Pricing Differences in Sears, Wal-Mart Urban Outfitters and Other Retail Malls – Term Paper Example
Marketing a Business Marketing a Business The inability of Sears or Wal-Mart to create a trendy counterculture image
The very model at which Wal-Mart operates its business is antagonistic to the whole idea of creating this counterculture. If we look at business model of Wal-Mart, we shall see that it operates on a principle of penetration and economy pricing. Therefore, by pricing its products at a lower price than others, the company tends to attract maximum customers. There is also minimum amount of investment on the experience of customization of the process that further changes the corporate model of delivery (Fishman, 2006). Therefore, this very model focuses on locking on to the customers and providing them EDLP (Every day low pricing). Therefore, from the above definition, it can be comprehended hat Wal-Mart focuses on the production of High volume-low margin products. Therefore customization, which is an essential quality to create a level of difference in the products, is remarkably missing. Therefore, for the creation of economies of scale, it is extremely important. That it achieves high amount of sales. So, we can conclude that Sears or Wal-Mart can never create an effective counterculture image.
Big box stores selling merchandise similar to Urban Outfitters
The fundamental policy of the big box retail stores is fundamentally different from the stores that sell customized material. The retail chains concentrate on a large number of customers for their business to be successful. Therefore, the production and the sales both have to be extremely high for the breakeven\n and the economies of scale to be achieved in business. The production pattern of merchandise in a store that sells customized material is much difference from the ones that are selling materials on a bulk like Wal-Mart or Sears. In those stores, the amount for each product line is kept very small in amount. This is done to create scarcity and a sense of exclusivity (Lichtenstein, 2009). They are also encouraged to keep the markdowns less so as to maintain the freshness of the products. Therefore, the products are encouraged to be fast moving in nature. On the other hand, the bigger stores believe in zero amount of customization and foster to a larger market. They believe in high volume production of goods. Secondly, the pricing strategy of the bigger stores is different from that of the smaller stores (stores that concentrate on niche merchandise).the former have the policy of penetration pricing and economic pricing (Fishman, 2006). Sometimes they even follow the policy of bundling pricing. However, the niche stores follow the strategy of premium pricing. Thirdly, the types of customers that they both cater to are fundamentally different in nature. While the former concentrate on middle and lower level income groups, the latter target the high end income group with greater disposable income. So, it is not viable for the bigger stores to sell materials similar to Urban Outfitters.
Reasons why exclusivity is important
Exclusivity is important for a host of reasons. It is a great asset if used properly. Generally, it gives the advantage of being a pioneer in a particular field. It can lead to the business getting a head start and leading to monopoly in a business. This would help in rapid market penetration and dominance. The service may also become synonymous with the company in certain cases. As for example, Xerox is synonymous with the concept of photocopiers. Secondly, it leads to the gaining of a transferred value for the customer, the whole feeling of belonging to a select group of individuals owning a product or service. Thirdly, exclusivity tends to satisfy the higher needs of an individual and leads to a feeling of satisfaction.
Is shopping an entertainment
No, I do not agree with the fact that shopping is entertainment. The decisions of the consumers are also highly variant in all these cases. The reasons for shopping are many. Some may only shop to satisfy the basic needs, some may shop even after the basic needs are satisfied. Therefore, the whole experience of shopping is based in the demographics and the hierarchical position of the individual on the societal spectrum. According to the EKB model, there should be a quantitative evaluation after the purchase is made by the individuals (Ingram, Yue & Rao, 2010). This reinforces the perception and strengthens the buying pattern. Therefore, the type of impression created by the buying is not general in people. If the feedback loop is positive, then repeat purchases happen in the future and vice versa. The Black Box theory concentrates on the interaction s between the buyer as well as the set of stimuli. Summing it up, it can be said that shopping is dependent on a lot of factors like race, ethnicity, demographics, psychographics, the past experience, friends and others. So, it cannot be overtly stated that shopping is an entertainment.
Fishman, C. (2006). The Wal-Mart effect: how the worlds most powerful company really works-- and how its transforming the American economy. London: Penguin Press.
Ingram, P., Yue, L.Q. & Rao, H. (2010). Trouble in Store: Probes, Protests, and Store Openings by Wal‐Mart, 1998–2007. American Journal of Sociology, 116(1): pp 53–92.
Lichtenstein, N. (2010). The Retail Revolution: How Wal-Mart Created a Brave New World of Business. NY: Picador.