Understanding Customer-based Brand Equity And International Marketing Mix: A Case Study Of Tesco

Customer-based Brand Equity and Branding Strategy

In the contemporary world of business, firms are concerned with establishing measures to brand itself with the market and gain considerable competitive advantage over other players. Most of the firms concentrate on what make a brand strong. In this regard, the questions of branding can only be answered by applying the customer-based brand equity.  The framework assists in comprehending the brand equity and means in which it is supposed to be created, assessed and controlled.  Nevertheless, the tactics of this model is from the user’s viewpoints, individual or organisation, since they are the focal point of successful marketing.

Since economic crisis in 2008 up to 2010, business managers are again looking to the future. As they are re-engaging in the global marketing strategy thinking, numerous executive are wondering if the turmoil was just another turn of the business sequence or restructuring of the international economic order.  However, though the globalisation of goods and services have stalled for a while, the overall globalisation trends are unlikely to reverse. In the era of globalisation and the progressively interconnected world, numerous corporations try to growth their sales into foreign market. International growth offers a novel and potentially more profitable arena, assisting in increasing the firm’s competitiveness and accelerates access to new product notions, production inventions and the current technology. Therefore, to fully understand the international marketing mix, the paper will also analyse the Svend hollensen model into great detail.

Tesco’s rapid growth in the recent decade has been driven by its carefully sustained and planned customer-focused approach. The company is possibly the only retailer industry attractive to different market segments, mid-range, upmarket and low-price. It constantly focuses on enhancing of customer value with concentration actions in zones like pricing, product range, quality, online customer convenience as well as in store.  For instance, back in the mid-1990s, the company initiated a significant strategic modification with adoption and customisation of the balanced scorecard policy.

Tesco aims to become a leader in the retail sector by providing good quality products at relatively low cost than competitors. One of the objectives of the company is to maximise sales which will increase the profits further. Tesco will try to optimise the benefit by cutting prices, establishing more stores, and expanding the existing stores to sell more stock.  Another aim of the company is to decrease the cost.  The firm may have a different strategy to achieve the above objective.  One is providing customers giveaways such has “buy one get one free”. Similarly, the campaign aims to present more healthy eating produces into a wide array of groceries they supply.  The purpose of adding more health goods is to entice more consumers.  Another goal of the organisation is to be of importance to the community by reducing the level of unemployment in local areas where the Tesco stores stand.  Lastly, the company ambition is to improve a broad internet shopping place.  Tesco aims to offer clothing, groceries, and electronic products as well as some online services. By doing so, the company will attract new clients that are incapable to shop in outlets.

International Marketing Mix: The Svend Hollensen Model

Tesco Plc. offers a wide assortment of products such food, outfits, financial, electronics, and financial services. The Tesco’s major competitors are Sainsbury, ASDA, K-Market, and Carrefour, giving difficulties to the firm’s processes (Annual Report and Financial Statements 2015).  The company has a broad range of products offering at its numerous stores. The company follow the approaches of cost leadership in its pricing strategy; provides lower priced produces while maintaining quality. The following are types of stores the company have; Tesco metro, Tesco superstore, Tesco express and Tesco extra. The company large stores are situated about 1,000 square metres in town and city centres. The promotions activities of the firm are founded on the low prices. It uses large extent promotion discount and offers such as ‘buy one get one’.  Tesco club card allow for the company to target and segment its users.

Three years ago, Tesco was experiencing a crisis as it reported a £6.3 billion loss as well as its brand trust rapidly eroded (Annual Report and Financial Statements 2015). However, the customers are now returning as the company executive focuses on what makes Tesco distinctive and connecting that to users. The company turn around was due to the focus on the customers,   cutting prices, customer services and improved availability.  The two value equation exists that makes the Tesco unique.  First, the basket charge reduced by 4% between August 2014 and February 2016 while couponing was down by 37% signifying that company can offer lower rate to their products (Annual Report and Financial Statements 2015). Additionally, it brand price ensures that users never lose out on brands outlets.

The introduction of the “farm brand” is also essential to the company’s success. Another part of the approach is to capitalise in what distinguishes Tesco.  The situations across the business remain significant concerns, not only due to the discounts but also the increase of suitability and online grocery spending (Seth and Randall 2011, pp.12). Assessing the marketing strategy in the UK industry,   there are a lot of similarities in term of marketing mix executing and tone (Bunn and Ellis 2012, PP. 660). However, the company is approaching the issue with different perspective. For instance, it took the risk in adopting humour in its platform.  Humour was an exciting medium because it does not work for everyone.  Another enormous variance in Tesco’s marketing approach is an above-the-line advertisement. Increase in the sales could be attributed to a shift of company’s cash into digital channels and its media.  The company has thousands of trucks with installed panes so that the firm can change the media very quickly and less expensive. The company has digital labs team which assist in rolling out services such as flexible payments. But, the company maintains that technology is concentrated on assisting the users.

Case Study of Tesco’s Marketing Strategy

The company enters foreign markets mainly through ventures with local companies, Greenfield investment and acquisitions. The company has registered a massive success in the foreign countries such as Asia.  However, the situation in the United States has been different due to inability to gain the market control.  The lack of endurance is due to the industrial structures and cultural differences.  The company was able to make an entry in South Korea due to merge with Samsung. It was crucial as shoppers prefer fresh and quality products like meat and vegetables.  The firm’s localisation and decentralisation displays local image thus making brand a highly responsible for lifestyles and tastes for the local consumers (Mosley and Barrow 2013, pp.36). Therefore, the company had a competitive edge in South Korea compared to other foreign firms such as Carrefour and Wal-Mart.  The company employed the same strategy in China and Thailand to penetrate the market.  The operation in the United States failed because it attempted to standardise instead of localising.  Part of the concerns was the market study focused on the purchasing behaviour of American and ignored crucial variables such as shopping value, experience, store atmosphere, quality and aesthetics.  For instance, the Tesco retails pre-packaged produces was a big blunder because America prefers choosing fresh products alone (Wood and McCarthy 2014, pp.124).

There have been a wide variety of brand definition, with some being more products oriented and others being more consumers oriented. According to Aaker, a brand is a design, term, name, symbol or any other features that identifies one seller’s goods and services as distinctive from those of other vendors. As elaborated by Keller, a brand is a name, design, symbol, sign or combination of them, intended to identify the good and service of a seller and to differentiate the merchandises from those of rivals. The Tesco branding strategy is to offer wide variety of choice ranging from brand, type, regional produces with relatively at affordable and reasonable price.

The Aaker model is a marketing framework which views brand equity as a combination of brand loyalty, association and loyalty, which supplement to give the value offered by the products or service. For the past three decades, many scholars have backed their effort in researching how the product equity can be linked to a brand.  Numerous structures had been drawn yet the frequently used would be the Aaker classical. Aaker argues that the brand loyalty is a kind of perceived quality, association, awareness, and loyalty (Aaker 2012, pp.11). When user had a specific connection or attachment towards a product, it is said that consumer is devoted to the brand.  Aaker sets value premium and customer gratification as a loyalty measurement (Aaker 2012, pp.13). The premium worth is the additional sum of cash that client is eager to pay for the product when it is compared with another product offering same assistance (Ryans 2013, pp. 28).  The problems of using client fulfilment as the dimensions are that it can only relate to present clienteles. Therefore, the above analysis is a relatively important in Tesco measurement for the service sector (Wood and McCarthy 2014, pp.127). 

Tesco’s Objectives and Strategies

Keller’s brand equity model is also known as the customer-based brand equity. The concept behind the framework is simple; to create a strong brand, shape how consumer feel and think about ones producer. One should generate the right types of experiments around the brand, so that users have specific beliefs, opinion, feelings, perceptions and positive thoughts. When the company as robust brand equity, customer will purchase more and they tend to refer others they become loyal and less likely to go to competitors.

Keller centres his work and inquiry on brand equity from the perspective of the distinct behaviours (Keller 2013, pp.113). The differential influence of brand familiarity on customer’s response to the brand marketing is the definition of customer-based brand equity.  Keller claims that customer-based brand equity occurs when the user is acquainted with the brand or has an acquaintance of the specific product (Keller 2013, pp.114). Numerous studies support that product knowledge influences decision making and choice.  Keller categorises brand familiarity into two components which are brand image and awareness (Keller 2013, pp.117).  Brand image is the relations of ideas which are linked to a specific brand, person, and the company.  According to the Keller, brand association is informational connected to the brand ‘knob’ in a memory (Keller 2013, pp.120). Brand recognition is the capability of user to acknowledge product’s knowledge when they are asked questions about a particular brand; it means the users can differentiate the brand.  

3.3 Brand identity: It is an exclusive set of brand link that planners hope to maintain or creates (McLoughlin and Aaker 2010, pp.11). According to the Aaker, brand identity is the company wishes to find or positions itself, its products or services. The passionate and exceptional aspects reinforce brand identity and values that help to differentiate the brand in the market. In this initial step, the objective is to generate  awareness or brand salience; need  to ensure that the brand stand out and that customer recognise  and are aware of the brand.  Therefore, one does not just create brand awareness and identity but also tries to ensure perceptions are correct at the central stages of the buying processes.

The perceived quality in the Aaker model is one of the main aspects of brand equity. Additionally, the perceived quality is one of vital part of study in assessing the brand equity. Perceived quality offers value by offering a reason to purchase, differentiate the brand, supporting high prices, attracting channel member interest and being the fundamental for line extensions.  Therefore, perceived quality is the consumer’s judgment about a product’ ’general superiority or excellence. The main basics making Tesco to build a strong character are personal possessions, organisational arrangement, company décor catalogue, card, packing, market and invention (Wood and McCarthy 2014, pp.130).

Tesco’s Competitors and Pricing Strategy

3.4 Brand recognition: Tesco’s brand recognition denotes how the users and possible clients perceive the products (Wood and McCarthy 2014, pp.127).  Attitudes and perceptions of the users can be influenced by how conscious is the brain. Perceived worth is one of the measurements of brand parity. The perceived condition has been linked to the price elasticity, premium price, brand usage and stock return (Mosley and Barrow 2013, pp.37). Several levels of awareness include recall, recognition, brand awareness, top-of-mind, brand opinion, brand awareness, brand dominance. Aaker suggests that brand in various product lifecycle need a different level of knowledge (Aaker 2012, pp.15). The final measures from Aaker classical are the market behaviour. It comprises market segment, price and delivery indices, which are data acquired from the marketplace rather than directly from users (Aaker 2012, pp.17). The model acts as universal procedures to quantify the brand equity at Tesco.

3.5 Brand positioning: positioning is the places in shopper’s minds that company want a brand to own. Building brand awareness involves ensuring that users understand the product or service   classification in which the brand competes.  According to Aaker model, brand awareness is the ability of potential purchaser to recognise that a brand is a member of a specific product’s category.  At the recognition level in the brand awareness, it offers with a sense of familiarity, substance, and familiarity.  Therefore, brand awareness is crucial in most of conceptual framework of brand equity. According to the Keller, brand recognition comprises customer’s ability to recognise and recall the brand.  According to the Aaker model, perceived quality offers value by offering a reason to purchase, brand differentiation, attracting channel member interest, supporting a higher price, and being the basis for line extension. Tesco’s brand positioning is well built through constant communication with the users about the merchandise to its directed market segment through brand label and packing, and advertisement (Keller 2013, pp.128).

3.6 Brand personality: According to the Aaker, brand personality is a set of human characteristics connected with a given brand. Any human personality is influenced by the aspects such as relatives, family and friends.  The brand personality concept assists the specialists in number of ways such as it helping to comprehend the attitude and perceptions of the consumers towards the brand.  It enables to differentiate the brand from its competitors. Finally, it leads to sustainable differentiation point and gives a competitive edge as a brand is perceived of being vigorous which is difficult to emulate.  The truth of the situation is that Tesco is putting their brand online and adjusting to the social media guideline with a specific tone of voice.  For instance, through use of the modest humour expression, the company is adding logic of personality into the consumer service.

Tesco’s Turnaround Strategy and Unique Value Proposition

3.7 Brand affinity: Brand affinity is a metric that lets market researchers make projection about how a consumer will behave. Brand affinity also adds a layer of information that is useful when differentiating among users to realise market segmentation. According to the Keller, brand loyalty is about consumer having an emotion link with the brand. Brand affinity also assist accelerate building of consumer loyalty, thereby making the process less expensive and time consuming for brands. Tesco is the most massive retailer in Europe currently. Just like ASDA, Morrison or Sainsbury, affordable price, high quality products, and fashionable design and distribution systems are critical to its success and rapid expansion globally (ASDA 2017).

Brand effectiveness is a result of an action that comes with the brand image. From the retailers, effectiveness is showed on the suppliers, community, staff, customers and local dealers.  The company is becoming successful in the global retailer, and trying to be active in the nonfood section, and putting the community at the forefront.  High growth rate, market share and value brand depict the effectiveness of Tesco brand.  Publicity is one of the distribution channels that measure the effectiveness of brand such as half price decorations, keeping Christmas special at Tesco.  Finally, the result of the activities from the brand image and positioning is shown by the Tesco’s brand effectiveness.

International marketing is defined as the performance of   business process designed to plan, promote, price and direct the movement of a corporate’s goods and services to users in more than one country for profit.

 In general, firms go international because they want to expand its operations, more particular drivers include generating more revenues, diversifying and recruiting new talent, and competing for new capital. For instance, when the McDonald entered India, they did a vigorous research before zeroing up the menu in offer for the Indian users. The company stuck to 40% pure vegetarian offering unlike any other overseas market.

Tesco being leading online grocery sellers, it owns a 35% stake in US grocery chain Safeway’s grocery works.  The company is leading in grocery store and it is currently advancing its business with a TV channel and a retailer centred education institution. Various attitudes towards the company’s involvement in international marketing process is referred to us international marketing orientations. The framework addresses the way strategic decision are made and how the connection between the headquarters and its subsidiaries are shaped.  For instance, Tesco used the framework when going global in Indian market. The company  offered  40% vegetarian product’s which would  go along  consumer similar tastes,  believing in the  distinctiveness of every market, and respecting the  cultural  and economic  similarities among the regions.

Tesco’s Approach to International Marketing

According to the hollensen, globalisation of companies is the involvement of producers, suppliers, consumers and other stakeholder in the global marketing process. Global marketing thus deliberates the style of firms selling’s products and services across many nations (Ulrich et al. 2012, pp.12). Drawing on an unparalleled breadth of international examples, Svend Hollensen not only illustrates on how the global marketing functions, but also how it link to actual decision around the globe (Alexander & Doherty 2009, pp. 5).

Globalisation of production and market has a great obligation in making Tesco largest retailer, as major Multinational Corporation. Approximately 65% of its operations lie outside the UK with 12 global subsidiaries.  During the expansion of Tesco, the aim was to capture and benefit from the inventive which emerged from the international subsidiaries. Due to the interlinking of the markets, company’s organisation design and operating skills have been steadily modified as it learned to function in and adapt to host nations. The company transferred know-how from the UK around its international operation using the intra firm networks of communication

When a firm runs its business internationally, there are two choices, standardisation and adaptation. The questions of what approach to utilise is a matter of debate since the 1980s (Cunningham and Harney 2012, pp.56). The essence of marketing mix is to find out the balance between standardised (extensions) and localised (adaptation) strategy. Firms have to scrutinise the range of standardisation and adaptation to resolve which aspects of the marketing mix to adapt or standardise.  Reasons for selecting standardisation are due to higher sales volume, lower manufacture cost, higher profitability and combined image globally (Harrison 2013, pp.40). The adapted marketing mix is another substitute to overcome snags when companies want to be a leader or reach new market segment.

Hollensen ‘global’ model (Ulrich et al. 2012, pp.12)

International marketing mix comprises use of various marketing techniques to accomplish positive financial result by firm operating on international markets.  The instruments includes, price, product’s, promotion and distribution. The international marketing mix should account for socio-cultural and legal circumstances in each nations to which it is directed. When launching a product into foreign markets, companies can use a standard marketing mix or adapt the marketing mix to suit the nation where they are operating their business.  For instance, Tesco is a global player but, their products are adapted to the local culture and needs. In India, cow is a sacred animal and therefore their produces comprises fish or chicken instead of beef.

Tesco’s Success and Failure in Foreign Markets

The whole procedure of a food and fashion brand like in Tesco starts with products and till they are bought.  If the products do not fulfil user’s expectation, whether other aspects such as price, place and promotion are successful, the brand will not sell. For instance, the main components of fashion goods are aesthetic style, form and brand image.  Products adaptation pursues to improve several products for varying markets.  Products adaptation covers the principal risks of the standardised products. Standardised products may fit in home market but it would not apt in other marketplace due to users in different nations having varying conditions and preferences (Piercy et al. 2010, pp. 6).

Even though globalisation minimises the difference among the nations, there are still considerable taste variances across varying countries (Harrison 2013, pp.42). For instance, persons in the south of Europe consent strong bright colours, but in the north of Europe, individuals tend to evade the colours (Morschett 2011, pp.15). Tesco sells fashion brands in its outlets. Apparently, the American and Asian shapes are different as mentioned above. On fashion websites, Tesco clients in America criticise that Tesco sizes are most of the time too small which is no surprise because the average American lady is bigger than the average European woman.

Tesco has one standardising design idea for all market in Asia and Europe. Tesco attempts to arrange all assortments of what diverse marketplace necessities.  The central variety should shelter all the desires of various markets. India is a gigantic market but that have warmer environment compared to other marketplaces. Therefore, the Indian market has added merchandises with short sleeves, and material of products gets substituted by firm Indian atmosphere.  Chinese’s users prefer products with a big brand; logos, anticipate more high-end products than other users in other nations.

For the similar style of clothing and food stuffs, price ranges and there are various pricing strategies and mechanism decided by the external and internal factors.  Another objective of pricing is getting the most excellent profits for the companies while satisfying user’s prospect in the market. Consumers are becoming price choosy all the time and therefore are unlikely to be deceived by the deliberate price confusion and false value chains.  Price is one of the gauges of the market positioning. It is a universal pricing plan that a firm sells the similar product at different charges in diverse markets; consumers have different conditions in every market (Piercy et al. 2010, pp. 8). In the long term, varying pricing tactic will be hard for the international market. With the globalisation, obtaining of products has become much at ease due to developed communication and technology (Hitt et al. 2008, pp.8).  The different pricing policy tends to weaken user’s brand loyalty because they see lower prices of the similar merchandises in other nations and comprehend there is no reason to pay more in their home state. The Tesco wholesale charges are the same but end retail rates of the company are marginally different due to the market situation in each country (Krafft and Mantrala 2010, pp.7)..  The global strategy of the Tesco is executed not only by pricing itself but also the product.

Aaker Model for Measuring Brand Equity

Distributing tactic is essential for the fashion and food brands, although it does not warrant triumph.  For a high fashion brand, it brand positioning and image are vital. They usually set up flagship outlets to show the brand identity in a market.  Tesco has the similar visual selling approach. The company’s outlets in Asia and Europe have the identical store setting and even how the products are shown. It is not easy to standardise the distribution network, and approaches for all the markets became all nations have a changing atmosphere, customers and laws which make consumers have different purchasing sequence (Hensmans et al. 2013, pp.22). The standardisation and adaptation of distribution are more relying on the markets conditions such as regulation, culture, customers and products than the decision of the company. Therefore, Tesco distributes its products internationally through brands retails, wholesales and e-commerce sites. All the brand stores are standardised over the globe regardless of the local surrounding (Sternquist and Witter 2011, pp.65).

Firms use the standardisation and adaptation promotion plans interchangeably as the trends transforms with the time (Wood and Gibbs 2014). Companies can select adaption, standardisation or combine both approaches to the promotions plan.  Among the three choices, the most active method is using the standardisation and adaptation together.  Businesses should analyses markets where they function and find shared ground. The resolution to mix standardisation and adaption approaches are grounded in its market growth, state, culture and rivalry in the market.  In many cases, the adaptation of publicity is a modification of the original advertising of companies but not building new promotion due to the additional costs to keep the steady brand image (Ulrich et al. 2012, pp,12). The company uses loyalty card scheme called Tesco club card (Felgate and Fearne 2015, pp.471). The Tesco ad campaign is used for all media and advertisement. The standardisatio8n marketing plan saves a lot of costs and offers the steady brand image globally.  Tesco is involved in a lot of initiatives including the sports for clubs and schools; computers for schools; cancer research UK race for life; and Tesco Great school run (Thompson et al. 2012, pp. 144). Tesco participates in direct marketing by giving free fruit to local school for four weeks before the opening of new outlets. The initiative combines healthy living and direct marketing.  

Conclusion 

Globalization influences a variety of field including the fashion and food sector. For the firm to survive in the globalised sector, companies need to choose a business strategy; standardisation and adaptation. The standardisation strategies use one approach to different market while keeping the consistent brand image as well as saving the costs. From the above research, the companies need to consider specific factors within the 4p’s of the marketing mix: product (logo, design, fit, size, and colour); Price (positioning, range, and difference); Promotion (advertising method and communication), and place (point of sales, local surrounding and distribution changes-to standardise or adapt the business for various markets.

Keller Model for Measuring Brand Equity

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