Wal-Mart Tries on Cheap Chic Analysis
Name: Anton Kornetskiy Student ID: 9475575 Date: 01.10.2012 Case Title: Wal-Mart Tries on Cheap Chic Section: AA
Overview : Wal-Mart, the #1 retailer in the world, adopts a cost leadership strategy in the broad target market due to their national and international presence and especially thanks to properly developed logistic system (best in the world), which gives them great economy of scope and scale. However this approach doesn`t look like working for their new “fast fashion” market. Overall they failed to properly communicate the real value of their fashion brand to their consumers ( and they targeted too broad segment of customers). Problem Statement : Wal-Mart did not know how to enter the fashion market due its core expertise in low-cost retailing. If they want to proceed with fashion segment – they should change their strategy to integrated cost leadership/differentiation.
Analysis in brief: Taking in consideration PERT technic :Demographic segment- in fashion segment we have younger Age Structure. This new generation is easier to be influenced with trends, mainly women between the ages of 20-40. In Wal-Mart case we are talking about lower class/lower income individuals, but who still have a strong interest in fashion and who want to look good. We can also mention Social –Cultural aspect of our society, our culture “dictate” how and what you should wear (TV shows, commercial). In Porter`s forces we`ll mention: High Power of Buyers - The buyers of Wal-Mart’s cheap chick has low switching costs and it is easy for them to go see elsewhere to buy clothing. Consumers represent Wal-Mart’s sole source of income, which means that if dissatisfied consumers will buy elsewhere Wal-Mart loose profits. Low Power of Suppliers - There are many producers of textiles and lower quality fabrics, and plenty of sewing factories, there is no incentive for
Overview : Wal-Mart, the #1 retailer in the world, adopts a cost leadership strategy in the broad target market due to their national and international presence and especially thanks to properly developed logistic system (best in the world), which gives them great economy of scope and scale. However this approach doesn`t look like working for their new “fast fashion” market. Overall they failed to properly communicate the real value of their fashion brand to their consumers ( and they targeted too broad segment of customers). Problem Statement : Wal-Mart did not know how to enter the fashion market due its core expertise in low-cost retailing. If they want to proceed with fashion segment – they should change their strategy to integrated cost leadership/differentiation.
Analysis in brief: Taking in consideration PERT technic :Demographic segment- in fashion segment we have younger Age Structure. This new generation is easier to be influenced with trends, mainly women between the ages of 20-40. In Wal-Mart case we are talking about lower class/lower income individuals, but who still have a strong interest in fashion and who want to look good. We can also mention Social –Cultural aspect of our society, our culture “dictate” how and what you should wear (TV shows, commercial). In Porter`s forces we`ll mention: High Power of Buyers - The buyers of Wal-Mart’s cheap chick has low switching costs and it is easy for them to go see elsewhere to buy clothing. Consumers represent Wal-Mart’s sole source of income, which means that if dissatisfied consumers will buy elsewhere Wal-Mart loose profits. Low Power of Suppliers - There are many producers of textiles and lower quality fabrics, and plenty of sewing factories, there is no incentive for