A time for new things

Last week, British retailer Tesco launched a new low-cost range of fruit and vegetables called Market Value.  This is not just about low-cost, Tesco is very cleverly adopting brand-led innovation to create the value people are looking for.

Good brands are really judged, not on what they promise, but on the value they tangibly deliver. This becomes doubly important in tough times when the search for value becomes even more deliberate, and only outstanding offers sell. Brand-led innovation is how clever businesses create useful products and services that people are happy to pay for. 

Ideas like Market Value are inspired by Tesco’s brand, ‘better, simpler, cheaper’ and ‘every little helps’.  These ideas in turn strengthen the brand and have larger impact on the business - Tesco plans to extend Market Value to other categories such as frozen food, dairy and health and beauty. They also acknowledge the customers' need for more value, without compromising on quality or usefulness, because in hard times, people want a lower price but not bog-standard and dirt-cheap. Sophisticated tastes see ‘economy’ as a compromise too far, so suggesting the values of a market in this (the realness, the colour, the proximity to source, the haggling even) is dead smart. 

Brand-led innovation is a clever approach to making the most in a downturn and contrasts sharply with some flawed and all-too-common alternative approaches:

1. Deviating from the brand idea. Rather than change what the brand is about, Tesco uses new ranges like Market Value to re-enforce its relevance

2. Ripping value out of the business through massive discounts. With Market Value, Tesco keep margins healthy on other ranges such as Finest without alienating value-conscious customers.

3. Sticking heads in the sand and doing nothing. Tesco understand that in tough times, it pays to take a fresh look at your products and services and use the brand to drive new ideas. Similarly, Apple, during the dotcom downturn, increased R&D budgets, invented iTunes and continues to dominate the category.

In all sorts of sectors where businesses and consumers are questioning their spend – energy, finance, advice, travel, retail – the winners will be those that stimulate demand by using their brands to create new things that people are happy to pay for.

7 October 2008, posted by Ije Nwokorie