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Walmart Current Market

Essay by   •  September 2, 2013  •  Case Study  •  1,668 Words (7 Pages)  •  1,269 Views

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Introduction.

Today it is about convenience and the best value for your dollar. People want to find bargains and do as much of their shopping at one place. Few retail chains offer these kinds of services. Such stores as Fred Meyer, Kroger, and Wal-Mart allow consumers to grocery shop, shop for electronics, clothes, house ware items, and other things. These stores offer competitive to low prices, brand names, and meet the daily demand of most consumers. Today Wal-Mart, Kroger, and Fred Meyers are strong retail businesses that allow one stop shopping for consumers.

Market Structure.

Let's take a look at Wal-Mart since they have stores across the United States. Wal-Mart has been around for over forty years. Sam Walton opened his first discount store in 1962. Since he opened his first store forty years ago he has been making money by offering low prices on name brands and selling them any where from 5-10% cheaper than other retail stores (Wal-Mart, 2012). Wal-Mart would be considered an oligopoly market structure. An oligopoly is a market structure in which the sellers are few and that the actions of any of the one firms in the structure will materially affect price and have an affect on competitors (Colander, 2008). Wal-Mart could also be considered a monopolistic competitive structure. A monopolistic competitive structure has many sellers, offer different products, show different dimensions of competition (Colander, 2008). Wal-Mart thrives in either structure.

Part of Wal-Mart's success comes from the different variety of products they sell and how they are advertised. Wal-Mart advertises in many forms. They use television, radio, the paper, mailers, and coupons. Advertising draws the customers and shows the competitors what they are looking at as far as pricing, brands, and the availability of those products. The amount of money Wal-Mart spends on advertising shows that they have confidence in their stores and their products and that they can out beat the competitors. The pricing, advertising, and convenience of Wal-Mart makes it easy for customers to shop and save money.

Effect of New Companies Entering the Market.

A new company entering into this market needs to be careful. Wal-Mart has made a name for its self and has been doing business for over forty years. Not only do they offer convenience and low prices they are World wide. Wal-Mart has over 7,800 stores worldwide and employs over 2 million people (Wal-Mart, 2012). They service over 100 million customers a year. Wal-Mart is very dominate in their market. As Wal-Mart grows so do their services. From grocery, to eye glass and contacts, pictures, and even their own bank. There is not much a new chain could offer in this market that would affect Wal-Mart.

Prices.

Wal-Mart offers and advertises low prices. As a consumer you can see they are consistently offering the roll back pricing as well as sales and everyday low pricing. By offering these low prices it drives business and shows that Wal-Mart is competitive. By offering low prices and one stop shopping they are creating convenience for their customers and this keeps them coming back. Even with Wal-Mart being able to offer low prices they still are in a perfect competitive market. They still have to maintain the market share. If prices are to low they lose money and if they are too high they lose business. If they are losing sales they will lose market shares as well because there are still competitors in the market. To low of prices they lose profit. The right pricing for Wal-Mart is key, so they use a market-bases pricing. Wal-Mart's goal is to keep consumers coming in, make a profit, while still offering low and competitive prices.

Technology.

Wal-Mart uses all sorts of different forms of technology in their stores. Such technological items they use are self check-out stations and merchandise scanning systems. Self check-out stations allow customers to skip long lines and check-out themselves. Everything is done through a stand alone machine that scans items. A customer inserts money or a card in the machine to pay, then bags their items and they are on their way. A merchandise scanning system lets employees see when stock on the shelves is getting low. This allows employees to restock items so they are always on the shelves for customers. If items are missing then sales are being lost and customers will go elsewhere (Solman, 2004). Here are two ways that show why technology is important for Wal-Mart. It keeps customers happy with selection and the convenience of short or no lines.

Productivity.

Wal-Mart is always trying to increase their productivity, but yet their productivity is customer based. They want to be able to save their customers money and show great customer service at the same time. Due to the amount of employees Wal-Mart

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