Introduction
With over 4,735 Walmart stores in the U.S and 210 distribution centers, Walmart ensures that its products are evenly distributed and readily available throughout the U.S market. Walmart utilizes intensive distribution channel design to ensure an effective Supply chain to get its products from suppliers to different retail locations. Having many company stores with the smooth distribution of goods and services has improved Walmart’s place element of the marketing mix by attracting customers to make shopping convenient through highly accessible store locations. Walmart also maintains a strong presence in the online market through e-commerce websites that offer a variety of goods and services. To market its products and services, Walmart employs a diversified mix of advertising media, including social network platforms, T.V., billboards, and their online marketing platform. By leveraging the product, price, place, and promotion elements of marketing mix, Walmart has become a successful international retailer.
Walmart’s Supply Chain (Place)
Walmart utilizes a combination of extensive online and non-online distribution channels to distribute its goods and services and enhance the company’s reach in the market. Over 11,700 Walmart retail nits are distributed in 28 countries and over 6,300 major retail shops (Walmart, 2022). Walmart leverages the state of the art supply chain Management (SPM) to ensure the efficient flow of its goods and services from the suppliers to the various retail destinations while maintaining its competitive pricing strategy.
First, dealing with bulky inventory such as Walmart’s has the problem of storage and the risk of getting overstocked, and the cost of storage for too much inventory. Overstocking a product when its demand is low leads to the bullwhip effect that negatively implicates the cost of production. Walmart introduced the concept of cross-docking for efficient inventory management. Depending on inventory needs, manufacturers load their products in Walmart’s delivery trailers and take them to Walmart’s warehouses, where they are repackaged and immediately distributed to retail locations without being stocked as inventory. Each distribution center network distributes merchandise that supports 90 to 100 Walmart stores (Walmart, 2022). Eliminating the need for storage in-between the supply chain reduces loss of damaged and perished goods and eliminates the risk of the bullwhip effect, minimizing overhead costs to maintain competitive pricing.
Walmart adopted an electronically Vendor Managed Inventory (VMI) system to automate its supply chain operation, cutting costs and improving efficiency. The system is able to monitor inventory levels to inform when the stock is getting low and indicate the demand for various goods at different locations. The VMI guarantees consumers that the products they need are available at all times (Wichmann et al., 2022). Therefore, Walmart can know what products are needed, in what quantity, the location, and when these products are needed. The VMI creates a significant link in Walmart’s supply chain, cuts costs to support Walmart’s pricing strategy, and improves customer experience by ensuring goods are always available on the shelves.
However, although efficient, the supply chain management used by Walmart creates the risks of empty shelves, disruption in the supply of particular goods, or inflation would affect Walmart’s inventory availability. Furthermore, using the non-stocking model, Walmart will likely face a significant inventory shortage when the global supply chain is affected. Walmart grappled with the surging inflation from high costs and snarled the global supply chain (Corkery, 2021). Despite the supply management method used by Walmart to save costs, it is susceptible to immediate changes in demand, supply, inflation, and the global supply chain.
Promotion
Sales are the core part of Walmart’s business, particularly e-commerce advertising. Walmart employs multiple marketing techniques and channels to enhance its sales. Walmart’s forms of advertisement are mainly used by social media, billboards, T.V. ads, and their websites. Advertisement is pivoted on building a reputation of delivering quality merchandise and services for the lowest prices possible by consistently using the pricing slogans such as “Everyday low prices,” Save money, live better,” “worry-free fresh,” and “lowest price store” (Wichman et al., 2022). The combined methods of advertising maximize Walmart’s reach to potential customers by running frequent promotions. The retail store also offers discounts across all seasons and has reliable warranties and replacement policies to guarantee affordable prices and high-quality goods.
Walmart uses segmentation to categorize the market and customers according to their needs. Psychographic and demographic segmentation strategies enable Walmart to break its customers into segments that affect purchasing behavior, such as beliefs, lifestyles, values, social status, and geographic location (Wichmann et al., 2022). For instance, Walmart’s psychographic segmentation is able to determine goods needed in different social class distribution locations. Walmart uses the undifferentiated targeting strategy to capture the global market and the Everyday Low Prices EDLP strategy to set competitive prices. Additionally, Walmart conducts targeted marketing campaigns through differentiated discounting, particularly in newly open retail shops. Walmart uses 59 different banners on their stores internationally, depending on the market environment. Finally, Walmart utilizes the positioning strategy to place itself in all markets, offering the lowest prices for goods and services.
Conclusion
Walmart is an organizational success attributable to tapping on the 4’Ps of the marketing mix, including product, price, place, and promotion. Walmart employs different programs to meet the competitive pressure in the industry and achieve growth and profitability despite offering the lowest prices to its consumers. On product element, Walmart offers a variety of products and services to become a one-stop shopping center. Walmart ensures that inventory sourcing is regulated to provide its customers with quality goods and products. The pricing for Walmart is established on EDLP to offer the lowest price possible all year round, which has increased corporate sales. The organization has different strategic retail locations evenly distributed to enhance accessibility. VMI supports the supply chain to ensure sufficient flow of goods in the sale locations while ensuring there is no warehouse storage hence cost and the bullwhip effect. Walmart promotes its products through an array of advertisement mediums such as billboards, social networks, and T.V. ads. However, the supply chain management creates a substantial risk of stocking storage in case of inflation, demand, supply, and global supply chain disruption. Walmart should tackle the supply chain’s potential challenge to maintain a stable performance, profitability, and reputation.
Recommendation
Walmart can mitigate the risks of supply chain distribution by introducing warehouses for buffer and anticipation inventory. Buffer inventory is an additional inventory of nonperishable goods to bridge the inventory gap caused by surges in demand, supply delays, transportation, and the global supply chain. Since VMI only evaluates internal factors when determining the supply chain, it cannot predict disruption in the larger market, creating opportunities for opportunity losses. Cushion inventory will prevent inefficiencies, shortages, and delays in the overall supply chain fulfillment process. Anticipation inventory is stock purchased and held due to an expected surge in demand. A sudden surge in demand for particular products using the current distribution model would lead to stock-outs, lost sales, and dissatisfied customers for Walmart. Anticipation inventory will enable Walmart to stock appropriately according to the predicted sales.
References
Corkery, M. (2021). Walmart beats expectations amid supply chain woes and labor costs. The New York Times.
Walmart. (2022). About.
Wichmann, J. R., Uppal, A., Sharma, A., & Dekimpe, M. G. (2022). A global perspective on the marketing mix across time and space. International Journal of Research in Marketing, 39(2), 502-521.