Brand and Reputation Management in Tesco Plc in the Light of the Horsemeat Scandal - Essay Example

An Evaluation of the Brand and Reputation Management in Tesco Plc in the light of the Horsemeat Scandal Table of Contents An Evaluation of the Brand and Reputation Management in Tesco Plc in the light of the Horsemeat Scandal 1 Table of Contents 1 Introduction 2 About Tesco 2 Brand and Reputation Management in Tesco 3 Brand Visioning in Tesco 5 Internal Marketing in Tesco 7 Brand Equity of Tesco 8 The Horsemeat Scandal 10 Horsemeat Scandal as Risk to Brand and Reputation Management in Tesco 11 Brand and Reputation Campaign Management in Tesco 13 Conclusion 16 Bibliography 18 Introduction The paper aims at generating both an empirical discussion and reflection of practical activities to help in sustaining the brand and reputation of organizations at the rise of an event that tends to generate enhanced risks for the reputation of the organization. Empirical discussions relating to brand and reputation management concepts would be produced at different stages to help in clarifying the understanding of the practical implications relating to the same. The case of the horsemeat scandal would also be introduced in the paper such that it would help understand the reasons for the rise of the same and the impacts that it would generate on the operations in the retail sphere. Finally it would also reflect the different reputational and brand management initiatives that were taken by Tesco Plc while matching the same to the empirical understandings to reflect on the efficacy of the same in meeting of end objectives. About Tesco Tesco operates as a leading grocery retailer in United Kingdom. The company was formed during the year 1919 by Jack Cohen through the creation of a large number of market stalls. Currently the company operates based on a team of 500,000 people based along 12 global markets to generate the right quality of services to the customers. On a weekly basis the team of 500,000 people based in 12 different nations contribute to addressing the needs of 75 million retail customers (Tesco Plc, 2014). Tesco as a global retail store focuses on to understand the needs of the customers and thereby to act in a responsible fashion to meet the need of the different communities. As a company the management of Tesco focuses on promote operations through effective teamwork such that it contributes in sharing knowledge and experience with each other. Working based on a team also contributes in generating a sense of trust and mutual respect for each other to help in the meeting of the organizational goals in a collective fashion (Tesco Plc, 2014). The company management of Tesco continually focuses on to invest in the development of different types of retail formats and also to incorporate needed technology to enhance the quality of services offered (Tesco Plc 2014). Brand and Reputation Management in Tesco The corporate or a company brand is signified as a constituent of the different products and services marketed by the company to its customers. Corporate or company brands relating to the holistic nature of services and products offered resemble the development of an umbrella that thereby requires the generation of effective vision and mission guidelines and also the incorporation of needed positioning strategies to position the brand relating to its different competitors. Furthermore the development of a corporate brand also contributes in not only enhancing the level of brand equity of the different product and services brand but also contributes in the development of effective relationship with potential stakeholders like suppliers, employees, investors, government and general customers. The development of a corporate or company brand is considered highly effective such that the same contributes in the meeting of the long-term vision and mission objectives and helps in adding value to the business, marketing and customer services conducted. Finally the development of a company brand also contributes in generating needed potential to make optimal use of the tangible and intangible assets that in turn enhances the level of business excellence for the corporation (Kotler, Michi & Pfoertsch, 2006). The concept of reputation relates to the beliefs, opinions and expectations developed by others pertaining to something with which they tend to be increasingly associated in their everyday lives. Moreover reputation also indicates to the definite character or identity of a person or institution with which the people opining tend to bear potential relationship. Related to the aspect of corporate reputation the first condition that needs to be evaluated is that whether the stakeholders of the business corporation have significant awareness related to the activities and existence of the business corporation. Thus the perceptual understanding developed by a social group related to another individual or institution is identified as a collective or social construct that contributes in the development of beliefs on the understandings and thought generated by others. The issue of corporate reputation relates to the holistic understanding and perceptions of the stakeholders related to the activities of the organization. Reputation of the corporate firms stems from four different sources like the annual reports of the firm, communication gained from media, knowledge gained from individual customer shopping experiences and also information gained from other stakeholders. A positive reputation gained from the different sources contributes in sustaining both employees and customers to the firm (Helm, Liehr-Gobbers & Storck, 2011). The management and development of the brand image of Tesco can be rightly identified in terms of the universal appeal generated to all income classes of consumers to help procure the merchandises marketed in its different retail stores. Generation of specific offers contributed in attracting the customers relating to different economic and social classes to the stores. The motto of selling quality merchandises at a reasonable price range was met such that the retail company management focused on the development of four different product categories like ‘Finest’ or the ‘Premium’ class; ‘Tesco Organic’ class; ‘Healthy Living’ class and for the economy class ‘Value’ class products were generated. This activity contributed in changing the perceptions of the consumers to the retail store thereby helping in enhancing the parameter of customer loyalty and business revenues. Focus on the generation of effective customer service rather than enhancement of shareholder value also contributes in creating a customer responsive image thereby enhancing customer loyalty. The third strategic development countered by Tesco to help enhance its brand image relates to the focus on diversifying into other product categories other than food or grocery. Diversification into product categories consumer durables, media and books and also to health and beauty contributed in generating larger brand awareness of the company to consumers. Tesco’s management also focuses on using acquisition as a key tool for helping in international expansion and in generating brand awareness (Aaker & McLoughlin, 2010). The creation of Tesco.com contributed in reinforcing the brand image of the grocery retail store such that it encouraged customers to order products online which were then supplied from the different retail stores. This online retailing strategy was used for repositioning the Tesco brand such that it along with food and grocery items helped the customers avail other goods and services marketed by Tesco. Diversification in the category of Personal Finance through collaboration with Royal Bank of Scotland further enhanced its brand position (Shajahan, 2004). Brand Visioning in Tesco The concept of brand visioning relates to stretching the company or the product brand such that the same tends to engulf and excite the performances of the staffs to deliver their personal commitments in generating success and productivity of the organization as a whole. Elucidating further the concept of brand visioning is identified as an activity conducted in a team setting such that the staffs are encouraged to conduct the tasks based on an analytical and visionary mode. Involvement of staffs and team members contribute in generating greater excitement and also in driving needed commitments in helping fulfil the brand management objectives. However existence of different types of organizational cultures like the existence of a bureaucratic organizational culture tends to limit the rights of the staffs to get aligned with the higher management in decision making and thereby in gaining the potential of generating needed feedbacks to the management for improvement. It is held that the practice of brand visioning contributes in enhancement of the level of competitive advantage for organizations such that incorporation of teamwork and staff involvement contributes in value adding to the existing brand potentials thereby making it difficult to be imitated by other companies. The idea of brand visioning is observed to be developed based on three different components. The first component requires the brand to be flexible enough to help in the incorporation of needed changes related to future periods. Changes in the approach and philosophy of the brand based on different periods contribute in enhancing the sustainability of the same. The second and third component relates to the purpose or the objectives for which the brand is created and the values, benefits and promises that the brand tends to deliver to generate needed customer satisfaction and also in terms of motivating and driving the employees to fulfil the organizational objectives (Chernatony, 2010). Evaluation of brand visioning relating to Tesco reflects on the steady incorporation of technology driven marketing and promotional activities and also the development of the loyalty programs to help enhance the relationship patterns developed with the target customer force. Digitalization of the Clubcard scheme with also the introduction of multichannel retailing is considered as an effective step taken in that direction. The primary purpose of the Tesco brand is to help evaluate the changes that have taken place in the consumer societies and thereby generate product and service offerings in close anticipation of changing needs and expectations of the consumers. In that the Tesco brand aims in enhancing the level of trust and loyalty involved with the customers. Similarly the brand visioning strategy of Tesco also aims in generating value for one and all such that the management of Tesco aims at encouraging the development of needed teamwork in the organization. Through effective teamwork the organization focuses at both sharing and development of knowledge of co-workers but also in generating newer opportunities for people to grow with while pursuing their entrusted operations. The above discussion thus reflects growth and development of the Tesco brand in a holistic manner (Tesco, 2014). Internal Marketing in Tesco In the aspect of internal marketing the employees in an organization are observed to be as internal customers. These customers are required to be convinced by the management body in such a fashion as to help in fulfilling the objectives and vision of the organization. The aspect of internal marketing thus not only requires the management to effectively communicate and share the vision and mission objectives with them but also requires in encouraging them to generate their individual opinions and feedbacks in helping fulfil the objectives entrusted. This strategy contributes in generating a sense of trust, commitment and accountability of the members in helping fulfil the business objectives in a collaborative fashion. Further the aspect of internal marketing also focuses on the incorporation of different forms of incentives like the generation of work from home facilities along with provision of bonuses and financial incentives. Generation of financial and non-financial incentives of the above accord contribute in rightly motivating the people to work in a collective fashion in accomplishing group objectives (Kusluvan, 2003). Relating to the dimension of internal marketing, it is observed that the management of Tesco focuses on the generation of training programs to help enhance the skills and expertise of the organizational members in generating enhanced customer services. The internal program referred to as ‘Every Little Helps’ focuses on creating the mindset of the staffs to spend greater time on the shop floors and in the generation of internal meetings aimed at framing of new objectives and targets that in turn drives the focus of the staffs to synchronize organizational resources to accomplish the stated objectives (Chapman, 2012). Brand Equity of Tesco The understanding of the concept related to brand equity contributes in enhancing the importance of the potential of the attribute of a specific brand. Creation of a brand ideally contributes in differentiating a product or service from another related product or service marketed by a different company. Brand Equity relates to the composite nature of different types of assets and liabilities that gets linked to the name or symbol of a company, product, service identified as a brand. Through such linkage such assets and liabilities aim in adding value to the offerings made by the brand to the different customers spread on a global basis. The concept related to brand equity is further evaluated based on three different dimensions pertaining to the customers, employer and also from the viewpoint of the company. From the viewpoint of the customer the idea of brand equity relates to the effect of marketing activities on attracting or distracting the attention of the customer. It thus focuses on identifying the effect of the marketing activity on generating a specific customer response. Thus a positive effect of the marketing activity tends to generate a like response of the customer towards the product or service. Gaining of experiences and association with a specific brand contributes in generating a specific mindset of the consumer towards a product or service. From the employer’s point of view the idea of brand relates to the parameter of loyalty and commitment developed by the employer in developing the position of the company. This concept of brand thereby also helps in binding the employees to generate needed productivity through working in a committed fashion. The pattern of brand equity developed by the employer towards the company contributes in designing the different types of human resources recruitment, development and retention policies which thereby differ from concern to concern. Brand Equity enhanced from the company’s viewpoint contributes in enhancing the parameter of employee satisfaction, involvement and participation of the employees in decision making activities and also such that contribute in reducing the attrition rates of employees in the organization. The above entailed is a holistic discussion of the concept of brand equity from three different perspectives (Aaker, 2009). The management of Tesco focuses on to enhance the value of brand equity through enhancing the product offerings being made to the customers. In recent times the company is observed to venture into the field of digital products such that Tesco aims to provide different digital books, music and cinema collections to help in fulfilling the needs and expectations of the consumers. Generating product offerings on the above accord contributes in enhancing the level of brand equity of the retail company in the target market. Similarly another key strategy that aims in enhancing the value of the brand equity of the company relates to the development of e-commerce. The designing of the e-commerce site is taken to encourage the customers to make orders on an online basis which in turn generates needed convenience and accessibility to the people (Hosea, 2013). Brand equity is developed by Tesco through the generation of product and service offerings both along the offline and online sphere. Related to the offline sphere the company is viewed to help entice the customers through operating along a wide range of product lines and assortments and also through helping the customers enjoy value for the money invested. Tesco endeavours to augment the level of brand equity through the generation of private offerings along different product lines such that the same depicts increased commitment of the company in meeting consumer expectations through the creation of private labels. From the viewpoint of the company the aspect of brand equity is enhanced such that the expertises of the company staffs are continually developed to generate the right kind of customer service. Segregating the activities of the company into different departments like sourcing, sorting and picking, development of store infrastructures, packaging, customer servicing and management of loyalty the company aims at enhancing the amount of retail productivity. Differentiating the retail activities contributes in rightly evaluating the competencies, commitments and loyalty of the employees in meeting of departmental objectives. Further with the development of the Club Card the development of relationships with customers is further enhanced thereby contributing to increased brand equity (Bold, 2014). The Horsemeat Scandal The Horsemeat Scandal gained emergence during January 2014 such that samples of horsemeat were found in burgers related to frozen beef made by retail companies like Tesco, Iceland and Lidl. The emergence of the horsemeat scandal spread like a wildfire thereby requiring different food retail companies operating along the United Kingdom and European region to potentially discard beef products such that considerable amount of horsemeat samples could be traced. In some cases it was found that beef products to be marketed were identified only by name while the product was fully developed on horsemeat. The impact of horsemeat scandal was potentially great that required the large scale dumping of beef burgers and other ready meal products suspecting the same to be developed based on horsemeat. Sales of frozen burgers on account of the above issue were observed to be reduced by around 41 percent during 2014 compared to the 2012 period. Likewise other frozen meals also reflected a sharp decline of the order of 11 percent during March and 15 percent related to month of April. The decline in the sales of frozen meat and food products were reflected in the post horsemeat scandal period such that potential change was observed in the habits and preferences of the customers that relied more on purchasing fresh meat products from butchers. The demand for processed meat products rapidly declined owing to change in customer preferences. Change in customer preferences was reflected owing to the decline in customer confidence over frozen meat products (Morris, 2014). Horsemeat Scandal as Risk to Brand and Reputation Management in Tesco The emergence of the horsemeat scandal was observed to generate potential impact on the operations of the retail grocery firm Tesco. With the reduction in the sales of frozen burger and processed meat products in Tesco the same reflected a rapid decline in the shares by around 5 percent. To counter the impact of the decline in the share value owing to the decline of sales prompted by the emergence of the horsemeat scandal the company further focused on the reduction of inventory of consumer durables such that it was observed to engage a lot of stacking space and also in failing to generate needed returns (BBC News, 2013). The drop in sales for the products in Tesco’s operation in United Kingdom gained a decline along three months ranging from March to May with also a reduction in sales by around 1 percent in the second quarter of the 2013 period. Other than the United Kingdom market, the decline in sales for Tesco was recorded as 3.8 percent related to the Asian markets while a decline of around 5.5 percent was observed relating to the decline in sales of Tesco operating in the European markets. Other than the above statistics the sales for the past 18 months before June 2013 also reflected considerable instability in the sales and the revenue paradigm such that the company recorded a potential drop in the annual profits during a 20 year period. The pre-tax profit for Tesco Plc recorded a rapid decline by around 95.7 percent during the same period thereby recording a figure of around £120 million. The emergence of the horsemeat scandal vehemently affected Tesco’s retail operations such that the sales of the retail stores of the company were potentially affected in around 11 global markets. The worst dip in sales was recorded relating to the retail stores of Tesco based in United Kingdom. Tesco’s operation in key markets like Turkey was affected by a reduction in about 15.5 percent while in other markets based in Czech Republic and China the sales recorded a dip of around 9 and 5 percent respectively owing to the emergence of the horsemeat scandal. Other key affected zones for Tesco included the retail market in Thailand and Poland such that the sales were affected by around 3 and 8 percent respectively (Moulds & Neate, 2013). In a statement rendered by Philip Clarke the fall in sales of Tesco Plc was clearly reflected such that the sales of the company recorded a steep decline in a 20 year period where sales recorded a decline by around 51.5 percent thereby recording a figure of GBP 1.96 billion. The decline in the sales by around 51.5 percent during the 20 year period also reflected a fall in the shares of the company by around 2 percent which was reflected by the management as disappointing performance. The management of the company largely accused the supply chain operations of the company as primarily responsible for the emergence of the horsemeat scandal prompting a decline in the sales figure of the retail stores (London Evening Standard, 2014). Other statistics related to the decline in sales reflect that till 25th May 2013 owing to the emergence of the horsemeat scandal the sales of Tesco recorded a considerable decline of around 5.5 percent relating to the retail stores operating in the European countries. It also reflected the cancellation of a major supplier Silvercrest such that the beef burgers sourced by the firm reflected samples of horsemeat (Leach, 2013). Following the rapid decline in sales in Tesco Plc owing to the rise of the horsemeat scandal the management focused on pulling out certain products out of the retail stores in United Kingdom which also reflected a change made in the level of existing suppliers. Further the company along with generation of testing activities has also required the customers to abide by potential regulations in terms of conducting quality checks on the products while also demanding a close focus to be made on meeting the specifications underlined. This was taken to help generate enhanced customer satisfaction and also helping in the generation of needed trust and loyalty pertaining to the customers (Quinn, 2013). Brand and Reputation Campaign Management in Tesco The brand management campaign by an organization in the post crisis situation is required to be conducted based on the meeting of certain steps reflected as follows. In the first case the business management is required to identify the different stakeholders to the business corporation based on which the communication activity is required to be developed. This would contribute in generating the right quality and pattern of message to help in clarifying its position to the mass market. Secondly the business corporation is required to help in the generation of special events, contests and promotions that would contribute in enhancing the level of loyalty involved with the target base of customers. Thirdly the brand management campaigns need to be developed in such fashion as to encourage the customers to report and return the faulty products to the company while also sending offers, promotions, coupons and samples to the customers related to different occasions. This would contribute in encouraging the customers to return back to the company. Further the company is also required to effectively personalise the brand with the target customers such that the customers can rightly identify their own identity with the brand. This can be done through the incorporation of celebrity endorsement to the brand that reflects its customer responsive and accountability approach. Similarly a person relating to the management can act as an effective spokesperson that would reflect the stance taken by the company in the light of the occurrence of the crisis. Fourthly the brand management activity related to the post crisis period is also required to gain the potential of the social networking platform such that the use of social media tools like Facebook and Twitter contribute in conducting of effective public relations. Finally the company management is also required to generate an effective blend of print, visual and internet media to effectively communicate their changed and customer responsible face to the target customer force. The above activities are taken to contribute in the generation of a new identity of the company to the mass market and thus would help in the encouragement of growth of customer visits and sales (Berg, 2011). The campaigning activities relating to restoring the corporate reputation in the post crisis period relates to the preparation of a statement reflecting the company’s stand relating to the emergence of the crisis. The statement needs to reflect the style that the management of the business corporation is taking to tackle the crisis. Further the reputation management also need to reflect the confidence of the management of the business corporation in tackling the crisis. The reflection of the existence of needed control generates a sense of trust in the minds of the different stakeholders thereby helping in the protection of the reputation of the organization. In addition to identifying the communication style that needs to be developed for tackling the crisis the management is also required to identify and install spokespersons that would contribute in reflecting the case and the position of the organization to the general public. Further the Greenwashing activities related to management of the organization’s reputation is required to be carried out through the sharing of information via the use of print and visual media and also the use of the internet. This point contributes in enhancement of the level of transparency involved such that it enables in the development and sustaining of needed trust and confidence of the stakeholders on the business. Another effective mode of gaining support of key stakeholders and the public is through the use of social media platforms like use of Facebook and Twitter. The same contributes in the development of needed communities such that information can be shared by the management with the people to generate needed trust and dependability (Bold, 2013). The brand management campaigns related to Tesco to counter the crisis imposed by the horsemeat scandal pertains to the generation of a digital website by the company. Through the use of the digital website the company aimed at sharing and reflecting potential information to the customers to show the process of gaining the raw materials for producing their branded products and the process of making such. The above activity digitally reflecting the modus operandi behind the sourcing and production of the food products was conducted to enhance the level of trust and confidence involved with the customers. As a part of the brand management campaign the CEO of Tesco Plc made a reassurance to the customers relating to the development of effective benchmarks that would contribute in generating greater control over the sourcing, production and distribution process. Generation of effective benchmarks is reflected as an ideal step in making the company largely accountable and responsible to the customers. In addition to the above activities further initiatives like the incorporation of food testing departments were also portrayed by the company management as an effective drive to help in the generation of needed trust and commitment to customer welfare. Further brand management activities relates to the development of such advertisements that would contribute in the involvement of a dialogue with customers. Generation of such type of advertisements is taken to help in the development of needed emotion and empathy pertaining to the understanding of the needs of the consumers and thereby in acting in a proactive fashion to help in addressing such. The above activities thus reflect a holistic stand taken in by the company relating to both engaging the supplier force and also the customers as potential stakeholders to help create a new image of the organization in the period after the emergence of the horsemeat crisis (Bold, 2014). Relating to the case of Tesco, the case of horsemeat scandal has required the company to device effective reputation management mechanisms such that the organization has focused on the development of a news website relating to food products that contributes in the evading of fear and doubt from the minds of general public. Tesco Food News generated by the CEO of the company aimed not only in working to deliver effective public relations but also in contributing in Greenwashing the tarnished image of the company generated owing to the emergence of the horsemeat scandal. Tesco also focused on the generation of electronic mails directly to the Clubcard customers that reflected an apology made by the company to the customers owing to the rise of the horsemeat crisis and also reflected a commitment to effectively change its approach towards the customers. Reflection of a picture of greater accountability and responsibility to the customers generated a positive picture of the company. Further along with the development of product testing centre the development of local sourcing centres based in Ireland and United Kingdom is taken to largely contribute in the generation of the right quality of product and services to the customers (Griffin, 2014). Conclusion The paper reflects on a specific issue related to the emergence of the horsemeat scandal and the manner the same affected the operations of a retail company like Tesco Plc operating in United Kingdom. Both empirical and practical discussions are generated thereof such that the paper reflects on various paradigms related to brand and reputation management and then deals with the same based on the case of Tesco Plc. Other potential discussions relating to brand equity and brand visioning are discussed in the paper with also relevance to the retail organization Tesco. The paper potentially reflects the brand and reputation management campaigns that are required to be formulated by the different organizations to help counter the effect imposed by the emergence of the horsemeat scandal. It is observed from the evaluation made that the rise of the horsemeat scandal owing to a supply chain management error generated considerable impacts on the retail operations of Tesco Plc such that it affected the share value and profitability potential of the company. Tesco’s management through the use of different kinds of media like the broadcasting, print and internet continually focused to manage its reputation and brand to help sustain the flow of potential customers to the retail stores. Bibliography Aaker, DA 2009, Managing Brand Equity, Simon and Schuster, United States. Aaker, DA & McLoughlin, D 2010, Strategic Market Management: Global Perspectives, John Wiley ad Sons, United Kingdom. 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