TI Malaysia Health Check Presentation Final 070508

8/13/2019 TI Malaysia Health Check Presentation Final 070508

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dunnhumby 2008 | confidential

Understanding TescoCustomersTesco Malaysia


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1. Why understanding customers is important Shopping Habits

Price Sensitivity

Ethnicity

2. How can it be applied to help make better decisions Winning with price

Winning with products and categories

Winning with promotions

3. Clear action plan to grow customer value

Agenda


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Understanding Customers to bring competitive

advantage

Shopping Habi ts

Price Sens it iv i ty

Ethnic i ty


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The top 30% of customers account for 66% ofsales

27%

39%

23%

7%

3%

Premium

Valuable

Potentials

Uncommitted

Lapsing

6%

31%

24%

9%

31%

% of customers % sales

Earning Lifet ime

Loyalty

*8 weeks 15th

October to 9th

December

Loyals


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A Premium Customer is worth 20 Uncommittedcustomers

Earning Lifet ime

Loyalty


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There is still headroom for increasing Loyal

customers visits

Valuable

Premium

Potential

Uncommitted

Average

visits / week

Average

RM / visit

1.3 RM141

0.6 RM114

0.4 RM70

0.2 RM37

Earning Lifet ime

Loyalty


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We can generate an incremental RM50 million ayear by increasing customers visit frequency

Valuable

CustomersSpend Customers

Vists per

Customer

Spend per

Visit

Average

visits /

week

Twice Weekly 2,621,531 3,944 18 36 2.3

Weekly 10,834,704 18,349 9 64 1.2

Fortnightly 11,488,025 25,636 6 69 0.8Stop Start 39,081,484 61,683 4 158 0.5Now & then 30,053,988 73,836 2 173 0.3

Total 94,079,732 183,448 5 114 0.6

73,836 customers shop an average of twice every 2 months. Encouraging them to

shop just once more in this period could be worth an additional RM50 million annually

73,836 customers * Total average spend per visit * 6 = RM50m

Earning Lifet ime

Loyalty



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23% of customers are Price Sensitive and they are the least

loyal

Earning Lifet ime

Loyalty

Low price dimension

High

pricedimension

Quality Sensitive32% Customers

33% Spend

Mid-market

45% Customers

47% Spend

Price Sensitive23% Customers

19% Spend

Low price dimension

High

pricedimension

Quality Sensitive32% Customers

33% Spend

Mid-market

45% Customers

47% Spend

Price Sensitive23% Customers

19% Spend

Significant headroom exists

for growing loyalty with Price

and Quality Sensitivecustomers



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Price Sensitive customers are predominantlyMalay

But Malays also make up 28% of Quality Sensitive

customers, 9% of total customers

0%

20%

40%

60%

80%

100%

Price Sensitive Midmarket Quality Sensitive Total Customers

%o

fact

ivecustomers

Malay Chinese Indian Other



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Using ethnicity data we can help Tesco win fromthe middle

Winning f rom the

midd le

Red Tomato

Udang Sederhana (8517)

Tesco Value Cooking Oil 5Kg

Potato Bread 9Pcs (0170)

Timun (3586)Tesco Choice Fresh Chic Eggs 30S (C)

Bawang Merah Besar-Kg (2560)

Potato-Kg (2552)

Bawang Putih-Kg(2557)

Kobis Bulat (3549)

Within Top 20 products bought by basket penetration for Malay, Chinese and Indian Loyals

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Understanding customers will help grow loyalty

Having identified those customers we cannot afford tolose we can work harder to keep them

There is huge value still to be realised through growing

the loyalty of our existing customers

The customer segmentations will form the building

blocks of all our future customer insights and help the

business target its investments more efficiently

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Applying customer understanding to support

better decisions

Winning w i th pr ice

Winning wi th products and

categories

Winn ing promot ions

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The shape of Tescos overall pricing policy isgenerally strong

* Both Tesco and Competitor prices based on median prices in 8 weeks from 2ndFeb to 22ndMarch

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On some key lines we should look to improve onprice for Price Sensitive customers

* These products are all within the top 100 for Price Sensitive customers sorted on competitor index* Both Tesco and Competitor prices based on median prices in 8 weeks from 2ndFeb to 22ndMarch


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We can identify specific lines for investment

But of these products only the Udang Sederhana is on the Staples list

* Both Tesco and Competitor prices based on median prices in 8 weeks from 2ndFeb to 22ndMarch

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By identifying those products most important to PriceSensitive shoppers we can help improve the Staples Listand Price Launches

Only 13 out of 23 fresh linesfrom the Staples Basket list are in the

top 50 Fresh products for Price Sensitive customers

Only 14 out of 350 linesfrom the March 08 Price Launch were inthe top 500 Dry Grocery products for PS customers

250 of thetop 500products for Price Sensitive customers dont

appear to be in the 6,000 price matched lines from the core basket

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Items we could add to the Staples Basket

More Super Core, More Produce, More Seafood! Other Core products


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The Chinese customer is not engaged with ourfresh offering in seafood

Class LFL P1Customer

PenetrationMalay Chinese Indian PS MM QS

FRESH CRAB -64.3% 2.5% 133 31 124 136 122 36

SALTED SEAFOOD -24.4% 3.5% 143 26 62 191 101 32

FRESH PRAWNS -22.7% 32.4% 132 46 84 184 102 34

FRESH SQUID -16.0% 13.3% 136 50 34 208 96 27

FRESH FISH -6.9% 35.7% 129 52 73 182 101 38

CONSIGNMENT FRESH SE -3.1% 5.7% 117 71 87 88 120 76DRIED SEAFOOD 13.2% 12.1% 136 37 75 191 99 35

FROZEN FISH 14.9% 2.6% 69 145 122 67 106 115

PROCESSED SEAFOOD 24.2% 3.8% 111 71 136 131 104 71

FRESH SHELL FISH 49.3% 8.7% 141 40 38 222 90 27

Seafood Class where products found at least 1 in every 200 baskets

Quality Sensitive customers are only engaged in frozen and not fresh seafood.

What can be done to change quality perception to bring these customers in?

Seafood is a department that is very important to Price Sensitive shoppers we need

to ensure that we are price competitive on the lines most important to them

No.1 for seafood

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We can identify categories are underperformingfor certain customer groups


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Ensure customer measures are included in all range reviews

Rationalise ranges with a large tail of low selling lines to be more

relevant for customers Challenge suppliers to use the Shop to provide customer insights for

all ranging decisions

Improving range through collaboration

Prepare

Analyse

ExecuteMeasure

The Shop - accessible customer insight

NovMalaysia 08/09 Work Plan

Q1 Q2 Q3

Jul Aug Sep OctMar Apr May Jun Dec Jan Feb

Q4

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* Analysis of c1,600 promotions run between 20th

March24th

April (Fresh & Grocery only)

There is huge potential for rationalisingpromotions

Only 2.5% of promotions

were run on Super Core

Classes and less than 1%

of these were on products

with broad appeal

We will be able to assess

whether promotions on

Niche products deliver for

the customer or category

Too many weak promotions

risk diluting Tescos price

image

*Niche products are not in the top 10% of products, based on basket

penetration for Loyal customers, in the Class for any customer segment

65% of promotions are run on Niche* lines

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We can use customer insight to ensure the mosteffective offers are on the Tab front page

26% of promotions on the

Tab front pages were on

Niche products

None of the offers were in

Super Core Classes

The strongest offer wason Maggi Cili SOS 500g(the 2ndmost important product in

the 6thmost important Class for

Price Sensitive customers)

We need to make the Tab

a shopping list forcustomers!

* Only looks at Fresh and Grocery products on the Tab front page between 20thMarch24thApril 2008

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We can apply similar principles to press ads

* The top 10% of products is based on basket penetration for Loyal customers

Product appeal is based on whether the product is in the top 10% of products in the

Class for each segment. Niche products are not in the top 10% for any segment.

Total Tesco Carrefour Giant

Products featured in Press Ads 83 21 21 41

Product Price Sensitivity Appeal

Broad appeal (all PS segments) 35% 52% 24% 32%

Quality Sensitive only 10% 10% 19% 5%

Price Sensitive only 5% 10% 5% 2%

Niche 39% 24% 43% 44%

Product Ethnic Appeal

Broad appeal (all segments) 37% 52% 33% 32%

Chinese only 5% 0% 10% 5%

Malay only 2% 0% 0% 5%

Niche 41% 33% 43% 44%Advertising in the Star on 26thApril, covering month end and Giant midnight price promotion


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Q1 Q2 Q3 Q4


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Measure the performance of promotions using customer measures

Broaden the mix and appeal of promotions and especially for those

on the Tabs front page

Drive efficiencies through more targeted tabs distribution

Improve how we communicate price to customers and ensure we

focus on key PS lines where we are competitive

Leaflets and promotions to be addressed as a key focus in the work

plan

Use customer segmentations to help drive moreefficient promotional and marketing spend

Prepare

Analyse

Execute

Measure

Improve leaflet performance

Malaysia 08/09 Work PlanQ1

Fewer stronger promotions

Q2 Q3 Q4

Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

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We have a clear work plan to build on our initialfindings

Jan FebDecAug Sep Oct NovApr May Jun Jul

Understanding Biz Clubcard

Mar

Health check Analysis

Pricing - Improve for Price Sensitive Customers

Improve leaflet performance

Q3 Q4

Best availability

The Shop - accessible customer insight

Q1 Q2

Malaysia 08/09 Work plan

Fewer stronger promotions

Improve targeted communications

Understanding Ethnicity

Prepare

Analyse

Execute

Measure

TI Malaysia Health Check Presentation Final 070508

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Transcript of TI Malaysia Health Check Presentation Final 070508