New Product of the Year

Lord MacLaurin of Knebworth must have thought that reviving the fortunes of Tesco would be the big-gest challenge of his life. How wrong he was.

Recreating Tesco, and captaining it as it overtook Sainsbury’s as the UK’s biggest supermarket chain, pales in significance beside his real challenge – reviving England as a cricketing nation.

No doubt that is what he is doing right now – preparing to galvanise England’s cricket team as chairman of the Test & County Cricket Board.

His appointment raised some eyebrows among those who wondered what a grocer knew about cricket. The answer is, rather a lot. MacLaurin, born in Blackheath on March 30 1937, was educated at Malvern College and played for the school First XI and the Kent second team. He was considering a career in first class cricket before Sir Jack Cohen lured him to Tesco, where he started as a management trainee in 1959.

No surprise then, that in addition to being chairman of the TCCB, he is also chairman of the UK Sports Council.

When MacLaurin was appointed chairman of Tesco in 1985, it had a respectable 13.4 per cent share of the UK grocery market but was falling steadily behind Sainsbury’s, which had 18 per cent. MacLaurin’s first contribution to recovery and growth was a piece of research which revealed that Tesco’s fundamental weakness was the inconsistency of the Tesco brand.

Tesco had pioneered the introduction of superstores in the Seventies – but in the mid-Eighties it still had a number of older stores, which were letting down its image. Its “pile it high, sell it cheap” philosophy was no longer in tune with the image-conscious Eighties.

But the research did identify one great strength: consumer perception of Tesco stores as energetic, down-to-earth, and purveyors of a family shopping environment.

Tesco used this dynamism, rooted in unpretentious family values, as the cornerstone of its new brand blueprint, a blueprint which is today enshrined in the “Every Little Helps” slogan.

One of the first steps was to drop Green Shield Stamps. Ironically, ten years later MacLaurin presided over the launch of Tesco’s Clubcard loyalty scheme, disparagingly referred to by David Sainsbury, chairman of J Sainsbury, as “electronic Green Shield stamps”.

How wrong Sainsbury was: Clubcard and Clubcard Plus are so successful that Sainsbury’s has launched its own versions.

No doubt, as MacLaurin prepares to retire as chairman of Tesco he is already planning a loyalty scheme for English cricket. He may be retiring from the retail scene: but it is doubtful we have seen the last of him.

Tesco Clubcard Plus

The premise for Clubcard Plus was arrived at after extensive consumer research towards the end of 1995 and the beginning of 1996.

The grocery bill takes up the largest proportion of an average household’s disposable income after the mortgage. Most consumers have an idea how much money they will spend each month on household essentials and petrol, and put that amount to one side. But while the money is waiting to be spent, it is effectively “dead” – usually idle in a current account, earning little interest.

Clubcard Plus allows consumers to pay a set amount each month into the Clubcard account by standing order, and to use that money to pay for groceries and petrol. Any surplus money earns five per cent interest – about ten times the amount that current accounts pay. Furthermore, when the Clubcard Plus account is used, the customer earns points through the Clubcard loyalty scheme.

The marketing plan behind the launch was a major factor in its success. To begin with, Tesco and its then partner NatWest examined the potential impact of the new service on all aspects of their operations to ensure the systems backing the card ran smoothly.

Next, there was the task of communicating the purpose of the new product to 130,000 Tesco staff, who would play a key role in making it work. Finally, there was the advertising of the new product, through television, press, and in-store promotional material. All told, the Clubcard Plus launch was the largest communications task ever undertaken by Tesco.

The basic concept had scored very highly in consumer research; and one in four UK households already shopped at Tesco. Furthermore, the retailer had already signed up 9 million members for its Clubcard loyalty scheme, to which Clubcard Plus was a logical extension.

Tesco recognised that consumers do not make decisions about financial services products quickly, so it aimed to sign up only 100,000 Clubcard Plus users within a year of launch, basing this target figure on the number of account holders recruited by First Direct in its first 12 months.

In fact, that figure was reached in six months, and the service is guaranteed to break even in its first year of operation.

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