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Walmart's competitive advantage
Walmart competitive advantages
Principles of marketing pricing strategy
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Pricing Strategy
Wal-Mart’s primary competition in US includes department stores of the likes of Target and Kmart. Costco offers competition to Sam Club format of Wal-Mart. In niche small markets, dollar stores are offering strong competition to Wal-Mart.
Kroger competes with Neighbor market and supercenters of Wal-Mart especially on the grocery product line. Target competes with Discount stores and supercenter shopping formats of Wal-Mart with Target commanding a small premium on prices as it follows fashion trend. Market segment of Target is the high-income customers leading to higher margin realization. ($ 50,000 of target vs. EDLP strategy of Wal-Mart by leveraging purchasing scale has pushed down prices compared to other retailers.
Average prices in Kmart and Target is at least 10-15% higher than Wal-Mart and focuses its competition on product variety and quality.
Revenue growth of Costco during 2008-2012 (22.64%) is almost doubled that of Wal-Mart (11.86%) during the same period. Target had a moderate growth of 11%.
The % of sales of large scale suppliers like P&G, Lever, PepsiCo, and Kraft with Wal-Mart is higher than the competitors ensuring maximum product availability, demand fluctuations and supply chain variability linked with promotions(Graff, T. O. (1998).)
EDLP strategy however resulted in a low price reputation driving volumes which also resulted in lesser need for frequent advertisement. EDLP strategy also results in lowering of inventory and logical costs. It will also ensure that the promotional cost/ trade spending cost will be drastically reduced. EDLP pricing strategy provides incentive for customers to travel long distances to shopping outlets, hurting retailers in near proximity(Casadesus-Masanell, ...
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Works Cited
Walmart Analysis. (2008).Retrieved from http://voices.yahoo.com/walmartanalysis1743207.html
Walmart's Keys to Successful Supply Chain Management. (2013). Retrieved from University of San Francisco: http://www.usanfranonline.com/walmart successful supply chain management/
Casadesus-Masanell, R., & Larson, T. (2009). “Competing through business models (D)”. Harvard Business School, Case 710-410.
Casadesus-Masanell, R., & Ricart, J. E. (2008). “Competing through business models (A)”. Harvard Business School, Case 708-452
Graff, T. O. (1998). “The locations of Wal-Mart and Kmart supercenters: contrasting corporate strategies.” Professional Geographer, 50(1), 46-57.
Graff, T. O. and Ashton D. (1994) “Spatial diffusion of Wal-Mart: contagious and reverse hierarchical elements.” Professional Geographer, 46(1), 19-29.
As I have outlined in the charts below, there are various similarities and differences between Wal-Mart and Target. Wal-Mart is Target’s primary competitor, and vice versa. Wal-Mart has a strong market presence in its global markets and has a diverse range of products and services that are affordable and available in stock. Target, on the other hand, does not have a strong market presence or efficient product supply; however, Target’s physical environment and innovative products further the brand’s image and value. Unfortunately, Target and Wal-Mart are both e-commerce laggards with major competitors such as Amazon. Target faces complications with their pricing strategies and their product availability, which hinders their strength when competing
Wal-Mart has had a significant economic impact on the US, as well as the economies of countries that have relations with the US. Wal-Mart is the world’s biggest company of any kind, with 80 percent of the households in America purchasing something from the superstore; it is the nation’s largest retailer. Wal-Mart’s continuing price reduction has given Americans the advantage of being able to afford 15 to 20 percent more than they previously could. (Hansen) In a world governed by globalization and greed, competition has become rigid; as a result firms like Wal-Mart have utilized advanced marketing strategies to insure that they are on the ‘neck’ of competition, and are the core deciders of the market. (Ortega) However, Wal-Mart made decisions that were of a disadvantage to aspects of the economy, including the depletion on a small scale of Small Town USA.
The top two reasons for such success in ranking first in retail store market, is because Wal-Mart is convenient globally and so are there prices in the competitive market . Wal-Mart has three segments which are superstores, discount stores, and Sam's Club stores, all of these are scattered in the United States, Canada, Mexico, Europe, Brazil, and Asia. One downfall was from Sam's club because too many were opening all over internationally it decreased the number of customers per location. Overall despite the company's decline on Sam's club sales, the Corporations did well over all with the figures brought in and conditions.
Target’s total store locations is currently one thousand, seven hundred and ninety nine and thirty eight distribution center located in United States and several locations in India. (PressRoomTarget) Walmart has more store locations within United States and across the country. So far, “Wal-Mart operates over eleven thousand retail unit under sixty five banners in twenty-eight countries.” (CorporateWalmart In addition to more locations, Walmart also has online business that can be a threat to Target. Another threat is the economic condition. Target’s target market consists of higher to middle income people. During hard economic condition, consumers are very unpredictable. Some consumer’s may be price sensitive due to these
Wal -Marts' major competitors are the Kroger co. #2 in annual sales, Albertsons' Inc. #3, Safeway,Inc. #4, and Costco Wholesale Group #5. Now even though Wal- Mart is leading the way in total sales the #2 and #3 businesses lead in way with total # of stores. The Kroger Co. has 3,302 with Albertsons at 2,476 stores nationwide. Wal-Marts total sales for that year alone was beating its 2nd place competition alone by more than 80 billion dolla...
This paper discusses the strategic problems that led to Kmart's poor performance. The first Kmart store was opened in Garden City, Michigan, in 1962 (the same year that Wal-Mart and Target began operations) by the S.S. Kresge Co., a five-and-dime chain that was founded at the turn of the 20th century in Detroit by Sebastian Spering Kresge. By the end of 1963 Kmart had 63 stores converted from Kresge's. By 1977, Kmart generated nearly all of Kresge's sales, and the company changed its name to Kmart Corp.
As compared to its rivals, Target has presented its brand as a middle-class brand which assists in attracting customers that find other stores like Walmart unpleasant
Definitely, it should be noted that in most cases, we can only dream of purchasing good quality products for a reasonable price. In this regards, I would like to quote Brian Manning, “it’s good to search for the cheapest rate and to buy from the company that guarantees the lowest rate instead of seeking out the provider that is going to offer the best value. “You don’t go to Walmart to buy a Rolex or a Ralph Lauren polo… You go to Walmart for one reason: to get the cheapest priced product”. That sounds logical. On the contrary, it is extremely illogical to expect that the Target’s customers will be ready to purchase low quality products for a high price. It was one of its main business development mistakes; especially taking into consideration that Target started under very favorable circumstances. It purchased the lease agreements of up to 220 Zellers stores for C$1.825 billion . As it stated in The Globe and Mail, “Target inherited leases from Zellers that already came with rents well below market prices, averaging $6 to $7 a square foot, compared to going rates close to $20”
Sam Walton, who first purchased a branch of the Ben Franklin Stores from the Butler Brothers, founded Wal-Mart. When he took over this franchise, his marketing strategy was the same and remains the same: selling products at low prices. By selling products at low prices, he is able to get higher-volume sales at a lower-profit margin. To make the lowest prices possible, he found suppliers that charged a lower price than the other stores nearby. This continues to be a primary strategy that induced Wal-Mart to currently being the largest retailer in the world. In effort to maintain their status as one of world’s most valuable companies, Wal-Mart has been exploiting employees and impoverished nations, ruining competition, and placing pressure on the U.S. government.
The key issues for K-Mart strategies are finding the right cost level for an opportunity to be aggressive, and differentiating the product for consumer in terms of different consumer and different intangible product attributes. K-Mart and Sears should be combined with a new overall corporate competitive strategy using a cost focus. This may turn out to be the only sensible strategy, and the one which best describes the strategy adopted. Strategies of cost leadership and product differentiation are often described as if they were mutually exclusive you can either pursue one or the other, but not both.
It opened in 1962 by Sam Walton, Wal-Mart has become the largest retailer in the United States, and with over 3,300 stores Wal-Mart continues to be successful. Under his successor, CEO David Glass, the small discount store chain started in Arkansas has become one of the largest corporations in the world. David Glass lays out the philosophy: “we approach this new and exciting decade of the 90’s much as we did in the 80’s focusing on only two main objectives, (1) providing the customers with what they want, when they want it, all at value, and (2) treating each other as we would hope to be treated, acknowledging our total dependency on our associate-partners to sustain our success.” This statement by Glass shows that Wal-Mart has devised a plan in order to maintain its high ranking in the retail business. The question becomes, can Wal-Mart continue to expand and succeed in an increasingly hostile retail environment? I will discuss the external stakeholders? 2) Do a SWOT analysis of Wal-Mart. What are the company’s distinctive competencies? 3) How would you describe Wal-Mart’s “Grand” strategy for the next decade? In terms of Porter’s generic strategies?
Wal-Mart and Target are two similar global corporations. If one asks each of these store’s customers why they shop there, somewhere in their answer one will find them saying that they can find everything. The difference between these two corporations is their mission, marketing, and quality. Each of these stores are looking to offer a different experience despite selling similar goods. So, when profits are not changing in the United States, they’ve opted for an expansion into other countries. They have opened stores and provided services outside of the United States.
Wal-mart has been able to achieve respectable leadership in the retail industry because of its focus on supply chain management. Discuss in detail the distribution and logistics system adopted by Wal-Mart.
Prices from stores like Walmart, Target, Kroger and even the online commerce giants Amazon and Ebay may differ a little bit, due to theri own promotion tactics. As we all know the United States is a free-market economy and it is highly competitive, each store execute their sales startegies to attract consumers.
Walmart is the world’s largest retailer. Its revenue was considered as GDP it would be 23 countries ahead of Sweden. Walmart has 4 different segments Walmart stores, Sam’s club, international, and other private labels. Walmart has great strengths like efficient supply chain cross docking and inventory management, service innovation, strong penetration and is the world’s largest private satellite communication system. With every company they also have weakness like poor public image, unable to adapt internationally and strict labor laws. Walmart have come across some great opportunities over the years. They have opportunities like globalization in the middle class globally, e-business and inorganic growth leading to consolidation. They have also encounter some threats