How Tesco competes with deep-discount retailers

Tesco has a new weapon in its battle with deep-discount retail chains Lidl and Aldi.

It just opened two discount-price stores in a new chain it calls Jack, for Tesco's founder, Sir Jack Cohen. Short name, easy to remember, limited assortment, low prices, local merchandise. And the store openings coincide with Tesco's celebration of 100 years of low prices.

Most of the products will be branded own-label, but some will be well-known global brands like Coca-Cola. To reinforce the British origin of local merchandise, and the chain's British heritage, Jack signage features the Union Jack.

Tesco's CEO says the target market is 'economically challenged [consumers] that need a bargain and the affluent shopper that wants a bargain'. Adding a 'treasure hunt' element, the centre aisle of each Jack's store displays WIGIG promotions--bargain products that will go quickly, so 'when it's gone, it's gone'.

Lidl and Aldi have challenged Tesco and other full-service supermarkets in recent years, attracting price-conscious consumers willing to buy what they want at low, low prices in a no-frills retail atmosphere.

A few months ago, Tesco closed its Tesco Direct business, which sold non-food products directly to consumers. That business had been operating for nearly 12  years but was not yet profitable. Will Jack's enable Tesco to compete effectively in a highly pressured retail environment--and be profitable at the same time?

Ryanair adds share, profits and partners

Not every marketer can achieve both higher market share and higher profits, but Ryanair's marketing plan has accomplished these two key objectives through price cuts.

By adding more jets and cutting fares to attract passengers, the no-frills airline has successfully boosted market share while forcing competitors to respond.

Even as Brexit proceeds, Ryanair is preparing for the future through partnerships with European airlines. The plan is to allow passengers to book longer-haul travel through Ryanair and connections with its partners, including Air Europa, Aer Lingus and Norwegian Air.

Ryanair's long-term goal is to be flying 200 million passengers yearly by 2024. Currently, the airline projects it will fly 130 million passengers in the next 12 months--with lower prices and higher profits.

This post updates the Ryanair case in Chapter 3 of my Essential Guide to Marketing Planning, 4th edn.

Do Service Quality Improvements Pay Off?

Ryanair is the latest firm to test whether improving service quality--even on a no-frills airline--will attract more customers and boost profitability.

Being 'cheap and nasty' is not the positioning chief executive Michael O'Leary wanted for his Ireland-based airline, yet that's exactly the view many had of Ryanair until last year. Tickets were cheap, but everything else carried a price tag. Or a penalty.

Ryanair flew from secondary airports to keep costs low, part of its stated promise to offer 'the lowest fares on flights to all of our destinations – and that’s guaranteed'.

Facing competitive pressure from easyJet and others, plus ongoing economic challenges in many markets, Ryanair recently announced major changes. The CMO explains that the objective is to 'become as liked as we are useful'. During the news conference announcing the changes, O'Leary held a puppy in his arms to reinforce the new attitude towards service.

To start, Ryanair has simplified its website to make it faster and easier to book a ticket. Now seats can be allocated before boarding, making the process more user-friendly. Most significantly for businesspeople who fly, Ryanair started arranging flights to and from conveniently-located top airports rather than only from secondary airports far from city centres.

These moves are winning Ryanair more passengers and more profits, according to its latest reported results. Today, Ryanair flies some 82 million passengers every year and is marketing its customer-friendly attitude with an eye towards further expansion in the coming years.

Customers are encouraged to follow Ryanair on Twitter or download one of its apps for access to flash sales and more.