British Food Journal

Tescos adaptation to the Irish market

Claudio Vignali

Article information:

Downloaded by Universiti Kebangsaan Malaysia At 22:15 13 September 2014 (PT)

To cite this document:

Claudio Vignali, (2001),"Tescos adaptation to the Irish market", British Food Journal, Vol. 103 Iss 2 pp. 146 163
Permanent link to this document:
http://dx.doi.org/10.1108/00070700110694852
Downloaded on: 13 September 2014, At: 22:15 (PT)
References: this document contains references to 19 other documents.
To copy this document: permissions@emeraldinsight.com
The fulltext of this document has been downloaded 9283 times since 2006*

Users who downloaded this article also downloaded:

A.J. Parker, (1978),"DISCOUNT GROCERY COMES TO DUBLIN", Retail and Distribution Management,
Vol. 6 Iss 2 pp. 36-39
Stephen Brown, Jim Bell, (1986),"Multiple grocery retailing in NORTHERN IRELAND", Retail and
Distribution Management, Vol. 14 Iss 1 pp. 57-60
A.J. Parker, (1979),"A volatile year for Irish grocers", Retail and Distribution Management, Vol. 7 Iss 6 pp.
25-28

Access to this document was granted through an Emerald subscription provided by 516270 []

For Authors
If you would like to write for this, or any other Emerald publication, then please use our Emerald for
Authors service information about how to choose which publication to write for and submission guidelines
are available for all. Please visit www.emeraldinsight.com/authors for more information.

About Emerald www.emeraldinsight.com

Emerald is a global publisher linking research and practice to the benefit of society. The company
manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as
providing an extensive range of online products and additional customer resources and services.
Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee
on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive
preservation.
*Related content and download information correct at time of download.

The current issue and full text archive of this journal is available at
http://www.emerald-library.com/ft

BFJ
103,2

Tesco's adaptation to the Irish

market
Claudio Vignali

146

Principal Lecturer, Manchester Metropolitan University,

Manchester, UK
Keywords Retail trade, Globalization, Supermarkets, Ireland

Downloaded by Universiti Kebangsaan Malaysia At 22:15 13 September 2014 (PT)

Abstract Examines the debate on internationalisation versus globalisation with specific

reference to Tesco UK's expansion into Ireland. First, Tesco UK and Tesco Ireland are
introduced in their respective markets. Following this, an analysis of the relevant elements of the
marketing mix is presented. The degree of consistency between the companies' strategies and
tactics is then examined with the help of the MIXMAP model. Finally, conclusions are drawn on
the extent to which Tesco UK has had to adapt its marketing strategies to the sensitive Irish
consumer.

Introduction
Tesco first acquired stores in the Irish Republic in 1978 by purchasing a chain
of discount stores and immediately rebadging them as Tesco. The company
then became the discounter. However, due to a lack of emphasis on the Tesco
brand the venture was unsuccessful and the stores were sold in 1986.
Currently, Tesco is the UK's leading food retailer in an extremely
competitive market. For this reason it has decided to expand operations across
Europe. As part of this expansion programme, the company moved to Ireland
again in May 1997. It now has a total of 109 supermarkets and 46 off licences in
Northern Ireland and Eire, making it one of the leading food retailers in both
markets.
The company refers to itself as Tesco UK. Although Northern Ireland is part
of the United Kingdom, it is not regarded as associated with Tesco UK.
Therefore, throughout this article, the term Tesco UK refers to England,
Scotland and Wales, and both Northern Ireland and the Irish Republic are
considered separately under the name Tesco Ireland.

British Food Journal,

Vol. 103 No. 2, 2001, pp. 146-163.
# MCB University Press, 0007-070X

Internationalisation versus globalisation

Today, international marketing is not an option but a necessity. As a result,
there are many schools of thought as to the necessity of tailoring marketing
programmes for foreign markets. Some think that domestic and international
marketing are totally opposed, requiring completely customised strategies,
whereas, at the other end of the spectrum, it could be argued that there is no
great difference between the two, as they are overridden by much larger, lesscontrollable factors (Perry, 1990).
To introduce the debate, it is important to look at the two dramatically
opposing views. First, Kotler (1988) in favour of internationalisation claims that
``a company going abroad must study each foreign market carefully, become

Downloaded by Universiti Kebangsaan Malaysia At 22:15 13 September 2014 (PT)

sensitive to its economics, politics and culture, and make some adaptations in
Tesco's
its products and communications to suit foreign tastes''.
adaptation to the
However, Jain (1989), contrary to this, stated that ``it has been argued that the
Irish market
worldwide marketplace has become so homogenised that multinational
corporations can market standardised products and services all over the world,
by identical strategies with resultant lower costs and higher margins''.
Internationalisation
First, internationalisation is in favour of a customised marketing programme.
According to this view, as people around the world become better educated, their
tastes diverge. As a result, it becomes necessary to have a customised marketing
programme, in order to appeal to differing preferences across countries.
Therefore, understanding and heeding cultural variables are one of the most
significant aspects of being successful in any international business venture. A
lack of familiarity with the business practices, social customs and etiquette of a
country can weaken a company's position in the market (Glover, 1990).
Exponents of adaptation argue, therefore, that consumers in different
countries vary greatly in their geographic, demographic, economic and cultural
characteristics. Differences in the following factors suggest the need to adapt
the firm's product offering for international markets (Kotler et al., 1996):
.
product preferences;
.
usages and conditions of product use;
.
customer needs, perceptions and attitudes;
.
consumers' shopping patterns;
.
income levels and spending powers;
.
the country's laws and regulations;
.
users' and customers' skills and education;
.
competitive conditions; and
.
media availability.
Globalisation
Globalisation, on the other hand, is the process by which the firm does not
merely trade internationally, but bases its operations internationally. If the
world were truly global, consumers, wherever they were in national terms,
would all exhibit more or less the same characteristics with regard to specific
consumption and private situations. The global company sees the world as one
market, minimising the importance of national boundaries. It therefore
integrates and standardises marketing actions across a number of markets.
According to Buzell (1968), the benefits of standardising marketing policies
are:
.
cost savings in terms of product design, manufacture and advertising;
.
consistency for consumers;

147

BFJ
103,2

Downloaded by Universiti Kebangsaan Malaysia At 22:15 13 September 2014 (PT)

148

.
.

improved planning and control; and

exploitation of good ideas (as they have universal appeal, an effective
standard marketing message should be successful in any country).

Furthermore, homogeneous needs and preferences mean that the company can
create a global brand. Also, a larger amount of people are travelling more
widely, therefore allowing more products to be marketed to them on a global
basis. Finally, the company can profit from economies of scale and of
experience more easily, as a standardised marketing mix reduces costs even
further, letting companies offer consumers higher quality and more reliable
products at lower prices.
A mixed approach
The question of whether to adapt or standardise the marketing mix has been
much debated in recent years. However, Quelch and Hoff (1986) have suggested
that the decision is not a rigid one between complete standardisation and
adaptation, but rather that there is a wide spectrum in between and there are
degrees of standardisation. In addition, for most companies, the appropriate
degree of standardisation varies from one element of the marketing mix to
another. Similarly, the relative importance of the advantages and
disadvantages will vary from industry to industry and company to company.
Companies should therefore look for more standardisation to help keep costs
and prices down and to build greater global brand power. But they must not
replace long-run marketing thinking with short-run financial thinking.
Although standardisation saves money, marketers must make certain that they
offer what consumers in each country want. It seems, therefore, that for most
multinational companies to be successful they should incorporate ingredients
of both viewpoints.
Tesco's entry strategy into Northern Ireland: acquisition
Tesco chose to enter the Irish food retail market by purchasing all
Quinnsworth, Crazy Prices and Stewart's stores in Ireland.
Although this initially leads to high costs and requires a great amount of
commitment and risk-taking, being such a successful retailer in the UK, Tesco
was capable of this complex form of entry.
Furthermore, this entry mode facilitates the use of Irish suppliers. It has also
meant that Tesco gained access to already established distribution channels.
Both of these points are extremely important, as Irish consumers are
particularly sensitive to change and loyal to what they are used to.
This is perhaps the main reason why Tesco has chosen to enter the Irish
market through the acquisition of Irish stores. Modes of entry such as
exporting would have meant that the company could not produce locally. In
addition, as Tesco is a reputable company it is imperative that it has complete
control over its ventures. Therefore, licensing, franchising and joint ventures
would not have been suitable modes of entry.

Downloaded by Universiti Kebangsaan Malaysia At 22:15 13 September 2014 (PT)

Pressure from the Irish government has meant that Tesco must undertake
Tesco's
contracts with local suppliers. This has been beneficial to Tesco, as it has adaptation to the
resulted in access to cheaper labour as well as contributing towards it being
Irish market
recognised as a domestic company by consumers.
Internal analysis of Tesco Ireland
(1) Strengths:
.
One of the leading supermarket retailers.
.
Accelerating sales growth.
.
Close to consumer:
club card providing information about the consumer;
extensive market research; and
Tesco Local developed after requests for a small store with as full
a range as possible.
.
Financial status able to bid high for sites on which to build new
stores.
.
Experienced in building large stores with a wide range of food and
non-food goods posing a danger to Irish competitors.
.
All Irish Tesco stores will be refurbished and up-graded wider
aisles, better shopping trolleys, faster checkouts, in-store bakeries,
in-store customer assistants and improved car-parking facilities.
.
Good relationship with local contractors and suppliers:
regional support office for Northern Ireland store; and
employing locals when possible and therefore gaining respect
from consumers.
.
Centralised distribution of fruit and vegetables reducing the time it
takes to get produce to its supermarkets.
.
Distribution centre solely for Northern Ireland.
.
Aims to bring about price equity lower prices for Irish consumers.
(2) Weaknesses:
.
Have wasted time and money finding out the needs of the
consumer, e.g. the removal of the multi-million pound Premium
Choice brand.
.
Bad image following advertisements claiming that the company was
only buying British beef.
.
The unsuccessful launch of Catteau in France proves that the Tesco
approach cannot necessarily be replicated overseas.
.
Accused of taking a very arrogant approach to retailing in Ireland.

149

BFJ
103,2

Airmiles have withdrawn its incentive scheme from Tesco-owned

outlets in favour of Sainsbury's.
Own brands suffer from having a cheap and nasty image.

External analysis of the Irish food retail market

150

(1) Opportunities:

Downloaded by Universiti Kebangsaan Malaysia At 22:15 13 September 2014 (PT)

Most recent figures suggest a 20 per cent increase in turnover

through outlets established for one year or more in Ireland.

Close trading links between Ireland and the UK.

Buoyant Irish economy.

Both countries are English-speaking, making relations easier.

The Irish have similar tastes to their UK counterparts.

A large number of successful UK businesses operating in Ireland.

The Irish retail market is underdeveloped and expanding.

Good growth area in wine houses in Ireland.

(2) Threats:
.

Large Irish stores such as Superquinn and Dunne's.

The Irish government is very much against large superstores.

Stores must sell a large number of Irish products.

Irish consumers are extremely sensitive and unsure about UK

supermarkets.
Short-term difficulties have been brought about by the strength of
the pound.
Continual expansion of major supermarkets into Ireland such as
Safeway and Sainsbury's.
Legislation to prevent below-cost selling.

Internal analysis of Tesco UK

(1) Strengths:
.

Undisputed leader in the UK retail market.

Large number of stores throughout England and Wales.

Innovation:
The first to introduce a loyalty card, now the most popular loyalty
card in the UK with over eight million cards issued.
The first into financial services. The company established a joint
venture with The Royal Bank of Scotland in February 1997. Tesco

Downloaded by Universiti Kebangsaan Malaysia At 22:15 13 September 2014 (PT)

customers can now receive benefits such as a credit card and

Tesco's
insurance.
adaptation to the
Do-it-yourself scanning
Irish market
Pesticide-free goods
.
Strong expansion programme.
151
.
Increased sales through loyalty cards.
.
24-hour shopping.
.
Tesco Metro able to challenge traditional convenience outlets.
.
Tesco Finest responding to consumer demands for ``foods that
combine convenience with superb flavour''.
.
Highly focused advertising.
.
Tesco Value range fighting off growing threat from discounters.
(2) Weaknesses:
.
Forced to phase out sub-brands in favour of own-labelled products
after spending money establishing their brand values.
.
Around 30 million of its profits could be lost because of current
forecourt price wars.
.
The company's unsuccessful venture into France financial losses
and possible damage to the company's image.
External analysis of the UK food retail market
(1) Opportunities:
.
In terms of annual sales, food retailers constitute the largest sector of
the UK retail industry.
.
Growth of non-specialised food retailing.
.
Decline in retail sales by specialised food retailers.
.
Pre-prepared and value-added foods.
.
Trend towards one-stop supermarket shopping.
.
Estimated increase in non-specialised food stores of 27.6 per cent
over the next five years.
.
Movement back into town centres.
.
Development towards own-labels, in particular premium products
enhancing store image and promoting store loyalty.
.
Budget brands due to increase in discounter popularity.
.
UK food retailing is extremely lucrative operating margins of the
top grocery multiples average well above European and US
standards.

BFJ
103,2

Downloaded by Universiti Kebangsaan Malaysia At 22:15 13 September 2014 (PT)

152

Liberalisation of Eastern Europe has provided new marketing

opportunities for UK food retailers.
(2) Threats:
.
The other three top supermarket companies Sainsbury's, Safeway
and Asda.
.
Tough planning laws.
.
Sales in the UK are static and falling in real terms due to strong
competition.
.
Increased competition is making the acquisition of sites more
difficult.
.
Price war possible Sainsbury's determined to regain its number
one position.
.
Growing threat from discounters.
.
Falling food prices.
.
Constant need to generate a high level of sales in the extensive
network of stores and distribution channels.
.
Supermarkets are likely to face a growing threat from the catering
trade in the future. One-third of food spending takes place away
from home and the proportion looks set to increase further over the
next decade.
.
Own brands face stiff competition from multinational corporations
such as Coca-Cola, who are attempting to protect their dominance in
the marketplace.
.

The MIXMAP model concept

As Vignali and Schmeling (1998) stated in their article, ``The MIXMAP model
for sports sponsorship'', it is the intention of the MIXMAP model to simplify the
coordination of the different elements and their variables of the marketing mix
in order to make important objectives and targets more obvious.
Strategic element
Having already carried out the first element of the MIXMAP model research,
the next stage is strategic mapping. With regard to Tesco, the company lifecycle and Boston Consulting Group matrix models will be discussed.
By the fact that both Tesco UK and Tesco Ireland implement strategies such
as product extensions and competitive pricing and also have a growing number
of competitors, we can presume that both companies are in the growth stage of
the company life-cycle (see Figure 1).
Tesco Ireland is positioned at the beginning of the growth stage due to the
fact that it is still perceived as a newcomer in the Irish retail market. Tesco UK,
however, is positioned towards the end of the growth stage nearing maturity.

Tesco's
adaptation to the
Irish market

Downloaded by Universiti Kebangsaan Malaysia At 22:15 13 September 2014 (PT)

153

Figure 1.
Company life-cycle

Owing to diversification, for example, through financial services and non-food

products, Tesco UK has recently managed to move from the maturity stage
back to the growth stage in the company life-cycle. Evidently, Tesco Ireland
has a large opportunity to grow within the Irish retail market; however, Tesco
UK must continue to be innovative in order to hold its position within the
growth stage.
Because Tesco UK and Tesco Ireland are leaders in their respective markets,
they both occupy a large market share. Additionally, although there is
impending saturation in the UK retail market, the fact that companies such as
Tesco can diversify into new areas implies that there must still be opportunities
for growth. Furthermore, the Irish market is underdeveloped and expanding
and is therefore also a high growth market. Consequently, both Tesco Ireland
and Tesco UK can be positioned in the star quadrant of the Boston Consulting
Group matrix (BCGM) (Figure 2).
Tactical element
The tactical level mapping is the final stage of the MIXMAP model.
The marketing mix
Product
Products or services form the core of the firm's international operations. Their
success depends partly on how well they satisfy the needs and wants of the
consumer (Czinkota et al., 1996).
This statement is particularly relevant to Tesco Ireland as the Irish
consumers are extremely sensitive with regard to foreign companies. Therefore
following the purchase of Stewarts, Quinnsworth and Crazy Prices, Tesco
carried out extensive market research involving more than 6,000 customers.
The research revealed that Irish customers want a wide range of competitively

BFJ
103,2

Downloaded by Universiti Kebangsaan Malaysia At 22:15 13 September 2014 (PT)

154

Figure 2.
Boston Consulting
Group matrix (BCGM)

priced, high quality products, preferably produced in Ireland along with

international brands.
Tesco is the only foreign multiple in Ireland that has given any specific
guarantee regarding the purchase of goods from Irish suppliers. According to
the Tesco managing director, Maurice Pratt, the proportion of purchases is as
high as 57.5 per cent. In an effort to reassure local suppliers and the
government, Tesco has promised that the 700 million Irish pounds' worth of
goods it sources in Ireland will be increased to over 1 billion Irish pounds by the
year 2002.
Furthermore, Tesco is committed to buying products from Irish suppliers for
its supermarkets in the UK and Europe. An example of this is the 250,000
contract with the Irish company Lir, who have been chosen to supply
chocolates to 120 Tesco stores in the UK. It is possible that the contract will be
extended to the entire 600 Tesco stores in the UK. In addition to this, the
Drogheda-based company, Boyne Valley, is now the sole supplier of soap pads
to Tesco in the UK and in Europe.
Internationally we are seeing products being positioned more and more to
meet global market needs. Products are therefore increasingly complex and
invariably not uniform. According to Samie and Roth (1992) and Paliwoda
(1994), the standardisation of products for world markets is impractical
because of the individual needs of various cultural groups and traditions of
particular consumer markets.
With regard to the Irish retail market, own label products are far less
popular than they are in the UK. When Quinnsworth was bought by Tesco only
5-6 per cent of sales were of own label merchandise. In the UK by comparison,
own-brand products account for 50 per cent of Tesco sales.
Branded goods are therefore more dominant in Ireland than they are in the
UK. The Irish consumer is extremely loyal to local brands and manufacturers,

Downloaded by Universiti Kebangsaan Malaysia At 22:15 13 September 2014 (PT)

who are ably supported by governmental and industry bodies. With regard to
Tesco's
this, Tesco has maintained that no Irish products have been deleted from the adaptation to the
company's range since it purchased from Quinnsworth, Stewart's and Crazy
Irish market
Prices stores.
Furthermore, Tesco has said that it will be adding a further 90 Irish-made
Tesco brand products to the 60 already being sold. Also, a number of the
155
Premium Choice brand products will be reintroduced in Ireland under the
Tesco brand.
Due to the fact that Tesco want to keep the introduction of stores in
Ireland as simple as possible, there are a number of product ranges that
exist solely within the UK. For example in February 1998, Tesco launched
its Finest range in the UK consisting of 130 products ranging from fresh meat
and fish to award-winning cheeses and luxury ice-creams. Tesco has also
launched Home Meal Replacements (HMR) in the UK, which the company
believes is one of the ``sexy'' new product areas that will help drive growth in
the future.
Price
Pricing is the only element in the marketing mix that is revenue generating all
of the others are costs. It should therefore be used as an active instrument of
strategy in the major areas of marketing decision making. Pricing in the
international environment is more complicated than in the domestic market,
however, because of factors such as government influence and additional costs
(Becker and Thorelli, 1980).
When Tesco first moved into Ireland the products it sold were more
expensive than they were within Tesco UK stores. This was because the UK
suppliers were charging the Tesco Ireland stores more than they charged the
UK stores. However, in December 1997, Tesco issued a circular telling the UK
suppliers that they had to bring the prices they charged the company's Irish
stores into line with those operating in the UK. This circular was aimed at
creating cost transparency so that customers in both markets could receive
price equality. Consequently this has meant marginally lower prices for Irish
consumers.
Tesco UK has introduced ``local pricing'' in 300 of its UK stores, where what
are known as ``price sensitive'' customers pay less for a range of items than
more wealthy shoppers. Tesco Ireland, however, has said that it has no plans to
introduce a similar pricing strategy within the country.
Nevertheless, local pricing in Ireland is already in operation to a
certain degree, as can be seen by the Irish supermarket chain, Superquinn.
Whilst the company has a policy of uniform pricing, the chief executive
has said that ``we give the freedom to local managers to bring prices down''
(Irish Times, 1998). The difference between Superquinn and Tesco UK,
however, is that Superquinn does not offer local pricing for demographic
reasons, but because a competitor in the area has also reduced the price of
certain items.

BFJ
103,2

Downloaded by Universiti Kebangsaan Malaysia At 22:15 13 September 2014 (PT)

156

Promotion
With regard to communications, the term ``brand globally, advertise locally''
(Sandler and Shani, 1991) can be used. This emphasises the need for a
consistent brand on a global basis in order to benefit from economies of scale,
whilst allowing flexibility in its implementation in order to facilitate adaptation
to specific local conditions arising from cultural and other consumer or market
differences.
Although Tesco aims to be consistent in its approach to branding, the
sensitivity of the Irish consumers means that the company has had to make a
number of adaptations regarding its advertising.
In addition, through its market research, Tesco realised that it needed to
undertake an original advertising campaign in order to promote a large amount
of its products as being Irish. This includes:
.
stands displaying Irish products more predominantly than those from
the UK;
.
posters and blackboards in some stores claiming ``all our beef is 100 per
cent Irish'';
.
hieroglyphics on till receipts in the shape of a shamrock next to each of
the items produced in Ireland;
.
a total at the bottom of receipts showing the number of Irish-made goods
and how much money was spent on them; and
.
even the familiar red and blue of Tesco's UK livery has been given a
touch of green!
The company has also placed large advertisements promising to listen to
customers prior to any changes being taken.
Nevertheless, Tesco caused outrage amongst Irish beef farmers when they
placed an advertisement in the UK in an attempt to placate UK farmers. The
advertisement said that Tesco would ``not profiteer by opportunistically buying
abroad . . . Currently, we are only buying British beef''.
Place
The estimated cost of the total refit and rebadging (rebranding to the Tesco
label) of stores in Ireland is 50 million. With regard to this programme, Tesco
has stated that there will be no rigorous sameness about every store, rather
each store will feature layout ideas often taken from customers and staff,
suitable to the local area in which it finds itself.
Despite the initial mistake made by Tesco of submitting building plans
where areas were given in UK square feet, rather than Irish square metres, the
giant out-of-town superstores that are already operating in Ireland are said to
produce massive turnovers in the region of 30 to 40 million Irish pounds each
year. Additionally, the UK multiple is seeking to open in the Republic the type
of giant superstores which legislation in the UK has recently curtailed (those up
to 90,000 square feet). However, in direct response to this, the Minister for the

Downloaded by Universiti Kebangsaan Malaysia At 22:15 13 September 2014 (PT)

Environment in the Republic has announced an interim policy directive

Tesco's
limiting the size of supermarket development to 32,000 square feet.
adaptation to the
Within Northern Ireland Tesco has launched its convenience store format
Irish market
exclusive to the province under the name, Tesco Local. The first store of this
kind was opened in Belfast after consumer calls for a small store with as full a
range as possible. However, this has caused outrage amongst Northern
157
Ireland's small retailers who are convinced that Tesco is preparing to launch an
all-out attack on their position in the province.
Regarding opening hours, a number of Tesco Ireland stores are already
operating the 24-hour shopping policy. In the run-up to Christmas 2000, all
Quinnsworth, Crazy Prices and Stewart's stores were expected to have
extended opening hours and face punitive action if they did not comply. This
has been received badly by the Irish Grocers' Association (RGDATA), who see
it as a disgraceful abuse of dominance in an attempt by Tesco to increase its
market share.
People
Throughout the store conversion process, Tesco has maintained that the use of
local contractors will be maximised. They are already using their own
approved contractors' guidebook drawn up by members of the Irish board and
estimate that 1,000 jobs will be created in the construction process over the next
three years. A further 2,200 jobs will be created within stores.
Currently, around 70 Irish import and distribution companies, employing
3,000 people, service Tesco's Irish chains. In addition, 16 new Irish suppliers
have been approved to supply to Tesco's own label range, bringing the total
number to 25 now selling into the massive Tesco network in the UK.
Since entering the Irish retail market, Tesco has interviewed over 11,000
Irish customers. Their suggestions, complaints and compliments have been
encompassed in a 12-point plan which Tesco Ireland is now implementing in
stores across the country.
Despite this commitment to local needs, Tesco has been accused by some of
taking a very arrogant approach to retailing in Ireland. The former chairman of
ICI has said that Tesco needed to realise that ``Irish people are not just Brits
who talk differently'' (Irish Independent, 1998).
An example of this is the fact that suppliers were being forced to man their
operations over the Christmas holiday period and staff were expected to forgo
their traditional holiday breaks to ensure that Tesco's demands were met.
Although the staff have been offered a ``goodwill'' package including increased
pay and better working conditions, an element of hostility is still felt towards
the company.
Tesco Ireland has also been heavily criticised by the Food, Drink and
Tobacco Federation, who claimed that the company had reneged on
commitments to Irish suppliers to consult them throughout, by dropping some
ten Irish distributors and importers and replacing them with the Dublin
distributor, O'Kane's, to handle all the new 150 imported products. Tesco

BFJ
103,2

Downloaded by Universiti Kebangsaan Malaysia At 22:15 13 September 2014 (PT)

158

strongly disputed the criticism, maintaining that the pledges it made to consult
with Irish suppliers were made only to Irish manufacturers, and not to
distributors. However, the Irish Business and Employers Confederation (IBEC)
stated that the commitments Tesco made to Irish suppliers included
distributors as well as manufacturers and that the announcement was the first
time some suppliers had heard of O'Kane's getting the distribution business.
Along with job creation, the introduction of Tesco Ireland has also led to a
number of job losses, including the closure of the two food-processing arms of
the Stewart's Group. This has resulted in 200 job losses with a further 430 jobs
lost elsewhere, including the entire senior management team at the Stewart's
head office. There have also been a number of other closures as a direct result of
the takeover by Tesco of the Irish supermarkets, including one of the leading
sportswear retailers across Ireland, Lifestyle.
Service
Within the UK, Tesco's customers are offered an extensive range of services,
including the recently promoted premier store card, ``Clubcard plus'', which can
be used as a deposit account as well as a shopping card. Irish consumers have
initially been provided with the basic clubcard; however, the acquisitions in
Ireland almost guarantee that Irish consumers will eventually be offered a
similar range of services to those offered to UK customers.
Consideration was given in May 2000 to introduce into Ireland the range of
financial products developed by Tesco UK. However, developing a financial
supermarket in Ireland would take a good number of years to complete and the
impression is that Tesco Ireland has enough to concentrate on at the moment
integrating a new national chain to the Tesco way.
MIXMAPping
While looking at each element of the marketing mix, we have taken the two
variables (tactics) that are most important to Tesco as a corporate entity. By
using mix mapping, we can see to what extent Tesco UK and Tesco Ireland
adhere to these tactics.
Product
Both Tesco Ireland and Tesco UK consider that the quality of their products is
of prime importance. With regard to own brand penetration, however, Tesco
UK offers a much higher proportion of own-brands in their stores than Tesco
Ireland (see Figure 3). This is largely due to the fact that own brands are not so
popular with the Irish consumer as they see them as lower quality products.
Therefore Tesco has had to adapt its own brand penetration to suit the needs of
the market in Ireland.
From the model we can conclude that both Tesco UK and Tesco Ireland
place a high priority on value-for-money and also price consistency (see
Figure 4). However, with the introduction of local pricing in the UK the
company must be careful that it does not let its prices vary extensively from the

Tesco's
adaptation to the
Irish market

Downloaded by Universiti Kebangsaan Malaysia At 22:15 13 September 2014 (PT)

159

Figure 3.
Product: own brands/
quality

Figure 4.
Price: consistency/value
for money

original pricing policy, so as to avoid a complete deviation from the company's

original tactic of price consistency.
Although Tesco Ireland and Tesco UK both have high levels of television
advertising and point-of-purchase material, they have not been able to use
these consistently in both markets (see Figure 5). In Ireland, for example, the
sensitivity of consumers has meant that Irish products have to be more heavily
promoted than they are in the UK.
Out-of-town superstores are regarded by Tesco UK and Tesco Ireland as
being very important (see Figure 6). Obviously, the extent of these superstores

BFJ
103,2

Downloaded by Universiti Kebangsaan Malaysia At 22:15 13 September 2014 (PT)

160

Figure 5.
Promotion: point of
purchase/television
advertising

Figure 6.
Place: extended opening
hours/out-of-town
superstores

in Ireland has not yet reached the extent of those in the UK, due to the fact that
Tesco is still a relatively new retailer in the Irish market. Tesco UK has
successfully adopted the 24-hour shopping policy in a large number of stores;
however, Tesco Ireland, although slowly trying to implement this tactic, has
had to be cautious due to cultural difficulties.
Here we can see that both Tesco UK and Tesco Ireland place a high
emphasis on satisfying customer needs and ensuring employee relations (see
Figure 7). With the diversification of financial services, Tesco UK has tried to
associate even further with the particular needs of their customers.

Tesco's
adaptation to the
Irish market

Downloaded by Universiti Kebangsaan Malaysia At 22:15 13 September 2014 (PT)

161

Figure 7.
People: good employee
relations/satisfying
customer needs

Although the company places a large emphasis on the importance of loyalty

cards, their extent of usage in Ireland has not yet reached that seen by Tesco
UK (see Figure 8). In addition, the Irish consumers have only been offered the
most basic form of loyalty card, whereas Tesco UK has diversified its range of
services extensively.
MIXMAPping observations
According to Vignali (1994), ``congruence between strategy and tactics is
indicated where related elements and variables are consistently placed in the
same quadrant''. With regard to Tesco UK, therefore, it has shown a consistent

Figure 8.
Service: loyalty card
importance/
diversification

Downloaded by Universiti Kebangsaan Malaysia At 22:15 13 September 2014 (PT)

BFJ
103,2

match between its strategies and tactics by being uniformly situated in box
number two. Tesco Ireland has also shown consistency in most elements of the
marketing mix; however, it has had to adapt a couple of its tactics in order to
satisfy the needs of local customers. This explains why it is not uniformly
positioned in box number two.

162

Conclusions and recommendations

From the case it is clear that there are a number of differences between the
retail markets in which Tesco UK and Tesco Ireland both operate. The fact that
Tesco made a number of mistakes regarding the Irish market and their
consumers shows that, although extensive market research was carried out,
they still had the perception that the entire ``Tesco way'' could be transported
from the UK over to Ireland. In retrospect it would have been more beneficial if
the company had looked at the Irish market as being a foreign market, rather
than an extension of the UK market.
Nevertheless, the similarities in the strategies of Tesco Ireland and Tesco
UK are such that both companies fall within the growth stage of the company
life-cycle, and therefore the ``star'' position on the BCGM. However, as Tesco UK
is positioned at the opposite end of the growth stage to Tesco Ireland, it can be
seen to possess a number of characteristics and strategies that are more
consistent with the maturity stage of the company life-cycle.
With regard to the entire MIXMAP model, Vignali (1994) has stated that ``It
is proposed that the match between strategy and tactics results in a consistent
message and is likely to enhance the probability of achieving strategic
objectives''. Tesco UK has managed to obtain a consistent match between their
strategies and tactics, and this helps to explain why they have achieved the
recognisable status that they occupy within the UK market.
Whereas the strategies of Tesco UK and Tesco Ireland match their tactics in
most of the marketing mix variables, including price, promotion, place and
people, resulting in both companies being positioned in box two of the
MIXMAP model process, it is evident that there is still a degree of variation
between the tactics of Tesco UK and Tesco Ireland within the box. Therefore,
although Tesco UK and Tesco Ireland have attempted to standardise their
tactics to those of Tesco as a corporate entity, this does not mean that there is
complete standardisation of these marketing mix variables. Moreover, Tesco
Ireland has realised the need to adapt its marketing mix to the local market.
Finally, the two elements of the marketing mix that are not positioned in the
same box in Tesco Ireland and Tesco UK product and service can be
explained by the fact that Tesco Ireland has had to adapt these variables
considerably to suit the Irish consumer. However, it can be presumed that, over
time, these variables will become more standardised to their level in the UK, as
the Irish consumer becomes more used to the Tesco way of retailing.
References
Becker, H. and Thorelli, H. (Eds) (1980), ``Pricing: an international marketing challenge'',
International Marketing Strategy, Pergamon Press, New York, NY, pp. 201-13.

Downloaded by Universiti Kebangsaan Malaysia At 22:15 13 September 2014 (PT)

Buzell, R.D. (1968), ``Can you standardise multinational marketing?'', Harvard Business Review.
Czinkota, M.R. et al. (1996), International Business, 4th ed., Harcourt Brace College Publishers,
San Diego, CA.
Glover, K.M. (1990), ``Dos and taboos: cultural aspects of international business'', Business
America, Vol. 111 No. 15.
Irish Independent (1998), 2 April.
Irish Times (1998), 7 September.
Jain, S.C. (1989), ``Standardisation of international marketing strategy: some research
hypotheses'', Journal of Marketing, Vol. 53 No. 1.
Kotler, P. (1988), Marketing Management Analysis, Planning, Implementation and Control,
6th ed., Prentice-Hall International, Englewood Cliffs, NJ.
Kotler, P. et al. (1996), Principles of Marketing, European ed., Prentice-Hall, Hemel Hempstead.
Paliwoda, S. (1994), The Essence of International Marketing, Prentice-Hall, Hemel Hempstead.
Perry, A.C. (1990), ``International versus domestic marketing: four conceptual perspectives'',
European Journal of Marketing, Vol. 24 No. 6.
Quelch, A.J. and Hoff, J.E. (1986), ``Customizing global marketing'', Harvard Business Review,
Vol. 64, pp. 59-68.
Samie, S. and Roth, K. (1992), ``The influence of global marketing standardisation on
performance'', Journal of Marketing, Vol. 56, pp. 1-17.
Sandler, D.M. and Shani, D. (1991), ``Brand globally but advertise locally? An empirical
investigation'', International Marketing Review, Vol. 9 No. 4, pp. 18-31.
Vignali, C. (1994), The Marketing Mix Redefined and Mapped Introducing the MIXMAPping
Model, Manchester Metropolitan University, Manchester.
Vignali, C. and Schmeling, B. (1998), The Mixmap Model for Sport Sponsorship, Manchester
Metropolitan University, Manchester.
Further reading
FT McCarthey (1998), CD-ROM, May 1997-September 1998.
Tesco plc (1998), Annual Review and Summary Financial Statement 1998 (Information sent by
Tesco UK ``Tesco in Europe'').
Vignali, C., Vrontis, D. and Dana, L. (1999), An International Marketing Reader, Manchester
Metropolitan University, Manchester.

Tesco's
adaptation to the
Irish market
163