Magazine article Marketing

Opinion: The Marketing Society Forum

Magazine article Marketing

Opinion: The Marketing Society Forum

Article excerpt

Was Hovis right to pull products from Tesco after it was refused a price rise?

Hovis increased the prices of its products because of the soaring cost of wheat. Tesco then refused to accept the new prices, which has resulted in several of the baker's brands being delisted.

NO - Raoul Pinnell, Chairman, Strategic Investment Partners

The data indicates that a similar - and big - customer segment has affection for Tesco and Hovis. Confrontational negotiations that deliver such an outcome deny customers choice.

It would seem both brand owners have failed in their negotiations.

An unfortunate consequence would appear that the one with more clout (the channel - Tesco) has allowed itself to be seen as the bully.

Could it not have found a way forward? With Tesco's avowed skill of communicating with customers, could it not have delivered an innovative solution? How about extra Clubcard points on Hovis products, to help balance the price increase? Both brands could make an investment in 'helping British farmers to grow more effectively - so that they can 'plant and harvest more efficiently' or to 'aid those in Africa who might go hungry as a result of increases in the price of flour'.

Crazy ideas, maybe. But shouldn't this have been the focus of the negotiation, to produce a win for all out of a difficult situation?

MAYBE - Bart Michels, Managing director, Added Value

This feels reminiscent of David and Goliath. Premier Foods is taking on the giant of the supermarkets and seems prepared to brave the consequences. Is it heroic or foolhardy? The truth lies in the brand's real strength and its value proposition. Only time will tell. Will customers shop elsewhere if they can't find Hovis? Or will they trade down or across to other brands and own-label?

On the one hand, you have to love this confidence - it shows real belief in brand strength. But it's also a genuine fight for survival, as the ability to charge a premium in the face of mounting ingredient costs is what will guarantee a long-term place on the branded shelves.

It's great to see this. It's like a brand version of X Factor with Hovis as a contestant and Tesco as Simon Cowell. Cowell can express an opinion, but the public votes count for more. Come to think of it, maybe all brands should do this. What better way to know how strong your value proposition is and whether you'll be missed? I've a feeling Hovis is loved enough to be back soon.

YES - Ian Billington, Managing partner, Billington Cartmell

The Hovis/Tesco dispute is true market dynamics at work, in terms of buyer-side positioning and supplier economics. …

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