Magazine article Marketing

Asda's Machiavellian Marketing Machinations

Magazine article Marketing

Asda's Machiavellian Marketing Machinations

Article excerpt

Asda's Machiavellian marketing machinations

It was a plot that would fox Poirot and Morse. The perfect coup. Bill McNamara, Asda's divisional director for marketing, had the rug quietly but emphatically pulled from under him last week. The trail went cold before it had a chance to get warm.

With "no further comment" to make, Asda drafted in ex-British Airways group brand manager Ian McComas to supplant the man responsible for "It Asda be Asda".

Corporate affairs director Paul Dowling was sphinx-like. "We made an appointment (a direct replacement) and we both decided he should leave," is all Dowling would say.

So what is going on at the UK's third largest food retailer?

The experts' view is that Asda was simply not achieving sufficient sales day-to-day.

During the year to April 1991 Asda managed to buck the food sector trend and witness a drop in profits - 173m [pounds] compared with 180m [pounds] the year before.

Also during that time, Tesco moved food retail advertising out of its time-worn ghetto and put unprecedented pressure on its rivals to match the blockbuster Dudley Moore campaign. Asda's ads didn't match up.

McNamara was well respected as a strategist - he was head of strategic planning until spring 1989 - but one insider claims "he was never a marketing person in the sense of the nitty gritty day to day job of getting sales through the doors."

The source adds: "It's difficult to know how much blame for Asda's problems to attribute to not opening or converting stores quickly enough, and how much to not promoting well enough what you have inside them."

But the fact that Asda couldn't compete cannot entirely be due to marketing. The business was lumbered by debt from its fateful 704m [pounds] purchase of 60 superstores from Gateway in 1989 - which turned out to include more leaseholds and less freeholds than Asda had thought, and a depot at Huntingdon which Asda agreed to acquire for 20m [pounds] and sold back to Gateway for 15m [pounds].

The Gateway purchase, intended to catapult the chain to become a major retail force overnight, has been sorely paid for as interest rates have soared while Asda's peers - Sainsbury's, Tesco and Argyll - are using newly raised equity to finance their respective expansions.

Asda has also been hit harder by the recession than its food retail competitors because of its non-food component (although it claims 86% of sales come from food) and its 25% stake in MFI, which was part of Asda until its management buy-out four years ago. …

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