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Nov 8, 2017 in Economics
Target Market Paper
According to ‘’fortune global’’ Wal- Mart was ranked to be the largest corporation in reference to its revenue. It has been estimated that about 98 million customers ,nearly a third of united states population visit Wal-Mart every week for shopping, the reason for this is that Wal-Mart offers relatively low prices to its customers. A recently released financial report by Wal-Marts indicates that its customers are high sensitive to high cost and gas prices.
In the year,2006 Wal-Mart took a stepladder in attempt to increase US customer base by modifying its stores from the form ‘’one size fits all’ store strategy to one constructed to “reflect each of six United States demographic groups namely: affluent, rural residents,African-American,empty-nestrs,Hispanics and Surbanites.After six months later Wal-Mart came up with a new motto: ‘’saving people money to enhance their living’’ which categorized its 200 million customers into three groups namely: value price shoppers (people who desire low prices on products but cannot afford much),price responsive affluent (people with money and love deals) and lastly product aspirationals ( people with low income and preoccupied with certain names such kitchen aids)( Mctuade,2008) .
The motivating force behind Wal- Mart Initiative plan was its geographical growth and profitability ratio in operation. Wal-Mart focused on it expansion where it introduced various branches on rural areas and small towns, away from its competitors. In this geographical location Wal-Mart offered discounted rates to its customers on various products.
Wal -Mart has the ability to market its products in some exceptional targeted ways. It has adopted different formats which are segmented to specific targets markets. for example it has came up with Modular Category Assortment Planning System (MCAPS) which examines and stores historical collected data on sales .The data collected is then incorporated and analyzed in various systems, then later it is used to plan layout of products that best suit various different markets (Dungates, 2010).Another example of market segmentation is seen in Wal-Mart has it has three different stores which are segmented to various targets market. Wal-Mart also empowers store managers with the sovereignty of running product promotion so as to target specific markets.
Wal-Mart stores in U.S operates under three forms:supecentres,discount stores and neighborhood markets .Consequently it operates internationally where it comprise of 2,970 stores which are suited in 14 countries .Accordingly to the recent annual released report the international operational account to about 22% of Wal-Mart net sales while the U.S operations account for 78%. (Reagan, 2005).It is important to note that Wal-Mart does not target only definite customers based on income, but also targets particular markets based on population, this also helps in making decisions on which store format should be established.
Wal-Mart focus on penetrating its markets by expanding the supercenter store more than the discount store as supercenter are more profitable compared to discount store, this will eventually lead to10% increase in profit margin in the next decade (Mctuade,2008).Wal-Mart has also plans to open 2,000more stores in United States in the next four years. This expansion will be facilitated by the overall growth of population.
In conclusion, good and organized marketing strategies of any firm or organizational helps to target customers and various markets .for example Wal-Mart powerful strategies have enhanced it competitive advantage over other firms. Therefore it is important for a firm to incorporate strategies that help in targeting customers.