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Wal-Mart: Pricing Strategy

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Term Paper:
The term paper should be approximately 1,000 words in length. Should include a title page and biblography.

Term Paper topic: Pricing Strategy of Walmart.

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This solution explains the pricing strategy of Wal-Mart. The sources used are also included in the solution.

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In compliance with BrainMass rules this is not a hand in ready assignment but is only guidance.

EVERY DAY LOW PRICING STRATEGY OF WAL-MART

The pricing strategy of Wal-Mart is directly related to its overall cost leadership strategy. Its pricing strategy is everyday low prices. Historically, Wal-Mart has been grown with the philosophy of keeping prices as low as possible. This pricing strategy is supported by Wal-Mart's scale of operations and volume of purchases. The pricing strategy is low prices, which is supported by minimal costs. The competitive advantage achieved by Wal-Mart enables it to develop a clout with suppliers and pass on even lower prices to customers (4). The strategy of very low prices is supported by its bargaining power with suppliers to lower prices. Further, it has developed cost effective processes which result in savings which are translated into lower prices. There are several methods that Wal-Mart uses to reduce its costs and prices. For example, Wal-Mart has its own trucking fleet with drivers who are well trained. This reduces distribution costs to less than half those of its closest competitors.

Wal-Mart has been instrumental in keeping the prices of consumer goods low. It has used its bargaining power with manufacturers and suppliers to keep the prices low. In several cases there have been changes in manufacturing inputs and processes. This has also led to off shoring of manufacturing facilities to countries such as China (2). In some cases automation has been introduced in the manufacturing process to help lower costs for Wal-Mart. The everyday low price strategy of Wal-Mart means that the consumers are assured of low price without having to wait for sales or discount offers. This strategy has created confidence in customers that they will get the lowest prices when they shop at Wal-Mart. Even the everyday low price strategy of Wal-Mart leads to lower ...

Solution provided by:
Hatim Baxamusa, MBA
Education
  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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