This paper analyzes Walmart's marketing and segmentation strategies based on an in-store observation and supporting literature. It examines how Walmart's everyday low-price value proposition attracts a core demographic of price-value shoppers, how the company leverages real-time data and satellite-linked pricing systems to maintain competitive pricing, and how celebrity and designer branding lines represent an incremental expansion beyond its core strategy. The paper concludes with a recommendation that Walmart consider smaller, segment-specific store formats to remain competitive as the U.S. superstore market becomes increasingly saturated.
Known for their prowess and expertise in supply chain management and retailing, Walmart is also becoming exceptionally strong at generic marketing and segmentation strategies. A recent in-store visit to a Walmart location was used as the basis for this analysis.
At the center of how Walmart effectively manages to lower prices so quickly across a wide array of products — while still keeping profitability synchronized across the entire product line — is the strength of its logistics functions (Mottner & Smith, 2009). The everyday low-price value proposition, a generic strategy that has continued to resonate across many different demographic customer segments, has also been used successfully to create the foundation for a branded retail experience within specific stores (Duff, 2009). The low-price value proposition brings in the most price-value driven shoppers, while branded lines are used to sell higher-end specialized clothing that generates greater margins (White, 2010).
Walmart is well known for its ability to quickly assimilate, analyze, and use data to gain a competitive advantage in its retail operations (Mottner & Smith, 2009). This is one of the foundational elements of its pricing strategy and its ability to act on pricing decisions literally overnight. Pricing elasticity is determined on products nightly after data uploads on sales and prices are completed via satellite links from stores globally. The inner workings of the Walmart model concentrate on understanding how pricing interacts within a given product category so that retailing and marketing strategies can be aimed at price-value shoppers who have the highest potential interest in the product (Mottner & Smith, 2009).
This strategy has led Walmart to concentrate on a core 16% of its customer base — the price-value shopper — who generates a disproportionately high level of sales for the company. The generic strategy has solidified this market segment for the company.
"Celebrity and designer brands as a secondary growth lever"
"Smaller segment-specific stores as a growth strategy"
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