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Nov 8, 2017 in Economics
Competitive advantages refer to how customer values a firm and how the firm is enhanced than its competitors. Wal-Mart unique competition advantage is an effect of several strategic plans it has adopted. The first strategy adopted by Wal-Mart was on geographical location where it established branches on small towns and rural areas, away from its competitors. On this location, Wal-Mart becomes a sole discount retailer on its goods and services. Mctuade (2008) states that the most important advantage was to have spacious stores in newly established areas where the other firms were disinterested.
A second key strategic plan was on implementing new and effective management model, where managers are given authority to control over which goods to display based to customer preference and arranging shelf space based on current demand. Managers price to meet demand in local areas as well as to increase sales volume with he aim of maximizing profit.
Wal-Mart being a large store, it has a significant effect to its competitors as it can deep pocket to under price its products as well as challenging its competitors. In addition, it can sell some products at a loss to fight competition. The size of Wal-Mart tends to feed itself many stores and good operation means fair prices to its customers as it has an advantage on its discount allowed by its suppliers (Patygurn, 2003).
Wal-Mart has also included other programs and policies that help it to carry on competition fairly. This programs and policies include; pay rise which is based on performance of the staff, discount stock purchase, incentives bonuses and open door policies.
Emotional and rational thoughts lead to a customer being interested in products that suit their personality. Wal-Mart stores has adopted an emotional marketing strategy that’s specifically focus on products attributes such as; behind every Wal-Mart brand there is a compelling ideas meant to capture customers attention, they have come up with unique brands that are completely different from other competitors, Wal-Mart has also branded their product in an attractive style which is appealing to its customers, finally Wal-Mart has adopted the honesty attributes which ensures it adheres to promises made to customers such as allowable discount rates.
The following graphs shows how Wal-Mart stores have been able to expand its markets and sales over one year period (2009/2010) due to the strong competition advantage (Sauerland $Mitchell, 2009)