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 ...