Walmart's Pricing Strategy

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Joseph Guy

The Marketing Mix: Wal-Mart’s Price Marketing Strategy

Over the past twenty years one company has dominated the discount retailer market. It has been hailed as the most admired company in America twice in the past five years by Fortune magazine. As of 2006 the company employed 1.6 million people that worked in one of their 6200 facilities worldwide. Despite this company’s unmatched success, it has been demonized by many in American culture, often being depicted as a destroyer of small business and the symbol of corporate greed. The company that I am referring to is Wal-Mart. No matter if you are an advocate or adversary of Wal-Mart and their business model, one thing must be mutually understood: They have mastered an essential element of the marketing mix, price strategy.

It all started in May of 1950 with the opening of Sam Walton’s first store, Walton’s five and dime. Like any typical business man, Walton was always looking for better deals from his suppliers. Instead of pocketing the additional savings that he was receiving from his suppliers, He realized he could increase sales volume substantially by passing along that savings to his customers. And so the philosophy that has propelled Wal-Mart to the largest retailer in the world was born: Offer shoppers lower prices than they get anywhere else. While the price marketing strategy that Walton implemented does not seem incredibly innovative in today’s economy, at that time it was a backwards way of thinking. How could you sell products for less and make more money? By keeping the company’s purchasing and operating costs lower than their competitors, Walton was able to sell the same products at lower prices and still increase total sales volume at a greater rate than his competitors.

Even though Sam Walton opened his first store almost sixty years ago and has been dead for nearly seventeen years, the executives that are running the company today still adhere to Walton’s...
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