An Investigation Into Pricing Strategies of Wal-Mart in China

Sam Walton’s extraordinary business strategies drove Walmart to its success and their key focus was customer satisfaction. As part of their customer centric initiatives Walmart had set up a unique pricing strategy with their “Every Day Low Prices” EDLP (Karen Robson, 2013). They would offer customers their daily needs at the lowest possible price to drive Walmart’s growth in the United States (Karen Robson, 2013) . Their pricing strategy was different than other major retailers in the U.S at the time; this provided an advantage towards rapid success and expansion (Karen Robson, 2013).

Wal-Mart founded in 1962 by Sam Walton is now the largest American retail corporation. With thousands of chains of stores and warehouses Wal-Mart monopolized the American retail industry. In addition, Wal-Mart is the second largest retail corporation in the world employing of two million employees world-wide. As one of the most valuable corporations in the world Wal-Mart continues to improve their sales annually while offering some of the lowest prices available. Wal-Mart’s famous low price guarantee, come at a high expense of the environment, the small businesses, education, the rights and safety of the consumer, but most importantly their employees. Although Wal-Mart has plays a dominate role in American economy, this “American”

Wal-Mart’s expansion in China had been hindered and slowed down by regulatory restrictions for a long time. Thus, international retailers were limited to certain cities, in which not more than three stores were allowed. Additionally, each new store needed the approval of the central government. Furthermore, enforcement of local interest such as tax revenues or jobs and local protectionism by local governmental agencies handicapped Wal-Mart’s expansion in China. As a result, the retailer had only 43 stores in China by early 2005 (p.12-14).

One of the most significant competitive edges that Wal-Mart possesses is bringing products to the ordinary customers at lower prices than its rivals (Woohyoung & Alan, 2013). In other words, Wal-Mart has kept its promise of ‘everyday low prices’ (EDLP) as a sustainable selling point (Walmart, 2015). At Wal-Mart, price is the core factor of most of the foreign markets, where that it has established operations in addition to the United States. The other 3 countries that have been included in this report (namely South Africa, Germany and Japan) are all implementing the policy of EDLP. Sam Walton, the founder of Wal-Mart understood that customers from Berlin to Tokyo, from New York to Cape Town are all attracted to purchasing products at the lowest prices. Undoubtedly customers around the world choose Walmart for its low prices, convenient access to versatile products portfolio and for a shopping experience which meets individual’s expectations based on the fact that It delivers sales through customer relevance and is always passionate about driving sales wherever it operates. EDLP, enabled by being a low-cost operator, is the foundation of its customer proposition, which strives to serve customers regardless of household income in Japan, Germany, South Africa and the US (Walmart, 2015).

The evolution of Wal-mart from the early 1960s to the present day has set a benchmark that few can achieve. Wal-mart executives have been successful nationally as well as globally. The knowledge and expertise in economics have made Wal-mart a global giant. The research completed is the final recommendations by the members of research team C and will address questions regarding global competition and issues of the organizations ability to expand or reduce current operations.

3) Do those same sources of cost advantage enable Walmart to achieve a sustainable competitive advantage in China? With a localized demand, localized supply base, and localized distribution in China also provided domestic stores with an edge in establishing a strong regional dominance when foreign retailers found it hard to leverage national presence in a regional market. In China, however, the constraints on a foreign retailers operation directly limited the regional expansion of Walmart stores and the efficient use of distribution centers since they were so spread out. Would have to spend more on distribution costs and given the slow speed of transportation did not enable Walmart to lower its prices. Walmart also faced a problem with lack of an information technology network with suppliers, making purchasing and distribution difficult. Also, consumers in China were very different than those back home, which added pressure to the operational costs and directly threatened its ability to set the price low as possible. People in China did not buy in bulk and that is what Walmart specialized in, so shopping patterns did not fit. Diminished economies of scale and interrupted supply chain meant higher costs in satisfying Chinese consumers. Everything that Walmart thrived in and was able to do to cut costs, they

The author is pleased to have brought you this case study about Walmart Stores Inc. From the organisational profile of the company, the magnitude of Walmart was revealed since it basically operates all over the globe with a number of stores in different variety. The retailing Giants carry a vast array of products to cater for all customers. In terms of Walmart’s vision and mission statements - the company endeavours to sell at very economical prices while being as efficient as possible in terms of expenditure. In terms of the literature review that was undertaken, this emphasised Walmart’s direction in comparison to that of Target Corporation and Costco Wholesale Corporation. From this, an appreciation was gathered that Walmart’s offerings

Wal-Mart is arguably the most dynamic corporation in the last 50 years in the United States, if not the world. Arising from its beginnings in Bentonville, Arkansas, it has grown to over 4,400 discount stores, super centers and corner markets worldwide. Wal-Mart continues to expand despite public criticism of its labor practices as well as complaints about their treatment of competitors. The many strengths of Wal-Mart, like their low cost production and marketing practices, will aid Wal-Mart as it continues to grow in the retail

As is known, pricing is one of the most important steps for business plan which needs good research, calculations and formulations. There are different pricing strategies to put into effect due to the market and product conditions, such as premium pricing, penetration pricing, economy pricing, price skimming(Voice Marketing, 2012). These four pricing strategies are main pricing policies. They form the bases for the exercise. However there are other important approaches to pricing. These pricing strategies are: Psychological pricing, product line

The strategy for setting a product’s price often has to be changed when the product is part of a product mix. In this case, the firm looks for a set of prices that maximizes its profits on the total product mix. Pricing is difficult because the various products have related demand and costs and face different degrees of competition.

A. Wal-Mart realized through third party studies and internal research that the Chinese customer were significantly more cost-sensitive than those in other countries and that there existed a strong, established culture of frequently shopping around to find the absolute lowest prices. Through these studies, Wal-Mart also realized that customer satisfaction level greatly influenced customer loyalty in China. The greatest determinant of this satisfaction was made up of perceived value. The perceived value is composed of three sub factors: (1) Product price, (2) Relative price and (3) Promotion. The other factors for customer satisfaction in descending order of its importance are Image,

The goal of the following analysis is to examine Wal-Mart Stores, Inc. and its quest to dominate international markets. Domestically, Wal-Mart has proven success throughout the United States and Canada. Wal-Mart is the pinnacle retail store in America. As of March 2004 Wal-Mart. topped the list of "The 2004 Fortune 500" with revenues of $258,681 M, profits $9,054M (2004 Fortune 500). Internationally; however, they seem to have several challenges that need to be addressed if Wal-Mart wants to be competitive. Even though Wal-Mart has what seems to be a flawless business model, there is still a major problem with making profits in

Walmart, founded by Sam Walton in 1962, is the largest retail company in the world. The low cost strategy and hence the “Every Day Low Prices” (EDLP) strategy allowed Walmart to outperform competitors in the US. Besides having stores in the US, Walmart has also expanded its market worldwide. Walmart’s entry into China was not surprising, given its population and growth potential. Nevertheless, Walmart China had been struggling with its sales volume. It was only ranked twentieth in sales out of all the Chinese chain stores in 2005. Walmart’s strategic move in the US does not seem to be applicable in the Chinese market. Different factors in the Chinese market blunted the cost advantage of Walmart. This paper

They offer brand name merchandise for less than department and specialty stores using the every day low prices method. As a consequence fewer promotions are necessary and therefore the advertising costs are only 1.5% of discount store sales. The direct competitors spend on average 2.1%!
Another distinctive part of the promotional strategy is the no 'risk/satisfactions guaranteed policy' which helps to attract the last suspicious customers. A further important component of the promotional and purchasing strategy entailed the attempt to switch as many foreign-sourced products to American-made ones. Due to the switches more than 41,000 jobs have been created for the American workforce. It is assumable that this has led to lower purchase costs, more sales and that it especially has boosted the image of Wal*Mart. The most remarkable aspect of their promotion philosophy is that they want to make them selfs more personal and customer-minded by so called 'people greeters'.
What also can be seen as part of their promotional strategy is the fact that Wal*Mart stores are rather new and young. Last but not least the promotional and pricing strategy to introduce shelf-labeling rather than product price tags reduced further costs.

In 1993 the top five discount retailers accounted for 71% of the industry sales. Wal*Mart is one of these five which means that they have a strong position in a big market segment with only four directly comparable

Price, which is one of the most important elements of the marketing mix, can be difficult to get right. Pricing too high, or low, can negatively impact on customer satisfaction and revenue. Adopting a pricing strategy is necessary to achieve desired sales objectives (Chan & Wong 2005).