Marketing 16th Edition by William Pride,Ferrell

Exercise 1

and Nevada and built a 1.4 million-square-foot distribution center capable of supporting an extensive store network. Even though Tesco operated everything from convenience stores to superstores in other countries, it was creating an entirely new retail brand from scratch and investing 2 billion to make it work. As part of its marketing research, the company built a prototype store inside a California warehouse to test potential shopper reaction. Only then did it finalize the retail design and begin opening stores.
However, Fresh and Easy's early results didn't live up to its parent's expectations. With rising unemployment and a deepening recession, consumers were cutting back on spending, even for food and other basics. Competition was another factor. Between supermarkets such as Ralph's and Vons, natural-food grocers like Trader Joe's and Whole Foods, and convenience stores such as 7-Eleven, the competitive environment was extremely challenging. Still, Tesco's management believed in Fresh and Easy's retail positioning and saw long-term profit potential in making its mark in the U.S. market.
One year into its U.S. expansion, Tesco slowed the rate of new-store openings as it fine-tuned Fresh and Easy's positioning. "After customers found the stores a little sterile, we warmed up the look, adding more graphics," says an official. "Family budgets being under pressure, we introduced more promotions and value packs." In addition, the chain installed higher shelving to increase the number of items available on the selling floor.
With these changes in place, Fresh and Easy launched its first-ever ad campaign to reinforce the message of fresh foods at low prices and used public relations to spotlight its support of its local communities and environmentally friendly operations. It connected with consumers through videos on YouTube, photos on Flit, blog posts, and Twitter tweets. The retailer also made a special effort to reach out to Hispanic consumers with a Spanish-language website and Spanish-language advertising. Store by store, it adapted the merchandise mix to include more of the foods and brands favored by Hispanic shoppers in each neighborhood.
Three years after Tesco started Fresh and Easy, its 150 U.S. stores were enjoying higher traffic and higher revenue. The economy was improving, the chain had shifted its new-store schedule into high gear, and customer feedback was positive. Profits, however, remained elusive. Looking ahead, can Fresh and Easy capture the hearts and wallets of enough U.S. shoppers to assure its long-term financial success?"
1. What type of store is Fresh and Easy? Knowing that Fresh and Easy Ells into this Classification of retailers, what does that tell us about Fresh and Easy's marketing efforts?
2. Based on Fresh and Easy's retail positioning and marketing situation, what types of locations should it seek our as it expands its store network?
3. A few grocery retailers offer online shopping for customers' convenience. Should Fresh and Easy offer online shopping? Explain.