In this article, we analyze the Marketing mix of Walmart and understand the product, price, place, and promotions of the leading retail store. Walmart Inc. is an American multinational retail corporation that operates hypermarkets, discount departmental stores, and grocery stores and has a huge supply chain in place in the United States. Walmart is headquartered in Bentonville, Arkansas. The founders of Walmart were Sam and James “Bud” Walton. The company was founded in 1962.
Walmart is one of the world’s largest companies and it has a revenue of $611.3 billion. Walmart has many competitors such as Amazon, Target, Home Depot, Kroger, and others. Walmart’s business model is focused on low prices and the company keeps prices low via Economics of scale and operating at a large scale. This allows the company to negotiate better prices with its vendors and suppliers and thereby pass on the benefits to end customers. In this article, we will analyze the Walmart Marketing Mix in detail.
About Walmart
- Type: Retail corporation
- Industry: Retail
- Founded: July 2, 1962
- Founders: Sam Walton and James “Bud” Walton
- Headquarters: Bentonville, Arkansas, United States
- Area served: Worldwide
- Key people: Greg Penner (Chairman) and Doug McMillon (CEO)
- Number of employees: 2.2 million
Product Strategy of Walmart
Walmart has a wide selection of products available for its customers which it sells via its physical stores as well as online stores. The Product mix or the product categories that can be found at Walmart include the following
- Groceries: A huge assortment of groceries is available at Walmart which includes packaged products, frozen foods, bakery, dairy, fresh produce, and others.
- Apparels: Clothing and apparel and a variety of accessories are available for all.
- Electronics: Gaming Consoles, Smartphones, Computers, TVs, Tablets, and Home and kitchen appliances all can be found at Walmart.
- Home and Furniture: If you buy a new home, you can literally fill it completely with Furniture from Walmart. Walmart has a large variety of bedding, towels, appliances, furniture, and other goods for the home.
- Health and Beauty: A lot of cosmetics, over-the-counter medications, and personal care items for health and beauty are available on Walmart.
- Toys: Walmart has a large variety of imported as well as USA-manufactured toys for children of all ages.
- Sporting Goods: For sports and fitness enthusiasts, Walmart has a huge section dedicated to sporting goods such as exercise equipment, sports equipment, and outdoor gear.
- Office Supplies: All kinds of office suppliers are available at Walmart which includes printers, notebooks, paper, pen, binders, books, and others.
- Pet Supplies: Pet supplies such as a large variety of pet food options and accessories are available for various type of pets like cats, dogs, and others.
- Private Labels: Walmart deals with a lot of private label brands which are also available at the stores.
As we can see a large variety of products can be found on Walmart. Besides this, there are specific strategies that Walmart uses to promote its product mix. Some of the product cantered strategies include the following.
- Broad Assortment of Goods: One of the major attractive points of Walmart is that a user can enter Walmart and buy a huge variety of goods in one go. A consumer can buy groceries, clothing, electronics, home goods, and everything else that he needs. It’s hard to find something not available at Walmart. This allows the brand to cater to a wide customer base with varying needs. It is one-stop shopping at its best.
- Integration of online and offline: Walmart uses an Omnichannel strategy wherein the products you bought online can also be returned offline. Alternatively, you could order online and just pick it up from the store. You could also order offline and get the orders delivered directly to your home. All this is a service product that is wrapped around customers’ convenience and preference.
- Convenience Shopping: Walmart is generally located near residential areas or places that are easy to reach. Each Walmart store is large and stocks a huge number of products. They are open for extended hours and convenience is the major focus of a Walmart store.
- Customer service: Walmart is primarily a retail service and hence customer service is a priority to this service product. Walmart’s customer service is known to help a positive shopping experience for its customers.
- Private Label brands: Walmart uses a large variety of private labels to keep its customers happy. What this does is that it allows Walmart to keep prices low because private labels tend to keep lower margins. They offer good value to the customers and many times customers come into these stores for the private label brands.
Walmart has products that are focused on variety and convenience. Besides that, its retail outlets focus on making customers happy and become a one-stop shop for customers of all ages. This has helped Walmart become a leader in the retail industry.
Pricing Strategy of Walmart
The main reason consumers love Walmart and the key differentiator which made Walmart the leader in Retail was its pricing strategy. Walmart made great inroads into purchasing products in bulk and offering products in bulk which brought down the prices and they offered these low prices to the end customers.
Thus, Penetration pricing is the primary pricing methodology used by Walmart. Besides that, there are other pricing policies applied by Walmart across its product portfolio. Let’s look at the pricing strategy of Walmart.
- Everyday Low Prices (EDLP): Everyday Low Pricing or EDLP strategy was introduced by Walmart, and it aimed to keep its prices lowest in the marketplace. Walmart was brave enough to promise the lowest prices for set products which is why customers came to Walmart to make their purchases. In fact, the whole conception and integration of EDLP is a case study in all major MBA colleges.
- Penetration Pricing: The primary pricing methodology used by Walmart is penetration pricing. This is because Walmart’s complete focus is to offer existing brands at the lowest prices to customers.
- Cost Plus Pricing: Walmart extensively uses a cost-plus pricing methodology wherein it drives a hard bargain from its suppliers, adds a markup to it, and then sells it off to end customers. This is the reason that Walmart has sustained its cost leadership. Because of the way it buys in bulk, Walmart has a huge cost advantage over competitors.
- Price Matching: Walmart offers price-matching to all its customers. If a customer finds a product offline or online which is lower priced than Walmart, Walmart will match those prices and allow the customer to buy the product. Off course, this is getting difficult to implement in the era of cutthroat competition from Amazon.
- Volume pricing: As you buy higher volumes from Walmart, you will get more discounts from Walmart. Walmart keeps a high volume and low margins approach. Thus, when a customer also buys in higher volumes, Walmart further reduces its own margins and passes on the margin benefits to the customers.
- E-commerce Dynamic Prices: Every online app nowadays is known to use dynamic prices to change the price based on demand. Walmart does the same on its online platform wherein it may change the prices of certain products based on the demand, the competition for the product, the time of the purchase, and various other factors.
All of the above pricing strategies have helped Walmart become a low-price leader in the retail industry. Because it offers lower prices, customers are naturally attracted to Walmart and prefer to buy products after seeing them in the physical store.
Place and Distribution Strategy of Walmart
Walmart has 4700 stores and 210 Distribution centers. A Walmart is present within 10 miles of 90% of the US population. Naturally, we should study the Walmart supply chain and the ways that it is so successful. The process of Walmart distribution is very clear. It happens in 4 stages in its warehouse.
- Unload: Unloading is done of products received from sellers and vendors
- Receive: Breaking the bulk is done at the receive stage. An automated storage system is used to store all products.
- Pick: Products are picked when an order comes and then the system retrieves the product.
- Pack: Made toe measure packaging is used to pack the products so that there is no wastage.
- Ship: Products are then shipped to a zone from where they may go to end customers.
Walmart’s distribution strategy has the following core principles
- Centralized Distribution: Walmart has distribution centers located throughout the globe but the key point is all of them are managed centrally. This ensures that there is quick and efficient distribution of products.
- Cross-docking: In Cross-docking, the goods are supplied from the supplier’s truck to Walmart’s trucks. They are not stored at the warehouses at all. Instead, they are delivered to the stores. This ensures that there is fresh material kept in the stores and that warehouses are not overfull.
- Efficiency in transportation: Walmart uses a combination of trucks, trains as well as airplanes for the transportation of goods. This ensures that they deliver products to the stores on time and replenish inventory on a timely basis.
- Usage of Technology: Walmart uses state-of-the-art technology for its logistics and distribution. This includes real-time tracking, communication systems, computer systems, scanning and sorting mechanisms, and retrieval systems.
- Omnichannel Retailing: Walmart has a large presence of customers in its e-commerce platform. It allows BOPIS, which is to buy online and pick up in stores. It also allows shipping of the products directly to customers’ homes. These features further put pressure on the logistics and supply chain of Walmart. But due to the efficiency of Walmart’s supply chain, Walmart is able to give customers the convenience of omnichannel retailing and customers can buy online or offline from Walmart.
- Supply chain management: Walmart’s supply chain management and its distribution centers play a vital role in ensuring that the goods are delivered to the customers at the right time. An efficient supply chain ensures reduced costs and better inventory management.
- Third-party partnerships: Walmart partners with many third-party sellers on its platforms. This allows Walmart to have more product offerings and for customers to get a variety of models and inventory. Furthermore, at times Walmart may not need to stock everything as their online partners do the stocking for them and Walmart just takes care of delivery.
- Local and Global sourcing: Walmart sources its products not only from its parent company but also from across the globe at the lowest rates possible. This keeps the costs low, margins higher and also gives a large variety of options to the customers.
- Huge network of Physical Stores: Walmart has a huge network of physical stores which is its primary point of distribution. As of 2023, Walmart has 4700 stores.
This shows that Walmart has an amazing Distribution strategy in place which is the heart of Walmart’s marketing mix because, in the retail industry, Walmart cannot exist without a strong supply chain and distribution method in place. This distribution strategy has helped Walmart retain its tag of one of the top retailers in the world.
Promotional Strategy of Walmart
Walmart continuously runs promotions to bring customers back to its stores and to introduce its offerings to new customers. Walmart’s promotions are generally focused on saving money as well as on new products and launches. Some of the tactical promotions which Walmart is currently running in 2023 include
Promotional Pricing and Membership strategies
- Walmart+: Like Amazon Prime, Walmart+ is a program by Walmart that gives premium features to its Walmart+ subscribers. Free shipping, discounts, and other benefits are offered.
- Discounts: Walmart may offer discounts of up to 50% on a certain line of products. These may be electronics, clothing, or consumer goods. Similar discounts are available on Schooling supplies.
- Free shipping: Walmart gives free shipping for orders over $75 to Walmart+ members
- Coupons: A variety of Coupons are used by Walmart to push customers towards buying from them. These coupons may be found online, in their Walmart App or via print ads. However, the combination of coupons and discounts brings a lot of customers back to Walmart.
Traditional Promotional Strategies
- Pricing Communication: Walmart focuses heavily on ensuring its EDLP pricing communication reaches all its end customers.
- TV Commercials and Print Media: TV commercials, print media, newspapers, magazines, and other such marketing tools are used by Walmart regularly for promotional activities. With these forms of media, Walmart advertises all its latest offers as well as its latest products.
- In-Store promotions: Walmart uses point-of-purchase displays, in-store events, and product demonstrations to promote products within the store. This results in higher customer attraction.
- Digital Marketing: Walmart has a strong presence on Social Media. Walmart’s Facebook page has 3 million followers. Its Twitter page has 1.3 million followers.
- Sales promotions: Black Friday, Back-to-school days are some of the ways that Walmart runs its sales promotions.
Here is a TV ad launched by Walmart that tells you that when you shop at Walmart, you know how to find joy in all the little things for less. As we can see, the TV ad majorly focuses on low prices.
Overall, Walmart uses a variety of promotion tactics which include sales discounts, coupons, loyalty programs, in-store events as well as seasonal discounts. They push the brand recall via television and social media ads.
Summary
In summary
- Walmart has a wide variety of products and its stores are large attracting customers to the one-stop shopping solution.
- Walmart’s pricing strategy is very aggressive and Walmart focuses on Everyday low pricing (EDLP) model.
- Walmart distributes its products through its 10000-plus stores worldwide.
- Walmart uses various strategies including price promotion and other promotional strategies to push and pull its customers towards the brand.
More References
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