- Present a clear overview of your chosen brand/organisation and identify key market segments
- Identify and prioritise critical success factors (CSF’s), plus targeted market segments, on the basis of market evidence.
- Demonstrate an understanding of the individual components of your brand’s existing marketing mix (7P’s). In light of the key CSF’s and the target markets you have identified offer clear and reasoned justification on future decisionson each of the elements of the marketing mix (7P’s).
- Present your work clearly and creatively in the form of a formal business report, referenced using UWE Harvard as appropriate. You are strongly advised to use sub-headings in sections 3 and 4.
Cost Control and Neglected Niche Market
In the modern day business, there are various aspects that need to be covered by an organisation. Every company has some or the other critical success factor and it helps them in their growth. Wal-Mart is one of the biggest retail firms in the world and they have many critical success factors in their list (Chan, 2011). This report identifies the two major critical success factors of Wal-Mart along with their marketing mix. It also recommends the changes that are required in their marketing mix based on their critical success factor.
Among all the critical success factors the two CSFs which need to be prioritised has been explained below.
- Cost control:Wal-Mart is known for its control over the cost. This cost control is done in the several aspects of the business. They have launched several types of models for achieving success in the market. Cost control is practiced in the Wal-Mart checking the fact that there should not be any compromise with the product and service quality. Every Day Low Price (EDLP) is a key communication propagated by the Wal-Mart all through the year. Further they offer or bring schemes like roll back and special buy where the emphasis is put on the bulk buying and discounts. Their cost averages around 20% less than their competitors (Pope and Pope, 2015). Along with this Austerity measures is used by the top management for keeping their cost on the lower side. They pass on the benefits to the end users. In order to make their internal cost control, they have made no specific investments in the regions where there is no direct return.
- Targeting a neglected niche: Another important critical success factors that has given Wal-Mart a competitive advantage in the market is that they have targeted the niche market which has been neglected by other players. They have catered to the requirements of the smaller market segment that has been neglected by other players like the people living in the smaller towns or shoppers in these towns. Along with this the cited firm has grabbed the advantage that is created by first movers i.e. they become first to enter into the smaller towns and then they try to move towards the big cities (Merriman, et. al. 2012). Apart from this, they have also concentrated towards saturated small markets which act as a barrier to entry and generate strong loyalty by the existing consumers. At the initial stages of firm’s growth no direct competition is faced by the firm. This helps in catering larger customer base. They have also reduced their land acquisition cost and real estate prices.
Marketing mix is a very essential tool in the marketing and it gives idea about the company wants to present themselves in their marketing. Marketing mix for Wal-Mart is as follows:
- Product: Wal-Mart is a multi-brand retail chain having different types of products being available in their portfolio (Hicks, Keil and Spector, 2012). It offers products such as books and music, movies, furniture and patio, clothing, household items, video games and baby items, pet’s products, pharmacy products, fitness and outdoor products, health and beauty items, gifts, personalised shopping, gifts, Auto & tires etc. They also have the departments that are seasonal where they sell products like Halloween party costumes. There are also departments related to different products such as computers, tablets, tech items, bedding, home décor, heating and cooling equipment and garbage equipment etc.
- Prices: Wal-Mart has become market leader and one of the reasons for it has been its pricing strategy. It sells its products at lower cost than competitors and most of its products have costs 15-20% lesser than that of their competitors. They enjoy the benefits related to economies of scale. They are procuring their products in large quantities from all across the globe which helps them in lowering their prices. Their pricing strategy depends on the consumer’s behaviour in that nation. Based on the demand and time, they have been coining their pricing strategies and hence some special terms like “Everyday low prices” and “Always low prices” is used by the firm. This signifies that every product is priced differently every hour (Olney, 2015). Every Day Low Prices has been their primary strategy. Their promotional line such as “Save money. Live better” suggests that company gives too much importance to pricing.
- Place: Wal-Mart is having large numbers of stores all across the globe i.e. more than 11500 retail units working under 63 banners and operating in 28 nations. Alone in US they have 4600 retail units. Along with this they have 650 Sam’s club as well as more than 6200 Wal-Mart International outlets. Their strategy for distribution includes direct delivery to stores by the vendors that are retail store suppliers. Products are delivered to their stores in huge amount. There are approx. 150 distribution centres where they use cross docking method. Where the company sees that the goods are centrally ordered and then sent to individual stores, they take use of hub & spoke method. Alone in transportation, they have a fleet of 6,100 tractors, 61000 trailers and more than 7800 drivers. They aim towards reducing the cost of supply chain and transportation as well as moving towards greener transportation (Zhu, Cordeiro and Sarkis, 2012). The products are stored in both urban and rural areas. The type of stores includes Wal-Mart super centres, Wal-Mart express stores, Wal-Mart discount stores, Wal-Mart neighbourhood market.
- Promotions: Wal-Mart does promotions through a plethora of sales promotions like product bundling and its competitive strategies related to pricing. They have adopted a brand promotion strategy that is highly aggressive. Their e-commerce unit attracts the consumers by providing them with gifts. Their pricing strategy acts as a biggest contributor in attracting their customers. The website also uses tag lines such as “Grab it before it’s done” helps in attracting potential consumers to buy the products without thinking heavily before the offer actually expires (Jiang, Jerath and Srinivasan, 2011). Among all the strategies EDLP has been most successful in attracting its customers.
- People: They have kept huge focus on their workforce so as to give best of services to their customers. They have a highly trained and highly motivated staffs that are able to handle all its strategies. This company has more than 2 million workers all across the globe and approx. 1.5 million alone in USA. Wal-Mart has reached to around 200 million customers in all over the world (Chekwa, Martin and Wells, 2014).
- Process: They believe in keeping things simple and hence making processes efficient. Customers can shop easily by the help of facilities such as arranged product categorisation and placement, trolleys available, various payment modes acceptable etc. Along with this other backend services such as warehousing, procurement and distribution are itself a benchmark for the other retail firms to follow (CLIFFORD, 2012).
- Physical Evidence: This marketing Mix can be seen by the fact that they have more than 11000 units in the world. Each store has multiple product category and efficient product placement etc. They also have different types of stores that add value to the business (Krugman, 2015).
There are changes required in the marketing mix of the Wal-Mart. These recommendations are based on the CSF of the company.
Based on cost control
- Product: They need to add regional and culture related items that also includes selling antique pieces. Their product range should also include wine and other beverage products as people are in search of these products at lower prices.
- Price: In order to use cost control as strategy, they need to adopt more technologies such as supply chain management system so as to reduce the overall prices of the product and to make an effective cost control.
- Promotions: They need to become aggressive on their digital media campaigns especially the ones that is done on social media. Social media marketing will be helpful for reducing the budget of overall marketing operations.
- Place: They are excellent in Brick and Mortar kind of business but they need to concentrate more on the online business (Bhatnagar and Syam, 2014). They need to sell most of their products using online stores this will help in controlling the cost.
Based on concentrating on neglected niche market
- People: They need to concentrate more on hiring people from the local areas that would help in providing better services in the niche market. Cultural similarity between the staffs and consumers has a very healthy effect on the customer relationship management.
- Process: More local culture based operations needs to be done. More concentration should be kept on doing task according to behaviour of the local consumers in the region (Moghadam, Ghomi and Karimi, 2014).
- Physical Evidence: They need to add more suppliers in their group so as to provide the quality products even in the towns that are having less competition. In order to control the market they need to provide products as they promised.
From the above based report, it can be concluded that Wal-Mart is one of the biggest retail firms in the world. Cost control and targeting a neglected niche market has been their priority. They have been selling range of products at prices lower than competitors by around 15-20%. There have more than 11000 stores and also sells products through online channels. They have wonderful workforce and the process is also smoother and simpler. They need to bring products that are antique as well as wines and beverages can be beneficial. Doing marketing and selling by online channels could be effective in controlling the cost. For having control on neglected niche market they need to hire more people from the local areas as well as they should make process local culture oriented.
Bhatnagar, A. and Syam, S.S., 2014. Allocating a hybrid retailer's assortment across retail stores: Bricks-and-mortar vs online. Journal of Business Research, 67(6), pp.1293-1302.
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Chekwa, E., Martin, J. and Wells, K., 2014. Riding on the waves of sustained competitive advantage: consumers’ perspectives on Walmart Corporation. International Journal of the Academic Business World, 8(2), pp.13-25.
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Hicks, M.J., Keil, S.R. and Spector, L.C., 2012. Mom-and-pops or big box stores: some evidence of Walmart impact on retail trade. Economic Development Quarterly, 26(4), pp.311-320.
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Pope, D.G. and Pope, J.C., 2015. When Walmart comes to town: Always low housing prices? Always?. Journal of Urban Economics, 87, pp.1-13.
Zhu, Q., Cordeiro, J. and Sarkis, J., 2012. International and domestic pressures and responses of Chinese firms to greening. Ecological Economics, 83, pp.144-153.
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