THE MARKETING MIX: PRICING STRATEGIES

The Marketing Mix: Pricing Strategies

The Marketing Mix: Pricing Strategies

INTRODUCTION

Wal-Mart Stores, Inc. is a U.S. multinational company specializing in retail, founded by Sam Walton and now headed by his eldest son, S. Robson Walton. Founded under that name in 1962, it has grown rapidly in Arkansas and led all U.S. begin to internationalize from 1991. In Europe, stores are present in Great Britain under the name Asda. Wal-Mart is now attacking the market Asia. Based in China since 1996, the group employed about thirty thousand workers in this country in 2006. It is also present in Japan under the name Seiyu. In 2005, 20 million customers attending the Wal-Mart on average each day. Wal-Mart is the largest general retailer in the United States with 3500 stores and 20% of estimated market share and the largest distributor of toys with a 45% estimated market share, having surpassed Toys "R" Us in the late 1990s (Brunn, 2006).

The major source of competition for Wal-Mart is Target, it is currently ranked second among discount retailers, the significant competitive advantage of Target is that it offers more upscale, fashionable merchandise than that of Wal-Mart and has earned a reputation for inexpensive, chic merchandise. The second source of competition is Kmart, which operates as a subsidiary of Sears, the basic competitive advantage it has over Wal-Mart is that its advertising budget as a percentage of sales is higher that Wal-Mart's. It also promotes particular brand relationships with Sesame Street, Martha Stewart and others to differentiate its product offerings from other discounters. The third competitor is Costco Wholesale Corporation which essentially competes with Wal-Mart's Sam's clubs. Costco is the largest wholesale club operator in the United States. The spatial dimension of Wal-Mart is crucial since every store's trade area is influenced by its location, its proximity to different types of customers, and the layout of other competitive stores (Brunn, 2006).

TARGET MARKET AND PRODUCT STRATEGY

Target Market and its primary attributes

Wal-Mart always strives to “provide quality products at an everyday low price and with extended customer service”. In order to achieve this, they have adopted a series of strategies which range from loyalty programs for customers to retailing. Some of the key strategies include building divisions, which include: smaller stores built in small communities with a population of less than 5000 people; this strategy allows Wal-Mart to give particular attention to customers in smaller markets in rural America. Another division is the Sam's Club which is fundamentally a membership only cash and carry operations, in which only wholesale operations are carried out. Customers have to pay a membership fee to be a part of the club in which they get to buy goods in bulk. Supercenters are another division in Wal-Mart whereby groceries, are combined with general merchandise “giving customers a one-stop shopping experience” this “one-stop” convenience has appealed to a large number of customers thereby making the super centers to become one of the most important retail concepts on the ...