When a Promise Becomes a Threat

We are now several months into Tesco’s latest marketing campaign, The Tesco Price Promise. 

And the anecdotal results I can see on social media are very interesting. 

On the face of it, this should be a successful campaign. What’s not to like, at the heart of a recession, about promising your customers that, if you (accidentally) overcharge them, they’ll get that overcharge off their very next shop? What’s not to enjoy about your loyalty being rewarded and a financial incentive to return?

But there’s a downside. If you continually overcharge your customers, and give them a piece of paper to prove that you are doing it. Every week. Then it’s only a matter of time before the customer sits up and thinks “Hey, wait a minute here….”

And the flip side? Well, if you are saving money, it’s only a matter of time before you get a little peeved that everyone’s getting money off vouchers except you…..

This latest price promotion could spell disaster for the market leader. Already CNBC is predicting Tesco’s fall from power, and rival supermarket chains are stepping up their marketing messages to compete with the price promise juggernaut head on. Sainsbury’s is even challenging Tesco through official channels that their “comparisons” are not even real comparisons, and you have to agree: it’s hard to compare the Fair Trade coffee to the ground coffee that was unethically extracted from its suppliers at rock bottom prices….

Social media is further fueling the spread of this disgruntlement, with irritated shoppers posting up pictures of their receipts, demonstrating just how much cheaper it would have been for them to do their grocery shop elsewhere. 

This doesn’t really affect our household. We switched our weekly grocery shop to the so called “premium” supermarket Marks & Spencer a few years ago. At an average saving of £40 on the weekly shop, the two grand annual saving is worth the stick we get from our friends for pretending to be posh. Quite frankly, I’d rather be “pretend posh” than poor. 

A few recent trips to Tesco, to just get a few things, have resulted in numerous money off coupons, and our astonishment that just a couple of carrier bags of “bits and bobs” can come to such a high amount. 

I simply pity the poor families who shop there weekly, on limited budgets, and see their hard earned wages going straight to Tesco’s bottom line.

So what should Tesco do now? 

Well, the sensible option would be to cut its prices. 

It might eat into some of the £1.4 billion pre-tax profits it has made in the last six months, but it’s likely to lose less customers in the long term. 

Since the start of the recession, shopping habits have changed immensely. Discount shopping is no longer stigmatised, coupons are considered valuable commodities but, despite these changes,  long term shopping habits remain a constant. 

And once a customer has shifted their main supermarket, it is doubly difficult to lure them back. 

As a marketer, I can promise them that.