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Trader Joe’s

Trader Joe’s is a food and grocery chain, which started its operations in 1967 with its first store in Pasadena, California. The information from the retailer’s official website indicates that the first store, which initially sold wine from California, still exists in the same building and with the same parking lot. According to the management’s statement on the website, the store in Pasadena remains the customers’ restaurant of choice on a warm summers evening, just as it was more than 50 years. Were it not for the proof of time, one would call the management’s statement another marketing gimmick. However, it would be logical to look into Trader Joe’s strategy that has kept the retailer alive for so long. Typically, Trader Joe’s has been consistently focused on offering great food at the lowest possible price, thereby creating value for its customers. The maintenance of low costs is linked to the firm’s consistent commitment to cost reduction measures, including economic order purchase strategies (“Our Story”). With the current milestones and hearsay concerning China’s economic development, Trader Joe’s is focused on expanding its operations to China.

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Problem Statement

Trader Joe’s wants to expand its operations to China. This strategy requires the firm to assess the availability of opportunities and the target market. As such, the retailer ought to conduct an intensive and extensive market research, based on which the strategy of international expansion may be termed as either viable or futile. Since I was hired by Trader Joe’s to help assess the opportunities in China, this paper presents as report of the recommended market assessment criteria specifically focusing on the information needs, the types of data needed, and where the information can be obtained. Additionally, the assessment of the 4Ps of marketing will be provided.

Analysis and Recommendations

To begin with, Trader Joe’s needs to collect qualitative and quantitative data concerning the Chinese market. The data should include descriptive factors of the product, promotion, price and place. This data can be either primary or secondary. However, the collection of primary records may be both expensive and difficult, since it may require the business to send a field researcher to China to assess the market. Therefore, the retailer is left with the second option, which requires the researcher to obtain secondary data on the 4Ps of marketing.

First of all, with the advent of the Internet revolution, Trader Joe’s will find it easier to use the information published online (Aaker 110). The possible resources include national statistic bureaus and data centers. The rationale behind this choice is the fact that China is described as an upcoming economic super power. As a result, many governments, including the United States, have been studying the Chinese market, which means that plenty of data should be already available. Secondly, Trader Joe’s can begin by assessing research papers published by credible authors and institutions. Peer reviewed journal articles provide vast opportunities for research. Additionally, the company can study the trends of online businesses, such as E-bay and other online retailers, to gain a view of the market fundamentals in China. Notably, there could be a limited number of research papers discussing food and grocery retailers in China. Therefore, Trader Joe’s should use the secondary sources of data for the purpose of the preliminary research. It will help the firm to identify the specific areas that require further research. The bottom line is that the obtained data should be informative regarding the consumer behavior and market dynamics in China (Aaker 110).

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Above all, the market assessment ought to look into the products offered by Trader Joe’s. More specifically, the market assessment should check, in the first place, whether the products are needed in the Chinese market. Trader Joe’s offers a variety of the gluten free foods, kosher, and vegan dietary options. Additionally, a message on the retailer’s official website indicates that Trader Joe’s often revises its lists to include new products and add new varieties. More importantly, the retailer has regionally customized products, such as vegan bread, which means that the food can be modified according to the needs of the Chinese market. Thus, one of the penetration strategies would be to assess the products offered by the competitors, compare them to what the firm intends to offer, and find a competitive advantage that would make Trader Joe’s better than the competitors in the eyes of the customers.

The second criteria for the Chinese market’s assessment concerns the pricing of Trader Joe’s products in the new market.

Regarding the price, the trader should assess two critical factors, which involve the general price level and the effect of foreign currency exchange rate fluctuations. With regard to the general price level, the firm must determine the class of customers to target. For instance, the firm may offer products that are only affordable to the middle class. If that is the case, the market assessment must be limited to this economic class. To advance this rationale, the prices get affected by the costs incurred during the production and the delivery of services. Notably, as opposed to the United States, China would provide the retailer with the opportunity to reduce the labor costs. This factor should influence the prices of final goods in case the prices of raw materials and other factors are held constant. What is more, Trader Joe’s will be faced with foreign exchange fluctuation risks, which might affect the prices of the products, especially in cases when transfer pricing is involved. To protect itself from the foreign exchange risk, the retailer will be required to assess the possibility of having a menu denominated in USD or other possible options.

After the product and price assessments, Trader Joe’s will be concerned with the place. This part entails the market availability and the distribution channels for the products as well as the sourcing of raw materials. The place assessment should take into consideration other stakeholders, including the competitors for the raw materials and the market share. Basically, under the place strategy, the retailer will be required to analyze the location of its stores, the sizes of the stores, the stores’ attributes, and the transportation of materials from the production sites to the stores. China is a highly populated country, which insinuates the availability of a large target market. However, it does not mean that Trader Joe’s can locate stores anywhere where there are vacant business premises. There is a rational need for proper market screening with regard to the place.

The last critical factor of assessment under the 4Ps of marketing is the promotion strategy. Trader Joe’s plans to penetrate a new market, but not a virgin land, where there are no other retailers dealing with the same products. As a result, first of all, Trader Joe’s should come up with a double-edged market penetration strategy in order to be able to penetrate the new market. Secondly, the promotion strategy should enable the business to fight off its competition by gaining a competitive edge. With a population of around 1 billion people, the traditional personal selling penetration strategy may not be appropriate. Thus, the firm may resort to mass media advertisements as well as online marketing. However, there are factors that Trader Joe’s should note with regard to mass media and online advertisements in China. They include limited democracy concerning the nature and content of the advertised material. All things considered, the last recommendation is presented below.

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Market feasibility assessment must not end with the 4Ps of marketing (Hood 66). Such approach substantiated by the fact that there are many other market dynamics and environmental forces that influence business. They include macro-environmental as well as the micro-environmental factors. It should be noted that the macro-environment in this case cannot be controlled, whereas the micro-environment is under the control of Trader Joe’s. Generally, there are three important tools that the trader can employ in order to conduct the needed assessment. They include the PESTEL analysis, the SWOT analysis, and Porter’s 5 forces (Hood 66).

With regards to the abovementioned macro-environmental factors, specifically, the retailer ought to consider the consumer behavior and the cultural Chinese cuisine. Technically, Trader Joe’s would not want to be disappointed by figuring out that certain foods are not are not allowed in the Chinese culture due to the religious or any other reasons.

In conclusion, Trader Joe’s international expansion to China provides the firm with potential economic returns. However, the retailer needs to exercise due diligence by conducting a comprehensive market assessment of the target market. This report contains the key areas that the firm should focus on. They include the 4Ps of marketing and the study of the micro and the macro environment.

Lastly, the report defines the data that needs to be collected and proposes possible tools for research.

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