Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from Term Paper:
The combined sales from Wal-Mart and Toys 'R Us account for a smaller percentage than these other distribution channels.
Another alternative may be to establish their own category killer store to replace Toys 'R Us. However, this is a risky move and is capital intensive. They would have to make certain that the market would be willing to accept this alternative. This alternative would require a heavy capital outlay and carries the greatest amount of risk. However, it may be a more cost effective alternative in the continuation of marketing research and product development. The costs and benefits of this alternative would have to be weighed against the risk.
In addition to expanding existing distribution channels other than Wal-Mart, toy manufacturers may wish to develop other distribution channels as well. For instance, they may wish to attempt to entice other retail establishments such as K-Mart, increase holdings in Target, Meijers or other similar mass merchandisers. This move is likely to receive a poor reception from Wal-Mart, as it will decrease their hold on the marketshare. However, it also represents better risk management as it distributes the losses over a greater number of players.
Of these alternatives, the best seems to be to increase current alternative distribution channels other than Wal-Mart, particularly with new products. This will entice customers to try out these new venues. Wal-Mart represents a major marketshare, but they are still small compared to other distribution channels. Diversity spreads the risk over a large area so that if a loss does occur, it is minimized in scope. It would cost little to establish other smaller distribution channels as compared to the cost of building and establishing their own retail establishment. New channels often cost more than increasing the use of established ones.
Many analysts assume that customers will automatically switch to Wal-Mart with the dissolution of Toys 'R Us. This would increase Wal-Mart's marketshare of the toy industry even further. However, there is also the possibility that customers will migrate to distribution channels other than Wal-Mart. This would mean greater competition and could result in price wars among distributors. This would theoretically increase demand for the products. This is good for the distributors, but bad for the retailer. Increased competition would mean the need to lower prices, which would have the aggregate effect of decreasing profit margins for distributors.
One must remember that we are talking about the same products, only the distribution channel would change. The manufacturer still gets the same wholesale price, the retailer is the one who takes the hit in this case. The customers are the ones that have the most to gain. They would benefit from lower prices and a wider array of purchase points. They would be more likely to pick up items other than toys. More distribution channels mean greater convenience and lower prices for the customer.
This would be just cure for Wal-Mart's price-busting strategy. Wal-Mart gained its position through the ability to under price the competition (Freeman, 2003). The toy market is only one of the most recent victims of the Wal-Mart phenomenon. Wal-Mart has already used similar moves to undercut the food industry, clothing industry, with many more on its slate for slaughter (Freeman, 2003).
In conclusion, from the standpoint of the toy manufacturer they have already seen what Wal-Mart has done to other industries (Salter, 2004). Instead of catering to the destructor and be forced to vacate to third world countries in order to maintain profitability, perhaps toy manufacturers should break stride and develop other markets. Toy manufacturers need to consider the overall picture and not risk 66% of their marketshare for the sake of their biggest distributor. This strategy is consistent with the old adage, "Don't put your eggs in one basket." Utilizing other distribution channels makes good risk management sense.
Brown, Eryn (2004, Sep. 12) "
Imagining Toyland Without One of Its Giants," New York Times, pg. 3, 5.
Freeman, R. (2003). Wal-Mart 'Eats' More U.S. Manufacturers. November 28, 2003. Executive Intelligence Review.
Pride, W. And Ferrell, O. (2003). Marketing. Twelfth Edition. Houghton Mifflin Publishers.
"Wal-Mart And The Toy Industry" (2006, October 18) Retrieved December 9, 2016, from http://www.paperdue.com/essay/wal-mart-and-the-toy-industry-72596
"Wal-Mart And The Toy Industry" 18 October 2006. Web.9 December. 2016. <http://www.paperdue.com/essay/wal-mart-and-the-toy-industry-72596>
"Wal-Mart And The Toy Industry", 18 October 2006, Accessed.9 December. 2016, http://www.paperdue.com/essay/wal-mart-and-the-toy-industry-72596
The Price-Sensitive Affluents, Wal-Mart has learned (Wal-Mart Annual Reports) is more interested in finding an exceptionally good deal and not necessarily concerned about the shopping experience. This is particularly true as one of the strongest factors influencing the execution of their strategy, the emerging global recession during this timeframe, takes hold. Again as with the Price Value Shopper and the paradoxical purchasing patterns of the Brand Aspirational segment show,
Wal Mart Over the last several years, Wal Mart has been a story that is focused on continuing successes and challenges. This is because the company was impacted by issues such as employee rights, costs and fierce competition. Yet, at the same time, they were able to experience continuing increases in their bottom line results. This is despite the fact that consumer spending has remained stagnant in the aftermath of the
Wal-Mart and Employee Rights Labor cost is always considered as the main issue, mostly in case of employees' unionization at Wal-Mart. This was noticed when Wal-Mart showed a remarkable earning at the rate of 44% per annum for its labor working on hourly basis. Another point which brought this issue ahead was when the sales clerk of Wal-Mart in 2001 earned wages below Federal Poverty Scale. According to an issue of
Wal-Mart Financial Analysis Wal-Mart Store Inc. is a multinational retailer corporation branded as Wal-Mart in 2008. Founded in 1962, Wal-Mart has now become one of the largest American corporations with chain of retail stores. Wal-Mart sells varieties of consumer goods such as consumer electronics, toys, automobiles, furniture, video games and several other consumers goods. Presently, Wal-Mart enjoys the patronages of 200 million customers per week making the company to record the
Toy Industry in Hong Kong Hong Kong Toy Industry The world toy industry in the world is growing tremendously and hence the need by many nations to invest in the sector. Among the nations, Hong Kong has been at the lime light, especially for being the leading economy in the industry. In conjunction with the Chinese mainland, the total accountability amount to 75% of the toys manufactured. The success of the operations
Further, under this segment are a number of financial products ranging from bill payments to wire transfers and money orders. On the other hand, the company's international segment has in its fold online retail as well as a number of discount and retail store formats. The company's Sam's Club segment has in place private-label items as well as other merchandise categorized as either soft goods or hard goods. Further,
Wal-Mart Key Issues/Problem Statement: How can Wal-Mart's low cost strategy remain competitive? Root Cause(s): Wal-Mart targets low-income consumers. When forced to raise the price of essentials like food, sales go down. Sales are also down at the end of the month when consumers are running low on their funds and waiting for their paychecks. Wal-Mart will continue to pursue a cost leadership strategy. Advantages/Disadvantages: Advantages include the fact that there are many price-sensitive consumers