Wal-MartMarking Strategy Based on the Global Economic Change
Thechanging global economy has forced organizations to devise strategiesto sustain their competitiveness in the industry. These strategiesinclude embracing new marketing techniques and improving theoperations. Wal-Mart is the leading retail store in the world withoperations in over 11593 locations distributed across the world. Overthe years, Wal-Mart has engaged various operations’ techniques toboost its operations in the retail industry such as engaging inprices competition, effective supply networks and marketingstrategies. However, with the changes in the global economy, it isimportant for Wal-Mart to engage in new marketing strategies in orderto sustain its operations in the retail industry in addition toexpanding its market operations.
Thispaper examines the future marketing strategies that should beembraced by Wal-Mart Retail Store Company which helps it to enhanceits profitability and competitiveness amid the economic changes inthe global economy.
Potentialimpact on marketing strategies under the following headings:
Thedifferent changes in the global economy are coming with the changesin the behavior and attitude of the customers. The various changestaking place in the global economy means organizations should alsodevise strategies to align their operations with the changes in orderto sustain their performance. First and foremost, Wal-Mart shouldtake note of the competitive rivalry and the threat from the newretail companies taking over the industry from various parts of theworld (Ziliani & Bellini, 2003). As a company that is widelyknown for its strong price competition power, it should focus onstrategies to sustain its position in the industry. This means,Wal-Mart should incorporate strategies that will market the companyin different markets and tactics that will help in reducing its costof operations. Wal-Mart should continue to lower its cost ofoperations in order to maintain its price competition strategy (Alon& Eugene, 2012).
Theslogan of Wal-Mart is to offer low prices every day, a factor thatcauses customers to prefer the store over its competitors in theindustry. Over 70% of products in Wal-Mart are sourced from Chinathe decision to have suppliers from China is for the purpose ofreducing the cost of production. In addition, Wal-Mart also benefitsfrom economies of scale due to its large size. Wal-Mart has aneffective distribution channel that ensures that the products havereached the market on time and the customers are efficiently served(Laudon& Traver, 2007).
AnsoffMatrix provides useful strategies through which managers and leadersin an organization can use to manage their existing markets andexpand their operations to new markets. The market expansion gridprovides strategies that be employed to growth and effectivelycompete with other players in the industry. According toIntemarketingOrganization (2014),theleaders of an organization divide their market into new and existingmarket.
Themanagement of the Wal-Mart should first identify the markets that theorganization is strongly based and refer them as their existingmarket and markets that it has not set its stores as a new market. Indoing this, the management should also consider regions or countriesthat its operations have not been effective enough in order toformulate new strategies. Currently, Wal-Mart operates more than11500 retail stores in 28 countries which include the United States,Mexico, Brazil, Japan, Canada and Argentina. In the countries inwhich Wal-Mart operates, the management should look for strategies tohelp it to expand its operations to new areas in the same countries(Rosen, 2005).
Inthe market development, Wal-Mart should target new or new areas inexisting market. This means, the company will have to focus onvarious geographical markets within a given country or region. Inidentifying the strategies to capture new markets, the company shouldfocus on PESTLE analysis to help the company to understand itsmacroeconomic environment. In addition, Wal-Mart will also requireincorporating new different marketing and sales channels such asdirect sales and online sales. Wal-Mart combines both direct andonline stores in reaching its customers. This means, the organizationshould develop new tactics of expanding the online and direct salesin order to expand operations in a given country. Market segmentationis another strategy that can be employed by Wal-Mart in order toensure that it serves all the customers in a given market (BARBERÁMARCILLA, 2014).
Accordingto Wedel & Kamakura (2012), diversification involves establishingdifferent products in a new or existing market. Diversification helpsto expand business operations by introducing products into the marketand it helps a business to diverse its risks in the industry.Wal-Mart deals in selling food products such as groceries and otherhousehold products such as electronics.
Marketpenetration involves winning more buyers in an existing market tospend on the products being offered by the company. Winning morecustomers requires a company to have a good marketing strategycombined with various tactics for motivating customers. Wal-Martstrategy of selling products at relatively lower prices has helped todraw many customers (Xu et al 2012). This means, with its large baseof customers, one of the methods that the company can use is toestablish a loyalty program which combines with various rewards tothe clients such as giving shopping vouchers, traveling tickets andother rewards to make the customers feel appreciated. Wal-Mart canalso engage in providing promotion offers and increase salesactivities. As a company that is facing stiff competition fromemerging Retail Company in its other regions, the company shouldresolve in the acquisition and merging with rivals with stiffcompetition. This will help to improve the chances of succeeding in anew market in addition to winning many customers.
Productdevelopment is incorporating new changes in the methods of productionwhich may include new packaging and branding styles. Productdevelopment may also include changing the method used in offering theproducts to the clients. Because Wal-Mart is focused on reducingprices for its products, it should ensure that it provides a widerange of products that customers can choose from.
Segmentation,targeting and positioning
Segmentationof a market ensures that all the customers in a given market have areason to invest in the company. The market segmentation used byWal-Mart is more focused on attracting customers that are consciousof the cost of the product. When the cost of the products is high,such customers will often look for substitutes or the same productsfrom a company with relatively low products. Segmentation of themarket goes beyond pricing, in some markets such as the UnitedStates customers are more focused on the value they will gain fromthe products. In other markets, such as Asia and other developingcountries, the focus is mostly on the price of products. A market canbe segmented based on four main factors geographic, demographic,behavioral and psychographic. In order to win the different customersin a given market, Wal-Mart should engage in branding and productpromotion targeting a particular group. On the other hand, Wal-Martshould make available various products suit the different customer ina given market.
Potentialimpact on customers’ behavior and how it might change
Inthe increased competition from the emerging retail chain stores meansthat consumers will have a wider choice of selection. This meansorganizations will have to look for strategies for boosting theircompetitive advantage in the industry. To align its operations withthe changes in the industry, Wal-Mart should look for ways ofcapitalizing its competitive advantages. In this regard, the companycan either use business level and corporate level strategies inboosting future performance. Wal-Mart should invest on marketresearch to invest in market segmentation as a business strategy ofmarket penetration. On the other hand, Wal-Mart can employ corporatelevel strategies such as diversifying its products in order to expandits market base. Currently, Wal-Mart is more focused on sellinghousehold products and food products, while this is an effective lineof focus, Wal-Mart can diversify its product line in order to attractwider markets (Meeks 2011).
PESTALANALYSIS and growth opportunity of Wal-Mart
Politicalenvironment can affect the performance of an organization based onthe trade policy that governs a given country. For instance, Chinaand other countries in Asia have been criticized for promotingprotectionist trade policies that hinder foreign companies fromeffectively competing with the local companies. For instance, thechange policy on foreign investment in China caused an adverse impacton the progress of the organization (Rosen 2005). Politicalinstability can also hinder international organizations from settingup subsidiaries in a given potential market.
Theeconomic position of a given country determines the purchasing powerof the customers. This is a factor that multinationals considers whensetting up new branches in other countries. The Economic positionencompasses the infrastructure and the financial market of thecountry. As indicated by Rosen (2014), Wal-Mart has maintained a goodposition in the global market because it offers its products atrelatively low prices. Selling products at low prices is attributedto the fact that Wal-Mart sources its products from China where it isable to cut its cost of production due to the availability of cheaplabor and raw materials.
Wal-Martprovides its customers with affordable services and efficientservices to enhance their shopping experience. In addition, Wal-Martfocuses on aligning its operations with the social desires of itscustomer. For instance, the decision to change the format of thestores was to align with the culture of different markets.
E-commerceis increasingly taking over the retail industry. Although Wal-Marthas embraced online businesses, it has not fully managed to establishitself online as compared to its competitors such as Amazon. InWal-Mart, online sales only account for 3% of the total sales, whichthere is a high potential in focusing its attention on onlinebusiness (Team, 2014). Embracing e-commerce lies with a hugeopportunity that Wal-Mart can capitalize on to increase its globalsales and market operations. The advantage of focusing in e-commerceis that it will enable the company to enter new markets in additionto expanding its market base. As the market in the United States getssaturated with Wal-Mart stores and other retail stores, the companycan take the opportunity to invest in the latest technology to helpthe customers’ experiences (Wamba et al, 2008).
Ecologicalaspects involve organizational functions that may cause a negativeimpact to the environment. The environment includes land, water,noise and air pollution which may harm people, plants and aquaticlife in the surrounding. With the growth of global economy, mostmarkets are more concerned about the environmental impact of acompany, which is why it is important to ensure that operations areenvironmentally friendly. This means, a corporation like Wal-Martshould carry out a market research in order to identify, on the beststrategy to enter a given market (Team, 2014).
Lawsuitsare filed against a company when it breaches the law governing themarket. Most of the legal issues that affect retail stores arerelated to the malpractice in the hiring and treatment of employees.In this regard, Wal-Mart should ensure that all its operations are inline with the law of the hosting country. This means, the companyshould adhere to hiring laws and other laws governing the running ofan organization.
Asthe leading retail store in the world, Wal-Mart has managed to risefrom operating in the United States to expanding its operations inother countries across the world. The growth of Wal-Mart has majorlybased its growth by focusing on its engagement price competition.Wal-Mart ensures that it keeps it puts its cost of products low inorder to sell its products at relatively low prices as compared toits rivals such as Target and Amazon and other rising retail storesoutside the United States. However, with the changes in the globaleconomy and the stiffening competition in the industry companies,Wal-Mart will be required to incorporate new marketing strategiesthat will enable the company to penetrate new and existing marketsand enhance its market base. Since only less than 5% of its salescome from the online sales, online sales lie a good opportunity towin more customers and expanding the global expansion. With thechanging global economy, Wal-Mart should invest on technologies thatwill enable market accessibility such as Radio FrequencyIdentification technology to improve customer experience.
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