Supply Chain Strategy Of Walmart

The alternative norms are that Costco operations are entirely based on the warehouse model and membership fees offer customer more of an economic advantage to customers than Wal-Mart everyday low prices and flexible payment with suppliers. My objective is to analyze the two retail giants’ methodology to satisfy and maintain customer although that I anticipate Wal-Mart’s to be a better buy than Costco because of the gargantuan scale of Wal-Mart has constructed its commerce on saving the customer

Cost plus pricing Pricing methods which are based on the cost structure of Cadbury that are favoured by accountants because they are supposedly more accurate and reliable. Cadbury is trying to maximise it profits. This method works successfully because all costs need to be accurately accounted. In many firms this is a very difficult process which is why the simpler mark-up procedure is used. Cost plus pricing tends to ignore the demand for the product and the competition.

Efficient Logistics helps marketing to satisfy customers. Some argument claim that logistics is a considerable cost of business because it increase the prime cost and price that may decrease the demand, which may decrease the overall profit. However, logistics can have a positive effect on satisfying customers and achieving marketing goal. Because efficient logistics among manufacturers, retailers and customers can reduce delivery time and provide customers better purchase experience especially in e-business, which is useful to built customer loyalty and satisfy customers’ needs (Lacoma [no date]). In addition, according to CSCMP’s definition, logistics includes “control the efficient and effective forward and reverse flow and storage of goods,”

Walmart is well known for its every-day low pricing (EDLP) model. Although EDLP seems as though it is a pricing model, it is mostly used to differentiate the retailer from others. Proof that EDLP isn 't always a pricing strategy lies in the fact that EDLP “does not have a lower price on all goods” (Lal & Rao, 1997, p. 97). This means that EDLP is a strategy for differentiating itself, not on always providing the lowest possible prices. “Walmart 's mission statement is “We save people money so they can live better” (Walmart, 2014) which indicates that Walmart 's pricing structure is the way it serves its customers.

By examining how it is that Wal-Mart exerts power in these ways, it is possible to qualify just how strong its effect on the world today is. Wal-Mart certainly has the power to direct action. Within the economic arena, of course, they provide many jobs and their demand for products also creates jobs, which raises manufacturers’ need for more labor. But, Wal-Mart also utilizes its own tactics to affect the economical balance of its customers. Wal-Mart is known for their Everyday Low Prices (EDLP); their guarantee that instead of big sales, their customers can come in and get what they need for less.

Following is an analysis of Wal-Mart's competitive strategy. Pricing Wal-Mart's marketing strategy was to guarantee "everyday low prices" as a way to attract customers. The traditional discount retailer, which relies on "sales," not only has to do more advertising and promotions but also has to rely more on catalog mailing, buildup of inventory before a sale, markdowns on the unsold inventory, etc. Wal-Mart stores operate according to their "Everyday Low Price" philosophy. Wal-Mart has emerged as the industry leader because it has been better at containing its costs, which has allowed it to pass on the savings to its customers.

The nature of Wal-Mart’s competitive priorities are based on the foundational of minimizing all its costs vis-à-vis its competitiors so that it may provide the lowest cost merchandise, and thereby boost its market share. Wal-Mart aims to differentiate itself, and enhnce it’s competitiveness, by making technology, its advanced computer and telecommunication system, a core competency. This maintenance of superior technology greatly enhances Wal-Marts ability to focus on building and maintaining relationships with its customers, suppliers and employees; for example, it cuts down on unnecessary large inventory levels and enables intimate and timely contact with suppliers. Wal-Mart further competes on cost, ‘value of the dollar’ philosophy, and also performance quality, by adding value through its training program and its corporate culture which increases customer satisfaction. However, Wal-Mart’s management which initially portrayed itself as the lowest cost provider had to change this policy partially because it becam... ... middle of paper ... ...r relative to its suppliers, Wal-Mart was able to implement and enforce radical cost-cutting measures; these included saving realized by eliminating manufacturer’s representatives from negotiations with suppliers; by making its vendors pay for communicating expenses.

Also the way the employers were considered was an important feature. The employers are treated as partners and they are eligible to the profit sharing of the company. This is an effort to make ... ... middle of paper ... ...tely cancel this very big problem. Another problem concern the fact that some small town doesn’t want Wal Mart to install its stores because they want to maintain a sort of local economy that would be destroyed by the opening of a Wal Mart store. As we know Wal Mart sells highly standardized products and for the people the switching cost to change from one to another store is very low.

This gave the company a huge marketing advantage over its fellow retail stores within the same market. “Walmart’s everyday low price, or EDLP, strategy stems from these economies. It also helped the retailer garner market share from other companies by strategic pricing. It has strategic pricing through programs like the Savings Catcher, Save Even More, Ad Match, and price rollbacks. (Soni, 2015)“With the power and success that the company is able to harbor its fellow companies like Kroger, K-mart, and Target don 't even stand a chance.

This also creates a disincentive for consumers to shop elsewhere, because they forgo discounts or extra benefits by doing this. The firms therefore have more revenues and profits because of these loyal customers. Research has also shown that loyal custo... ... middle of paper ... ...M., & Backhaus, C. (2012). Consequences of customer loyalty to the loyalty program and to the company. Journal of the Academy of Marketing Science, 40(5), 625-638.