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Tesco's failure in America - Essay Example

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In this essay we analyse the failure of TESCO in USA and the possible reasons for this failure. We then go on to provide possible solutions for the revival of the company in USA so that it does not has to shut down its operation…
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Tescos failure in America
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Download file to see previous pages Reasons for the Failure
Market Positioning
Positioning may be defined as the process of creating an image in the minds of the target market for the brand (Ferrell, O. et al., 2000). This positioning can be functional, symbolic or experiential. Functional positioning tries to solve problems and provides benefits to the customers (e.g. - Wall mart’s everyday low prices); symbolic positioning creates affective fulfilment (e.g. - Apple’s products give an ego boost to owners) and experiential positioning provides both rational and emotional fulfilment (Lao, 2013).
TESCO entered USA through Fast and Easy (F&E) stores. The F&E stores were positioned between the discount supermarkets and the upscale organic stores. F&E stores were labelled as stores which will provide ‘healthy’ food at low prices. Thus TESCO tried to position itself between Wal-Mart and Trader Joe’s (Sonne & Evans, 2012). The positioning of F&E was neither functional nor symbolic. Wal-Mart succeeds due to its promise of everyday low prices whereas Trader Joe’s provides snob value to the rich and entices them to be different and buy organic food. Trader Joe is clearly positioning it’s product for the rich and Wal-Mart for the mass market. TESCO’s positioning was not enticing to either of the 2 segments. There was no market which wanted health organic food products at low prices in USA. Only 3 % of American population follows the healthy lifestyle unlike in UK and Europe where this trend is the norm (Sonne & Evans, 2012). ...
Trader Joe is clearly positioning it’s product for the rich and Wal-Mart for the mass market. TESCO’s positioning was not enticing to either of the 2 segments. There was no market which wanted health organic food products at low prices in USA. Only 3 % of American population follows the healthy lifestyle unlike in UK and Europe where this trend is the norm (Sonne & Evans, 2012). Thus positioning itself as a store with a healthy image in a nation which loves fast food and soda was the biggest mistake committed by TESCO. This was one of the main reasons for their failure in USA. Customer Relationship TESCO had a troubled relationship with USA customers. This was because it ignored the cultural differences between USA and UK.TESCO looked more like a coloniser who stuck on to its customs and culture rather than adopt the culture of the new country. Some of the mistakes leading to a troubled customer relationship were – Low Brand Recognition USA unlike Europe is obsessed with brands. Americans are willing to spend more money if they consider the brand good and worthwhile (Piercy, 2012). Fresh & Easy was an unknown brand to them. The name TESCO was not associated with F&E stores in any way. TESCO focused its money and resources in opening more stores rather than advertisements on brand building. The Fresh & Easy stores were also highly dependent on private labels in a market which likes to see and buy branded products. This was a big mistake in a country which likes to buy branded products. Lack of Service In order to keep the costs low, F&E stores had adopted the self check out system. The staffs in F & E stores were also kept ...Download file to see next pagesRead More
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