Aggressive Marketing in the Present World - Case Study Example

WAL-MART EFFECT In the present marketing world aggressive marketing is the new mantra. Due to the changing trends and tastes of customers the retailers are exploring new ways of marketing. Advertising, considerably slashing the prices of the commodities, increasing the discount rates, etc., are the methods used by the companies to stay in the extremely competitive market. In any marketing sector marketing plan is considered to be very important and a thoughtful business plan cannot be overemphasizes because much hinges on it: financial support, management of the available resources like operation and finances, credit from suppliers, promotion and marketing and last but not the least company's goals and achievements. Wal-Mart, Target and Kmart are the top retailers in the present American market. Each of them is having more than 1000 stores. Wal-Mart is the king of the ring. It's the number one retailer in United States of America. Target is slowly moving closer to Wal-Mart and has become a tough competitor to Wal-Mart. Kmart has a long history; recently it is trying to emerge from bankruptcy reorganization. Kmart is slowly losing its customers to Wal-Mart. Their strategies include low price and highly qualified customer care service. This factor played an important role in the long-term development of the Hotel. The cheaper prices with high quality service and further free goodies attracted many. Another factor is the customer service. Customer plays an important role in the development of the company because it is the customer who uses the product that was developed by the companies was good at it. Before being bankrupted Kmart was the second best retailer after Wal-Mart. Both companies used different strategies to outsmart each other. They tried different strategies to woo the customers. After coming out from bankruptcy Kmart found that it has lost most of the customers to Wal-Mart and other retailers like Target. Its total net profit also declined considerably. Target took this opportunity to its full advantage and started aggressive campaigning. Though the think tank of Target knew that most of Kmart's customers would go to Wal-Mart rather than coming to Target's stores, they started slashing the prices of the products and announced heavy discounts on them. They used innovative ideas to woo the customers. To maintain its top position Wal-Mart used to slash the rates so that when customers come to purchase the items would buy other products also. These items were termed as loss leaders. Most of the middle class families are Wal-Mart's customers. Target aimed at upper middle class. Because of this stiff competition between Wal-Mart, Kmart, Target, Costco, etc., customer has wide range of choices to choose. Customer can buy products at discount rates. The companies are employing every possible method to woo the customers to their stores. Due to the bankruptcy Kmart lost its most of the investors to other retailing companies. The company that largely profited by this was Wal-Mart that was so much preoccupied of defeating Kmart. Most of the investors purchase bonds. A bond is nothing but a promissory note that the company would repay the sum over a certain period at a certain interest rate. Bonds are also called as debentures. If the company is in trouble and has to be dissolved, bondholders must be paid in full before paying the stockholders. Experts advise the investors to buy both Wal-Mart and Target stock. Both the companies had seen upswing of their net profit in the recent past. In the present market everything sells by brand names, the marketers are expected to put up good brand name products for sale. The purchaser desires to have or own a good brand name product and material with good quality at reasonable and cheaper rate. If the marketers were able to meet this demand of people of the society, definitely there would be a souring business for their product. Wal-Mart from its good service, customer support service and with competitive prices has achieved this. The advertisers and marketers say that they would be able supply anything to customers what they want. It may be right to say that marketers and advertisers are in a position to meet the desires of customers up to some level. In order to provide those customers with a branding strategy, they tailored it to the actual market. Outside the country, where they needed to build a strong brand, such as in the United States, the goal was to provide that of a campaign dedicated to customer service Beta is defined as "a measure of a security's or portfolio's volatility, or systematic risk, in comparison to the market as a whole. Also known as beta coefficient" (Jesse). Beta is related how to manage money, it can be for personal budgeting or to run a company. Money swings in the market, when financial crises arises in company, how financial needs are managed viz., in stock market most probably finance inflation may rise or fall and at the same time company's share market also fluctuates that may effect bank interest rate. Company's (like Wal-Mart, Kmart, etc.,) security returns will also be affected. If oil price are increased in the market there will be considerable impact on other goods. Indirectly the price of other goods will rise. There is an overall risk of raising capital for firms. Whenever any entrepreneur wants to run a company/firm with low budget and high profit, entrepreneur would consider different terms of interest rate, production, long-run growth, and company debentures. A mix portfolio of 40% is invested in A + 40% of investment in B, which may earn only 7% in a good market but booms to 14% in a recession, and the other 20% in government investment G earning 4%. Portfolio Expected Return for Portfolio P: E(RP) = [.40 x E(RA)] + [.40 x E(RB)] + [.20 x E(RG)] Where E(RA) =8.8%, E(RB) =9.8% and E(RG) = 4% (the risk-free rate) E(RP) = (.40 x .088) + (.40 x .098) + (.20 x .04) E(RP) = .0824 or 8.24%. Total risk of any investment is equal to both the market risk and diversifiable risk. "The market risk is called systematic risk and the diversifiable risk is called as unsystematic" (D. B. Hamm). Total risk = market risk + diversifiable risk = Systematic risk + Unsystematic risk. Systematic risk or market risk is measured by beta coefficient or . The general rule for beta is give as follows: =1.0 indicates the risks involved in investment in market are normal. 1.0 indicates risks involved in investments in marker are above normal. Suppose if the beta value of a company is = 1.2 the risks involved is 20% higher than the normal risk. If = 0.8 then the investment has 20% below market risk. Risks are involved in the investment market; if the potential returns are higher then potential risks involved in it are also higher. A clever investor wants his money to be doubled or at least the amount invested should return. The company that is having = 1.0 is mostly favored by the investors. More or less Wal-Mart value is just above normal market risk. TOWA matrix (Threats-Opportunities-Weaknesses-Strengths) has been used to develop feasible alternative strategies. The matrix consists of four quadrants. They are (1) using strengths to overcome weaknesses, (2) Using strengths to overcome threats, (3) overcoming weaknesses to take advantage of opportunities and (4) overcoming weaknesses to address threats. First quadrant concentrates on possible strength-opportunity strategies. Important factors are to hire highly skilled workers, wide brand recognition, customer satisfaction, effectively and efficiently raising capital resources, etc. Second quadrant concentrates on possible strength-threat strategies. Important threats that have to overcome are changing government regulations, seasonal shopping, and competition from other Hotels, protect business and customer information, currency exchange, etc. Third and Fourth quadrants concentrates on Possible Weakness-Opportunity Strategies and Possible Weakness-Threat Strategy. Third quadrant looks at reviewing product, develop standards up to the customer satisfaction, etc. Fourth quadrant looks at implementing backup systems, implementing policies to protect and avoid security risks. References Charles Fishman. The Wal-Mart Effect. Penguin Books: New York. 2006. Alison, Stewart. "Is One Beta Good Enough" Managerial Accounting 63, 9.Mar. 1991: pg 38-40. Terence J. Downing. Wal-Mart study faulted by engineering firm. 11 April 2005. The Enterprise. 17 Mar. 2006. http://enterprise.southofboston.com/articles/2005/04/11/news/news/news06.txt --> Hunter G. Target versus Wal-Mart, Wal-Mart Competitive Analysis. 31 Jul. 2005. echeat.com. 15 Mar. 2006 http://www.echeat.com/essay.phpt=27488. Mathew Emmert. Reinventing Kmart. 16 June. 2003. The Motley Fool. 15 Mar. 2006 http://www.fool.com/mft03061604.htm Daniel C. Leonard. KMART CORPORATION COPMANY FORECAST. 20 May 2003. Ctopc. 15 Mar. 2006 http://www.ctocp.com/Kmartpage.htm --> Read More