standard Tesco Brand Value Tesco brand evolution 4

7 CX Ltd 10.08 6 Hurdle rate analysis. Retail Support Tools. Specs: Design manual Consumer panel processes Legal & Technical Supplier Scorecard Benchmark policy Price police Merchan- dising policy New product. Dev. Brief Range Review routine Focus groups. Company policy Review all aspects of product & launch to assess the impact of the product & customer acceptance To make sure that the product reaches the store on time with all of the Point of Sale, merchan- dising plans & promotional needs To label the product with a design that fits into the Tesco design strategy & is suitable for the product Ensure consumer accepta- bility & preference v benchmark To select the right supplier to produce the product to a consistent quality at the correct price. Make sure that: The product has clear hurdle rates for sales, margin waste, profit & lifecycle Benchmark v brand & competitor offers to ensure leverage at cost & retail Decide: Pillar brand The benchmark. The quality require- ments. Strategy: Decide on the range Decide on whether the products will add value for the customer 8765 4 321 STEPS BRAND STRATEGY IDENTIFY PRODUCTS & OPPORTUNITIES COMMERCIAL REQUIREMENTS SUPPLIER SELECTION CONSUMER PANELS DESIGN & PACKAGING PRODUCT LAUNCH REVIEW TOOL KEY ACTIVITY PROCESS Tesco brand evolution 4

8 CX Ltd 10.08 7 Three formats – ‘Value’, ‘Tesco Brand’, ‘Finest’ There must be a clear quality difference between the three. By the end of 2004 to accounted for at least 40% of food / non- food turnover in all countries BRAND STRATEGY BRAND STRATEGY STEP 1 Tesco brand evolution 4

9 CX Ltd 10.08 8 GOOD STANDARD FINEST Price Position E.P.P Brand -15-20% Brand +10%, unique Margin av. 12% av. 35%av. 55% AV Volume Tesco brand evolution 4

10 CX Ltd 10.08 9 BRAND STRATEGY STEP 1 WHAT ABOUT SUB-BRANDS VALUETESCO BRANDFINEST X Healthy Living Gluten Free Kids Organic Tesco brand evolution 4

11 CX Ltd 10.08 10 Buyer Category Director Commercial Director Retail Marketing Choose a Product Grp Technologist Identify the Market Leader. These become the Benchmark Define the Range and Identify market trends and Opportunities Develop own brand Set Commercial Targets. Review the chosen products activity. competitors Check the IDENTIFYING PRODUCTS & OPP STEP 2 Product Development Brief. Benchmark routines. Range Management routines. Market share data. If the product: Cannot increase sales Cannot increase profit Not match benchmark quality Cannot meet the retail price requirements. Do Not Continue Set targets for Sales, Margin, Profit, Volume for the products. If a product is being delisted calculate the lost sales and profit & decide if the own brand will make more. Customer perception of benchmark. Decide which pillar brand to develop. Fill in Product Dev Brief. Product must have sufficient sales to be relevant to the business. Include EPP lines. Decide on the pack size or weight. The benchmark is the product that has the biggest Is there a strong secondary brand. Do they do their Own Brand. Identify the top selling lines in the Grp. Understand the Brand, i.e., loyalty, dominance & advertising spend Begin with a Product Group, with sales big enough to make a difference! TOOL KEY ACTIVITY 3

12 CX Ltd 10.08 11 Ref. A.C. Nielsen “style” analysis IDENTIFY PRODUCTS & OPPORTUN- ITIES STEP 2 Index versus national comparisons, e.g., dummy data 13.0 Index 62 74.5 Index 70 4.6 Index 10 7.2 Index 20 5.4 Index 50 BakeryMeatDeliFoodNon-Food Tesco brand evolution 4

13 CX Ltd 10.08 12 Quadrant analysis Private Label 150 125 100 75 UNDER DEVELOPED 50 0 LEAST POTENTIAL AU$ x m SATURATION AU$ x m GREATEST POTENTIAL Tesco brand evolution 4 IDENTIFY PRODUCTS & OPPORTUN- ITIES STEP 2

14 CX Ltd 10.08 13 Buyer Category Director Commercial Director Retail Marketing Technologist Financial Funding Definition of the brand /pillar brand Listing/ space Fees Retails COMMERCIAL REQ STEP 3 Brand strategy. Decide if you will charge for; Promotional end space. Listing cost. Advertising. New store opening allowances. Returns/waste. Make sure suppliers: Contribute to cost reductions for promotions. Contribute to marketing activities. Contribute to tastings & demonstrations. Balance the costs with the branded funding, listing support & advertising spend that will be reduced or lost. Setting the correct retail is crucial for the success of the product. Do not undervalue the products, too cheap will give impression the product is poor. Too expensive & it will not sell. Set clear commercial objectives for price sales, volumes & launch date. Products must meet or exceed financial objectives taking into account lost income on the lower retails compared to the brand equivalent. To make sure that any new product will grow the total category business. Identify price & quality targets. KEY ACTIVITY TOOL Tesco brand evolution 4

15 CX Ltd 10.08 14 Tier 1 Tier 2 Tier 3 RSP v brand Quality versus brand B. Margin v brand Supplier development funding Listing fees Promo contribution Advertising Returns / waste NSOA Guidelines by tier for: These should balance across tiers by category Tesco brand evolution 4 STEP 3 COMMERCIAL REQ

16 CX Ltd 10.08 15 SUPPLIER SELECTION STEP 4 Commercial targets set in Identifying Products section. Compare all costs to determine the most competitive. Make sure that from the costs all financial targets will be met. Technologist. Legal Dept. Product Development Brief. Supplier scorecard. Existing supplier list. Supplier scorecard if a supplier already listed. Meet with chosen supplier to agree terms of business. Agree initial volumes. Assess the factory for: Good quality control systems. Safe production techniques. Ability to produce to a specification consistently. Ability to produce & deliver to order, on time. Volume capacity for future growth. Ability to label & package the product. Fill in the Product Dev. Brief & send out to suppliers. Compare samples against the benchmark. Keep approved samples for reference. Choose the supplier/s from the following determinants: Commitment to customer & product safety. Price. Consistency of quality. Reliability. Financial stability. Short list of potential suppliers from: Ones supplying already. Suppliers who have submitted similar product but may not be supplying it. Branded manufacturers. KEY ACTIVITY TOOL Buyer Category Director Commercial Director Retail Technologist Marketing Sampling Commercial Key Determinants Factory Assessment Supplier Agreement Identifying potential suppliers Tesco brand evolution 4


18 CX Ltd 10.08 17 CONSUMER PANELLING STEP 5 Buyer Category Director Commercial Director Retail Marketing Technologist 3 rd party recruitment of Panellists v Quota sample Results analysed Select type of panel Product approved/ failed Panel testing Stats packages. Trained Home Economists. Sensory Analysis guidelines. Amend product/retest as necessary. Decide hurdle rates in advance. Results to supplier/buyers. Controlled conditions. In-store consumer kitchens are the ideal. Collate data on product preparation too. Quota sample to reflect target customers. Exclude employees. Min 112 panellists. 2 or 3 way v benchmark best Appearance Texture Flavour Overall acceptability Propensity to purchase. Frequency of purchase. KEY ACTIVITY TOOL Tesco brand evolution 4

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