Wal-Mart Communicating Prices

Wal-Mart Communicating Prices 

My favorite retail store is Wal-Mart which has been the most successful retailer in history. The three guiding principles to its success are community involvement, customer value and service, and partnership with its associates. The retailer uses different types of pricing tactics especially the odd number pricing. The company shares its savings with customers by charging low prices to help customers enjoy the maximum value of their money. The retail store mostly has 20% lower prices than its competitors.  The pricing strategy has increased loyalty from price-conscious rural customers. The stores work with the principle, “by cutting your price, you can boost your sales to a point where you earn far more at the cheaper retail price than you would have by selling the item at the higher price. In retailer language, you can lower your markup but earn more because of the increased volume” (IBS Center for Management Research, 2016).

Wal-Mart strategies follow the cost leadership patterns. This gives the company a competitive advantage as it offers the lowest operation cost in the industry. The main reason why they gained many customers is offering their products at lower prices than their competitors.

References

IBS Center for Management Research, (2016). Wal-Mart’s Cost Leadership Strategy: Business Strategy. Retrieved 23 October 2016, from http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy2/Wal-Mart%20Cost%20Leadership.htm

Response to Kelly Pratt

Hello Kelly. I like your discussion on World Market’s price communication strategies. You have discussed how this retail store utilizes psychological pricing of less than a dollar in an item. This type of pricing is commonly utilized by other companies. They also utilize their psychological pricing in packaging and making their products more attractive.  Psychological pricing is applied when marketers require the consumer to respond on an emotional and not rational basis. Do you think that this type of psychological pricing would be effective in unfamiliar market?

Response to Aminah Rashid 

Hello Aminah. I like your discussion about Communicating Prices. T-J Maxx is a discount store that is doing well at marking down of low prices. I like how you have explained the deterring factor. The cause of such deterrence as you have stated is disorganization that causes mixing in prices. The company’s strategy works due to putting a real treasure in the treasure hunt. It uses an off-price chain model of placement of products differently than other retailers. One of TJ-Maxx’s myth is that the retailers sell products that designers and department stores cannot sell. How do they maintain a ‘sell new not a sale’ which is off-price business?