1. Why do customers patronize Wal-Mart China stores?
A. Wal-Mart realized through third party studies and internal research that the Chinese customer were significantly more cost-sensitive than those in other countries and that there existed a strong, established culture of frequently shopping around to find the absolute lowest prices. Through these studies, Wal-Mart also realized that customer satisfaction level greatly influenced customer loyalty in China. The greatest determinant of this satisfaction was made up of perceived value. The perceived value is composed of three sub factors: (1) Product price, (2) Relative price and (3) Promotion. The other factors for customer satisfaction in descending order of its importance are Image, Merchandize, Shopping environment, Service, Check-out process and Store policy. Wal-Mart thrived for offering quality merchandise at the lowest price and with best customer service possible. Wal-Mart also had a reputed image as a foreign supermarket chain in China. Due to all these favorable factors customers patronized Wal-Mart China stores. 2. What are the distinguishing features of Wal-Mart China’s distribution system? How does it achieve relatively high availability with similar levels of stock (week’s cover) to other companies? A. The Wal-Mart distribution system in China was quite different from distribution system in United States. In United States 90% of the total store sales passed through Distribution Centers (DC) while only 40% of Wal-Mart China’s sales were supplied via its DCs. Fresh products such as bread, fish, vegetables and fruits, some electronic goods and high value items were supplied directly to Supercenters (SC) by suppliers. Another feature of Wal-Mart China’s distribution system was that the incoming shipments from suppliers arrived in diverse range of trucking and loading configuration while Wal-Mart outsourced standardized trucking fleet for all of its DC-DC and DC-SC shipments. The shipments from...
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