familiar second place and the remaining players fighting it out below
them.
The way forward
In an industry where margins were slim, increasing market share was vital.
Due to its position in the league table Tesco had been battling to improve
its performance. 1991 and 1992 had been bleak trading years for them and
gloomy early figures for 1993 had shown that they had lost 3 per cent of
customers in the previous year. In response to this decline, research was
undertaken in order to throw some light on the reasons for the fall-off in
customer numbers. Results showed that customers wanted better value,
service and responsiveness as well as a supermarket that was innovative.
Under the charge of Terry Leahy, then Marketing Director, a strategy plan
was devised on the basis of these findings which concluded that Tesco
‘should aim to be positively classless, the best value, offering the best shop-
ping trip. This will be achieved by having a contemporary business and
therefore one that remains relevant by responding to changing needs. We
should aim to be the natural choice of the middle market by being relevant
to their current needs and serving them better, i.e. customer focused.’^2
In the early 1990s the corporate strategy had been margins-focused and
efforts had been directed at extracting higher returns in a nationwide cost-
efficiency drive. Under the new plan, strategy was changed to the aim of
delivering the best shopping trip for the customer. This covered a variety
of attributes so, starting in 1993, Tesco embarked on a series of initiatives
designed to offer better value, improve the stores, and give a higher level
of service to their customers.
Better value
The Tesco shopper was found to be a value-oriented customer and, in
response to requests for cheaper prices, Tesco launched a commodity range
across 110 core products. In their distinctive blue and white packaging,
they were designed to communicate value for money for everyday goods
and negate the need for cross-shopping at discount stores. Customer
response was very positive and trading improved. This was then followed
by a reduction in the price of popular, key branded items, to give the Tesco
shopper the cheapest prices in the marketplace. In 1995 this was extended
to key lines of fruit and vegetables, the most notable of these being
bananas. This sparked a mini banana war in the high street in which the
price fell from 49p to 19p per pound in the space of a few weeks, one of the
lowest across the world. In-store bakeries were next to offer cheaper prices
The customer market domain: Managing relationships with buyers 81