Wal-Mart Strategy

Topics: Customer service, Discount store, Department store Pages: 10 (3346 words) Published: January 24, 2006

As determined by the IE Matrix, Wal-Mart fits into the category of grow and build strategies. Thus, the aforementioned strategies would fit Wal-Mart very well. All three of the strategies that we decided on are grow and build types. The three strategies that Wal-Mart would benefit most from are: market penetration, market development, and product development.

1.Market Penetration

The market penetration strategy is when a company is seeking to increase the market share for present products or services in present markets through greater marketing efforts. This is also an appropriate strategy for Wal-Mart to implement because they can take advantage of the bankruptcy of K-Mart. Through the increase of Wal-Mart's marketing campaigns, they can attract and retain most of K-Mart's customers. Also, because K-Mart has been closing hundreds of stores, Wal-Mart has a distinct advantage of controlling markets where both Wal-Mart and K-Mart are located. Also, because of Wal-Mart's economies of scale against its rivals, they have the power to influence markets in their direction.

The company culture is also well suited for this type of strategy. The management of Wal-Mart has ingrained in the employees the core values needed to excel at increasing their market penetration. Again, their EDLP and Rollback campaigns can readily be diffused into markets where they do not have as much of a market share as they want. This will also have a positive impact on the company culture because of the increased opportunities available to current employees. As their market share increases, they would also probably begin to add to their product offerings in that area. This will, in turn, allow employees the ability to grow with the company and be promoted into higher positions.

The costs involved with market penetration are not nearly as great as with market development. Wal-Mart only needs to increase its marketing campaigns in the target areas. And again, with K-Mart's unfortunate exit in many of the same markets as Wal-Mart, they have an even better chance of success simply because they will be the only large discount retailer in the area. They may not even have to increase any costs in this type of situation simply because of the natural reaction of consumers needs. If they were going to K-Mart for products and K-Mart is closed, their natural reaction would be to simply go to Wal-Mart.

The length of time for this type of strategy implementation can be measured in days. This is because Wal-Mart already has a very large, established marketing campaign. All that they would need to do is realign or increase their marketing in the target area. This is a very simple process of contacting the local television stations and purchasing advertising space. It can also be accomplished through circular ads and the newspaper. The running length of time for this strategy can be measured in weeks, as Wal-Mart would probably change their campaigns periodically.

This is a good strategy for Wal-Mart because of the relative ease of success that Wal-Mart can garner simply from advertising in areas where K-Mart stores have closed. This is also a good strategy because it will have a positive impact on Wal-Mart's bottom line without a very large increase in costs. The only bad aspect of this campaign is that other competitors will probably be doing the same. Every single business in that area will have to respond to Wal-Mart's drive to increase its customer base.

The advantages of this strategy are almost immediate results, increased market share, increased sales, and increased consumer recognition. Disadvantages of this strategy are possible failure and increase competition.

2.Market Development

The market development strategy is simply the introduction of present products or services into new geographic areas. This is a very good strategy for Wal-Mart because it is in line with its core values. Wal-Mart has many areas of...
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