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Wal-Mart Marketing Mix
Wal-Mart Stores (|NYSE: WMT) closed it latest fiscal year with $103.8B in revenues, growing 4% over the previous fiscal year (WalMart Investor Relations, 2012), a remarkable accomplishment given the recessionary climate of the U.S. And other westernized nations. Wal-Mart's ability to withstand economically challenging times is directly linked to how well they synchronize their product, pricing, promotion and distribution strategies using an extensive information systems architecture (Wang, 2006). Wal-Mart is unique as discount retailer as their corporate culture is very focused on analytics and real-time use of data from its more than 3,700 retail locations globally (Ritson, 2005).
Product Considerations and Strategies at Wal-Mart
The cornerstone of Wal-Mart's strength in product strategies globally is in their ability to manage supplier relationships to pricing and margin targets while at the same time requiring the highest quality of any mass merchandiser...
Holding suppliers accountable for exceptionally high levels of quality and low prices is what makes the Low Price Everyday (LPED) value proposition so effective in appealing to a wide spectrum of customers. The LPED value proposition is made possible by the tight integration of supplier management and continual focus on pricing, promotion and distribution (or place) strategies all being so tightly integrated that costs are kept to an absolute minimum. Wal-mart uses analytics as the glue that unifies the entire marketing mix around the rapid acquisition and launch of products into markets of the most value to them depending on a given items' appeal (Wang, 2006). Wal-Mart uses analytics to evaluate how profitable each supplier is on a monthly basis, often drastically reducing their marketing mix to open new opportunities for those suppliers' products that can deliver greater gross margins (Cocheo, 2003).
Pricing Strategies
The aspect of the…
The aspect of the marketing mix that Wal-Mart is best known for, the LPED value proposition is actually made possible by every other area of their value chain supporting a lean sourcing and distribution network (Ritson, 2005). Pricing strategies are also dictated through the use of analytics, where Wal-mart calculates the demand curve for all best-selling products every night based on uploaded salsa data via satellite links at their stores (Cocheo, 2003) (WalMart Investor Relations, 2012). The satellite dishes on their stores uplink sales data daily to Bentonville, Arkansas daily for analysis over night. By 10AM Eastern Time every day, pricing decisions on literally thousands of products have been defined and implemented regionally, nationally or globally. This extreme price agility that Wal-mart has is one reason why Target has failed to displace them in clothing and high-end consumer electronics (Lee, 2006). Increasingly with the use analytics, Wal-Mart is also able to track the product introduction and product strategy progress across distribution centers and also evaluate quickly which promotional programs are best and worst performing (WalMart Investor Relations, 2012). Pricing strategies at Wal-Mart may be seen as predatory yet the company has a keen sense through the use of analytics what the optimal price is for each of their best-selling products.
Promotion Strategies
The primary focus of promotional strategies at Wal-Mart is to connect with and reinforce the customer loyalty of their most active and profitable customers. Wal-Mart is a heavily analytics-driven company and this includes their intense focus on customer research as well. Wal-Mart has progressed beyond segmenting their markets using demographics and today segment using psychographics, which is the study of how people assign themselves to groups who share their values (Frazier, 2006). A recent study released by
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