Tesco

Problem Statement: Tesco will face several challenges and difficulties in its new expansion into the saturated and competitive United State’s market. Its ambitious plans to create its own distribution channel and bring its own suppliers could be a costly mistake. Possible Alternatives: * Carefully research the market to establish its potentials and opportunities. * Choose the appropriate market entry strategy * Choose the product line it will sell * Determine the components of the marketing mix * Implement suitable marketing strategies Recommendation: In order for Tesco to enter the American market successfully, they must have a clear understanding of the market, so that they can develop the right entry strategy and logistic system. Reasons for recommendation: Tesco is the UK’s largest grocery chain and it has recently been focusing on the global market. They currently have stores in several countries across Europe and Asia, as well as a large online grocery business. Their goal is to expand through a variety of different avenues all around the world. To be have a successful expansion, Tesco must distinguish itself from competitors such as Wal-Mart, consider convenience stores as a starting point instead of superstores, and focus on the marketing mix to gain the trust and loyalty of the new consumers. In order to do that they mush have a clear understanding of the market, so that they can develop the right entry strategy and logistic system. When entering a new market, especially one that is very competitive and saturated such as the United States, understanding is very important. Without a clear understanding of the culture, as well as their wants and needs, the United States market will be a very tough market to enter and be successful. Tesco must thoroughly study the market to understand the shopping habits, patterns, characteristics, and attitudes of the particular target market. Before Tesco entered the Japanese market, they sent a team of consultants to live with Japanese families in order to understand their culture. Due to the competitiveness of the market in the United States, consumers are constantly looking for the best deal, whether it is the pricing, quality, or convenience of the product. “The American consumer is fickle and may change loyalty at a moment’s notice. A fad today may disappear tomorrow, and a favorite product may be gone by the end of the week, as something new and more exciting is lurking around the corner”. Being able to understand the potential market and its opportunities is the first step to be successful in a new International market. Because they were successful in studying the Japanese and other markets, they should follow the same procedures in the study of the American Market. Choosing the right strategy to enter a new international market is just as complex as understanding the market. There are several options and choosing the appropriate one is not an easy task. Currently, Tesco is the “Third-largest retailer in the world measured by revenues after Wal-Mart and Carrefour and the second-largest measured by profits after Wal-Mart”. Although Tesco has plenty of money to invest and could start big by competing head-to-head with Wal-Mart, Tesco’s foot in the door idea to have small neighborhood stores is the right one. Tesco must first create their identity and what their goals are. Tesco’s cost of production and logistics must be low for it to be competitive. Tesco’s original plan to use its own supply chain and build its own distribution channel could be a very ambitious and costly plan. One of the key ideas to enter a new market is to create local partnerships with local distribution systems. Using distribution channels that are already in place will help keep initial costs low, which is essential when entering a new market. Local distribution channels already have a trained work force. They have partnerships with local transportation companies, and have warehouse facilities in place. Local distribution channels have the capabilities to transform raw materials into finished good. If Tesco does indeed follow their plan to create its own distribution channel, it will have to spend a lot of money to hire and train new employees, to build warehousing facilities, invest in technology, and create its own transportation system. Even for Tesco, the world’s third-largest retailer in the world, such a large initial investments could potentially keep them from penetrating such a competitive market. Although the American market is very competitive and cluttered, there is a great market potential for Tesco enter be successful. In order for them to enter the market and be contender with the other large retailer, such as Wal-Mart, Tesco has to first understand the market to develop the best market entry strategy utilizing local distribution systems. Works Cited Category, By. "Tesco API Profile." ProgrammableWeb - Mashups, APIs, and the Web as Platform. Web. 18 Nov. 2010. . Cescau, Patrick. "CtW Investment Group Calls on Tesco Director to Address U.S. Pay and Performance Failures... -- WASHINGTON, June 30 /PRNewswire/." PR Newswire: Press Release Distribution, Targeting, Monitoring and Marketing. 29 June 2010. Web. 18 Nov. 2010. . GreenBiz. "Marks & Spencer, Tesco, Walmart Lead Retailers' Sustainability Efforts | Business | GreenBiz.com." Green Business News, Resources, and Sustainability Career Tools | Business | GreenBiz.com. Web. 18 Nov. 2010. . Malhotra, Heide. "Tesco’s Foray Into U.S. Market Hits Snag | Business | Epoch Times." 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