International differences

In the second of a series of articles, Clive Humby, co-founder of dunnhumby, talks about overcoming international differences in retail marketing.

Clive Humby
Clive Humby

Localisation in Globalisation

Globalisation has changed the face of the world. For global businesses it is inevitable that there will be both obvious and subtle differences in the behaviours of customers in different parts of the world. While brands have spread and attitudes certainly have changed to be more open to other cultures, people are still not willing to have a way of life imposed on them. That means that when companies go global, they have to respect the local.

Know the local customer

To overcome this issue, local customer understanding is essential as it allows knowledge to drive innovation that is relevant to each country that companies work in.

The key is to have a customer-centric approach that is not restricted to one market but which can easily be adapted in different countries to best serve the local population. In the Asian countries Tesco has adapted many parts of its business on the basis of getting to know their local customers by analyzing their data – from sources such as EPOS, loyalty programmes and traditional research methods.

At possibly the most basic level of observation, better understanding of its customers has led Tesco to adjust its car parks in many Asian countries because shoppers are more likely to visit stores on their motorbikes or scooters than in a car. This means they will buy less and shop more frequently, which has an impact on how products are sold and marketed.

The attitude to parking in Thailand is very relaxed. Shoppers leave the handbrakes off in their cars so other drivers can move their car if needed. It’s not unusual to see whole lines of cars being pushed around the car park so that another shopper can leave the car park!

This massively different attitude to the shopping experience can also be seen in-store. In Malaysia, many shoppers like to hang out for a whole day in a shopping mall. Tesco has built an entire mall there and leased out other areas to lure in customers. There’s even one Tesco in Malaysia with a cinema!

Analysis of Asian customer data also meant Tesco knew to reduce prices on products that appealed to less affluent shoppers. This understanding has led Tesco to provide better prices on around 24 different items each week to members of its Chinese Clubcard loyalty programme.

Analysis down to individual customer level

Being able to understand customer behaviour down to the individual item level has proven essential in Asia. It’s crucial that the price is right for a number of particular products. In China, eggs are a deal breaker. In South Korea the most price-sensitive items are fresh produce. If the products are not priced at the right level, shoppers will go elsewhere. Understanding what customers are saying through various forms of data ensures Tesco strikes the right prices in each of these countries.

In-depth knowledge of different types of customers is vital in Malaysia. Tesco has to ensure that its special offers appeal to the country’s three main ethnic groups – Malay, Indian and Chinese – complicated by the fact they all tend to shop in very different ways.

In Thailand, customer data has given Tesco the confidence to introduce for the first time a ’price rollback’ on thousands of products that customers really care about rather than the lines they could afford to reduce. This represented a radical move and highlights how complete customer understanding can drive innovative strategies and events in greatly differing countries.

Understanding which promotions work best for customers and the business is also essential in the Asian markets. Customers tend to be promotionally driven with many receiving five pamphlets per week from competing hypermarkets advertising their promotions. In some regions promotional sales are as much as 50% of total store sales. Running the right promotions and sending out the right pamphlets is the key to making sure Tesco’s customers keeping coming back.

Small changes to loyalty programmes lead to big impact on behaviour

This deep understanding of customers in each market has led to many small changes in the way Tesco operates its loyalty programmes in each country. This manifests itself in even the simplest ways, with the South Korean version named ’Familycard’ and the China programme named ’Membercard’. This local tailoring has also seen ’Every Little Helps’ translated into various versions with ’Rao Sai Jai Khun’ (’We put our heart to serve you’) used in Thailand.

The rewards offered to cardholders also differ according to the specific markets with the most popular redemptions in South Korea being discounts on the hundreds of activity classes and courses (including cookery and learning languages) held in the ’Culture Centres’ in Tesco’s Homeplus stores. Cardholders are also typically targeted with offers via SMS compared with mail-outs in the UK.

The use of integrated customer insight to drive innovation in its businesses around the world has proved very significant for Tesco. It has highlighted that even in developing markets, where each has its own very specific characteristics, the strategy of becoming more relevant to individual customers is arguably a more valid strategy than adopting the one-size-fits-all approach of simply cutting prices.
It’s a global approach to business that delivers local results.

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