Wall Mart's Competitive Advantages Essay

1029 Words Aug 11th, 2014 5 Pages
Below is the Porter's five Forces model for Wal-Mart in the 1960-70s:

1. Force 1-The Threat Of Entry: Low
Capital-requirement-Initial starting cost is large and also the infrastructures, buildings, equipments, other costs, all have to put in place even before the actual store is opened. The amount of money that these costs add up would prevent many.

Brand image: Wal-Mart has been in the business since the 1960s. When Sam Walton, founder of Wal-Mart, began his first discount store in 1962, since the time of starting they are known for their price benefits to the customer which is now became unbeatable of any new player.

2. Force 2- The Degree Of Rivalry: High
Numerous small players (Kmart, Target), it is a fierce competition.
…show more content…
As a result consumers stopped driving to other cities for shopping, and started to shop at Wal-Marts stores in their own towns. By the mid 70s one third of Wal-Mart's stores in regions where no direct competitors could be found. Soon the profits of Wal-Mart changed the conception that discount retailing isnt possible in small towns.

Advertisement & Publicity: Wal-Mart let its store managers to find out which product ranges are preferred by the local customers, based on each stores sales data and update to their centralised system. As such, instead of depending on advertisements to publicise their products, they brought products that were in high demand at the specific places these were demanded. Also their advertisement expense on a new store was only for its initial days, once people know that a store has been opened, advertisments became significantly less. This led to very low advertisement expenses. Compared to an average of 50-100 advertisement circulars of Wal-Mart's competitors, the discount retailer launched only 13 circulars as a reminder. Consequently, costs for advertisement were 0.6% lower than the competitors that spent 2.1% of their store sales.

Differential Pricing: Also all al-Mart folowed differential pricing at different

Related Documents