Walmart inc. Takes on amazon Harvard Case Solution & Analysis

Walmart inc. Takes on amazon Case Study Solution

Psychographic segmentation

In addition to this, the company also uses the psychographic segmentation strategy and have a closer look over the psyche of the customers and came to know that the customer prefers to buy the high qualityeveryday products at affordable prices. Being the low-cost provider in the US retail market, the company is capable to serve the wider base of customers, capture business growth opportunity as well as increase sales.

Amazon

Demographic segmentation

The segmentation strategy of the company is based on the purchase behaviors of the customers. Under the demographic segmentation strategy, the company targets customers with internet access, age group of 25 to 50 years as 45 percent of the online buyers belong to the 35-49 age group. As the tech savvy buyers constitutes major proportion of the overall population of the US, the company increases the profitability by targeting customers who are well-informed about the use of the modern technology.

Behavioural segmentation

Under the Behavioural segmentation strategy, the company targets those customers who seeks convenience when buying a product online and have interest in new products and categories. Additionally, these customers opt for the quality products at the low prices and make comparison between products from different companies before making a buying decision online. Keeping in mind the behavior of the customers, the company provides various benefits to its customers including convenience, product assortment and competitive prices.

Psychographic segmentation

Under the Psychographic segmentation, the company segments customers by loyalty and customers who like changes to the website and innovation. Also, the company targets customers whose lifestyle could be included aspirer, reformer, explorer, resigned, mainstreamer and struggler.

Geographic segmentation

Under the geographic segmentation strategy, the company has been operating domestically and internationally and focuses on the digital sales over the real world sales. The company also focuses on the well-developed areas where there is a compulsive and a frequent use of the smartphone or computer.

Positioning strategy

Walmart:

Being the renowned and largest US based retailer, the company positioned itself in the market as a low-cost provider of high quality everyday products that meets the expectation and needs of the customers. The customers perceives Walmart as a customer-centric and discount store because of the fact that the company has maintained and developed the strong relationship with its customers.

The customer friendly prices as well as the focus on improving the customer services are the core considerations for the company. The pricing strategy of the company is the major reason of the growing popularity of the company in the highly competitive market arena. Thus, the positioning strategy of Walmart is low prices as well as satisfied customer services which includes convenient hours, friendly service, good quality merchandise as well as the pleasant and satisfied shopping experience (Mohammed, 2019).

Amazon

The company offers both low price as well as value to the customers. The brand of Amazon is built on the satisfaction and convenience of customers. It is perceived to be the customer-friendly brand, which means that the company positioned itself in the market as the most convenient company with the best customer service and lowest prices in the market. The positioning strategy of the e-commerce giant i.e. Amazon is based on various elements which are as follows;

• Comprehensive selection
• Instant access
• Extraordinary convenience and
• Low prices

Customer analysis

Walmart:

Being the provider of the everyday items to the customers, the company targets price-sensitive customers who are in search for the affordable products that meet their needs and expectations to greater extent. The purchase decision of the price sensitive customers is prone to the little changes in the price of the products, hence they prefer to switch from one company to another providing low cost products and due to the presence of low cost providers and e-commerce giants, they could easily shift from Walmart to amazon and other indirect competitors. In addition to the price sensitive buyers, the company also targets value price shoppers and brandy aspirational shoppers.

The company targets specific customers on the basis of their income levels but also markets based on population due to which the company has launched various stores which targets different segments of customers based on their income level which are as follows;

• Discount Stores: the company operates 1568 discount stores which serves the price sensitive customers who wants pocket-friendly household items including groceries, toiletries and cleaning supplies.
• Supercentres: offering products through supercentres means that the company targets middle-class resides in the highly populated areas.
• SAM's Clubs: it is the high end membership-only clubs chains that offers bulk buying to the customers and targets the affluent and high earners.

Amazon

The targets customers of the company include middle class and upper class social groups who have an increased inclination towards using mobile phones and e-commerce to make purchase decision and find it convenient and comfortable to compare the products, assess the reviews, evaluates the attributes and features of the product, and then make informed decision. There are 310 million active customers of the company all around the globe, 90 million of which are Amazon Prime Members with the average spending of $1300/year on the platform and the remaining 220 millionAmazon Non-Prime Members with the average spending of $700 per year on the platform.

Alternatives:

Alternative 1 – Investment in technology

Pros

• Improvement in the technological use results in time saving i.e. performing actions with more speed leading to increased cash flow and revenue generation.
• A significant reduction in the errors allows the employees to efficiently manage the larger workloads.
• It allows the organization to keep its business operations updated with the changes in the industrial trends, and lead to the production of innovative products.
• Wireless access to internet and cloud storage is allowed from any location providing the ability to respond quickly.

Cons

• An increased usage of technology might result in distraction i.e. frequent mail checking. for a response expected the user leading to a reduction in productivity.
• Increased investment in technology might bring reduction in the total assets of the organization leading a decline in the equity of shareholder.
• It might create an immediate impact on the income growth of the organization leading to a decline in business income.

Alternative 2 – Improve the in-store capacity

Pros

• It would bring improvement in the experience of customers who visit the stores to purchase different goods followed by the presence of highly differentiated and wide-variety of products in the stores.
• Increased customer satisfaction would improve the shopping percentage of customers i.e. 13 percent of the 92 million customers.
• In-store shopping would provide customers with the opportunity to develop interaction with both the product and the management before the completion of a purchase.
• It would grab the attention of the customers who like to see inventory in-person leading to the generation of returns.

Cons

• It might disturb the concentration and focus on the online business sales because online business sales also requires time to be monitor and evaluate the customers.
• Expanding the capacity of in-store service would increase the number of monthly bills resulting in the organization to have more financial responsibilities.
• It also requires the hiring of more in-store sales person to provide assistance to customers, inventory management and overseeing the store.
• It would influence the perception of the customers regarding the product quality, customer service, and other related aspects.

Alternative 3 – Pursue Omni channel

Pros

• Use of Omni-channel distribution strategy provides customers with a more satisfied experience leading to a boost in the customer loyalty.
• It leads to the development of singular interpersonal relationship with the potential customer base.
• It significantly supports the long-term growth of brick-and-mortar in association with the presence of e-commerce.
• It allows the journey of the customers to flow through multiple channels and make sure that a personalized experience is received by the customer.
• It would lead to increased conversion of visitors to customers followed by the trust based on the availability of the information about products on different channels.

Cons

• Implementation of an Omni-channel strategy would require the organization to bring change in the organizational structure.
• The storage, packaging, and delivery of inventory to multiple cities required additional cost but would lead to high profit margins.

Decision criteria

Recommendation

Based on the alternatives following the issue of limited presence in e-commerce and growing demand of the e-commerceworldwide following the increased inclination of the customers to make purchase decisions after evaluating the products based on features, added-value, quality, ease and convenience, the company is advised to accelerate its efforts in the e-commerce and drive sales.

By analyzing the overall situation, it is recommended that the company should adopt the last alternative of adopting the Omni-channel strategy. In doing so, it should develop a vast online strategy along with the brick and mortar model. Implementing such a strategy, Walmart should publish its new items through the online model. Such will generate huge attention and will also create brand virility and product awareness in the market, complementing the brick and mortar model too.By offering appealing mix of the online product or services to the customers, the company would be able to remain competitive in the Amazon dominated retrialindustry.Following is the short term and long term plan recommended to Walmart(HENSEL, 2019 ).

Short term plan

The company should build the variety of the Omni channel services which ranges grocery pickups as well as the ability to place order with the use of the phone with the with an in-store associate and assortment of the premium brands such as Levi’s and Betsey Johnson in the apparel of kids to get big-ticket items into the baskets of the online buyers. The company, by buildinga more favorable merchandise mix would be able to improve profit margins in e-commerce.

Long term plan

The company would need to find new ways to build customer loyalty which could be done through membership programs for the unlimited deliveries of groceries and fast service. It must have more visibility in warehouses, standardize the quality of shipping and packing.  The company would also need to accelerate its path to success by enhancing efficiency in its supply chain. Focusing on delighting customers would be the cornerstone of the company’s growth and success in e-commerce. The company could also launch the new service allowing third-party vendors to hire retailers to pack, ship & store products, hence making company able to compete with e-commerce giant – Amazon.

Implementation and Control:

Set goals

The implementation of the Omni-channel approach requires changes in the organizational changes followed by goal setting. The approach to set goals is required to be specific and measurable so that the organization would have the ability to track the success or failure of the organization and the comparison of sales after implementation to reach the ultimate goal of remaining competitive and increasing the sales growth.

Know your customer

The Omni-channel in the retail industry is known to be highly effective when the organization is well-aware of the areas that require focus and increased concentration. Due to this reason, this step would deal with the identification of the target customer base and its location. For this purpose, the organization must lead the creation of customer persona to assist in successful implementation. The identification of a potential customer base would significantly allow the organization to bring improvement in the customer journey customer-oriented and more personalized.

Map out the customer journey

This step is based on mapping the journey of customers which tend to be based on the findings of the key factors i.e. the route taken by the customer to make a purchase, the channel used for the purchase, the experience of the customers, rate or frequency of order cancellation. This to identify the areas of improvement in order to develop an appropriate strategic approach.

Setting up and using channels

In this step, the channels for the implementation would be determined and set up in order to appeal to the target customer base. This requires the optimization of all the channels to prioritize one platform that would fit with the needs and demands of the customers and the strategic approach of the organization.

Optimizing and developing

After the implementation of the Omni-channel approach, the crucial step is the optimization and monitoring of the outcome. This is important to determine the effectiveness of the approach on the customers and to evaluate the impact of expected changes on the growth and maintenance of organizational position in the highly competitive retail industry.

Conclusion:

Considering the continuous evolution of the retail industry, there has been a rapid change in the market dynamics that tends to be based on consumer preferences, attitudes, and demographic shifts.There is a requirement to make evolve with the customers continuously due to a significant change in the change in aspirations and lifestyle needs. Due to this reason, focusing on delighting customers would be the cornerstone of the company’s growth and success in e-commerce.The positioning strategy of Walmart is low prices as well as satisfied customer services which includes convenient hours, friendly service, good quality merchandise as well as the pleasant and satisfying shopping experience.

The capability to understand the consumer needs, demand, and change in behavior would allow the organization to bring improvement in-store shopping experience because nearly half of the customers tend to spend an additional $60 during in-store purchases.To become more competitive in the market, Walmart should focus on expanding its Omnichannel services and updated this with ordering and in-store pickup.It would lead to increased conversion of visitors to customers followed by the trust based on the availability of the information about products on different channels.By offering an appealing mix of the online product or services to the customers, the company would be able to remain competitive in the Amazon dominated retrial industry....................................

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