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Example research essay topic: Marketing Strategy For Wal Mart - 2,491 words

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Marketing Strategy for Wal-Mart Mission Statement The mission of this paper is to define the best management strategy for Wal-Mart Corporation. In order for us to come up with recommendation of how to increase Wal-Marts commercial effectiveness, we will have to analyze different aspects of companys operations. In its turn, this will require an understanding of what defines companys commercial dynamics, on our part. Goal Just like in case with any commercial enterprise, the most important goal of defying main principles of its strategic management is to increase profits. Therefore, it is important to understand that every issue, which is going to be analyzed here, will be directly related to how increase companys effectiveness. This can be accomplished by many different methods, but we will have to always remember that we can never put the main objective, out of focus.

Many modern economists make a mistake, when they suggest there can be other goals of economical activity than making profit. Various affirmative action and diversity policies, forced upon commercial institutions, divert managers attention from their foremost task. Wal-Mart comercial success comes as a result of ignoring social factor, while focusing its attention on archiving economical domination. Portfolio Wal-Mart is American largest retail company. There are close to 3. 500 Wal-Mart discount stores in USA alone. Companys headquarters are located in Bentonville, Arkansas.

The most of its stores Wal-Mart has in Arkansas, Oklahoma, Mississippi and Missouri. 87 % of Companys annual profit is based on domestic sales. Companys management maintains a well-structured hierarchy, within its body. The crucial part of designing a portfolio for Wal-Mart is to define what constitute its Strategic Business Units (SBU). As for today, there are only two companys branches that can operate independently of each other: Wal-Mart retail centers and Sams Club wholesale division. 65 % of all Wal-Marts the sales are done in USA, but Company also tries to expand on international market, it now has outlets in Mexico, Britain, Japan, Canada, Germany and China.

So far, Companys international expansion proved to be not as effective as it was originally expected. It appears now that Wal-Mart wont enjoy much success on international market, because of numerous psychological differences between American management style and European realities. Sams Club is the second largest wholesale retailer in U. S. after Costco. It is a part of Wal-Mart Corporation, but it is being operating independently.

This was being done mainly to enable Sams club managers to be more flexible, when it comes to winning competition with its main rival Costco. Sams Club main competitive edge is the fact that it has three times as many outlets as Costco does. Many economists suggest that Wal-Marts continuous expansion will inevitably slow down and even turn into contraction. This is because company has grown too big already and it practices inflexible business strategy, when everything that matters is expansion at any cost. Still, it needs to be recognized that companys old-fashioned business approach proved to be quite efficient, up to this date. The reason for this is that Wal-Mart wasnt just growing bigger but it was also pushing smaller retailers out of competition.

In this case, growth and acquisition came hand in hand. Companys aggressive expansion strategy was being widely criticized over the last few years. Critics point out to the fact that acquisition of smaller retailers has not always being done legally. It appears that Wal-Mart strives for nothing less but becoming retailing monopolist in USA.

This, of course, cannot be beneficial for the society, as whole. The Wal-Marts unique problem is its dependency on Chinese cheap labor and its unwillingness to adopt a progressive marketing strategy, like Costco. 95 % of all the goods sold by Wal-Mart are made in China. But there is a cost of buying cheep products the low quality. We can talk of psychological manipulation practices, being deployed by Wal-Mart.

It exploits peoples desire to save, without guaranteeing quality. Companys opportunities derive from the fact of its gigantic size. Being the largest retail operator allows it to buy goods directly from manufacturers, without having to use distributors services. Thats why it is hard for any competitors to beat Wal-Mart prices. This is the Companys most important competitive advantage. Wal-Mart business opportunities directly depend on its ability to remain one step ahead of its competitors in regards of its prices.

Marketing strategy Target markets Wal-Mart retailing capacity is not being fully exploited, as it plans to open 140 new outlets abroad. It is likely that it will remain at the same level for as long as Company can guarantee low prices for the products it sells. A lot depends on Global Economy trends. So far, Company was able to fully exploit them to its own advantage.

The globalization processes in worlds economy allows large companies to benefit from the fact that there are getting to be less international trade regulations. Wal-Mart fits exactly into definition of what transnational corporation is. Its production capacity is the least affected by competition with other retailers on American market, although it also plays role. The most important factor here is an abundance of cheep labor in Third World countries. Only this enables Wal-Mart to continuously increase its sales, while offering prices that cant be beat by most of competitors Wal-Marts target market can be considered as truly universal. Even though that Company mainly focuses on exploiting the American market, its competitive prices allow Wal-Mart to successfully operate even in such countries as China.

Positioning Wal-Marts positioning derives from its strong association with retail industry. Company strives to attract customers by offering a competitive price. But at the same time, it also tries to convince them that they buy high quality products. This, of course, cannot be achieved by applying a logical approach, when it comes to attracting potential buyers.

The reason is obvious a high quality item cannot be cheap. Therefore, Wal-Mart promotes its image of Retail Company, as such that is focused on exploiting a middle class share of the market, while in fact, 50 % of Wal-Marts customers belong to the lower class. By shopping at Wal-Mart, people think that they cheat the commercial realities, because its products are much cheaper then anywhere else. At the same time, they think of Wal-Mart as fully legitimate company, in terms of public image. Marketing Mix The Wal-Marts marketing mix is closely related to its positioning.

Its classical concept consists of blending four independent variables, in order to craft a strategic plan, which is going to be able to correspond to the market dynamics for a long time. Basically, this method suggests that price, product, promotion and place need to be properly adjusted, in their relation to each other. This, in its turn, requires an understanding of what socio-political trends will define market in the future. Wal-Mart prices will remain competitive, because other retail companies are not quite as large to enable the whole spectrum of products being specifically produced for them in China. But the quality of Wal-Marts products remains low.

Still, if Company begins to focus more on improving the quality, it will not be able to maintain its competitive edge, when it comes to pricing. Therefore, Wal-Mart needs to focus more on promotion, which is psychologically adequate, in regards of the market. This is why such promotion has to correspond to the time and place. Product As for today, the most profitable Wal-Marts line of products is following: electronics, clothing, pharmaceutical products and food items. But Company also needs to put emphasis on selling luxury items through its network, like Costco does. As practice shows, the principle of targeting specific customers cannot be overlooked.

Wal-Mart seems to only be focused on targeting one group of customers, namely lower-middle class. Yet, Wal-Mart could be selling luxury items as well. Apparently, even those who buy such items also want to save money by paying competitive prices. Before expanding internationally, Wal-Mart needs to fully exploit U. S.

retail market opportunities. Price There have been suggestions that Wal-Mart would do better, had it employed different pricing strategies, such as Broad Differentiation Strategy, which emphasizes on lowering buyers overall costs and making customer more satisfied with the purchased value by continually improving the quality of the product and adding to the customers satisfaction non-economically, through making him associated with well-respected brand. Yet, there is no doubt, in my opinion, that while it could have helped to improve company's public image, Wal-Mart's sales margins would drop. Wal-Mart does not have a choice; it uses the expansionist strategy, as the mean of remaining competitive. In other words, it can only remain economically successful by continually expanding, by pushing competitors out of business. The end of expansion would automatically mean the beginning of decline for the Wal-Mart.

Therefore, the Wal-Marts ability to offer low prices is the most important factor behind this company being able to dominate the retail market in U. S. Distribution Wal-Mart has close to 3000 fully operational warehouses in U. S. Also there are 24 new ones in the process of building. Companys officials stress out that its expansion will gain even more momentum, once it manages to win competition with Costco.

The decisions about distribution are being made on the local managerial level. This allows Wal-Mart a great degree of distributive flexibility, because the needs of the local markets are being fully addressed. Such approach directly derives from Costco's distributive practices. Promotion Wal-Mart is known to actively use the method of loss-leader, to promote the line of its products. But it is also not a secret that the practice of loss-leader is considered to be illegal, under certain circumstances. There is no doubt that company, which applies this method, intentionally misleads the customers.

Using loss-leader is nothing but taking advantage of human psychological weaknesses. It is can be thought of as highly immoral. Yet, we live in capitalist society, where the idea of profit supersedes any other considerations. Therefore, in my opinion, Wal-Mart has chosen the right strategy.

It definitely works, because it is a well known fact that it is only the matter of time, before other retail stores close down, after Wal-Mart moves into the new area. The continuous expansion of Wal-Mart retail outlets is the best indication of loss-leaders effectiveness. Personnel Currently Wal-Mart has 1. 3 million people employed, which makes it the largest private employer in U. S. Companys approach towards increasing the efficiency of its personnel can be defined as inadequate. The entry position salary is $ 8 an hour, which is the lowest of all retail operators.

Because of this, Companys annual employees turnover was 65 % in 2001. Recently, Wal-Mart officials had realized that this percentage needed to be reduced otherwise it would negatively affect Companys normal functioning. A few years ago a so-called People Asset Review program was being launched. It was meant to increase workers efficiency through applying selective principles for employees promotion. According to this program, Companys top managers have to track down the most hard-working individuals, in order to give them career- making opportunities. Although Companys staff turnover has shrunk from 60 % to 44 %, it is still too high.

Wal-Mart is being continually sued by its former employees over the violations of Fair Labor Standards Act. There are also numerous reports of this Company employing illegal aliens. So far, Wal-Mart was able to avoid any investigations, as result of these allegations. Still, the probability that this will happen in the future is very high, as Companys officials seem to be very reluctant, when it comes to changing Wal-Marts business strategy Also Wal-Mart deploys various diversity programs, which are meant to appease watchdogs of political correctness. Just like in McDonalds, workers discontent over being underpaid is dealt with by applying team spirit at workplace. This, of course, cannot be effective, in the long run.

As practice shows, economical ways of encouragement cannot be replaced with psychological ones, without reducing companys operational effectiveness. At present time, Wal-Mart faces 40 lawsuits over its discriminatory practices towards women and visual minorities. Companys workers are not unionized, which allows managers to force them to work overtime without being paid. It appears that Wal-Marts top officials simply lacks an understanding of a simple fact that, only through giving workers more rights and increasing their salaries, Companys efficiency can be substantially increased Advertising Wal-Mart management understands the importance of effective advertising, when it comes to promoting companys line of products. Yet, companys advertising campaign cannot be considered as truly innovative. This is because it is not based on the principle of attracting peoples attention because of style, but because of content.

Wal-Mart prices are simply the lowest and this is the best kind of advertisement. Recommendations I would recommend that Wal-Mart continues with its present strategy, although it has to become much more aggressive. Company has to push its domestic competitors out of business by whatever the means it might take. International expansion can only come as next step, after Wal-Marts total dominance is accomplished in America. Still, it appears highly unlikely that Walt-Mart is going to be able to effectively end any competition within U. S.

any time soon. Therefore, the innovative management methods need to be applied. The evaluation and control are very important elements of every effective management style. Thats why Wal-Mart bosses have to make sure that the analysis of companys operational activity is being done on regular basis. Only this will guarantee that companys commercial efficiency will be maintained on appropriate level. Wal-Mart doesnt have any supporting programs implemented to enhance its market competitiveness at this time.

Yet, if Company survives competition in immediate future, its executives will have to consider its expansion strategy turning into strategy of strengthening its reputation. Reconsidering its marketing strategy will require a financial restructuring, on the part of Company. It goes without saying that there are going to be initial losses, at the beginning, if this approach is to be taken. Yet, the biggest loss for the Wal-Mart will be losing its reputation of reliable retailer. Wal-Mart needs to pursue its expansion strategy but it also has to be ready to reconsider such strategy, if new circumstances arise. Bibliography: Anal, Dan Wal-Mart's November Not So Jolly.

November 30, 2006. ABC News. December 13, 2006. web Bussiness Portfolios. 2004. Business Tree. December 13, 2006.

web Heller, Robert Better Business: Survival of the Fittest. (2004). Thinking Managers. Com. December 16, 2006. web Holland, Joshua Wal-Mart's 'China Price.

November 7, 2005. Alter Net. Org. web Good, Pa valli Wal-Mart's Organic Offensive. March 29, 2006. Bussiness Week Online.

December 13, 2006. web Mitchell, Raymond Strategy Formulation. (2000). Economy and People. December 13, 2006 http: // 64. 233. 167. 104 /search? q = cache: ihEEDTpDAm 4 J: web Milchen, Jeff and Mitchell, Stacy Wal-Mart's Drug Deal. October 27, 2006.

Tom Paine. Com. December 13, 2006. web Taking, Jonathan Wal-Mart's Sweetheart Deal.

February 16, 2005. Tom Paine. Com. December 13, 2006. web


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