Macro Environment Assignment: Case Analysis of Walmart
Task: You are required to prepare a macro environment assignment report related to a particular organization of your choice. The overall aim is to evaluate ways in which changes within this organization’s MACRO environment might impact upon its marketing strategies and activities.
You will be assessed on your ability to:
Within an evidence-based scenario of a potential change in any of the MACRO environment forces of your chosen organization:
A) Critically evaluate the company’s strategies for Sustainable competitive advantage Segmentation, targeting and positioning (STP), andBranding
B) Identify and critically assess two opportunities for growth within the organization’s MACRO environments
The present macro environment assignment undertakes Walmart which is one of the largest American retailers and comes under the world’s largest corporations. The company is in business for the last 50 years as the largest retailer and has served large volume of customers. The company continues to develop itself as the leader in sustainability, corporate philanthropy and employment opportunity (Walmart, 2021). The report analyzes the changes that have taken place in any of the macro environment of Walmart and critically evaluating the strategies implemented by the company in competitive advantage, STP and branding. Further, the report assesses critically two opportunities for growth for Walmart.
Summary Statement of the Change in Macro Environment of Walmart
Macro environment conditions affect the business in many ways by changing dynamic factors and leading to changes in avenues, competition and complexities. Further, macro environment also has an impact on marketing strategies of the business. Walmart has faced a huge change in is economic environment in the American market that it operates. The present coronavirus pandemic has created economic crisis with unprecedented scale and is created with demand shock, supply shock and financial shock. With huge job loss, Walmart is facing huge drop in purchasing power of maximum portion of the population (Priporas et al., 2019). Further US has faced changes in their social factor seen in the number of online in 2020 where large section of the population moved to online buying pattern even for their everyday needs (Statista, 2021). The volume of online sales for grocery and good sales has increased in US and this has an impact on Walmart. Along with economic and social changes in the macro environment of Walmart the company has also faced changes in its technological environment such as extended reality, which is the extended version of augmented reality. This technology helps users to interact with digital objects through the screens of the smartphones (Marr, 2021). Such development has an impact on the efficiency of the Walmartand improvement of its online processes.
Critical Evaluation of Strategies of Walmart
Walmart has adopted various kinds of strategies to market its products such as competitive advantage, segmentation, targeting and positioning strategy and branding. Each of the marketing strategies is important in business because it helps the organization to develop communication with their potential customers marketing activities thus forms an integral part of the business operations because of the impact it has on the success of the entity (Walmart, 2021). Walmart has implemented strategies for marketing its products among its customers in relation to sustainability, STP and branding.
Sustainable Competitive Advantage
Competitive advantage refers to as the capability of the organization to achieve increased ad better performance in comparison to the competitors. It is important for the business to have experience-based adaptation that can help create competitive advantage. Sustainable competitive advantage refers to the process of creating value wherein the firm pursues innovation in the market to prefer it differently among the competition. The sustainable performance is considered as an important business action that helps in maximizing their value (Pratono et al., 2019). It is a force that enables business to market their products and attain greater success over the competitors.
Walmart is known for understanding its competitive pressure in the retail market and develop high strategic goals in the areas of opportunities and sustainability. The company has approached various competitive strategies based on its core capabilities and strengths.Walmart has been leading their sustainable journey since past 15 years and has been highly committed. With all the strategies adopted by Walmart the company has been able to attain sustainable competitive advantage through cost leadership from its supply chain strategy through low cost products, reduced inventory carrying costs, increased variety of products and highly competitive pricing (Haseeb et al., 2019). Walmart is known for its huge supply chain where it maintains wide variety of products to choose form. This has enabled them to attain competitive advantage and strength in the global market. The company has effectively and continuously worked on their supply chain processes to attain greater efficiency. In relation to supply chain it is seen that Walmart believes in continuous innovation.
This has enabled in managing wide supply chain through developing integrated process of experimentation (Walmart, 2021). Further, sustainable planning has enabled Walmart to cut down on various inventory cost by implementing integrated technology, direct shipping from manufacturers and regional warehouses. This has also helped in improving shopping experience of the consumers.
Attaining cost leadership has meant that the company has involved in low product differentiation. With much of their focus on low prices the company has poorly differentiated (Islami, Mustafa& Latkovikj, 2020). Walmart’s retail services are common among the big retailers of US and poor differentiation focus has made it face huge competition from other firms in the retail industry. This has made it necessary for the retailer to consider restructuring of its services and products to differentiate it from the competitors. Moreover, the cost leadership strategy adopted by Walmart to attain competitive advantage can be easily imitated by big retailers in US and this can reduce its ability to distinguish itself from the competitors (Walmart, 2021). This makes it necessary for the business to focus on differentiation along with bringing value to the customers and communities.
Segmentation, Targeting and Positioning Strategy
Market segmentation is referred to as an approach to identify potential customers and managing their needs through different marketing resources. Segmentation is an important strategy for an organization because it helps in targeting potential customers efficiently based on different characteristics such as demographics, culture, attitudes, psychological, psychographics and behavioral (Camilleri, 2018). Thus, segmentation enable an organization to implement a marketing strategy that is customer focused. Based on each segment that company targets its customers to market its products directly. It enables the business to identify the most profitable market segments. The segmentation, targeting and positioning strategy is the core focus of the success of Walmart. Walmart segmented its customers based on demographic, geographic, psychographic and behavioral segmentation. Based on demographic segmentation it is seen that Walmart segments its customers according to their age, ethnic groups and income (French, 2017). Walmart is seen to target customers from various age group because it supplies various kinds of products. Moreover, the company targets customers from low to middle income group people because of low cost products and number of ethnic groups in America and in other locations.
Under geographic segmentation it is seen that Walmart segments its market based on regions such as it targets customers from various regions across US as well as in international markets Africa, Asia and others. the company operates more than 10,800 stores across 25 countries. In addition to this, Walmart is also seen to segment its customers based on digital area where it targets e-commerce customers from its websites (Walmart, 2021). Under psychographic segmentation, Walmart is seen to segment its customers based on lifestyle and social class. The target market of Walmart includes people from both lower and middle social groups. Moreover, it also targets customers that have a lifestyle where quality is very important and lead a comfortable life where they can purchase everything from one place. Walmart is always focused on targeting customers that are “hard core loyal” individuals and purchase only from one brand for their needs (Walmart, 2021). Further, on the basis of behavioral segmentation it is seen that Walmart segments its market according to behaviors or has a particular kind of behavior when making their purchase decisions. In this relation Walmart targets consumer groups like brand aspirational, price-sensitive affluent and value price shoppers.
Even though Walmart is seen to segment its market based on these four segmentation strategies, yet it is evident that the company has failed to segment its customers in a broad manner. This is because most of its targeting is based on mono-segmentation of the market instead of a targeting mass market.
In relation to segmentation and targeting strategy, Walmart is also seen to position itself as a brand with customer-friendly prices and high-quality product. The company believes in direct sourcing where it sells the products to the customers directly from the source and this enables them to sell the products at most affordable prices. Offering low price product sold by Walmart directly depends on its supply chain capabilities in which it has competitive advantage. However, Walmart implements mono-segment positioning in which the company appeals to only one segment of customers such as the one that give greater value to price than in any other attributes of the products. this segmentation help Walmart to successfully place themselves in the target market (Pathak, 2016). However, such kind of positioning makes it difficult for the brand to generate much sales from the customers of other segments.
An organization has to engage itself in extensive branding strategies or be strategic in their branding efforts to ensure that its products and services reaches its customers and meet with high demand. Moreover, branding strategies allow the business to increase the trust of the consumers towards the brand because it reduces the perceived risk of the new product purchased. The branding strategy involves the long-term goals that a company aims to achieve through the evolution of a successful brand. It is the kind of promise that one makes to convey the message to the potential customers (Truong et al., 2017).
The branding strategy of Walmart is creating a brand identity that covey the message of comfort, perfect fit and great choice for all customers, associates and suppliers. This means that the branding strategy of Walmart can be compared to a pair of jeans that is made for the comfortable for the customers. Moreover, through its branding strategy of charging low price from the customers the company makes a brand promise of “save money, live better” (Walmart, 2021). They aim at offering shoppers with a better-quality life with one place access for all their needs and greater sustainability. This shows that Walmart is focused at implementing attitude branding by not only selling its product, however, it also creates an emotional connection between the brand and the customers. “Everyday low price” is the cornerstone strategy of the company. Along with attitude branding it is also seen that Walmart also implements private level branding strategy in which its own products with their own stamp of ownership on them. Its private labels include all kind of ever-expanding variety of items and aims at driving loyalty and profits. Recently, over 84% of the customers shopping in Walmart purchase their private label products every time. However, Walmart has routinely faced branding issues when it comes to reputation where it has been criticized for sourcing goods from china and driving out mon and pop stores (PATHAK, 2016). Further, lack of brand extension branding has made it difficult for Walmart to cope with the needs of the consumers because same product lines does not foster much conversation and sales with the rise in competition.
Two Opportunities for Growth within Walmart’s Macro Environment
From the above analysis it is seen that Walmart still faces wide scope of growth in the retail sector by making use of the present opportunities. It is evident that the current opportunities facing Walmart in the macro environment is the rise in the demand for online shopping due to the rise of covid-19 pandemic in recent years, need of product differentiation, the need for extended market segmentation with huge competition in retail sector and limited brand extension branding. Among all the growth opportunities faced by Walmart the two most evident growth opportunities for Walmart is rise in the demand for online products and high scope for product differentiation in the market.
Rise in online shopping- in relation to the rising pandemic it is seen that Walmart has received huge opportunities to map its growth from online retail sector. With time digital shopping will be highly important due to social distancing needs and time limitation. This has offered huge opportunity to the company to tap the opportunities in the digital platform and expand their digital strategies. The company maintains a static corporate website and this will not covert sales in long run with growing needs and knowledge of online shopping. In relation to Walmart it is also evident that the company has experience a 97% growth in its e-commerce in comparison to 27% growth of the retail industry (Kohan, 2021). However, online growth opportunity can be costly for the organization because it makes it necessary for Walmart to hire digital expertise and team to maintain and improve their static website. Moreover, online shopping can be a risky strategy because it increases the needs of the customers to improve their online consumer service.
Product differentiation- Walmart has always been focusing on cost leadership strategy with the aim to keep the price of their product low and capture a huge market share. However, there is huge scope for the company to indulge in product differentiation strategy that can enable them to be different from other retail firms. Retail service is a common service and it is important for Walmart to implement differentiation to effectively cope with rising competition. This will also enable Walmart to effectively widen their segmentation strategy by shifting from mono-segmentation to mass segmentation strategy by focusing on other product attributes along with price. Moreover, the production differentiation strategy will also allow Walmart to easily expand their product categories and product lines and implement brand extension branding (Pathak,2016). However, taking advantage of product differentiation opportunity is a challenging process in the retail sector because the products sold in the sector are common and are widely available in the market.
Walmart can take advantage of the two growth opportunities available to them in the macro environment with the help of certain strategies and actions:
- Firstly, it is recommended that Walmart should hire digital team to improve its website and online customer service quality. Moreover, they can indulge in timely updating their mobile apps to give the customers a different and unique experience.
- Secondly, it is recommended that Walmart can also form partnership with other e-commerce brands to sell their own private label products to the customers because it will help them improve their online service quality and expand their online selling.
- Lastly, it is recommended that Walmart should plan and enter into new product lines after conducting extensive research on the product lines of the customers so that it can differentiate their products and services from others.
These actions can be initiated by the company to take advantage of the present market opportunities and benefits in the macro environment.
From the above analysis it can be concluded that Walmart has effectively implemented competitive advantage strategies, STP strategies and branding strategies. While implementing these strategies it is seen that Walmart has attained competitive advantage over its competitors by maintaining a strong supply chain process. moreover, the company has segmented its market based on different segmentation variables such as demographics, psychographics, geographic and behavioral. However, it follows mono-segment positioning strategy based on low price of products, which has eliminated the brand from positioning itself based on other product attributes. Based on this, it can be stated that the company has two growth opportunities such as implementing differentiation strategy and improving online shopping channels.
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