Marketing
A comparison between two major department stores, Nordstrom and Wal*Mart can illustrate the concepts of pricing and distribution. The research shows that both Nordstrom and Wal*Mart use pricing and distribution strategically, but with different means, methods, and end results.
Pricing and distribution are integral parts of an overall marketing strategy. Pricing refers to the cost of the item, and is related to product positioning, perceived value, and the profitability of the company. Distribution refers to the methods by which the company delivers its goods and services to the consumer, and signals how consumers first come into contact with the items for sale. A comparison between Wal*Mart and Nordstrom helps to illustrate the interrelated concepts of pricing and distribution. Nordstrom and Wal*Mart are both major department stores that depend on strategic pricing and distribution strategies. However, their pricing strategies are completely different. Nordstrom lures customers with perceived quality and status, whereas Wal*Mart woos customers with the promise of low cost goods.
Nordstrom offers a wide selection of brand name products, including its own house label. Wal*Mart does the same, and yet the two companies would never be confused with one another. While many consumers will shop at both Wal*Mart and Nordstrom, it is unlikely that one consumer will purchase women's business attire at both shops. The target market for women's clothing is different for each department store, with Nordstrom offering a smattering of luxury goods that Wal*Mart declines to carry due to its...
Therefore, both Nordstrom and Wal*Mart consciously use pricing as part of their overall marketing strategies. Wal*Mart uses low prices to lure consumers who care more about cutting costs than about status or quality, whereas Nordstrom discounts less to offer the consumer increased status and quality.
Price is related to product positioning, and can affect the quality of the product. After all, if a company cuts the price of an item like a woman's business suit, in order to make a profit it would also cut costs somewhere in the production cycle. Lower prices are not necessarily going to woo status-conscious consumers. In fact, a dependence on low prices as a means to get customers into the door can backfire. Higher prices sometimes signal quality, and many brands use high pricing as a marketing strategy. A target market that is budget conscious, but not quality conscious, might be lured by the attractiveness of lower priced items. Yet a target market that has a greater amount of disposable income will be suspicious of goods that are too cheap.
In some cases, discounting can be downright dangerous. As Burnsed (2009) points out, luxury brands like Tiffany understand that publicizing sales may be bad for business. Tiffany's executives are "well aware of the need to woo today's frugal buyers while trying to maintain tomorrow's prestige," (Burnsed 2009). Nordstrom might not be Tiffany's but the company is also concerned with tarnishing its brand by offering consumers prices that are too low.
Both Wal*Mart and Nordstrom are…
