This paper entails a comprehensive analysis of retail business analysis. Considering the fact that retail business analysis as an academic field is wide in scope, the paper focuses on the generic strategies.
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In an effort to understand how firms in the retail industry incorporate generic strategies, the researcher has taken into account a real business by conducting a study on Wal-Mart Stores Incorporation which operates in the United States. The paper is organized into a number of sections. The first part gives a theoretical background of what retail business analysis is all about.
The second part gives a brief overview of Wal-Mart’s background. In the third part, the researcher defines market segmentation and how a firm can be effective in its market segmentation. The section also illustrates the segmentation strategy adopted by the firm. In its operation, Wal-Mart has adopted the cost-leadership strategy. This has enabled the firm to attain price competitiveness.
The section also explains how the firm has managed to implement the strategy. The fifth part gives the suggestions for improvement and the impact of generic strategies and segmentation on the firm’s marketing and positioning. The sixth part entails a conclusion to the study.
Retail business analysis
Retail business analysis entails a number of tasks and techniques which are aimed at developing a comprehensive understanding of the strategies, policies, structure and operations of business firms within the retail business industry.
The core objective of the analysis is to identify areas where the management team of a particular retail firm should improve and to recommend solutions that will enhance the firm attain its goals.
According to Carkenord (2009, p.2), retail business analysis also enables business firms in the industry to identify and take advantage of the various opportunities in the industry. This is attained by helping entrepreneurs to design the necessary procedures and structures.
Wal-Mart Stores Incorporation is the leading retail firm in the world. Since its establishment in 1969 in the United States, the firm has managed to develop a high competitive advantage (Pahl & Ritcher, 2009, p. 22).
The firm has incorporated the concept of internationalization which has enabled it to establish different outlets in different countries. In its operation, the firm has established a number of retail facilities which include Discount Stores, Sam’s Club Warehouses, Wal-Mart Supercenters and Neighborhood Markets.
Wal-Mart has adopted a low-cost leadership strategy in its operation. This is achieved by eliminating middlemen in the process of distributing its products. Wal-Mart distributes its products directly to the consumer. This has played a significant role in improving the firms’ effectiveness in implementing a low pricing strategy. The resultant effect is that Wal-Mart is able to attain price competitiveness.
Segmentation strategy and its implementation
For a firm to be effective in its marketing, it must understand its target market. This increases its efficiency in its market segmentation which entails dividing the total market into a small number of groups on the basis of the groups’ customer needs. In formulating their segmentation strategy, entrepreneurs have to put into consideration different segmentation variables (Longenecker, 2010, p. 190).
The variables are the parameters upon which the segmentation is conducted. Wal-Mart has adopted price as its segmentation variable. The firm has segmented its market on the basis of the customers’ price sensitivity.
The firm attains this by targeting middle and low income consumers located in different parts of the world. This arose from realization of the fact that consumers are price sensitive in their purchasing patterns.
To attain this, Wal-Mart has adopted a broad product mix where it procures different products from its supplies in bulk. This benefits the firm through quantity discounts which are passed on to the customers via lower prices.
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Suggestions for improvement and impact of generic strategies and segmentation on the firm’s marketing and positioning
By adopting the cost-leadership generic strategy, Wal-Mart has managed to develop a high competitive advantage. The firm has managed to attract a large number of customers thus increasing its profit maximization objective.
Additionally, the firm has managed to position itself as the global leader in the retailing industry. Despite its effectiveness in offering a wide range of products, Wal-Mart made a strategic mistake when it reduced its product offering.
This led into a significant decline in its customer base since they could not make their purchases under one roof. To deal with this, Wal-Mart should incorporate the concept of product-line extension.
Wal-Mart has been effective over the years it has been in operation. This has been attained through effective formulation and implementation of generic strategies. The result is that the firm has effectively positioned itself in the market as a low-cost leader. Its market position has played a vital role in countering competition which is very intense in the retailing industry.
Carkenord, B. (2009). Seven steps to mastering business analysis. Ft. Lauderdale, Fla: John Ross Publishers.
Longenecker, J. (2010). Small business management: launching and growing entrepreneurial ventures. Australia: South-Western Cengage Learning.
Pahl, N. & Ritcher, A. (2009). SWOT analysis-idea, methodology and a practical approach. Cologne: Munchen Grin Verlag GmbH.