Marketing Strategy

Assignment for 1st Mid Term

Submitted to:
Farhana Rahman
Lecturer
Department of Organization Strategy & Leadership
University of Dhaka

Submitted by:
Sadia Islam
ID: OSL-FM-14
Batch: 2nd
Department of Organization Strategy & Leadership
University of Dhaka

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 Table of Contents

Executive Summary ................................................................................................................... 3

Company’s profile ..................................................................................................................... 4

Tesco’s strength points .............................................................................................................. 4

Problems for Tesco’s ‘Fresh & Easy Concepts’ ........................................................................ 5

Solutions: ................................................................................................................................... 6

Conclusion ................................................................................................................................. 7

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Executive Summary
The case is all about Tesco which is an international company. In UK, Tesco has a great market
value. Mainly in this case, it has been described Tesco’s whole journey in USA. In USA, Tesco
entered with a concept which name was ‘Fresh & Easy’. In this report, it has been expressed
that what kind of strategies it followed, what are the good parts or what problems Tesco faced
in USA. In USA, Tesco created a concept which name was ‘Fresh & Easy’. It has been written
the solutions which can be decrease those major and simple problems.

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Company’s profile

Tesco is a British multinational groceries and dominated retailer which headquarter is situated
in Welwyn Garden City, England. It is the third-largest retailer after Wal-Mart and Carrefour
in the world. Tesco has diversified into such areas such as the retailing of books, clothing,
electronics, furniture, toys, petrol, software etc. In early 1990’s, Tesco has expended this
business globally in 11 other countries. Tesco is listed on the London Stock Exchange. Tesco
had a market capitalization of approximately £18.1 billion.

Tesco’s strength points

1. Biggest grocery store in Britain: Tesco has really occupied the UK market in terms of
revenue. However, it is the UK’s leading retail store and supermarket. In 2018-19, its annual
revenue in the UK and Ireland amounted to £ 63,911 million.

2. Efficient network of suppliers: Suppliers play a vital role in the running of any business.
Tesco has always followed a very simple business model, which consists of reducing costs by
having an efficient waste management system. As a result, Tesco have to maintain an effective
relationship with the supplier, who deliver the product on time.

3. Internalization: Since Tesco was established, it has spread to 14 countries in Europe and
Asia, and has a strong position in the market. There are some emerging markets like- Turkey,
Indonesia and South Korea, these markets have a great potential to grow. The total number of
supermarkets and grocery retails stores worldwide is approximately 6,800. Tesco has a great
impact in USA market.

4. Unique steps of Tesco: When Tesco expend the business in USA, it followed some tricks.
Leahy, the CEO of Tesco, did a good plan. That person didn’t use the real name. Instead of
using the real name, Tesco use ‘Fresh and Easy” concept. The reason is that the biggest
competitors like- Wal-Mart, Safeway, Whole food etc. didn’t realize about the power of Tesco.
In USA, Tesco’s main goal was fill the gap of competitors. Tesco offers low cost price but
quality and fresh foods. Tesco did a market research in a different way. For two weeks, 50
senior Tesco directors and managers lived the ‘American dream’- shopping and eating with
American people.

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Problems for Tesco’s ‘Fresh & Easy Concepts’

1. Failed to understand USA’s culture: Tesco’s biggest mistake was fail to understand the
culture of USA. The goal was same for the UK and USA but the format can’t be same. It need
to be different from Britain to America. In USA, Tesco’s main target was West coast (Los
Angeles, California, Mexico). But after that Tesco tried to expend the business in other areas
like Oklahoma, Wisconsin, and New York with the same business strategy and foods. But
unlikely UK, there are so many diversity of culture, local foods, mindset etc. So, Tesco didn’t
get the proper knowledge about USA culture.

2. Failed to do proper research on consumer: Tesco’s F&E offered mainly offers fresh and
organic foods in a discount rate and cheaper price. Also F&E stores used self-service system
to reduce cost. But American people don’t used to self-service system. These people love to
take service from employees. That was one of the biggest problem for F&E. Again Tesco’s
main strategy was to open small stores in poor inner-city areas largely unpopulated by rival
retailers. These small grocery stores were located near train station. However in California and
Nevada, people rarely use trains or subways. They use cars. So Tesco lost a huge chunk of the
business. Tesco failed to do enough market research.

3. Unattractive name: Consumers didn’t like the name of ‘F&E’. It sounded more like a chain
of chicken ranches or a tampon. Customers didn’t get attracted by this name. Tesco failed to
do enough market research.

4. Aggressive attitude: The most problematic part of F&E relationship with employees and
trades unions. These trades unions are very powerful in USA. Tesco was being accused of
arrogance and being out of touch with local communities and failing to maintain the close ties
between consumers and grocery workers. Barack Obama sent letters to request Tesco for a
meeting with unions. And Tesco has refuged this. So, there was no good relationship with
unions.

5. Stock market: Again Tesco aggressively use its market power in stock market which was
also very dangerous. Tesco’s share continuously undervalued by the stock market for its
aggressive expansion strategy.

6. Ignore the strong competitors: When Tesco entered in USA, It changed the name and use
‘Fresh and Easy’ concept. So, Tesco thought that US competitors didn’t get the Tesco’s tricks.
And competitors didn’t take any actions. But Tesco was completely wrong. That time Wal-
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Mart was planning small grocery shops in phoenix area and Safeway was launching small
stores in California. Also, Wal-Mart had hired a former Tesco executive to head its defense.
Tesco was avoided these competitors.

7. Failed to work as expectations: F&E was falling short of expectations. Even suppliers were
reporting disappointing sales at F&E. Also, F&E stores were struggling to attract customers.
Tesco made a yearly annual report based on the first few months which was totally
meaningless.

8. Stuck in the middle: The biggest dilemma was F&E didn’t clear about the goal and mission.
F&E tried to offer fresh food in a lower price. But Tesco got confused about what they actually
did. Like- either Tesco upgrade an existing markets or create a new market.

Solutions:
Tesco’s F&E’ concepts had so many problems. But it could solve these problems with some
changes. It has been explained below:

1. Proper market research: Tesco’s ‘F&E’ can proper market research in USA. Because of
proper market research it can gather information consumers’ needs and preferences. So, F&E
could have changed the Tesco format. And could have make the service system. Also would
have gave super shops far from residential areas. So, American people could go easily there by
using cars. Also ‘F&E’ could have did enough research about the attractive name. Because
name is the most important thing for any kind of organization.

2. Market segmentation: Market segmentation is a process of dividing a heterogeneous

market into relatively more homogenous segments based on certain parameters like
geographic, demographic, psychographic, behavior4. F&E could have done proper market
segmentation. In USA, there are so diversity among the areas such as- California, New York
etc. F&E could have research on this diversity. Again there is a big difference between UK and
USA culture, people’s life style, behavior. F&E could do proper analysis on this market
segment

3. Amicable attitude: Tesco could apply amicable attitude instead of using aggressive
attitude. Tesco could maintain a friendly relationship with employees and trades unions. It also

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could create a good relationship between consumers and grocery workers. In stock market,
Tesco could right valued by share price using this amicable attitude.

4. Proper research on competitors: Tesco could have researched on competitors like Wal-
Mart, Whole food, Safeway. Tesco could have kept proper information about the Wal-Mart’s
strategy. Tesco could find out what its competitors were doing and what kind threat can be
created in future.

5. Particularized goals and objectives: Tesco could have a clear goals and objectives. Tesco
could have to know that what Tesco did. Either Tesco created a new market or updated an
existing market. There couldn’t have any ‘stuck in the middle’ condition.

6. Focusing on attracting consumer: Tesco could try to attract customers by innovative

products. It would have increased the sales and revenue of Tesco. ‘F&E’ could have focused
on products which were describing as a boring or depressing product.

Conclusion

Globally, Tesco has created a great impact in world economics. Though Tesco did some major
mistakes but it also made some incredible strategies which lead to some great achievements.
Tescopoly had the negative impact of Tesco’s behavior along its supply chains both in the UK
and internationally. Tesco need to be more careful while taking any decision. But
unfortunately, Tesco didn’t get the whole success in USA. Doing this report, it can be a great
learning things about the importance of market research, value proposition, market
segmentation, cultural diversity, good relationship, research on competitors etc.