Walmarts Cost Leadership Strategy

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"We save people money so they can live better." This all too popular mission statement is not to be taken lightly. The retail industry is dominated by few retail giants, with Wal-Mart competing in several retail categories. Wal-Mart competes against Kmart and Target in the general merchandise retailing; against Costco in the warehouse club segment; and against Giant and Safeway in the supermarket retailing realm. The core feature of Wal-Mart’s strategy is overall low-cost leadership. According to the text, cost leadership is a lower-cost competitive strategy that aims at the broad mass market and requires “aggressive constructions of efficient-scale facilities, vigorous pursuit of cost reductions from experience, tight cost and overhead control, avoidance of marginal customer accounts, and cost minimization in areas like…” It attracts a broad spectrum of customers by supplying a wide selection of the lowest-cost general merchandise. When it comes to marketing your business, there are three generic strategies you can use: focus, differentiation and cost leadership. While the cost leadership strategy can be highly successful, it can be quite difficult to employ. It involves marketing your company as the cheapest source for a good or service. This means that you need to minimize your costs and pass the savings on to your customers. Wal-Mart Stores Inc. has been successful using its strategy of everyday low prices to attract customers. The idea of everyday low prices is to offer products at a cheaper rate than competitors on a consistent basis, rather than relying on sales. Wal-Mart is able to achieve this due to its large scale and efficient supply chain. They source products from cheap domestic suppliers and from low-wage foreign markets. This allows the company to sell their items at low prices and to profit off thin margins at a high

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