walmart and target business model discussion
please use this discussion board to compare Wal-Mart and Target with regard to their overall business model. These two are the major players and their business models are similar but different in may obvious and subtle ways. A business model is basically how a business makes and spends its money. Once you research and see how Wal-Mart truly operates, you will be amazed at the power they have in the marketplace. This is a discussion board and treat it as if you are a group of 20 to 25 students sitting around discussing the business models of Wal-Mart and Target.
You are required to have two original posts and two responses to classmates’ posts per discussion board. Reference needed.
Original post 1:
Original post 2:
Responses to classmates’ posts: (choose two of them to responses )
1.Target has positioned itself as mid-range department store, while Wal-Mart is a perceived lower-end department store. Both offer the same categories of merchandise, however Target is perceived a higher grade of merchandise than Wal-Mart.
Target’s slogan is “Expect More, Pay Less”, compared to Wal-Mart’s slogan “Low Prices. Every day. On everything.”
While Walmart and Target both are discounters, they cater to different customers. Walmart, which says its customers’ average household income ranges from $30,000 to $60,000, hammers its low-price message and focuses on stocking basics like tee shirts and underwear along with household goods.
Target, whose customers have a median household income of $64,000 a year, is known for carrying discounted designer clothes and home decor under the same roof as detergent and dishwashing liquid. This fashion-forward image hurt Target during the economic downturn. People didn’t perceive Target as having the best prices. To combat that, the retailer expanded its food offerings and began to emphasize low prices in its advertising. These two things put Target in direct competition with Walmart. They also started a 5 percent discount program for customers who use its branded credit or debit cards.
Walmart offers deeper discounts and a broader assortment of merchandise. Target, on the other hand, is still trying to appeal to higher-end shoppers.
Personally, I have never been a Target customer. Over Christmas my grandsons wanted a particular gift featured at Target. I reluctantly took them there to shop. Upon leaving, I told them that we would never shop a Target store again because the prices were too high and the selection was terrible. Yes, they did have a few nice products, but even on clearance they were priced beyond my comfort zone.
2.Wal-Mart is one of the world’s largest companies, and one of the world’s largest employers in the world. Wal-Mart’s strategy is “Everyday Low Prices”. Wal-Mart is globally known, and has been a leader in the industry because it prides itself on selling products at lower prices. Its model is built on low prices due to the large volume of sales at a minimal cost. Wal-Mart succeeds because it is able to maximize productivities and reduce costs, minimize operational and overhead expenses, and has the ability to force suppliers to lower prices due to its strong bargaining influences. Wal-Mart continues to thrive, because it is able to strategize and set the locations of its stores in areas and communities where people will buy their products.
Wal-Mart’s Strategic Business Model:
-Leader on Prices
-Invests to differentiate its products
-Competitive on variety of products
-Able to deliver a great experience
Target’s strategy is “Expect More. Pay Less.” Target prides itself on product value and improvement, all while providing an outstanding shopping experience. Target wants to appeal to consumers, and wants it to be their preferred shopping location. Target is able to offer name brand trendy products, at affordable prices. One of Target’s strengths is that it is favorably recognized and well respected by consumers, due to its ability to create a more pleasurable shopping experience . Target offers price matching, and it also offers a 5% discount upon use the Target’s REDcard.
Target’s low prices, but high quality name brand products, have allowed it to expand and stay competitive with retailers, such as Wal-Mart.
3.Wal-Mart and Target, along with Costco, are the top 3 retail chains in the world, but each pursues a different business model. Wal-Mart is the largest retail chain in the world with 11,000 stores in 27 countries. Target has 1,803 locations in the U.S., Canada which closed in 2015, and India.
Wal-Mart’s strategy focuses on “lead on price, differentiate on access, be competitive on assortment, and deliver a great experience.” No one can beat them on their price, due to an ability to leverage their buying power, and efficiencies in their distribution chain. Wal-Mart, in my opinion, does not deliver on its “great experience” strategy. I have gone into their stores at different times, days, and locations, and most of the time I experienced surly, unhappy associates, or no associates to help find an item, and associates that do not even acknowledge my presence. Most times I have gone to Wal-Mart, especially if it is a busy day like Saturday or the Holidays, customers are lined up across the store to check out. On more than one occasion I have left the store without purchasing because of the lines or rude associates.
Target’s strategy focuses on “great shopping anytime, anywhere, celebrating diversity, and expect more pay less.” I prefer Target shopping experience to Wal-Mart, because in the past I have noticed that the dirtiest Target store is cleaner than the cleanest Wal-Mart. Every time I go into Target I find friendly sales associates that ask how I am, whether they can help me, and just generally seem happier in their jobs than Wal-Mart associates. Target has a more fashionable clothes and home accessories than Wal-Mart.
As a consumer, I will pay more for higher quality fashionable merchandise delivered in an attractive atmosphere than to fight a crowd and wait to be checked through the registers. In the interest of full disclosure, I am a former Wal-Mart associate, and even the last few years I worked for them I would shop at Target, because of the better quality and atmosphere.
References:
Target Corporate Purposes & Beliefs, www.corporate.target.com
Key Elements of Wal-Mart Business Model, Vij, Ravi, Retrieved from www.revenuesandprofits.com
, 2015.
4.Walmart’s historical business strategy is being low cost focus and Target’s overall corporate strategy has seemed to “develop” over the years. Target began with low cost focus and quickly discovered they could not compete with Walmart. They are “developing” a differentiation strategy and have focused it in their four signature categories; Style, Baby, Kids, and Wellness.
Low cost strategy does not necessarily mean a company sells at the lowest price point in the industry, what it means is the company operates as the lowest cost competitor in the industry. Cost include cost of goods sold, cost of real estate, labor cost, etc. Walmart has a very unique approach with its suppliers. Their strategy is to become the biggest customer to the provider and continually drive down their cost. They often put businesses in a position after several years of doing business to accept price decreases (lower margins) or go out of business due to the percentage of their business Walmart accounts for.
Walmart believes that price, access, assortment, and experience drive customers to retailers. Walmart leads on price and assortment.
Target’s strategy as explained by CEO Brian Cornell in March of 2016 is to become customer centric which includes updating their loyalty programs and more personalized offers. Mr. Cornell also stated their differentiation strategy utilizing their four signature categories is an effect as their growth is three times higher than other categories.
Sources:
Target in 2016 and Beyond: Five Questions with CEO Brian Cornell, March2, 2016. Retrieved from https://corporate.target.com/article/2016/03/brian…
Business and Strategy, n/d. Retrieved from http://stock.walmart.com/investors/our-strategy/
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