Dissertation > Economic > Trade and Economic > China's domestic trade and economic > Commercial institutional and organizational > Supermarkets, chain stores,specialty stores

Analysis of Wal-Mart’s Marketing Strategies Based on 7Ps and Its Enlightenment to China’s Retailing

Author XueYongYan
Tutor HuYingKun
School Dongbei University of Finance
Course International Trade
Keywords Wal-Mart 7Ps marketing strategies China’s retailing
CLC F721.7
Type Master's thesis
Year 2010
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Retailing is an important part of a country’s economy and its development trend reflects a country’s overall economic trends. More specifically, retailing is the barometer which reflects both national and regional economic situation. Whether development of national economy is coordinating, whether social and economic structure is reasonable, it will be manifested first of all in circulation, especially in the consumer market. Every change and progress of retailing has brought about the improved quality of life, and even triggered a new way of life. Modern retailing is a combination of high investment and high technologies. Now, retailers use the most advanced computers and various communications technologies to respond quickly to the changing consumer demand.Since 1990s, especially under the promotion of China’s accession to the WTO, China’s retailing has maintained continued and rapid development. Meanwhile China’s retailing has accelerated pace of opening up and international retail giants have stepped up pace into China. By this time, the domestic retailing industry is facing enormous pressure and challenges.With the entry of foreign capital, the development of China’s retailing is characterized by coexistence of old and new retailing formats, rapid increase of scale, market concentration as well as the rising level of modernization. However, compared with some international retailing giants, China’s retailing overall still has small scale, ragged formats, large gap on management level and many other issues. How to face these realities and take appropriate measures to meet this challenge, and how to seek greater development space for China’s retailing, we still has a long way to go. In order to participate effectively in international competition, China’s retailing, first of all, needs to upgrade its overall strength.During the internationalization of world retailing, Wal-Mart has become the outstanding representative and created myth of retailing. It entered China in 1996, and opened the first Wal-Mart shopping plaza, and Sam’s Club Store in Shenzhen. Currently Wal-Mart operates a number of formats in China, including the shopping plaza, Sam’s Club store, community store, etc. By August 5th,2010, it has opened 189 shopping malls in 101 cities of 20 provinces and created more than 50,000 jobs.This paper combines international and domestic environment China’s retailing faces with Wal-Mart’s business practices, analyzes the opportunities and challenges retailing enterprises in China are facing, and tries to provide some useful suggestions and strategies for domestic retailers. The whole paper can be divided into seven parts.The first chapter mainly gives a brief introduction to retailing industry, Wal-Mart as well as China’s retailing. Retailing industry is very important to people’s life and a country’s economic development. Development of world retailing went through many processes. Retailing formats experienced the changes form initial department store, chain store, discount store, convenience store, etc. to shopping mall. This change is complying with changes of consumer demand. Meanwhile, the increasing globalization of world economy and environmental changes of market competition bring along the internalization of retailing. Internalization also influenced domestic market a lot. More and more companies realize that internalization not only stands for future growing opportunities, but also gains growing acceleration for them under the fierce competition in both domestic and international market. It is known that Wal-Mart has become the most extraordinary representative of those retailing giants who expanded their business overseas.The second chapter provides the theoretical basis for the whole paper. Since 7Ps marketing mix includes relatively large content, it accounts for a single chapter to be introduced.7Ps refers to product, place, promotion, price, people, physical evidence and process strategies.7Ps strategies are used by business men as tools to assist them in pursuing their objectives.The third chapter uses 7Ps theory to elaborate Wal-Mart’s marketing practice. For every strategy, the paper demonstrates it in several perspectives. First of all, Wal-Mart’s product strategy is about commodity structure with rational distribution. It seeks to provide various kinds of commodities for customers and emphasizes high turnover of goods. For distribution strategy, it has efficient and perfect delivery system. It established more than 70 distribution centers to support branches. The distribution center has standard operation process. What’s more, its fleet always responds quickly to delivery order and every truck is equipped with a GPS receiver and the company can know the transportation status by satellite. For promotion strategy, Wal-Mart keeps advertising in low key. Compared with its competitors, Wal-Mart has limited budget on advertising. However, Wal-Mart always dedicates itself to charitable donation and public events to enhance its public relations. Price strategy is a very important part for Wal-Mart. It is known that every day low price has become a slogan and symbol of Wal-Mart. In order to achieve this, Wal-Mart has made many efforts like localizing purchase, avoiding intermediaries, etc. In terms of participants, Wal-Mart not only satisfies customers but also respects every employee. In Wal-Mart employees are called "partner" or "associate" rather than "employee", which can greatly motivate employees. Teamwork is encouraged in Wal-Mart. In addition, Wal-Mart also put high emphasis on employee training, providing fair and equal opportunity for every employee. Posters written with slogans are always shown to customers and salesmen must greet customers and smile once customers appear within ten feet, all of which is physical evidence of customer orientation. Wal-Mart provides thoughtful service during three stages which include decision-making of customers as well as post-purchase. It pays attention to every detail to win customers. The fourth chapter mainly talks about China’s retailing market. Basically, domestic retailing has led a rapid growth either in scale or in competitiveness. Both old and new business formants satisfy the changing demand from consumers. However, due to natural condition, economic background and some other reasons, imbalanced development happened on different regions and cities. Also the scale of retailing companies is much smaller than Wal-Mart. Meanwhile, price war resulted from excessive competition once maintained for a long time. Besides, economic benefit is below expectation because of blind investment and emphasis alone on sales volume. During the contest between China’s and international retailers, the only advantage is local advantage. International retailing capital must localize if it wants to survive. Localization needs time whereas China’s retailers don’t. Domestic retailers win a first hand in this aspect and it takes time for a foreign retailer to seize the market.The fifth chapter introduces some major domestic retailing enterprises. GOME and SUNING, two large home appliance enterprises, almost keep neck and neck in the expansion of stores. However, from the performance in 2008, GOME’s scale and profits had been surpassed by its main competitor SUNING. Beijing Hualian and Shanghai Bailian, two large retail groups with several business formats. Due to allying with some foreign enterprises, Hualian shares in recent years are in a period of rapid growth. By contrast, incubation stores of Bailian had severe losses in 2008 and supermarket sales were a little better than department sales. To sum up, both of them should enhance management level in future.The sixth chapter gives suggestions to China’s retailing industry on the basis of 7Ps theory again. The most important strategy for product is developing private brands. Only in this way, can China’s retailers attract loyal customers and increase additional values for commodities. What’s more important is to play a solid foundation for companies’ long-term development. For distribution system, because currently foreign retailers focus on big cities, domestic retailers can seize market opportunities in small and medium cities as well as some villages. The big gap between China’s retailing to foreign retailing giants lies in the level of logistics. China’s retailing companies haven’t put enough emphasis on establishment of information infrastructure and application of modern technologies. Besides, we still lack experienced logistic talents. Promotion channels are very common which can be known to every retailing company. Numerous advertisement means has appeared in the market nowadays. We should pay attention to innovation and avoid blind investment in the advertising. In addition, we also should learn from Wal-Mart that cares for the charity and customers. This is called sponsorship and emotional promotion. In terms of price strategy, the first thing we need to do is regulating price competition since it will cause potential danger to circulation industry. A better way to obtain more benefit is forming economies of scale, which can reduce purchase price. Another good experience that is learnt from Wal-Mart is thrift which means strictly control management cost. Finally, it is also very necessary to establish good relationship with suppliers and let them involve in the competition. For people strategy, we mainly need to reserve and train talents and stimulate employees’ passion because employees are an essential link in delivering products and service to customers and are also critical to create values for the company. For physical evidence, one the one hand, arrangement and design in the sale store should be convenient for customer visit and selection; on the other hand, service provider should deliver good service attitude and show a good image to customers. For the last strategy, process, the main point is customer orientation. Retailers need to work hard to cater to this nature by satisfying what they want most in many aspects, such as satisfying their personalized need, etc.Finally, the paper simply sums up the strategies Wal-Mart uses in its practice. It also points out the implications for China’s retailing industry in four aspects. Firstly, retailing companies should develop private brands which can bring competitive differentiation and save cost. Secondly they should enlarge company scale. A better way to obtain more benefit is forming economies of scale, which can reduce purchase price. Thirdly, China’s retailing companies should put enough emphasis on establishment of information infrastructure and application of modern technologies. Fast and advanced delivery system is guarantee of customer satisfaction. Finally, it is also very necessary to establish good relationship with suppliers and let them involve in the competition.Wal-Mart put customers’needs on the top of its business goal. By contrast, we seem to neglect this point. We must actively learn its advanced marketing experience and management skills, use modern marketing concepts to transform traditional business and accelerate industrial restructuring. Wal-Mart, as a successful example of rapid growth, its successful marketing strategies are worth learning and using for reference.

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