Essay Example on Walmart: Low Prices, Big Market Leader

Introduction

Walmart Inc.'s retail services have significantly focused on selling point using low prices. It has made it be a market leader in the retail sector even with intense competition from various large companies such as target. Walmart has implemented the cost leadership strategy and integrated it into the five forces of Porter developing a price boundary for new product entries. Walmart acquired the slogan of low prices always providing a peculiar point of selling because consumers get attracted to retail stores having great value for the proposition of money. It has succeeded in using this strategy because of its methods of purchasing products at lower costs in plenty of supply per unit. The store has put strict control on the overhead from its conception setting up stores in large warehouses with minimal rent. Using a rigorous process of monitoring product flows, it effectively performs checks on orders, operations, sales and inventories minimizing wastage and ultimately production costs.

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Whole foods markets head the organic grocery retails store basing on specialty, biological, and natural retail industry. Whole foods markets use the service and product differentiation strategy which requires the store to create services and commodities having unique characteristics. The company has gone past providing simple or ordinary grocery shopping experience. The company has embraced innovation in bakery and prepared foods and exclusive brands. In service diversification, it has improved value perception using external marketing efforts, promotions and strategic reductions in prices (Pogorelc, 2015). It has also implemented digital strategies converting sales form website traffic and integrating Instacart into its application (Pogorelc, 2015). The company targets all segments of the market producing products suitable to all consumers no matter their age and gender (Thompson, 2017). Its aim of maximizing the quality of the product seeking commodity having minimum amounts of artificial ingredients. The supply chain contributes to the generic strategy as the producers or farmers comply with the quality standards of Whole Foods Market (Thompson, 2017).

Reason Why Each Firm Has Opted for Its Chosen Strategy

The low pricing strategy for Walmart makes cost leadership the most feasible approach. Several ecological, socio-cultural and economic concerns have resulted in the use of the policy. Political factors that presented opportunities include globalization political support and high political stability. In terms of economic factors, the prospect gets displayed in the continuous growth of developing nations (Rowland, 2019). Also, the balance of significant economies and reduce unemployment in the United States. The sociocultural factors comprise urban relocation, healthy routine trends and the trend of cultural variety. The ecological influencers creating opportunities include the direction of environmentally friendly products and the direction of business sustainability (Rowland, 2019). Finally, the technological aspects are increased business mechanization, analytics and extensive mobile gadget usage among consumers. The statutory factors include employment and food safety regulations improving the quality standards of the products.

Whole Foods Markets focus on consumers having more disposable income who are highly persuaded to make choices reflecting social responsibility. Whole Foods have concentrated on serving effectively the needs that are specialized in a niche market that creates vast riches. The political issues that influence the strategy are the consumer and environmentally safety policies with the sound environmental standards of the company. The customer protection policies put pressure on the organization to ensure safe supplies for producers. The economic factor influencing the strategy is improving household income, causing increased demand for the products (Thompson, 2018). Social issues include a healthy lifestyle trend creating a higher demand for natural and organic commodities from Whole Foods. Also, there is rural to urban population shift resulting in more demand for the products since the urban populace unlikely plant and harvest natural and organic produce. The technological factors encompass the automation of inventory management and complex food production systems (Thompson, 2018). Complex food production systems create higher yields and efficiency of natural and organic farming causing higher reliability of the supply chain of the company (Thompson, 2018). Inventory management automation causes higher productivity in the operation of the store. Climate change is the critical environmental factor that poses the ability to affect the yield of natural and organic farming causing reduced supply of products hence diversification.

Continuation to Pursue Its Current Primary Strategy or to look to Change

Walmart's business strategy focuses on offering client's low prices. The current goal of the approach of customer retention by attracting consumers using low prices and engaging them in shopping and discount convenience. The changes it has made are in improving customer experience. Legal, technological and sociocultural factors have influenced it.

The whole foods market penetration approach supports the growth strategy by increasing market revenues and reach. It also uses market development by attracting new consumers in fresh markets to high quality organic and natural products in the stores. In product development, the company provides new products gaining extra revenues and customers (Thompson, 2018). In environmental maintenance, it has invested in eliminating plastic bags that are disposable strengthening generic strategy using uniqueness or quality. The company needs to develop long term profitable growth in the dynamic and increasingly competitive market (Thompson, 2018).

Discussion on The Impact on Performance Of Each Company's Chosen Strategy

Whole food differentiation strategies have been useful in the market intensive growth strategy of the company. The company has introduced growth initiatives such as an increase in efficiency in the business and efforts to differentiate the experience of the customer. The company has launched a new working scheduling tool to reduce expenses (Pogorelc, 2015). The company has also developed a better perception of value using promotions ad strategic price reductions.

The pricing strategy of Walmart Inc. works with numerous of the consumers who stretch a small check they receive. They have mainly focused on middle-class consumers whose budget works on minimizing costs. The company continues to provide low prices due to several reasons. Firstly, the volume of sales, extensive customer base and the operation scope (Hyde, 2019). The company has several stores extending the market reach and sells products through neighborhood markets, club warehouses, Walmart supercenters and discount stores. Secondly, the store manages its supply chain basing on warehouse layout, distribution roles of the vendor and electronic product information (Hyde, 2019).

The company supply chain is technologically advanced and extremely efficient. A smoother inventory flow was designed by inventory management to the suppliers from Walmart, constituting a vendor managed inventory management. It reduced irregularities and ensured customer requested commodities are available always resulting in a cost-effective process. Thirdly, the minimization of operational and overhead costs maintains the company's success (Hyde, 2019). The company also leverages its power of bargaining forcing the suppliers to agree to lower prices. Ultimately, most Americans will go for lower costs hence making cost leadership a better choice.

References

Hyde, R. R. (2019, June 25). The Momentum, And Methods, Behind Walmart's Model. Retrieved from https://www.investopedia.com/articles/personal-finance/011815/how-walmart-model-wins-everyday-low-prices.asp

Pogorelc, D. (2015, November 4). Whole Foods outlines strategy to differentiate customer experience, improve price perception. Retrieved from https://www.newhope.com/news-analysis/whole-foods-outlines-strategy-differentiate-customer-experience-improve-price-percepti

Rowland, C. (2019, December 5). Walmart PESTEL/PESTLE Analysis & Recommendations. Retrieved from http://panmore.com/walmart-pestel-analysis-recommendations-case-study

Thompson, A. (2017, January 31). Whole Foods Market's Generic & Intensive Growth Strategies. Retrieved from http://panmore.com/whole-foods-market-generic-strategy-intensive-growth-strategies

Thompson, A. (2018, August 17). Whole Foods Market External Factors & Consequences. Retrieved from http://panmore.com/whole-foods-market-external-factors-consequences