Tesco
Content
Tesco Fresh & Easy 1
Study case: Tesco Plc – Fresh & Easy in the United States
Give a discussion of how the 4P’s can be used For analyzing the marketing mix model in the case of Tesco’s venture in US under the name of Fresh & Easy, we will consider the 4 P’s. Product: ’’means the goods-and-services combination the company offers to the target Market’’ (Kotler & Armstrong, 2012, p. 51). Tesco entered the US market with fresh and healthy food and prepared meals, but with a limited variety of goods compared to the average local supermarkets. Many products were sold under store label and thus were unknown to local shoppers. Frequent stockouts didn’t help as US shoppers went elsewhere in contrast with typical UK consumer who returns next day for the product. To better meet customers demand, the company increased the selection of products, tailored the offer to the local needs and wants. Price: ’’the amount of money customers must pay to obtain the product’’ (Kotler & Armstrong, 2012, p. 52). The strategy of Fresh & Easy was ’’everyday low prices’’ rather than weekly discounts. They didn’t understand local market requirements as no American Express card, coupons or personal checks were accepted. As economic crisis hit in 2008, it changed its policy by accepting Government program vouchers and offering discounts (Quelch, 2010). Place: ’’includes company activities that make the product available to target consumers’’ (Kotler & Armstrong, 2012, p. 52). Initial idea was to open a huge number (10,000) of small convenience stores all over America (Financial Times, 2010). By 2010 it had opened less than 200 stores in California, Nevada and Arizona. This network is supported by a distribution center, set up by an UK company, large enough to supply 500 Fresh & Easy stores. Though, most of the products sold are produced in California. The average size of a store was 3 times higher than a 7-Eleven and 6 times smaller than the average Tesco Express in UK. The stores’ design reminded of a hospital to consumers, so they were redecorated to create a more pleasant environment. Promotion: it ’’ means activities that communicate the merits of the product and persuade target customers to buy it’’ (Kotler & Armstrong, 2012, p. 52). The company is environmental friendly: it has a green certificate LEED so the stores use 30% less energy, package materials are recycled, and the logistic center has solar panels on top which produce 50% of daily energy. ‘’Fresh & Easy was also named one of the top 50 innovative companies in the world by Fast Company magazine for its corporate environmental efforts’’ (APCO, 2010). Due to disappointing results company invested more in advertisement to increase brand awareness. ’’ The brand awareness hasn’t work and if you don’t get that right than you can’t get money out of people’s pockets’’ (BBC News, 2011). Publicity was also target to bring more customers into the stores. As one analyst pointed out, one of the main company’s problem was that ‘’they failed to persuade people to come through the door’’ (BBC News, 2011). In order to promote the image of Fresh & Easy, the company tried to focus more on the needs of US market. It has a wide range of advertising campaigns based on fundraising for schools, donations for local charity and local food bank, reducing the impact on environment, reward for shopping with Fresh & Easy (Fresh & Easy Neighborhood Market Inc., 2012). It also uses social media for increasing brand awareness: Twitter and Facebook (Fresh & Easy Neighborhood Market Inc., 2012).
Tesco Fresh & Easy 2
As a conclusion, it can be said that although initially the idea of expansion in US market received positive feedback, the result after almost 5 years is not meeting expectations. ’’California, Arizona, and Nevada were among the states hardest hit’’ (Kotler & Armstrong, 2012, p. 404) during the 2008 financial crisis and that had a negative impact on company’s extension plans. The process of adapting to the US market should continue in order meet the requirements of US shoppers.
References
Belgian results of Deloitte Xmas study. (2011). Retrieved October 2012, from Deloitte: http://www.deloitte.com/view/en_BE/be/insights/surveys/9773749ff3fe3310VgnVCM1000001a56f0 0aRCRD.htm Brown, C. (2012, September 18). Why Tesco’s Fresh and Easy concept is struggling in America. Retrieved October 2012, from MarketCulture: http://blog.marketculture.com/2012/09/18/why-tescos-freshand-easy-is-struggling-in-america/ California loses most amount of jobs since recession. (2012, March 26). Retrieved October 2012, from Business Journal: http://www.bizjournals.com/sacramento/news/2012/03/26/california-job-lossrecession-analysis.html Forbes. (n.d.). Retrieved October 2012, from Forbes: http://www.forbes.com/global2000/list/#p_1_s_a0_Food%20Retail_All%20countries_All%20states_ Fresh, but far from easy. (2007, June 21). Retrieved from The Economist: http://www.economist.com/node/9358986 Geoghegan, T. (2011, May 4). Why is Tesco struggling in the US? Retrieved October 2012, from BBC News: http://www.bbc.co.uk/news/magazine-13190124 http://www.apcoworldwide.com. (n.d.). Retrieved October 2012, from Tesco Fresh & Easy Neighborhood Market: http://www.apcoworldwide.com/content/client_success/client_success.aspx?pid=0&csid=f97f6d41c5c0-4f96-ad98-8ff6c25a3abd# Kotler, P., & Armstrong, G. (2012). Principles of Marketing. New Jersey: Prentice Hall. Quelch, J. A. (2010). Tesco Plc: Fresh & Easy in the United States. Boston: Harvard Business School. Rigby, E. (2010, September 20). Tough times for Tesco’s American dream. Financial Times. Retrieved October 2012, from Financial Times: http://www.ft.com/intl/cms/s/0/bfa51888-c4e5-11df-913400144feab49a.html#axzz29H48GOWD Wolinsky, H. (n.d.). Can Tesco Freshen Up Its U.S. Chain? . Retrieved October 2012, from Retailer Reader: http://www.retailleader.net/print-article-can_tesco_freshen_up_its_u.s._chain__-2861.html
Study case: Tesco Plc – Fresh & Easy in the United States
Give a discussion of how the 4P’s can be used For analyzing the marketing mix model in the case of Tesco’s venture in US under the name of Fresh & Easy, we will consider the 4 P’s. Product: ’’means the goods-and-services combination the company offers to the target Market’’ (Kotler & Armstrong, 2012, p. 51). Tesco entered the US market with fresh and healthy food and prepared meals, but with a limited variety of goods compared to the average local supermarkets. Many products were sold under store label and thus were unknown to local shoppers. Frequent stockouts didn’t help as US shoppers went elsewhere in contrast with typical UK consumer who returns next day for the product. To better meet customers demand, the company increased the selection of products, tailored the offer to the local needs and wants. Price: ’’the amount of money customers must pay to obtain the product’’ (Kotler & Armstrong, 2012, p. 52). The strategy of Fresh & Easy was ’’everyday low prices’’ rather than weekly discounts. They didn’t understand local market requirements as no American Express card, coupons or personal checks were accepted. As economic crisis hit in 2008, it changed its policy by accepting Government program vouchers and offering discounts (Quelch, 2010). Place: ’’includes company activities that make the product available to target consumers’’ (Kotler & Armstrong, 2012, p. 52). Initial idea was to open a huge number (10,000) of small convenience stores all over America (Financial Times, 2010). By 2010 it had opened less than 200 stores in California, Nevada and Arizona. This network is supported by a distribution center, set up by an UK company, large enough to supply 500 Fresh & Easy stores. Though, most of the products sold are produced in California. The average size of a store was 3 times higher than a 7-Eleven and 6 times smaller than the average Tesco Express in UK. The stores’ design reminded of a hospital to consumers, so they were redecorated to create a more pleasant environment. Promotion: it ’’ means activities that communicate the merits of the product and persuade target customers to buy it’’ (Kotler & Armstrong, 2012, p. 52). The company is environmental friendly: it has a green certificate LEED so the stores use 30% less energy, package materials are recycled, and the logistic center has solar panels on top which produce 50% of daily energy. ‘’Fresh & Easy was also named one of the top 50 innovative companies in the world by Fast Company magazine for its corporate environmental efforts’’ (APCO, 2010). Due to disappointing results company invested more in advertisement to increase brand awareness. ’’ The brand awareness hasn’t work and if you don’t get that right than you can’t get money out of people’s pockets’’ (BBC News, 2011). Publicity was also target to bring more customers into the stores. As one analyst pointed out, one of the main company’s problem was that ‘’they failed to persuade people to come through the door’’ (BBC News, 2011). In order to promote the image of Fresh & Easy, the company tried to focus more on the needs of US market. It has a wide range of advertising campaigns based on fundraising for schools, donations for local charity and local food bank, reducing the impact on environment, reward for shopping with Fresh & Easy (Fresh & Easy Neighborhood Market Inc., 2012). It also uses social media for increasing brand awareness: Twitter and Facebook (Fresh & Easy Neighborhood Market Inc., 2012).
Tesco Fresh & Easy 2
As a conclusion, it can be said that although initially the idea of expansion in US market received positive feedback, the result after almost 5 years is not meeting expectations. ’’California, Arizona, and Nevada were among the states hardest hit’’ (Kotler & Armstrong, 2012, p. 404) during the 2008 financial crisis and that had a negative impact on company’s extension plans. The process of adapting to the US market should continue in order meet the requirements of US shoppers.
References
Belgian results of Deloitte Xmas study. (2011). Retrieved October 2012, from Deloitte: http://www.deloitte.com/view/en_BE/be/insights/surveys/9773749ff3fe3310VgnVCM1000001a56f0 0aRCRD.htm Brown, C. (2012, September 18). Why Tesco’s Fresh and Easy concept is struggling in America. Retrieved October 2012, from MarketCulture: http://blog.marketculture.com/2012/09/18/why-tescos-freshand-easy-is-struggling-in-america/ California loses most amount of jobs since recession. (2012, March 26). Retrieved October 2012, from Business Journal: http://www.bizjournals.com/sacramento/news/2012/03/26/california-job-lossrecession-analysis.html Forbes. (n.d.). Retrieved October 2012, from Forbes: http://www.forbes.com/global2000/list/#p_1_s_a0_Food%20Retail_All%20countries_All%20states_ Fresh, but far from easy. (2007, June 21). Retrieved from The Economist: http://www.economist.com/node/9358986 Geoghegan, T. (2011, May 4). Why is Tesco struggling in the US? Retrieved October 2012, from BBC News: http://www.bbc.co.uk/news/magazine-13190124 http://www.apcoworldwide.com. (n.d.). Retrieved October 2012, from Tesco Fresh & Easy Neighborhood Market: http://www.apcoworldwide.com/content/client_success/client_success.aspx?pid=0&csid=f97f6d41c5c0-4f96-ad98-8ff6c25a3abd# Kotler, P., & Armstrong, G. (2012). Principles of Marketing. New Jersey: Prentice Hall. Quelch, J. A. (2010). Tesco Plc: Fresh & Easy in the United States. Boston: Harvard Business School. Rigby, E. (2010, September 20). Tough times for Tesco’s American dream. Financial Times. Retrieved October 2012, from Financial Times: http://www.ft.com/intl/cms/s/0/bfa51888-c4e5-11df-913400144feab49a.html#axzz29H48GOWD Wolinsky, H. (n.d.). Can Tesco Freshen Up Its U.S. Chain? . Retrieved October 2012, from Retailer Reader: http://www.retailleader.net/print-article-can_tesco_freshen_up_its_u.s._chain__-2861.html
