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Impact of WalMart’s Marketing Strategies on the Market Shares of the USA as a Leading Retailer

Abstract

Value addition in an organization and its operations, values and organizational qualities are strongly enhanced by Marketing which creates a strong value addition by aiding the company in adopting the latest marketing tools. Therefore, marketing is a vital department in any productive company just as other departments such as accounting, finance, manufacturing etc. are. One of the most resourceful and efficient tools that an organization can use to gain a larger market share is its marketing strategy.  A company can significantly increase its profit by setting out a working marketing strategy which mainly focuses on customer satisfaction and customer awareness by selling, expanding or creating a new market line, branding, building awareness of new products and services and customer appreciation campaign. By focusing on the marketing strategies, the company will have created an elaborate distribution plan that enhances customer relations thus creating a competitive advantage over their competitors and an opportunity to investigate the competitor’s capabilities by assessing their reactions to their marketing strategy by differentiating itself.

The main goals of this research are to study and assess the impact of Wal-Mart’s marketing strategies on the market shares of the USA as a leading retailer and to investigate the main role marketing strategies play in the enhancement and growth of Wal-Mart and how their strategies have aided them in staying different from its competitors.

Impact of WalMart’s Marketing Strategies on the Market Shares of the USA as a Leading Retailer

Table of Contents

Background of the study

Research Objectives

Research Questions

Scope of the Research

Research Approach

WalMart’s Marketing Strategies

  • Low Priced Goods
  • High Quality Goods at reduced prices from suppliers
  • Social media marketing
  • Appeal to majority of the community
  • Location/Ease of access

Research Strategy and Research Approach

  • Primary data collection
  • Secondary data collection

Limitations of the Research

Data Collection Method and Analysis

  • Data collection method
    • Primary data collection
    • Secondary data collection

Data analysis method

  • Porter Five Forces
  • Population and Sampling

Data Collection Analysis and Interpretation

  • Results from survey
  • Porter Five Forces Model analysis findings
    • Bargaining Power of Suppliers
    • Bargaining Power of Buyers/Consumers
    • Threat of New Entrants
    • Price Competitive Strategies

Relationship marketing strategies and market share

Conclusion

Recommendations

References

Introduction

Background of the study

Wal-Mart is currently the largest retail store chain in the world and its profit margins have been increasing yearly thus enabling it to remain the most profitable retail store in the United States. Wal-Mart was founded in the late 1940s by Walton and has been dealing with all major products which are categorized into fourteen general categories, that is music and books, apparel and jewelry, electronics, furniture and home décor, outdoor living, groceries, health and beauty, movie, photo, medicines, baby care, sports and fitness, toys and video games. The retail store has received reputable fame due to its marketing strategies and profit gains over the years making it the most researched on retail store worldwide.

Research Objectives

The research objectives of this report are as follows:

  • To investigate and come up with a detailed analysis of Wal-Mart’s marketing strategies and process
  • To analyze the cultural, social and economic differences in Wal-Mart’s marketing management against their competitors
  • To assess the main roles of marketing in ensuring Wal-Mart’s success in terms of increasing the company’s growth share
  • To assess the major roles of the marketing strategies and their impacts on Wal-Mart’s success
Research Questions

Seven research questions were developed to ensure that the goal of the thesis statement by directing the research into the right direction and to aid in the formulation of valuable outcomes.

  • What, if any, international marketing strategies has Wal-Mart applied?
  • How have modern marketing techniques changed the running of Wal-Mart’s business operations?
  • What modern marketing technologies and trends is Wal-Mart currently using?
  • Is marketing a wasteful activity at Wal-Mart?
  • What roles have marketing strategies played in the growth of Wal-Mart’s market share?
  • How can or have these marketing strategies rewarded Wal-Mart in terms of differentiation and competitive advantage?
  • How can marketing strategies be used to enhance the financial performance of Wal-Mart?
Scope of the Research

This research is beneficial in the analysis of marketing strategies that Wal-Mart uses to remain atop the retail market as it demonstrated the benefits of marketing strategies in aiding companies reach their objectives. In today’s market, customers are increasingly demanding for satisfaction in terms of what they want, product quality and service quality hence raising the level of completion among retailer. Due to this, the market environment is constantly changing thus calling for a change and improvement of marketing strategies to ensure that the company’s consumers remain loyal to the brand.

Literature Review

Marketing strongly enhances value addition in an organization and its operations, values and organizational qualities thus creating a strong value addition by aiding the company in adopting the latest marketing tools. According to Webser (1991), a company that establishes a well laid out marketing strategy that satisfied the wants and needs of consumers will have an increase in loyalty thus sales which will lead to an increased market share.

Wal-Mart’s managers and directors have over the years, enhanced their focus on several strategies to maintain a low cost strategy which is based on diverse sources. Wal-Mart’s strategy to avoid basing its supplies on one large supplier but rather numerous small and medium scale ensures that it receives quality products are affordable prices by eliminating price hikes due to a monotonous supplier. Strategic marketing management is beneficial and vital for yielding an organization’s internal benefits by securing customer attraction and loyalty to the business while still ensuring that the organization’s employees remain motivated and enthusiastic working for the company as Wal-Mart demonstrated. Wal-Mart’s employees demonstrate a feeling of pride in their work since they work with big and identifiable brand names. The global economy over the years transformed from product orientation to service orientation thus leading the customers to request for high quality services as Kotler and Armstrong (2010) demonstrate in their research. Wal-Mart adopted marketing strategies to satisfy their customer’s wants by establishing and investing in brand, and marketing management.  By so doing the company has ensured that their customers remain loyal and that they promote the growth of the company in terms of annual sales profit and a growth of market shares in the USA and in other counties where these stores are located.

Findings from other Researchers

According to research and journal articles the results of porter five forces model in a similar setting provided the following results.

Bargaining Power of SuppliersWal-Mart is not facing any problem from suppliers as their bargaining power is reduced due to competition and mass production of the same product by different companies who are willing to offer the goods and services at reduced prices.

Bargaining Power of Buyers/Consumers -The bargaining power of buyers has over the years increased due to increase in completion and customer demands for high quality and low priced goods. Wal-Mart has not put up a working strategy that can counter this yet hence they face loss of customers whose needs and wants are not satisfied. Consumers are constantly looking for a brand to identify with thus Wal-Mart should take up the opportunity to promote brand loyalty before new entrants beat them to it.

Threat of New Entrants In the recent years, the number of big players that are venturing into the retail store chain industry has dramatically increased resulting into an aggressive pricing competition between the stores. Due to competition the quality of goods and services has increased while the cost for the products and services has significantly dropped thus the new entrants can easily take price aware consumers from Wal-Mart.  Wal-Mart has also neglected the minority ethnic groups in the country thus creating a limitation that the new entrants can use to bring the store down.

Price Competitive StrategiesWal-Mart’s strategy in the provision of low priced goods has continued to win over more customers since they have the lowest prices on essential goods such as groceries. This strategy is a plus on Wal-Mart’s side as most stores provide these essential goods at a considerably higher price.

This research is tailored to assess the impacts of marketing strategy on the market shares of Wal-Mart in the USA and thus conclude with the relationship between marketing strategy and market share with the aid of secondary data collected over time by other researchers.

Methodology

This research aims at assessing the impact of marketing strategies on the market share of the companies, with Wal-Mart as the example of the case study. Marketing is considered as one of the main sectors that promote a companies’ success thus a company can significantly increase its profit by setting out a working marketing strategy which mainly focuses on customer satisfaction and customer awareness by selling, expanding or creating a new market line, branding, building awareness of new products and services and customer appreciation campaign. By focusing on the marketing strategies, the company will have created an elaborate distribution plan that enhances customer relations thus creating a competitive advantage over their competitors and an opportunity to investigate the competitor’s capabilities by assessing their reactions to their marketing strategy by differentiating itself. By so doing, the company will experience an increase in sales and thus a rise in its market shares. This research will take a systematic approach and will concentrate on the research approach; strategy and design; data collection and analysis techniques; as well as ethical considerations under this chapter.

Research Approach

In an attempt to answer the above research questions, descriptive and exploratory research approaches will be considered vital in the analysis of Wal-Mart’s marketing strategies and the impacts they have on their business. Using the descriptive research approach is significant in that it gives a clear description or visualization of the overall ‘scenario of phenomenon’ as described by Johnson and Christensen (2011). The approach depicts the nature of variable relationship that tend to occur in the situation of selection of samples from population, description of the features of the samples, and the formulation of conclusions for the population based on sample analysis. The descriptive approach is beneficial in terms of assessing and learning the behaviors and habits of Wal-Mart customer’s demographics, opinion, and attitudes by aiding in the breakup of tasks into identifiable sets that can be easily assessed and analyzed.

On the other hand, the exploratory research approach aids in the exploration of new avenues of research area. This approach tends to be more dynamic in nature than the descriptive approach since it uses dynamic qualitative research tools thus increasing the effectiveness of the research. These tools are beneficial in the collection of primary data and are cost effective thus a researcher is able to formulate a problem statement and identify new thoughts and ideas regarding his research.

Wal-Mart’s Marketing Strategies

Low Priced Goods

Wal-Mart gets its fame in terms of sales by using a marketing strategy that entails use of discounted goods to attract consumers into their stores where they see better goods that are valued at a relatively higher price.

  • High Quality Goods at Reduced Prices from Suppliers

They use a strategy whereby they provide low prices for their goods at the expense of their workers and suppliers. The suppliers get pushed to the limit to offer their products at low prices for Wal-Mart to sell their products. When the suppliers fail in providing low prices or better quality, Wal-Mart drops them and chooses their competitors who offer better prices for their products.  A good example is Rubbermaid’s case. They were forced to provide low prices for their products so that Wal-Mart could comply to sell their products that led to the fall of the company.  Wal-Mart uses a strategy where they present extremely low priced goods to their customers luring them to a particular section. When the buyer enters in the section, he psychologically believes that every item is low priced than all the other retail stores and ends up buying goods at a higher price.

Campaigns and Promotions

Wal-Mart is known to use campaigns mostly through offering discounts to promote the sale of products that are considered as dead stock in order to make room for new and modern products.

  • Social Media Marketing

Wal-Mart uses the Internet as a business opportunity to expand its market. Wal-Mart uses advertisements, blogs and video sharing sites to captivate the online user to shop at their stores thus increasing their customer database.

  • Appeal to Majority of the Community

Wal-Mart offers a wide range of products of all types ranging from toys to groceries thus targeting a larger audience. This brings about convenience in that one does not have to pass through numerous stores to get everything that he/she wants but can go into one store and get everything under one roof.

  • Location/Ease of Access

One of the most effective marketing strategies Wal-Mart uses is ease of access; they ensure this by having numerous stores worldwide particularly in the USA. This offers convenience in that even if a person moves from one geographical location to another he can still access the same store he is used to. Another strategy is the ease of customer service access, Wal-Mart stores customer support is always online twenty four hours a day thus comforting and tending to dissatisfied customers thus maintaining them.

Research Strategy and Research Approach

The research will be conducted mainly using secondary data but primary data will also be collected and analyzed to aid in the final findings.

  • Primary Data Collection

This entails firsthand information gathered from primary information sources including interviews, questionnaires, pilot studies, online surveys and observation.

  • Secondary Data Collection

The secondary data collection approach uses information from other researchers and contains information that is already generated. This is second hand information; it will mainly be used due to its cost effectiveness, time efficiency and easy availability of research information thus serving up as evidence for answering the derived research questions. In this case, the secondary data collected will mainly be used in comparing the effectiveness of Wal-Mart’s marketing strategies and to provide a comparative analysis of Wal-Mart. Wal-Mart’s corporate websites and annual reports of their major competitors Tesco will be assessed.

Limitations of the Research

The most disadvantageous limitation that the research will face is the lack of resources, which consequently developed into a limitation of data collection, interpretation, processing, and analysis of the collected data. Most of the information available is not freely available due to bias of the researchers and due to the fact that companies never provide all required data in order to maintain confidentiality and privacy.

Data Collection Method and Analysis

Data Collection Method

Primary Data Collection

Survey

A web survey is to be conducted on Wal-Mart’s customers using the online shopping site. A paid advertisement is to be placed on the site at every customers check out cart. Another survey will be issued to shoppers in Wal-Mart stores thus ensuring that the sampling scope is enhanced and errors are minimized. The questionnaires will contain multiple questions including:

  • Sex of the participant
  • Age Bracket of the participant
  • Ethnicity of the participant
  • Why do you Shop at Wal-Mart?
  • Effectiveness of Wal-Mart’s marketing strategy
  • Effectiveness of Wal-Mart’s employees
  • Effectiveness of Wal-Mart’s campaigns and promotions
  • Are there other stores that are better than Wal-Mart?
  • Kindly give a brief justification of the answer above.
Interviews

Oral interviews will be conducted on Wal-Mart employees who comprehend the marketing strategies that Wal-Mart uses and continues to use in order to maintain its position as the leading retail store in the United States.

Observation

The researcher will be involved in an observation exercise to gather information of the most common goods being purchased by numerous shoppers and categories them according to the fourteen categories that Wal-Mart uses.

 

Category

Number of Shoppers
Day1Day2Day3Day4Day5
Music and books
Toys and video games.
Sports and fitness
Baby care
Medicines
Movies and photos
Groceries
Health and beauty
Furniture and home décor
Electronics
Outdoor living
Apparel and jewelry
Total

Secondary Data Collection

The research will also rely on data collected by other researchers by reading and analyzing:

  • Sales report: This source of data provided by the company contains the needed data to show Wal-Mart’s success in terms of sales and profit earned yearly thus will be used in the research.
  • Customers report: such reports found on customer forums consisting of reviews from Wal-Mart customers will be analyzed as a form of direct data collection.
  • Articles and journals: There are numerous reliable web articles and scholarly journals available online the provided a clear analysis of the success of Wal-Mart in terms of market share with the major driver being their marketing strategy.
  • Books: There are books available on the history of Wal-Mart that will significantly aid in the collection of Wal-Mart’s past sales records and research.
  • Official Wal-Mart Corporate website. Data from the official Wal-Mart website is critical and should analyzed.

Data Analysis Method

Qualitative and quantitative methods are to be used to analyze the primary data collected while the secondary data will be analyzed using porter five forces model due to its relevance in analysis of competition against leading organizations.

Porter Five Forces

Porter five forces model is the most effective approach since it determines the industry attractiveness by assessing the market competitiveness of Wal-Mart in the USA. It consists of five forces that are used in the analysis of an organization namely rivalry among competitors, power of suppliers, threat of substitute products, power of buyers, and threat of new entrants (Davies & Ellis, 2000). According to a Porter five forces analysis, although a company may seem to be currently successful as a business, it needs to adopt a differentiation strategy to reduce competitiveness from competitors and increase its competitiveness. It also shows that a company’s greatest threat is the new entrants since they are using new strategies to grow thus the company should put barriers to stop new entrants from taking their market share by increasing its marketing campaign to enhance customer loyalty and brand loyalty.

Population and Sampling

For this research, approximately 500 forms will be filled in the online survey due to the large number of daily customers shopping at Wal-Mart’s online store. Another 300 forms will be filled handed out at Wal-Mart store by shoppers. The researcher will stand at the counter issuing the forms to willing Wal-Mart shoppers.

Data Collection Analysis and Interpretaion

Results from Survey

According to the data received from the survey, 55% of their customers were mostly aged between 35 – 45 years while 12% were aged between 46-60 years the rest were aged between 18-34 years. 68% of the shoppers were female. The response to the other questions varied but 74% of the shoppers agreed that Wal-Mart had effective marketing strategies and campaigns and their main reason for shopping at Wal-Mart was ‘Good quality products and services’.

In regard to the ethnicity question, 4% were Asian, 8% were European, 18% were African American while the rest were American.

Porter Five Forces Model analysis

Porter’s five forces model will be used to analyze the competitiveness and efficiency of their marketing strategies in the larger industry that Wal-Mart operates.

Relationship Marketing Strategies and Market Share

From this analysis, Wal-Mart can be said to have effective marketing strategies thus the evident increase in its market share throughout the years. Thus it can be concluded that marketing strategies are vital in the survival of a company and in growth of a company’s market share since they will enable the company in boosting its sales. Understand its customers, satisfy their customers’ needs and wants, and hence enhancing its financial position and market share. This research will mainly focus on either approving or disapproving this conclusion. The collected data will dictate the final conclusion of the research and aid in the formulation of recommendations concerning the same.

Conclusion

Numerous researches have been carried out to assess the success of Wal-Mart’s marketing strategy, which have resulted to its huge growth and increase in market shares in the USA. The research conducted will be eye opening as it will either approve or disapprove of these conclusions and conclude whether marketing strategies have any direct effect on a company’s marketing share.

Recommendations

Although the research will mainly use secondary data, support is highly needed in getting reliable information, as most of the reliable information sources are not freely available thus the university should consider offering access to the needed research materials.

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