Agency: Lowe Lintas Authors: Ashleye Sharpe and Joanna Bamford

Tesco Stores Ltd

How 'Every Little Helps' Was a Big Help to Tesco

 

THE SCOPE OF THIS PAPER

The Transformation of Tesco

The radical transformation of Tescos fortunes from lacklustre number two to Britains largest retailer has been well documented. Between 1990 and 1999, Tescos turnover increased from 8bn to 17bn1 and its share rose from 9.1% to 15.4%2 overtaking Sainsburys to become market leader in 1995.

Whilst loyalty has risen, particularly in more recent years, Tescos ability to attract new shoppers has been essential to its success. Just over 2 million more households have chosen to shop at Tesco.3

But what persuaded them to shop at Tesco?

Of course, Tesco made radical structural changes. However, a fundamental turnaround in Tescos brand image was essential to making these changes meaningful to consumers and other stakeholders alike. This is in sharp contrast to Tescos key competitor, Sainsburys, whose image (and rate of growth4) has declined over the same period.

The Transformation of Tescos Brand Image

Think back to 1990. Tesco still had its unappealing pile it high and sell it cheap reputation. Incredulity would have greeted the suggestion that people might buy gourmet food and wine from Tesco or entrust it with their savings. From a company with flagging credibility, Tesco is now one of the nations most trusted brands,5 securing significant gains across a range of image criteria (Table 1).

Table 1: Tescos Brand Image has Improved Across the Board6

1990

2000

 

% agreeing 

% agreeing

Always introducing new ideas 

28

 31

Stocks a wide range of products

23

47

Has competitive low prices 

23

36

Offers good value for money

21

37

Has friendly, approachable staff

19

40

Has high quality products overall

17

40

The Role of Advertising in Transforming Tescos Brand Image

Tescos brief to Lowe Lintas in 1989 was We are looking to smash away preconceptions about our business with advertisingto develop an image campaign which will lift us out of the mould in our particular sector.

Advertising has been a consistent but relatively minor component of Tescos total investment.7 However, strong evidence shows it has played a crucial role in transforming consumers perceptions of Tesco, particularly those consumers who could not experience Tescos instore transformation (because, at the time, they did not shop there). Through its effect on Tescos image, the advertising has encouraged more people to shop at Tesco and, latterly, to stay loyal to it. Thus, it has made a significant financial contribution to Tescos business. Moreover, its transformed image has allowed Tesco to expand into a wide range of nongrocery sectors, where brand credibility is a key requirement.

The advertising has also helped improve Tescos image in the minds of three further audiences:

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

2. The Marketing community an important source of new talent to drive Tescos development.

3. City analysts who directly affect Tescos share price.

Lord MacLaurin said in 1997, As Tesco has changed its image, it was helped enormously by the advertising agency.

A COMPLEX TASK

How do you establish the effect 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 initiatives?8

The task is made more complex due to specific evaluation difficulties:

  • In many cases, the advertising worked hand in glove with Tescos operational changes.
  • Tesco advertises nationwide9 and operates predominantly in the UK. We cannot, therefore, make regional or crossborder with/without advertising comparisons.
  • As soon as someone sets foot into Tesco, the instore experience will obviously affect their perceptions of the brand.
  • As ever with a longterm case data are patchy. Backdata (including accurate share of voice10) have not been kept; questionnaires have changed. So we lack continuous/comparable/singlesource information for most useful measures.

Nonetheless, the evidence which exists demonstrates clearly the effect of the advertising on image, behaviour and, ultimately, sales. Econometric modelling is a key component of this evidence. Unusually, we have used it to help understand the effect of advertising on image as well as sales.

There are two phases to Tescos transformation:

1. Pursuing and achieving market leadership (19901995).

2. Consolidating this position (1995 onwards).

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

For simplicity, we have concentrated on the effects of TV brand advertising only.

THE PURSUIT OF MARKET LEADERSHIP (19901995)

In the early 1980s, Tesco was still piling it high, and selling it cheap. It was perceived to be basic groceries that bore no comparison with the sophisticated lines that the market leader, Sainsburys, stocked. Yet Tesco had set their sights on market leadership. They initiated a major programme to counteract their key weakness quality. This was Sainsburys strength.

From around 1983, Tesco started to upgrade their stores and the quality and range of what they sold. Yet even by 1990, they had failed to dent Sainsburys dominance.11 Although the changes in store were evident to existing customers, they had not affected Tescos image amongst nonshoppers.

[Tesco] is as good, if not better, than its competitors. The problem is that it is not perceived as such. Its an image problem. The supermarket price wars of the 1970s were more closely associated with Tesco than any other retailer and they still loom large in consumers memories.12

As you might expect, nonTesco shoppers had a significantly more positive image of Sainsburys than they did of Tesco since many of them shopped at Sainsburys. 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 Sainsburys did of Sainsburys is testament to Tescos image problem at the time (Table 2).

Table 2: By 1990, NONSHOPPERS DID NOT APPRECIATE THE QUALITY IMPROVEMENTS THAT TESCO HAD MADE13

NonTesco 

NonTesco

NonSainsbury's 

 

shoppers' image of

shoppers' image of

shoppers' image of

 

Sainsbury's 

Tesco

Sainsbury's

 

% agreeing

% agreeing

% agreeing

Very good name and reputation

23

4

12

Is particularly popular nowadays

27

5

10

Has high quality products overall

21

3

  9

Has a particularly wide range of products

25

5

10

As a result, few new shoppers had been persuaded to give Tesco a try in the period from the beginning of the Quality programme (1982) to the launch of the new campaign (1990) (Table 3).

Table 3: ALTHOUGH LOYALTY HAD PICKED UP, PENETRATION HAD HARDLY GROWN14

1982

1989

Penetration (% of female housewives)

27%

28%

Loyalty (% who are primary shoppers) 

67%

74%

The Opportunity for Advertising

The opportunity for advertising was to persuade nonshoppers to think again about Tesco by presenting it as a credible alternative to Sainsburys: everything they could find at Sainsburys they could buy at Tesco and it would be just as good quality.

Equally importantly, people had to want to shop there on an emotional level to be happy to be seen carrying a Tesco carrier bag. We 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, to lift us out of the mould in our particular sector.15

The Quest for Quality (May 1990Dec 1992)

The first campaign, the Quest for Quality, ran from 1990 to 1992. In total 18 executions ran, with 400 ratings 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 freerange chickens, en route discovering other surprisingly highquality products to add to Tescos range. Products were obviously chosen to demonstrate Tescos newfound quality; the idea that it would stock freerange 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.

The campaign was very impactful peaking at 89% awareness.16 Nonshoppers even remembered the campaign more than they remembered advertising for the competitor stores they shopped at. The key message was understood and helped people begin to believe that Tesco was improving its quality. Importantly, they enjoyed the advertising more so even than Sainsburys Recipes campaign17 and this began to affect the way they felt about Tesco.

The main message consumers receive from the campaign is that Tesco strive to provide the consumer with the best quality and most interesting variety of products.18

A far more competitive and positive personality has emerged [vs 1988], of which advertising is a part.19

Every Little Helps (Nov 1993March 1995)

In 1993, having achieved significant improvements to product and store quality, Tesco embarked on a newer and bigger strategy. They understood that shopping is so much more than just the products you buy and realised that none of their competitors was making serious attempts to improve the whole experience of shopping. Tesco capitalised on this by launching 114 new initiatives which included mother and babychanging facilities, removal of sweets from checkouts, the One in Front checkout opening system, a new Value range and Clubcard.

The new strategy required new advertising since Dudley was so closely associated just with the products that Tesco sold.

Whilst publicising the new initiatives, we needed to continue to build affinity with people who had not experienced the new Tesco for themselves. A selfcongratulatory launch would have been wrong.

The advertising idea was that whilst not everything in life goes perfectly, Tesco were doing their best to make at least one aspect doing the shopping a little easier. Although each of the 20 commercials that were made focused on one particular initiative, a new line, Every Little Helps, was used across all executions to capture Tescos new consumeroriented philosophy of always doing right by the customer (Figures 3 and 4).20

Awareness of the new campaign peaked at 64%. It successfully communicated each new initiative to shoppers and nonshoppers, with high proportions claiming their awareness was a result of advertising. These included One in Front, and, importantly, Clubcard (which helped attract the final tranche of new shoppers that secured market leadership) (Table 4).

TABLE 4: Every Little Helps drove awareness of key new initiatives21

 

% citing as source of awareness

% aware 2 weeks after launch 

Advertising

Instore

The press

Word of mouth

Clubcard

79

57

32

13

6

'One in Front'

68

70

  7

24

1

At the same time it helped to build a more positive overall impression of Tesco among shoppers and nonshoppers as the responses to two typical ads in the campaign demonstrate (Table 5).

Table 5: Tescos new customeroriented approach was clearly communicated to both shoppers and nonshoppers alike22

Aware of ...

'Baby Face'

'One in Front'

 

Shoppers

Nonshoppers

Shoppers

Nonshoppers

Agree that:

%

%

%

%

Tesco is trying to make shopping easier

51

39

61

59

Tesco understands what every day life is like

34

32

38

32

The ad is good for the store's image

30

25

33

32

What Happened?

Tescos turnover increased by 38%, enabling them to overtake Sainsburys in early 1995 (Table 6).

Table 6: Taking market leadership23

1990

 1995

Tescos market share 

9.1%

 13.4%

Sainsburys market share

 10.4%

 12.2%

In contrast to the period before 1990 when Tescos instore changes had not affected nonshoppers image of Tesco or their willingness to shop there, 1.3 million extra households were persuaded to choose Tesco between 1990 and 199524 (Table7).

Table 7: More people shopping at Tesco was key to growth25

1982 

1990 

1995

Penetration (% of female housewives) 

27%

 28% 

32%

Loyalty (% who were primary shoppers*)

67%

 74%

 73%

*Primary shoppers are those who claim to do most of their shopping at that store.

Significantly, this penetration growth is not simply the result of more stores and increased floor space. Tescos 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 Tescos expansion programme (Table 8).

Table 8: The incremental growth in penetration gain per additional square foot, 19901995 vs. the period before the advertising26

19831990

 19901995

Penetration gain (% points)

 +1

 +4

Sales area increase (million sq ft)

 +1.56

 +4.189

% points of penetration gained per additional million square feet

 +0.641

 +0.953

In summary, our contention is that the advertising was instrumental in the improvement of Tescos 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 publicised Tescos new approach to shoppers and nonshoppers, but also helped them like the brand, Tesco may not have attracted so many additional new shoppers.

Tesco themselves certainly believed this was the case.

Consumer reaction to the Dudley Moore ads shows very high recall. The strength of the Tesco brand is growing. It is helping bring in new customers: the tills ring up around nine million sales a week nowadays, compared with six and a half million sales three years ago.27

The reality of our business and the content of our communication are moving in tandem. It is a combination of these two things that mean were pretty pleased with the sort of year weve had in terms of our overall business performance.28

CONSOLIDATING LEADERSHIP (Mid 1995 Onwards)

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

A New Campaign

By 1995, as intended, Every Little Helps had become the driving philosophy that steered every initiative that Tesco made.

The challenge for us all is to make "Every Little Helps" second nature in everything we do. Its more than just a line at the end of an advert.29

Whilst Tesco continued to develop these initiatives, the advertising needed a change. Britain had come out of recession. We could afford to mirror the publics increased confidence. But for the consumeroriented 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.

So we turned the tables. Instead of focusing on Tescos attitude to their customers, we 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 Tescos initiatives as an opportunity to put the store to the test. She has done so in 25 commercials that have kept her one frustrating step ahead of her long suffering daughter, Kate. In testing it to the limit, Dotty gives 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 has allowed us to communicate service, quality, range, value for money and Clubcard, yet remain faithful to the core Every Little Helps philosophy. This has been particularly true in the case of value which has become increasingly important in the face of Rip Off Britain. Whilst Sainsburys has very publicly experienced the difficulties of injecting value into its qualitybased positioning,30 Tesco has seamlessly integrated this message because lowering prices for the consumer is as relevant to Every Little Helps as offering better service.31

Media Strategy: Making Dotty Popular

The Dotty campaign was designed to have populist, yet quality appeal and the media strategy complements this. The campaign is deliberately mainstream. An average execution typically reaches 88% of housewives at 6.2 OTS. (See also Figure 1)

The quality and relevance of each OTS is maximised by the following strategy:

  • More top programmes are on the schedule in order to maximise attentiveness.
  • The campaign is skewed towards populist programmes where Dotty fits most naturally as a commercial break.
  • More centrebreaks are bought than our competitors, again, to reach the captive audience in the middle of a programme they enjoy.
  • More spots firstin and lastout of each break for the same reason.

What Happened?

Over the period of the Dotty campaign, Tesco has strengthened its brand image vs Sainsburys considerably. This is reflected in its widening share advantage over Sainsburys. 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 (Tables 911).

Table 9: Tescos image has strengthened relative to Sainsburys32

 

Q1 1996

Q4 1999

 

Tesco vs Sainsbury's

Tesco vs Sainsbury's

 

Overall image

+3%

+9%

 

Table 10: Widening the market share gap between Tesco and Sainsburys33

 

1995

1999

 

Tesco

13.4%

15.4%

Sainsbury's

12.2%

12.1%

 

Table 11: More people shopping and strengthened loyalty have driven growth34

 

1995

1999

 

TGI

   

Penetration (% of female housewives)

32%

37%

AGB

   

Loyalty (% of total weekly spend)

38.1%

41.3%

Average weekly spend*

18.73

19.72

 

*Spend is shown at 1999 prices.

   

As before, penetration grew at a higher rate than the additional floor space might have suggested (Table 12).

Table 12: The incremental growth in penetration gain per additional square foot, 1995199935

 

19831990

19901995

19951999

 

Penetration gain (% points)

+1

+4

+5

Sales area increase (million sq ft)

+1.560

+4.189

+3.340

% points of penetration gained per additional million square feet 

+0.641

+0.953

+1.497

 

THE CONTRIBUTION OF THE DOTTY CAMPAIGN TO TESCOS CONTINUED SUCCESS

The Dotty campaign is a famous campaign, with universal awareness among the target. People enjoy the advertising and there is no sense of wear out. As the campaign has developed people have become noticeably more involved with it; both with the humour and with the characters and their world. As a result the commercial messages are communicated that much more easily and with more credibility. The range of messages appropriate for Dotty to communicate seems to extend to every aspect of Tescos service, quality and value claims.36

We have built up a series of connecting evidence that shows that Dotty played an important role in determining brand choice. Because we have no singlesource data, we have drawn on a range of alternative sources to make the case. Tracking data show response to the advertising, econometric modelling shows the relationship between advertising and image, and tradeoff analysis demonstrates that the image criteria which advertising affects are important determinants of where to shop. The use of econometrics has also allowed us to disentangle the effects of other factors such as price or Clubcard.

1. The campaign is particularly memorable (Figure 2).

2. Consumers like the campaign and connect with it emotionally.

Dotty is the archetypal old bag, consumers connect with her.

Dotty plays a pivotal role because it is her that generates the humour. People can relate to the advertising because Dotty frequently reminds them of relatives or acquaintances.38

The campaign has been one of the most likeable in the sector (with only Safeways Harry and Molly campaign pipping Tesco to the post before 1997).39  It was voted Britains favourite advertising in 199940 despite the furore of Rip Off Britain and heated competition from Budweisers Frogs, Levis Flat Eric and Rolos Skippy the Kangaroo (Figure 3).

3. The campaign has clearly communicated a wide variety of imagerelated messages.

Each of the 25 executions in the Dotty campaign focuses on one specific initiative. Whilst each has successfully communicated the particular initiative in question, there is usually an additional, broader communication of the Every Little Helps philosophy.

For simplicity Table 13 shows how four typical executions have communicated. Each is representative of a particular aspect of Tescos image.

TABLE 13: Communicating Tescos initiatives and the broader philosophy41

'Packaged

'Checking

Holiday'

'Loyd'

'In the Club'

Them Out'

Typical ad

3/412/5/96

6/43/5/98

14/514/6/97

20/61/8/99

Focus of ad

Service

Quality

Clubcard

Value for money


Spontaneous communication

38%: helpful,

39%: best/

39%: Clubcard

70%: good

  of key message (%)

friendly place

better quality

26% good

price/value/

36%: good

than others

price/value/

offer

customer service

19%: good range

offer

Prompted communication (%)

Cares about giving good customer service

42

23

38

19

Trying hard to make shopping easier

40

15

29

10

Tries hard to please customers

40

15

29

10

Comes up with good ideas

16

23

24

10

Sells good quality goods

12

27

17

23

Gives good value for money

21

31

22

44

Has a lot of special offers

10

12

12

20

Has competitive prices

12

23

11

24

4. The campaign has a positive effect on Tescos image.

We know from qualitative research that Dotty creates a more favourable impression of Tesco in both shoppers and nonshoppers minds:

Not only are the ads funny, crucially since the humour is attached to specific initiatives, communication is clear and the warmth generated is attached to the brand.42

Unfortunately, we do not have a single source from which to quantify the connection between advertising takeout and brand image.43 The only way we have been able to connect the two is through modelling the relationship between advertising and brand image. This has the added advantage of isolating the effect of advertising on image, by accounting for the impact of other factors that undoubtedly also influence it.

In assessing the effect of Tescos TV advertising on its image, the models44 also took into account the effect of:

  • TV advertising for Tescos three key competitors Sainsburys, Asda and Safeway (explored as TVRs by message);
  • press and radio advertising expenditure for all four brands;
  • the relative price of Tesco, Sainsburys, Asda and Safeway;
  • the number of Tesco shoppers receiving quarterly Clubcard mailings (which remind them of the benefits of their Clubcard and supply the moneyoff vouchers they have earned);
  • the relative number of stores for each brand;
  • macroeconomic factors.

The models show that the Dotty campaign positively affects perceptions of Tescos value for money, wide range, quality and special offers.45 It cannot, unfortunately, demonstrate advertisings effect on Tescos service image, as this has only been tracked on the image and attitude study since 1999.

The effects obviously decay over time, but some persist for up to 34 years (Figures 456 and 7).

5. The image dimensions which the campaign affects are key to determining store choice

We have seen from the model that advertising has a direct and positive effect on perceptions of Tescos value for money, quality, range and special offers. But do these image attributes affect consideration?

Again we have been thwarted by gaps in the data which mean we are unable to show a direct correlation between endorsement of an image attribute and consideration of Tesco. However, using a separate study,46 we know that value, quality, special offers and range are all key to determining where someone chooses to shop. In addition, service (which we know the campaign has affected from qualitative research) is also important.

Due to the competitive sensitivity of these data we are unable to show the full ranking. However, we can show that of the fifty image statements which consumers could select from, all four key measures featured in the top twenty most important criteria.48

  • Value for money came second.
  • Quality (measured by different statements relating to specific products and overall) came 3rd, 4th, 6th, 7th, 8th, 12th, 17th and 19th.
  • Special offers came 14th.
  • Service, in various guises, came 9th, 13th and 15th.
  • Range came 16th and 20th.

Summary of the Contribution of the Dotty Campaign to Tescos Continued Success

Tescos brand image has strengthened significantly vs Sainsburys. We have shown that advertising affects the image criteria that influence where someone decides to shop. It is reasonable to conclude, therefore, that the Dotty campaign has been important in encouraging more people to shop at Tesco and/or to reaffirm their choice. Econometric sales modelling (which is referred to later in the paper) confirms this conclusion by showing a direct correlation between advertising and revenue.49

THE VALUE OF ADVERTISINGS EFFECT BEYOND CUSTOMERS

Since the beginning of the 1990s Tescos advertising has also helped change the image of Tesco for the better in the minds of two other important audiences, the staff and professional marketers. We have also assessed the advertisings direct impact on Tescos share price by exploring the effects of advertising on a third audience city analysts.

The Impact of Tescos Advertising On Store Staff

A single failure such as the bad attitude of a lone checkout operator can wreck carefully built customer loyalty.50

It has also been well documented that a failure on the part of advertising to meet the approval of staff can also have disastrous effects on their loyalty.51

Tesco have over 160,000 staff. The effect of the advertising on them is fundamental to the success of the Every Little Helps strategy and to securing their loyalty.

Advertising helps ensure that staff live up to the promise of Every Little Helps

We believe that truly engaged employees are key to the future growth of any business. We engage people behind the brand promise because people are the face of the brand, particularly in the retail environment.52

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.

Clearly Tesco staff see the advertising as consumers.53 But the advertising is also used as a more motivating way to train staff in the Every Little Helps philosophy than a memo or pep talk from a store manager.

The new customeroriented strategy was launched to the staff in a video which used the advertising to demonstrate what was meant by the new strategy.

Thats the new advertising campaign. I think youll agree with me that it says quite a lot about our business. "Every Little Helps" the housewife in so many ways. Its the hundred and one things that we know we can do to make shopping easier for our customers.54

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.55

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

It makes you feel you should prove yourself.staff want to be the image thats shown in the ads.56

It sets an example to staff. Its informal training.57

After Sainsburys had refused to slice cheese from the deli counter, Rita at Tescos cheese counter did it without hesitation. Now thats 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.58

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 thats why Im writing. When I see that Tesco advert "Every Little Helps" I really do believe it.58

Because Tesco advertise nationally, with only occasional variations in message, we cannot compare delivery of advertised initiatives in advertised vs. nonadvertised regions. There is one exception, however, when One in Front was advertised only in the South East.59 (Other regions received a pricebased ad.) Customer exit surveys showed an 8% difference in delivery of One in Front in favour of advertised areas.60

Advertising helps build loyalty by demonstrating that Tesco value their staff

With 160,000 staff, the costs of losing staff are significant. Most executions in the Dotty campaign have deliberately given staff a key role in sorting out Dottys demands. Research has shown that the campaign helps demonstrate how much Tesco value the staffs contribution to their business and, in doing so, it makes them feel more positive towards Tesco.

Tesco employees found the campaign highly enjoyablea campaign they could be proud of. It highlights how hard their job is [and] shows how far Tesco will 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 Gateway ads. It gave them a sense of worth in relation to Tesco, acknowledged them as being important to Tescos success and has given them responsibility to pursue this. [They] recognised it had business effects with which they had an interest.61

A recent staff survey supports this view (Table 14).

Table 14: The positive effect of the Dottycampaign on staff62

% agreeing

 

Like the campaign 85

85

The campaign is good for Tescos image 87

87

The campaign makes the public feel more positive about Tesco

80

The campaign shows the staff positively

85

Furthermore, qualitative research reveals that the campaign makes them feel more positive about working for Tesco.

Yes, it makes me proud. People turn around and say "oooh, its your shop".63

It adds to the feeling that youre working for the best in the field.64

I think the atmosphere at work is jolly because of Dotty.65

Twenty six years ago Id say I worked in a shop. Now I say I work for Tesco.66

The Value of Advertising in Attracting Better Quality Marketers to Tesco

Headhunters agree that a companys 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.67

Clever marketing has been instrumental in Tescos 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)68 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.69

However, Tescos 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 Britains most admired company by its peers ahead of such marketingdominated companies as Cadbury Schweppes, SmithKline Beecham and Unilever.70 We also know that Tescos advertising is most admired by its peers.71

I admire the Tesco Prunella Scales ads. Theyve focused on image and moved away from just product and price and it works very well.72

Tesco. Their television commercials are good because they are much more servicebased and offer the customer something much, much more than just price. I see them as a prime example of moving [retail advertising] away from just price.73

Canvassing opinions from marketers who have been recruited to Tesco from highly respected marketing organisations suggests that admiration for Tesco and its advertising are connected.

Id never have considered the job as head of advertising at Tesco ten years ago. But when I joined, the advertising was something to be proud of.74

When I joined UDV I would never have thought of working in retail. Six months ago I joined Tesco. I was very excited about it because, unusually for a retailer, it was truly marketing led. Tesco listens and responds to customers. The advertising I had seen as a consumer was testament to this.75

The "Dotty" advertising was certainly one of the reasons I considered the job as Tesco brand manager. It was unusual for a retailer because it was a brandbuilding campaign with "Every Little Helps" at the heart of it. The ads had contributed to my view of Tesco as a shopper and a marketer and they made me laugh.76

The advertising has also been influential in encouraging graduate applications to Tesco.

The "Dotty" ads showed the company to be likeable and funny and gave Tesco a human face amongst the marketing giants when I was doing my applications. They gave me the impression of a company where you would work hard but have fun too.77

Tesco Advertisings Direct Effect On Share Price

It would be expected that the advertising effect we have identified would indirectly impact upon Tescos share price: all other things being equal, improvements in sales and market share ought ultimately to result in improvements in share price (Table15).78

Table 15: The increase in Tescos share price over the last decade79


 

Share price

  Growth vs. 1990


1990

65p

 

1995 

84p

+29%

1999

177p

+172%


In addition, research conducted by the Corporate Branding Partnership suggests that advertising can directly influence a companys share price by shaping its corporate image.80 To see if this might be true in the case of Tesco, we canvassed city analysts (the judge and jury and executioners of retailers81) views of Tescos corporate image, Tescos advertising and the relationship between the two. The quotes below summarise our findings. It appears that the advertising has, indeed, shaped their views.

Clearly something has allowed Tesco to move forward into other markets more successfully than its competitors, ostensibly that is its brand, which has been served well by a consistent, high profile advertising campaign.82

Tesco advertising has been very sound. The basic approach has been to have a central theme of "Every Little Helps", and personally I think its worked. The key to Tescos advertising has been to implement changes and then communicate these, gently reinforcing over time. Consistency is essence in retail. The brand has been consistent. The advertising has been consistent.83

It is clear that Dotty "talking" creates a strong impression of Tesco in consumers minds.84

Good marketing is not enough on its own though. Tesco managed to win customers from Sainsburys by convincing them they would not be moving downmarket by shopping at Tesco.85

These findings have been corroborated by the Financial Times.

Analysts identify the new advertising campaign, "Every Little Helps", a more understated campaign [which] played on what people would recognise as Tescos strengths, while on the other hand said to its customers "We recognise that you have got problems" as "one of the initiatives crucial in giving Tesco a competitive edge".86

THE ADVERTISING PAYS BACK

Direct Payback

Using econometric modelling, we have calculated that the Dotty campaign delivers an incremental 2.206bn of turnover (excl. VAT) across fiscal years 19951999.87 Increasing turnover is a key performance target for retail businesses, given such high investment in operating costs which are very often fixed throughout the year, e.g. the stores themselves.

Using Tescos average operating margin over that same period of 5.9%88 we have calculated that the campaign delivers an incremental operating profit of 130m.89

So every 1 spent on advertising generates an incremental 38 of turnover and 2.25 of operating profit.

Thus the campaign pays for itself more than twice over, delivering a 225% return on investment.

This is a significant payback to operating profit given the Dotty campaign has accounted for less than 1% of Tescos operating costs over fiscal years 19951999.90

The ROI may be on the conservative side given that it usually costs less to generate profit from advertising (as fixed costs, which are included in the standard operating margin, have already been covered).

This payback covers only the Dotty campaign. It seems reasonable to suggest that the Dudley and Every Little Helps campaigns will also have contributed to Tescos revenue in the first five years.

Additional Revenue Opportunities Afforded by Tescos Image Transformation

Real growth in the sector is hard to come by. Fewer stores are opening. Many towns have reached saturation point.91

Expansion in nonstaple categories is essential to Tescos continued growth. We believe that the advertising has helped transform Tescos 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. Imagine buying a salmon en croute or vintage champagne from Tesco ten years ago. Now the range of wines numbers 800, including vintage champagnes.

This transformation in Tescos credibility has also enabled them to expand into new nongrocery categories (such as financial services, childrens 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.

The Tesco brand can now be used to sell almost anything. From wine through to magazines, videos, petrol and banking, Tesco has moved into one sector after another.91

To illustrate: Tesco has nearly 8% of the CD market; 1 million people have opened personal finance accounts with them92 in January 2000, 20% of all credit card accounts were opened with Tesco;93 it is the fourth biggest supplier in Britains 14.4bn petrol market;94 Tescos Fun to Learn childrens toy range generated 50m last year;94 Tescos share of the healthcare market has increased from 5% to 11.5% over the last ten years;95 Tesco is now the biggest online grocery retailer in the world;96 11% 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.97

It would be fiendishly complicated to calculate the contribution that advertising has made to this part of Tescos business (and in any case, we are not at liberty to reveal sensitive unpublished revenue information). However, in the last three years, Tesco has tripled its share of the 75bn UK nonfood market from 1% to 3% representing an additional revenue stream of 1.5bn. By the end of 2002, they expect this to rise to about 5bn.93 It is not implausible to suggest that the longterm financial contribution of advertising to this part of Tescos business is significant.

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

END NOTES:

  1. Annual results (year to Feb 1990 and Feb 2000) at 1999 prices.
  2. Institute of Grocery Distribution, Grocery Market Shares: Dec 1989 to June 1999.
  3. TGI based on female housewives.
  4. Sainsbury's Annual Review 1999, Sainsbury's turnover grew by 23% year on year in 1990, but only by 5% year on year in 1999.
  5. Henley Centre - Planning for Consumer Change.
  6. BJM Advertising Tracking (Stockastic Reaction Monitor), April/June 1990 and Jan/May 2000
  7. For example, in 1999 Tesco spent 761m upgrading and expanding their stores vs 15.3m on TV advertising.  Sources: Tesco Preliminary Statement of Results, 52 weeks ending Feb 2000; MMS
  8. This may explain why to date there have only been two winning IPA papers for supermarket advertising (Safeway which won a silver in 1996 and Fine Fare (for the opening of the Birchwood Superstore) in 1982) despite the fact that this sector is the fourth biggest investor in advertising in the country.
  9. There are very occasional (and shortlived) exceptions.
  10. Accurate figures are only available after 1994.
  11. IGD: the gap remained just over 1 percentage point, despite the fact that Tesco had, by this stage, added som 7000 lines and had pioneered the building of fabulous new superstores.
  12. David Robey, Tesco Corporate Marketing Director, The Sunday Times, May 1990.
  13. BJM Advertising Tracking, AprilJune 1990.
  14. TGI. (AGB data are not available until September 1995)
  15. Tesco's brief to Lowes, 1990.
  16. BJM Advertising Tracking (Prompted Awareness from Recognition of Stills).
  17. BJM Advertising Tracking. Enjoyablility of 'Dudley' ads averaged at 33% compared to 26% for Sainsbury's 'Recipes' campaign.
  18. The Qualitative Consultancy, 1991.
  19. Connexions Consultancy Qualitative Research, 1991.
  20. As before, each burst was circa 400 ratings.
  21. MRSL interviews with 450 nationally representative supermarket shoppers (i.e. not just existing Tesco shoppers) in November 1994 and March 1995, respectively.
  22. BJM Advertising Tracking. Base: ad recallers; recallers of 'Baby Face' were also asked whether the ad made them more interested in visiting Tesco.  23% of nonshoppers agreed it did.  Sadly, this is the only time this question was asked, so we cannot compare this response that that for their ads.
  23. IGD (Yr to Dec 1989 and Yr to Dec 1995).
  24. TGI, based on female housewives.
  25. TGI
  26. Penetration: TGI; sales area: Tesco's Annual Reports.
  27. Lord MacLaurin, then Tesco Chairman, in the Daily Express, Jan 1991.
  28. Tim Mason, Tesco marketing Director, Campaign, January 1995.
  29. Tesco Trading Plan, March 1996.
  30. 'The "Value to shout about" campaign, which starred John Cleese [was] seen as a flop, irritating customers and employees.' Daily Telegraph, June 1999.
  31. As shown in 'Managing the Brand Philosophy' 1999 Marketing Society Paper.
  32. RSGB; comparable data only available from Q1 1996, 9 months after Dotty came on air.
  33. IGD Dec 1995 and June 1999.
  34. From this period AGB loyalty figures are available.  They are more accurate than TGI since (i) they are quarterly rather than annual; (ii) they are actual rather than claimed; (iii) they provide a more salesoriented measure of loyalty (actual spend rather than just frequency of visiting).  For consistency, we have continued to show TGI data for penetration, though AGB data also show a similar rise (from 43.5% to 47.7%).  TGI data are year to March 1995 and year to March 1999.  AGB data are 12 weeks to Sept 1995 and Sept 1999.
  35. Penetration: TGI; floor space: Tesco's Annual Reports.
  36. Peter Dann, DRSM, Jan 2000 effectively a quantitative study, since over the course of the campaign, DRSM have conducted over 80 qualitative groups, discussing the campaign with more than 600 people.
  37. BJM Advertising Tracking.
  38. DRSM Qualitative Research
  39. BJM Advertising Tracking.
  40. National TV Awards (500,000 GMTV viewers and TV Times readers voted).
  41. BJM Advertising Tracking.
  42. DRSM Qualitative Research, 1996.
  43. The BJM Tracking study has tracked awareness and communication of advertising across the whole of the 'Dotty' campaign.  However, it has only measured brand image and consideration from 1998 onwards.  The brand image data that cover the whole of the campaign come from a different survey: RSGB's Image & Attitude Study which does not measure ad awareness.
  44. 44. Holmes and Cook.
  45. All data are statistically significant at significance levels of 90%+; time periods shown are initially calendar quarters, but due to changes in the way data were collated, change to 'Tesco Quarters' in 1998. Tesco's calendar year runs from March, so TQ1 1998 = MarchMay 1998.
  46. RSGB Trad Off Store Choice Determinants Analysis 1997; conducted amongst shoppers and nonshoppers.
  47. Time periods on graphs vary due to data issues.
  48. Although we cannot state what the top scoring criterion was, we can say it was a hygiene factor (much as people may say that a car must have four wheels and an engine).
  49. See Payback section.
  50. Managing Retail Brands: Michael Jary and Andrew Wileman, 1998.
  51. E.g. Sainsbury's 'Value to shout about' campaign (Sept 1998March 1999).
  52. James Harkness, Banner McBride, Tesco's internal communication consultants.
  53. 'Our staff and customers are very much alike' (Terry Leahy, Sunday Times, May 1997).
  54. Lord MacLaurin in the 'How you can help with first class service' video, 1993.
  55. Training Industry Estimates.
  56. Robert Tree, General Assistant, Tesco Saffron Waloden.
  57. Dave Whiting, Stock Control Manager, Tesco Folkestone.
  58. 'Compliment of the month' letters from customers in 'First Class Success' monthly staff bulletin, No 1994 and Jan 1995.
  59. For one moth, Quarter 3 1997.
  60. Tesco Customer Exit Interviews: Quarter 3 1997.
  61. DRSM Qualitative Research, 1995.
  62. Tesco/Lowe Lintas Staff Research, spring 2000.  Onehundred and four store staff were interviewed in five separate locations.
  63. Kristina Wanza, checkout operator, Tesco Folkestone.
  64. Alison Ostermeyer, Home Shopping, Tesco Romford.
  65. Doris Claydon, General Assistant, Tesco Romford.
  66. Rosemary Constable, Personnel Manager, Tesco Saffron Walden (26 years' service).
  67. Fran Minogue, Director of Retail Practice at Norman Broadbent International, the largest UKbased international search group.
  68. marketing's salary survey shows that the average retail marketing salary is lower than every other sector but construction.
  69. Ann Grain, Director of External Affairs for the British Retail Consortium.
  70. Management Today: Britain's Most Admired Companies.  The research was conducted amongst top public companies by market value in 26 sectors.
  71. Mintel Report on Retail Advertising, April 1999: 'Tesco was, by far, the retailer whose advertising work was admired by other retailers.'
  72. Marketing Manager, grocery retailer.
  73. Advertising Manager, electircal retailer.
  74. Catherine Baxendale, who moved from P & G to become Head of Tesco Advertising from 1996 to 1999.
  75. Peter Wright, who moved to Tesco from UDV last year to become Head of Brand Communication.
  76. Mandy Minichiello, who moved from Guinness in 1998 to become a Brand Manager at Tesco Stores.
  77. Tesco Graduate Trainee, 1997 intake.
  78. Butterfield.  Excellence in Advertising, 1999.
  79. Tesco Annual Reports (year end share price; adjusted to account for 2 for 1 bonus issue in 1998).
  80. J. Gregory.  The Impact of Advertising on Stock Performance, 1997.
  81. Mike Godiman. Verdict Research.
  82. Simon Champ, Dresdner Kleinwort Benson.
  83. David McCarthy, Director European Food Retail Research, Saloman Smith Barney.
  84. Sally Ronald and Sarah Carter, Merril Lynch.
  85. Frank Davidson, HSBC James Capel
  86. Financial Times, April 1995.
  87. Holmes and Cook
    In brief...
    We modelled only revenue derived from 'Dry Grocery' good which includes canned goods, packet goods, tea, coffee, biscuits, cereals, rice, pasta, etc.  Revenue was chosen because volume varies widely from category to category.  This means that volume for one category is not a proxy for volume in another so it cannot be used as an indicator of business performance and is frequently not collated or reported.  Dry Grocery was chosen for three reasons: (i) Dry Grocery products can be considered staple purchases indeed Tesco use Dry Grocery as a proxy for football; (ii) Dry Grocery does not benefit from the effect of fastgrowing consumer trends (as a category like, for example, ready meals, would). (iii) Dry Grocery is one of the largest product categories accounting for around onefifth of revenue sales.
    The model accounted for the contribution of Tesco's advertising in isolation of Tesco marketing initiatives and promotions (including Clubcard), competitive advertising, Tesco's relative price, inflation within Dry Grocery, national expenditure on Dry Grocery, seasonality, and the trend from high street to out of town.  it took account of any increase in the number of stores, the number of stores relatave to competitors, store size and type of store.
    The payback calculation was as follows: incremental revenue generated in the Dry Grocery x 5 (since Dry Grocery accounts for 20% of total sales)x 2 (since the number of stores modelled accounted fro 50% of total stores).  This was multiplied by 5.9% (Tesco's operating margin) to give the incremental profit.
  88. Source: Tesco Annual Reports.
  89. The cost of the 'Dotty' campaign is accounted for within operating margin.  Source: Tesco Annual Reports.
  90. Source: Tesco Annual Reports.
  91. Sunday Times, May 1997.
  92. Mintel: to date, Tesco Personal Finance has received deposits of 859m, paid out credit card advance of 128m and lent 243m.
  93. Tesco Preliminary Statement of Results, Year to Feb 2000.
  94. Mintel.
  95. AGB (52 w/e April 199152 w/e April 2000).
  96. Daily Telegraph, Jan 2000.
  97. Taylor Nelson Sofres Omnibus, Feb 2000; incidentally, this was nearly half as many as would trust Ford (the biggest selling car manufacturer in the UK) to fix their car.

  NOTES & EXHIBITS


FIGURE 1: 'DOTTY' SHARE OF VOICE HAS BEEN RELATIVELY LOW