Corporate Branding and Brand Competitiveness

1. Group Presentation

As a group, you are required to prepare and deliver (in Week 8) a 15 minute presentation. Group size will be confirmed at the beginning of the module. Using de Chernatony's (1999) process for managing brands, your group needs to critically evaluate the corporate branding efforts of a service organization of your choice. Please assume that your presentation is to be given to the Managing Director of the service organization. The presentation will be followed by a 5 minute Q&A session. You are expected to use powerpoint to deliver your presentation. All members need to prepare a part of the presentation and present it to the class. You need to submit a copy of your powerpoint slides at the beginning of the presentation. You also need to submit a logbook of your meetings.


Today, some of the most successful corporate brands in the world are retail brands. These retailers make large investments to build brand image and brand equity. One part of this branding strategy is to launch store brands. One of the leading grocery retailers, the British supermarket chain Tesco, has developed a look and feel for its own-brand products that reflect its brand values rather than the values of the established brands in each category (Wolff Olins, n.d.). A coherent look and feel that reflects the values of the corporate brand is assumed to have a positive impact on the store brands carrying the corporate name.

Tesco was founded in 1924 by John Edward Cohen. Jack 'the Slasher' Cohen, as he was better known, started out as a market stall trader in the East End of London. ( The name 'Tesco', was first used on tea, and was derived from the initials of Cohen's tea supplier, T E Stockwell, combined with the first two letters of Cohen. Tesco Stores Limited was incorporated in 1932. (International Directory of Company Histories Vol 2.)

The UK's supermarket customers have long known the secret of Tesco's success.. Living up to their advertising strap line of ''Every little helps'', consumers have flocked to their stores for not only well-stocked, cheap provisions, but an increasing number of goods and services - from TVs to insurance, deckchairs, mobile phones, insurance etc.

The strategy of developing market share for goods outside the usual supermarket arena led to Tesco surpassing its once-rival Sainsbury's to become the biggest supermarket in the UK.

At the national speech awards speech in 1993 Leahy, who was the CEO of Tesco Plc at that time, was questioned, "What is your secret for making Tesco Britain's number one retailer?" He answered in 5 words: "We sell what people want" explaining it further he said fast growing companies especially companies in retail sector can not afford to have complex processes and long-winded decision making processes. Simplicity must run through every thing its values, its aims, how it grows and how it does business with customers, whether they are individuals or companies. (Seth & Rendall (2005, p.60)


-What makes people(consumers) wanted to come to TESCO?

-The uniqueness of the brand, brand salience whereas when people mention about TESCO , it will be automatically comes to mind about the variety products and a convenience store for them.

"The power of brand lies in what resides in the mind of customers".Customer based brand equity. What makes customer loyal to TESCO? Physical appeal to customers and also create a brand awareness to consumers due to the size of the building, atmosphere, facilities which lead to the element of brand resonance

Consumers' choices of shopping destination, for example, 'Quality of stores', 'Cleanliness' and 'Availability of rest rooms'

-Cleanliness' was the attribute most associated with the spending

Travel distance and time to both centers and supplied details such as age, location of residence(general layout)and occupation of the main earner in the household.

Upper vs. lower socio-economic groups: For managerial, administrative, professional, supervisory and clerical, 'Lighting' and 'Access by road' were significantly more associated. For manual workers, senior citizens and unwaged Shoppers travelling by automobile or public transport: ', 'Choice of major stores' and 'Eating and drinking' 'Shoppers nice people', 'Big shopping center' and 'Value for money'. Spending power. For example, shoppers travelling by public transport are more likely to appreciate (free) seats, compared to the more affluent auto travelers who choose to relax in a restaurant, bar or caf�. 'shops' encompasses not just the physical environment of the shops but also the wider systemic shopping environment. Tesco allow suppliers direct, real time access to individual store sales and stock data via the Internet. Internet make a website through which they can sell online. In this step, they want to get everyone from the local area to buy products from them

Many shoppers are willing to part with personal and transaction information in exchange for benefits .

The principle behind the success of the Tesco personalized communications (e.g. welcome letter; satisfaction questionnaire; special offers and so on).

Centers that offer free parking,

The type of goods and services demanded by consumers is a function of their social conditioning and their consequent attitudes and beliefs. Consumers are becoming more and more aware of health issues, and their attitudes towards food are constantly changing. One example of Tesco adapting its product mix is to accommodate an increased demand for organic products. The company was also the first to allow customers to pay in cheques and cash at the checkout.

Humby & hunt (2003) discusses as to how Tesco gained customer loyalty. Tesco implemented `Customer-Centric` Strategy. Looking at the customer needs through this strategy, Tesco expanded the non-food range of its products to sell over the internet ( And they did remarkably well by selling CDs and DVDs and Christmas presents. The company sold over a million wine bottles and 230,333 CDs and DVDs. Another big step through customer-centric strategy Tesco took was the launch of club cards using which customers get extra points. Through club card Tesco got the advantage of having the record of the customer's preferences and buying behaviours. This enabled Tesco a rapid progress and the achievement of the market share

Tesco implements promotional strategy like

  • Buy one Get on Free

  • Buy one Get one half Price

  • Buy Tooth Paste (e.g.) and Get Tooth brush Free etc


All modern organisations need to be trusted by stakeholders at a deep level. Sir Terry Leahy, Chief Executive of Tesco, said in Tesco's 2008 Annual Review that in the current economy Tesco's strengths stand out as customers look for help with higher mortgages, bills, fuel and taxes (Tesco Plc, 2008a). It is this search for assistance by consumers that drives Tesco to maintain a strong Corporate branding reputation which in-turn helps to increase market share and increase profits.

Tesco's primary stated aim is to "create value for customers to earn their lifetime loyalty". (Tesco Plc, 2008d) and measures deliverance of this value through a balanced scorecard.(Figure 2). This balanced scorecard, known as Tesco's 'Steering Wheel', allows Tesco to publicly show areas of focus (in conjunction with short-term objectives) and transparently report progress to all stakeholder groups. Tesco states that they "engage with stakeholders in every sphere to take into account their views and we try to ensure our strategy reflects them" (Tesco Plc, 2006). This statement shows the first of many clear signals that Tesco understands Corporate Reputation's importance and the management of Corporate Reputation from a strategic level downwards in the organisation.

Part of Tesco's success story is that their steering wheel simplistically highlights major stakeholder groups to be managed (for Corporate Reputation purposes) namely customers, the local community (including local traders), shareholders (from finance), employees (from people) and suppliers (from Operations). Tesco utilises stakeholder theory in achieving aims across individual and multiple stakeholder groups understanding that Corporate Reputation is built on a positive reputation in every group.

Tesco states it is committed to engaging in "constructive dialogue with all stakeholders" and links in a trust-based understanding of Corporate Reputation stating "customers need to be able to trust our business and will only trust if we do the right thing by all our stakeholders" (Tesco Plc,2008f).

Tesco's dealing with shareholders, who were initially wary of risking their investment abroad, and there were reports that the City held back expansion within European in the 1990s.

Some researchers use strength and size at home to secure the best human resources overseas information (perceptions, inferences, and beliefs) about it that people hold. Whereas, some researchers use image and reputation as substitutes, others such as Fombrun (1996) see reputation as the esteem in a long-term perspective that the company has, as opposed to image that can be more short-term in nature. In this paper, image and reputation are used as substitutes, since it is likely that the early studies on store image would have used the concept "reputation" had they been done today. A company's reputation can act as a signal that summarizes its past behavior and which can be used to forecast future actions. A general assumption in the branding literature is that a favorable brand image will have a positive impact on consumers' behavior towards the brand, such as the opportunity to command premium prices, buyers who are more loyal, and more positive word-of-mouth. Translated to a retailing context, it is likely that a favorable store image increases satisfaction with the store which in turn increases store loyalty (Osman, 1993; Bloemer and de Ruyter, 1998).

Stakeholders interacting with staff from numerous departments in order to ensure a consistent message and uniform delivery across all stakeholder groups.

SELF IMAGES (awareness and image)

How TESCO meets customer needs-brand meaning: brand performance and create brand response to the customers.

Brand Image- that creates strength related to personal relevance and consistency. In addition, TESCO also stand tall with the uniqueness of it, by plays the role of its functionality.

When thinking of TESCO definitely consumers will think of the good price (value for money )and such a deliverability store(perform,sustainable over time).

Tesco's Corporate Reputation has been managed carefully with top board-level attention aided by Tesco's corporate identity remaining solid as a 'value' grocery retailer Case Study: Tesco's Corporate Reputation success leading up to and during the 2008 'credit crunch'. Andrew McDonald, 2008 Pg. 4.

With an improving corporate image. Tesco's strong corporate identity makes a distinctive visual statement (Business Dictionary Online, 2008a) for consumer stakeholders with corporate catch-phrases such as 'every little helps', 'value', 'working hard for customers' and 'saving even more' utilised in marketing. Tesco's corporate image could be defined as value, non-luxury (Business Dictionary Online, 2008b). Tesco's image has changed more than its identity as Tesco grew from UK based operations to Europe, USA and Asia. In each

instance Tesco has, through either its brand or a partnership, stayed focused bringing a value proposition to consumer stakeholders carried along by Coporate reputation. For example in US, Asia and European operations Tesco utilises different brand permutations yet does not waiver from its business angle of delivering 'value' groceries to consumers. In contrast when Tesco began operations in the US in 2007 it leveraged the image and reputation of the Spice Girls

The latent variable "Store as a Brand" included the manifest variables "low prices," "value for money," "trust," "a neat store," "a pleasure to shop in," "an unusual store," "a competent store," "customer oriented," "environmentally concerned," "assortment," "understands customer needs," "customer relationships."

The latent variable "Store Brands" included the following product categories: gourmet food, lunch food, detergent, toothpaste, skin products, deodorant, hair care products, vitamins, micro wave oven, and vacuum cleaner.

The latent variable "Manufacturer Brands" included the manifest variables "manufacturer brands making it easier to select brand," "reduce risk of making wrong choice," and "saves time," "trust in manufacturer brands," "serves as a guarantee," "makes it fun to shop," "says something about the buyer," "value for money," and "good packaging."

"Store as a Brand" was the price dimension, i.e. that the store had low prices and offered value for money. It was much less important that the store offered "Store Brands" than that it was good at being a competent retailer.

Competitive prices on attractive leading brands have pulled consumers to the store

The launch of the Efficient Consumer Response (ECR) initiative provided the shift that is now apparent in the management of food supply chains (Datamonitor Report, 2003). Tesco stores utilise the following technologies:

  • Wireless devices

  • Intelligent scale

  • Electronic shelf labelling

  • Self check-out machine

  • Radio Frequency Identification (RFID).

Tesco store brands had a packaging style that reflected the existing cues in that category. Tahe established brands, rather than reflecting any of the values of the Tesco brand itself. The case study of Tesco, as well as prior academic studies, suggests that a favorable store image may influence consumers' perceptions of store brands. The profitability of store brands versus manufacturer brands varies between product categories. A study by McKinsey showed that when retailers introduce store brands the impact on profits can be an increase by 80 percent in the best category and a decline of 1 percent in the worst category (Gl�met et al., 1995). When all cost and revenue items are taken into account, store brands are often less profitable than branded equivalents. Since, retailers allocate an excessive amount of shelf space to store brands in relation to brand leaders, the former generate lower ratios of profit per cubic meter in almost half of the categories analyzed. An obvious question is, therefore, to what extent store brands contribute to the corporate image of retailers and make the store more attractive to its customers.

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