Walmart Strategy

Strategies

As determined by the IE Matrix, Wal-Mart fits into the category of grow and build strategies. Thus, the aforementioned strategies would fit Wal-Mart very well. All three of the strategies that we decided on are grow and build types. The three strategies that Wal-Mart would benefit most from are: market penetration, market development, and product development.

1. Market Penetration

The market penetration strategy is when a company is seeking to increase the market share for present products or services in present markets through greater marketing efforts. This is also an appropriate strategy for Wal-Mart to implement because they can take advantage of the bankruptcy of K-Mart. Through the increase of Wal-Mart\\\\\\\\\\\\\\\'s marketing campaigns, they can attract and retain most of K-Mart\\\\\\\\\\\\\\\'s customers. Also, because K-Mart has been closing hundreds of stores, Wal-Mart has a distinct advantage of controlling markets where both Wal-Mart and K-Mart are located. Also, because of Wal-Mart\\\\\\\\\\\\\\\'s economies of scale against its rivals, they have the power to influence markets in their direction.

The company culture is also well suited for this type of strategy. The management of Wal-Mart has ingrained in the employees the core values needed to excel at increasing their market penetration. Again, their EDLP and Rollback campaigns can readily be diffused into markets where they do not have as much of a market share as they want. This will also have a positive impact on the company culture because of the increased opportunities available to current employees. As their market share increases, they would also probably begin to add to their product offerings in that area. This will, in turn, allow employees the ability to grow with the company and be promoted into higher positions.

The costs involved with market penetration are not nearly as great as with market development. Wal-Mart only needs to increase its marketing campaigns in the target areas. And again, with K-Mart\\\\\\\\\\\\\\\'s unfortunate exit in many of the same markets as Wal-Mart, they have an even better chance of success simply because they will be the only large discount retailer in the area. They may not even have to increase any costs in this type of situation simply because of the natural reaction of consumers needs. If they were going to K-Mart for products and K-Mart is closed, their natural reaction would be to simply go to Wal-Mart.

The length of time for this type of strategy implementation can be measured in days. This is because Wal-Mart already has a very large, established marketing campaign. All that they would need to do is realign or increase their marketing in the target area. This is a very simple process of contacting the local television stations and purchasing advertising space. It can also be accomplished through circular ads and the newspaper. The running length of time for this strategy can be measured in weeks, as Wal-Mart would probably change their campaigns periodically.

This is a good strategy for Wal-Mart because of the relative ease of success that Wal-Mart can garner simply from advertising in areas where K-Mart stores have closed. This is also a good strategy because it will have a positive impact on Wal-Mart\\\\\\\\\\\\\\\'s bottom line without a very large increase in costs. The only bad aspect of this campaign is that other competitors will probably be doing the same. Every single business in that area will have to respond to Wal-Mart\\\\\\\\\\\\\\\'s drive to increase its customer base.

The advantages of this strategy are almost immediate results, increased market share, increased sales, and increased consumer recognition. Disadvantages of this strategy are possible failure and increase competition.

2. Market Development

The market development strategy is simply the introduction of present products or services into new geographic areas. This is a very good strategy for Wal-Mart because it is in line with its core values. Wal-Mart has many areas of opportunity to excel with this strategy, both at home and abroad. The have the needed capital and human resources to expand, they are very successful in their industry, and there are several untapped and unsaturated markets still available. This is also an appropriate strategy because of the increased competition that the retail/discount industry is facing. While Wal-Mart is at the top, they are increasingly seeing their competition move closer to dethroning their position.

The company\\\\\\\\\\\\\\\'s culture already is receptive to this type of strategy. They have been expanding their reach in all facets of their business for years. This type of strategy allows for current employees to be promoted by relocating to new stores, have increased roles in the success of new locations, and be a part of a winning organization. Also, because of the societal influence that Wal-Mart has, they can improve the quality of life in the areas of expansion. This is a very important aspect of Wal-Mart as discussed with their scholarship and community donations.

The costs of this strategy are very high. Because this would involve constructing new buildings and organizing new distribution networks, Wal-Mart has to plan for this with the utmost attention to detail. This is not a very large problem for Wal-Mart, though, because they have the financing available to do just about anything. The typical store covers over 150,000 square feet, and requires a lot of planning before the construction begins. Everything has to be organized in a way that everything is in place and operating within the shortest amount of time. We believe that Wal-Mart has this capability and will excel in this strategy.

The length of time for Wal-Mart to implement this type of strategy is typically four months. Wal-Mart has very favorable access to construction companies, local governments, computer systems, and other necessary services needed to expand their operations. This is because of the extraordinary impact that a single Wal-Mart can have on a local area. The sheer size of the stores provides a large boost to local government tax revenues, and Wal-Mart has the incentive of fast turnaround time so that the store can begin adding to their bottom line.

This is a very good strategy for Wal-Mart, and it shows because this is one of their primary strategies that they are currently using. They are following their commitment to expansion by adding additional stores every year and are adding to the economy of the United States by employing hundreds of thousands of Americans. The only negative aspect