Tesco Venture Brands

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Tesco venture brands are an advanced form of private label brands launched by Tesco in 2011 that do not carry the retailer name. These products fall under the category of Tesco venture brands and complement their current value, standard and finest ranges. Tesco venture branded goods are available in a wide range of industries from food to children's toys to sanitary products. Most of the brands are positioned as "premium goods" competing with existing premium branded goods.

Contents

The Difference Between Private Label Branding and Venture Branding

The concept of venture brands is a naming strategy that originates from private labels. Private labels are products or services that are manufactured or provided by one company for offer under another company's brand. Tesco venture brands are an evolution of this concept which attempts to disconnect the store name (Tesco) entirely from the product. Private label products are commonly associated with value for money however venture brands have been positioned as premium products, competing with existing premium named brands.[ citation needed ]

Reasons for Launch of Venture Brands

Marketing Strategy

Modern consumers are increasingly willing to switch to substitutes or similar products due to the presence of easily accessible information. [1] Creating new premium brands that do not carry the Tesco name (known for value products), this can be seen as an attempt by the retailer to attract more loyal customers as opposed to selling to customers who previously bought at Tesco due to price factors. Tesco Venture Brands such as Chokablok have been developed into premium products with unique branding and packaging, differing greatly from the conventional Tesco Value, Discount and Finest ranges. The effect of which can be seen as an effort to increase perceived value as packaging can contribute to the customer's understanding of the brand which can result in sales growth. [2] The venture brands can be developed into a premium brand, which can result in added value for the product. The construction of premium brands can increase the extrinsic value of the product and increase perceived value by the customer. [3]

Expansion of Business

Venture brands can also be seen as a strategy for business expansion. By creating a brand that is independent to the retailer, in terms of brand, can become a tool to target specific customer groups that do not favour the Tesco brand. This strategy may be explained by the various meat adulteration scandals associated with the Tesco brand. [4] If the venture brands are successful and manage to attract a loyal customer base, this may give Tesco an advantage over competitors such as Waitrose and Sainsbury's. [5] As the venture brands are managed by Tesco, the retailer will have the power to restrict sales of such venture branded products in Tesco stores.

Movement into Premium Market

From 2008 to 2014 Tesco has been extremely active in the sale of their premium range of products. Relaunched in 2013, Tesco Finest is the retailer's most premium range of private label products. From this it can be seen that Tesco has experienced success with this area of the market and according to Kantar Worldpanel, Tesco Finest range "is now the fastest growing premium brand in the market". [6] It can be viewed that Tesco is attempting to break into the premium products market through the use of venture brands marketed as high quality brands that do not carry the retailer name. By creating venture brands, it can be seen that Tesco is attempting to appeal to customers who are deterred by unbranded products. [7] Tesco stated in its 2012 annual report "to be a creator of highly valued brands". [8]

Advantages of Venture Brands

Diversification

In the view of consumers, venture brands have no relationship with the Tesco label. The venture brand will be independent to the retailer and the brand image of Tesco will not necessarily affect the brand image of the venture brand. This can be seen as a form of diversification. If the retailer's brand image suffers, the venture brand image should not be affected. [9]

Changing Customer Preferences

Venture brands can be an opportunity for Tesco to experiment with new products for consumers. The retailer will have the ability to make adjustments to changing customer preferences. The ability to implement these changes quickly can result in greater market share for the venture branded goods and the retailer. [10]

Venture Brands

Chokablok: A premium ice cream and chocolate range launched in 2011. The ice cream range was delisted on 1 October 2014 but confectionery products have remained in production. Chokablok ice cream was arguably the most successful venture brand with the tub version of the brand worth sales of £1.5m. [11] Chokablok was also the first venture brand to be sold outside of Tesco's existing retail chain, the premium chocolate range was first sold in mid 2012 at various zoos, theme parks and piers across the UK. [12]

Parioli: A range of Italian dining products including pasta, cooking sauces, olive oil and tinned tomatoes. Parioli, alongside Chokablok is widely regarded as one of the few successful venture brands launched by Tesco. With MNDB (advertising firm) claiming Parioli to be "Tesco's most successful venture brand". [13]

Criticism

Since the inception, Tesco's venture brands have experienced varied success. With the Chokablok and Parioli brands seen as the only brands that have shown success. There has been criticism by members in the marketing industry claiming some of the brands "are simply named products and have not been cared for and marked as brands in the way that real brands would be". [14]

Many of the venture brands first launched in 2011 have subsequently become delisted including New York Soup Co., Yoo Yoghurt, Lathams, Nutricat and Halo. Tesco has also been criticised for reverting to placing the Tesco logo back onto such venture brands. [15]

Related Research Articles

Tesco plc is a British multinational groceries and general merchandise retailer headquartered in Welwyn Garden City, England. In 2011 it was the third-largest retailer in the world measured by gross revenues and the ninth-largest in the world measured by revenues. It has shops in Ireland, the United Kingdom, the Czech Republic, Hungary, and Slovakia. It is the market leader of groceries in the UK.

<span class="mw-page-title-main">Grocery store</span> Retail store that primarily sells food and other household supplies

A grocery store (AE), grocery shop (BE) or simply grocery is a store that primarily retails a general range of food products, which may be fresh or packaged. In everyday U.S. usage, however, "grocery store" is a synonym for supermarket, and is not used to refer to other types of stores that sell groceries. In the UK, shops that sell food are distinguished as grocers or grocery shops.

<span class="mw-page-title-main">Pricing</span> Process of determining what a company will receive in exchange for its products

Pricing is the process whereby a business sets the price at which it will sell its products and services, and may be part of the business's marketing plan. In setting prices, the business will take into account the price at which it could acquire the goods, the manufacturing cost, the marketplace, competition, market condition, brand, and quality of product.

<span class="mw-page-title-main">Waitrose</span> British supermarket

Waitrose & Partners is a brand of British supermarkets, founded in 1904 as Waite, Rose & Taylor, later shortened to Waitrose. It was acquired in 1937 by employee-owned retailer John Lewis Partnership, which still sells groceries under the brand. Its head offices are located in Bracknell and Victoria, England.

Yellow Pack was a brand of generic groceries, first launched in March 1980 by Fine Fare, a British regional supermarket chain ultimately owned by the Weston family, whose extensive interests include the UK's Associated British Foods, Loblaw Companies in North America, and a range of upmarket retailers such as Selfridges, Brown Thomas and Fortnum & Mason.

Tesco Ireland is the Irish subsidiary of supermarket group Tesco. Tesco Ireland was formed by Tesco plc's 1997 purchase of the Irish retailing operations of Associated British Foods, namely Powers' Supermarkets Limited and its subsidiaries, trading as "Quinnsworth" and "Crazy Prices". There are 152 Tesco stores in operation in Ireland as of August 2018. Tesco had approximately 21% of the Irish grocery market in 2019 and its main competitors are Dunnes Stores and SuperValu.

<span class="mw-page-title-main">Private label</span> Brand made by one firm, offered by another

A private label, also called a private brand or private-label brand, is a brand owned by a company, offered by that company alongside and competing with brands from other businesses. A private-label brand is almost always offered exclusively by the firm that owns it, although in rare instances the brand is licensed to another company. The term often describes products, but can also encompass services.

Somerfield was a chain of small to medium-sized supermarkets operating in the United Kingdom. The company also previously owned the Kwik Save chain of discount food stores. The company was taken over by the Co-operative Group on 2 March 2009 in a £1.57 billion deal, creating the UK's fifth-largest food retailer. The Somerfield name was replaced by the Co-operative brand in a rolling programme of store conversions ending in summer 2011.

Kwik Save is a British convenience store chain. Prior to 2007, it was also a discount supermarket chain that had shops across the United Kingdom. It went into administration in July 2007, but was brought back in April 2012. Its shops were small to medium-sized high street supermarkets, mainly located in areas with below average incomes.

Loyalty marketing is a marketing strategy in which a company focuses on growing and retaining existing customers through incentives. Branding, product marketing, and loyalty marketing all form part of the customer proposition – the subjective assessment by the customer of whether to purchase a brand or not based on the integrated combination of the value they receive from each of these marketing disciplines.

A product line extension is the use of an established product brand name for a new item in the same product category.

Mövenpick Ice Cream is a brand of ice cream of Swiss origin produced by Nestlé, and now is the new company called Froneri since 2016 in joint-venture with Nestlé and R&R Ice Cream.

Tesco.com is an electronic commerce website operated by Tesco. It offers a wide range of other products, including electronic goods, books, broadband and financial services. Tesco closed their Tesco Direct website in 2018.

Premium pricing is the practice of keeping the price of one of the products or service artificially high in order to encourage favorable perceptions among buyers, based solely on the price. Premium refers to a segment of a company's brands, products, or services that carry tangible or imaginary surplus value in the upper mid- to high price range. The practice is intended to exploit the tendency for buyers to assume that expensive items enjoy an exceptional reputation or represent exceptional quality and distinction. A premium pricing strategy involves setting the price of a product higher than similar products. This strategy is sometimes also called skim pricing because it is an attempt to “skim the cream” off the top of the market. It is used to maximize profit in areas where customers are happy to pay more, where there are no substitutes for the product, where there are barriers to entering the market or when the seller cannot save on costs by producing at a high volume.

<span class="mw-page-title-main">Brand</span> Identification for a good or service

A brand is a name, term, design, symbol or any other feature that distinguishes one seller's good or service from those of other sellers. Brands are used in business, marketing, and advertising for recognition and, importantly, to create and store value as brand equity for the object identified, to the benefit of the brand's customers, its owners and shareholders. Brand names are sometimes distinguished from generic or store brands.

<span class="mw-page-title-main">Co-op Food</span> Brand of consumer co-operative supermarkets in the United Kingdom

Co-op Food is a brand used for the food retail business of The Co-operative Group in the United Kingdom.

In the United Kingdom, it is common practice for retailers to have their own value brand in an effort to compete on price. These brands have become more popular in the UK with shoppers since the Great Recession caused food prices to rise.

<span class="mw-page-title-main">Thrive Market</span>

Thrive Market is an American e-commerce membership-based retailer offering natural and organic food products. It was founded by Nick Green, Gunnar Lovelace, Kate Mulling, and Sasha Siddhartha. By 2016 they had raised $141 million across three rounds of funding following their launch in November 2014.

The retail format influences the consumer's store choice and addresses the consumer's expectations. At its most basic level, a retail format is a simple marketplace, that is; a location where goods and services are exchanged. In some parts of the world, the retail sector is still dominated by small family-run stores, but large retail chains are increasingly dominating the sector, because they can exert considerable buying power and pass on the savings in the form of lower prices. Many of these large retail chains also produce their own private labels which compete alongside manufacturer brands. Considerable consolidation of retail stores has changed the retail landscape, transferring power away from wholesalers and into the hands of the large retail chains.

References

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