Fresh And Easy Marketing Mix

Having only launched in the USA in November, 2007 (BBC, 2007), Fresh & Easy is in the market introduction stage of its product life cycle. Typical of this stage of the product life cycle, Fresh & Easy is not yet profitable (BBC, 2007) and is suffering from low sales (Rigby & Braithwaite, 2008). It has endured high distribution costs, having to build a new distribution network from scratch (BBC, 2007), including building its own distribution centre in Riverside, California to serve up to 500 stores. Promotion expenses have been in the way of store design and creating brand awareness, with the company choosing to avoid most traditional advertising media outlets. Also typical of this stage is competitors moving in with similar products, in this case Wal-Mart with its Marketside supermarkets (Brown, 2008) and Safeway, who are also considering the launch of smaller stores in California.

Fresh & Easy have a low sales volume (Davidson, 2008), have yet to make a profit, customers are innovators and it has few competitors, all characteristics of the introduction stage of the product life cycle (Armstrong & Kotler, 2005). Tesco is expecting to start being profitable from 2010 (BBC, 2007).

Fresh & Easy’s product is its brand. They want to create value for their customers so they will return and feel that fresh, wholesome food should be available to everyone (Who we are, 2008). At over 1,500 (Russell, 2007) over half of the products it sells are private-label, compared to 20% at most supermarkets (Palmer, 2007) and there are no Tesco branded items (Brown, 2008). Private-label items also make up over 75% of store sales (Palmer, Inside Tesco's new US stores, 2007). Private-label products create a marketing synergy between the store and the product (Cuthbertson & Bell, 2004).

One of the main things Fresh & Easy hope to do is introduce the concept of the ready meal to US consumers by selling high value prepared meals at a fraction of the normal cost (Brown, 2008). There is also not a wide variety of different sizes for products as simplicity is the name of the game (Coupe, 2008), with research suggesting that American shoppers do not want too many choices (Covino, 2007).

It is also important to note that they do not sell tobacco products, as it does not fit in with the brand image (Fact sheet, 2008).

Fresh & Easy are also capitalising on a demand for healthy foods in America, brought on by concerns about obesity (The Economist, 2007).

In regards to pricing, Fresh & Easy have put a premium on many of their own brands, with Chief Marketing Officer Simon Uwins saying that their “strategy is to let the food do the talking” (Palmer, 2007). In doing this, they are pursuing a hard-discount model, similar to that of Aldi and Lidl in the UK (BBC, 2007).They have carefully selected an assortment of products to simplify operations and reduce costs, which means lower prices for consumers (Quote sheet, 2008).

Fresh & Easy’s products are about 20% less than the major supermarkets (Covino, 2007).

The company is establishing a strong price advantage by centralising its supply chain operations and making a lot of the produce on offer private-label (Brand Republic, 2007).

In regards to distribution, store locations are chosen that appeal to a broad demographic (Fresh & Easy demos skew broadly, 2008) and are designed to serve all types of neighbourhood, including traditionally under-served ones (Fact sheet, 2008). Expansion is being confined to the west of the country for first few years (Brown, 2008).

The chain currently has 59 stores (Rigby & Braithwaite, 2008), with plans to eventually have a 1,000 strong retail chain, including 200 outlets by 2009, and as many as 800 by 2012 (BBC, 2007).

With it having to build a distribution network from scratch, the company has a distribution centre in California that can serve up to 500 stores, with plans for a second one of similar size. It also aims to source 60% of products locally (BBC, 2007).

The company does not expect to make a lot of money per store, but is focusing on a strategy to have as many stores as possible so that they are accessible to people (Covino, 2007).

Most traditional media outlets have been ignored by Fresh & Easy as part of its publicity. London-based branding consultancy Pemberton & Whitefoord, who they have worked with for over 20 years (Brand Republic, 2007), were brought in to help with the branding of the company.

The only traditional media used is a limited direct mail campaign where neighbourhood residents receive fliers, but not coupons. They use a shopping based campaign, relying on word of mouth generating interest (Russell, 2007).

One of the major promotional tools they have used is the fact that it is environmentally friendly. It is a voluntary member of environmental business groups and it estimates that stores will use 30% less energy than standard grocery stores. Each store also has dedicated parking for hybrid cars and bikes, as well as in-store recycling. Its distribution centre has one of the world’s biggest solar roof panels (BBC, 2007).

Each store has a budget to make product donations to the local neighbourhood (Fact sheet, 2008), and every time a new store opens, a $1000 donation is made to a local non-profit organisation based on suggestions from community (Newsletter, 2007).

The Fresh & Easy brand name is intended to target health conscious shoppers and is used for corporate identity, in-store products and to reinforce Tesco’s overall marketing message (Brand Republic, 2007).

Fresh & Easy stores require minimal staffing as each store only has self-serving tills, with assistance if needed (Brown, 2008). Staff members enjoy good salaries and benefits (Place to work, 2008).

The company’s customer base is very similar to its two biggest competitors, Wal-Mart and Fry’s (Fresh & Easy demos skew broadly, 2008). Tesco actually listened to what consumers wanted and developed a brand that gives shoppers what they asked for rather than attempting to impose a conventional European format (Brand Republic, 2007), with the stores designed for everyone in America (Quote sheet, 2008).

Tesco do not think of good and bad customers, but good and bad retailers, where the customer has the power in the relationship. Tesco’s core purpose is to earn customers lifetime loyalty (Reynolds, 2004). In doing this. Fresh & Easy understands their customers better than their competitors and they want to attract a larger and more loyal customer base (Lempert, 2007).

The actual stores are 75% smaller than most American