Consumer Behaviour of Walmart - Case Study Example

Consumer Behaviour of Walmart Table of Contents Consumer Behaviour of Walmart Introduction 3 Shopping and Purchase Environment 4 Perception and Self 5 Motivation and Values 7 Attitude Influencing Consumer Behavior 8 Decision-Making in Consumer Behavior 9 Conclusion 10 Recommendations 10 Bibliography 12 Introduction Walmart is an American retail supermarket chain founded in 1962 by Sam Walton in Roger, Arkansas (Wal-Mart Stores, Inc., 2015a). Currently, it is headquartered in Bentonville, Arkansas. Since its inception, it aims at helping customers to save money by offering discounts on its products and services and improving the standard of living of the people. Starting as a small discount retailer, it has created a large supply chain by opening numerous stores in the United States and has also expanded internationally (Callahan and Zimmerman, 2003). It operates with more than 11,000 retail stores in 27 countries. It also has a huge customer base internationally with whom it interacts through the eCommerce site of the company across 11 countries (Wal-Mart Stores, Inc., 2015b). Walmart Global eCommerce is based in California and looks after the online, mobile and social innovation aspect by operating the sites such as Walmart.com and @WalmartLabs (Wal-Mart Stores, Inc., 2015b). Walmart operates through three types of primary stores in the United States, Walmart Supercenter, Walmart Discount Stores and Walmart Neighborhood Market (Wal-Mart Stores, Inc., 2015c). The corporation started building Supercenters in 1988 and this decision changed the path of development of the enterprise as it became the largest grocer in the U.S market. These Supercenters are open 24 hours and they offer a one stop shopping experience to their customers for apparel, home furnishings, toys and electronics along with a grocery store with fresh produce, dairy products and bakery. The supercenters are also equipped with specialty shops such as health clinics, pharmacies, hair salons and banks. Walmart discount stores are smaller than Supercenters and they also offer similar services such as the supercenters but in a more open and brightly lit space. Established in 1998, the Walmart Neighborhood Markets are designed for a smaller footprint choice for communities who are in need for affordable pharmacy and fresh grocery (Wal-Mart Stores, Inc., 2015c). Walmart entered the international market in 1991 and currently operates in 26 countries across the world outside the U.S. In the recent times, Walmart International is the fastest growing part of the business and it tries to utilize the full capacity of its global resources to meet the needs of the local communities (Wal-Mart Stores, Inc., 2015d). Shopping and Purchase Environment When there is a very little differentiation in the products and services available in the stores and e-commerce sites, customer shopping experience can be improved by providing superior service to them as a result of which they would like to return to the particular retailer for future purchases. Enterprises in the retail industry has started realizing the importance of enhancing shopping experience of customers and are working innovatively for achieving this objective (Management Association, Information Resources, 2014; Solomon, 2006). Though Walmart is dedicated in providing quality services to its customers at lower prices than other supermarket players, it has been observed that all Supercenters do not offer the services according to the standards set by the organization. Customers often complain about the lack of sales persons in the stores, messy environment with goods placed in a haphazard manner, long queue at the clearing counters (Loeb, 2013; Singh, Hansen and Blattberg, 2004). This indicates that in order to increase the profit margin of the company, it had cut costs by reducing management staff significantly and as a result, the service at the Supercenters, Discount Stores and Neighborhood Market has been adversely affected. With intense competition in supermarket chains, Walmart is trying to improve its services in store which are not meeting the standards of customer service and is also taking major steps to provide pleasant and sustainable shopping experience to its online customer across the world. The largest retailer has recently launched its Walmart Sustainability Leaders shop which makes it easier for customer to find and purchase products made by companies with best scores in the Walmart sustainability Index (Wal-Mart Stores, Inc., 2015e). The Sustainability Consortium, a third party expert conducts surveys across product categories to evaluate the managing of social and environmental aspects by the companies operating in different product categories (Wal-Mart Stores, Inc., 2015e). This step will help customer to choose products from the most sustainable producer in each product category contributing positively to the environment as well. Perception and Self The self-perception theory highlights that individuals become aware of their own behavior and state of mind by recollecting their own behavior from past. Though this theory was developed within social psychology, it has significant implications in consumer behavior. The consumer behavior is considered as a dynamic phenomenon affected by past experience and information from external sources such as advertisement, relatives and promotional events. The past experience aspect of consumer behavior has been affected by self-perception (Loudon, 2001; Solomon, 2006). Self- perception of consumers has a significant influence on their behavior in the market place. A consumer prefers a particular brand as he or she believes that the chosen brand reflects its own self-image. Consumer behavior remains constant in the short term and changes gradually over time. Consumers prefer other brands only when they decide to change their self-images and perceive that the other brand reflects the characteristics of the individuals (Loudon, 2001).As a result, it is extremely important for organizations to study the self-perception of customers regarding what they think about purchasing a certain product and what are the characteristics that they prefer in a product. This helps the organization to develop products and services which attracts the consumer. Walmart, one of the largest supermarket chains in the world, regularly carries on various surveys among the consumers spread all over the world. This helps the company to launch specific products and services meeting the needs of the consumers according to their self-perception. For example, it has conducted the Engagement Survey in January 2013 through Google Consumer Surveys. It surveys 1500 respondents above the age of 18 from the U.S. internet population to get the perception of individuals regarding the purchase of an engagement ring. The survey revealed that sixty percent of the respondents believe that one should spend less than $2000 on an engagement ring which helped Walmart to design the price structure of its collection of engagement rings (Wal-Mart Stores, Inc., 2015f). Walmart also conducted a Talking Holidays Toys Survey by questioning 1009 children in the age group of 3 to 11 and also the parents of each child in 2102. They found out that kids are willing to do anything to get the toys they want in the Christmas holidays but parents prefer educational toys and they are highly focused on the price of the toys. The survey revealed that parents were trying to fulfill the wishes of the children but looked for toys at affordable prices. Thus, it helped Walmart to receive the perception of parents regarding buying the type of toys and thus it took advantage of its size and scale to meet the wants of the parents as well as the kids (Wal-Mart Stores, Inc., 2015g). Motivation and Values Enterprises try to satisfy customer needs but the reason for purchasing a particular product varies from person to person. Thus, the identification of customer’s motive behind the purchase of good or service is extremely important for the producers to appropriately fulfill customer wants. Traditionally, enterprises have focused on satisfying the customers need on the basis of utility obtained by consuming a good or service, but the purchase is motivated by the urge to have fun or explore new things also play a role in influencing consumer purchases. The process in which a consumer evaluates or chooses a particular product depends on the degree of involvement of the customer with the product, the purchase situation and the marketing message of the products. Involvement with the product ranges from very low to a very high degree. Low degree of involvement is indicated when the purchase is influenced by inertia, whereas, high degree of involvement occur when the consumers have a very strong bond with the products and services he or she purchases (Wright, R., 2006; Hawkins, 2007). Motivation of consumers is often driven by the underlying values of a consumer. Values are defined as the extent to which people share a belief shaped by individual, social and cultural forces. Values such as freedom, individuality, security and inner harmony affect the general consumption pattern of individuals (Wright, R., 2006; Solomon, 2006). Walmart cater to the various needs of its culturally and socially diverse customer base by offering a huge number of products with various brands in each product category. It also offers a various specialized services in the supercenters, discount centers and the neighborhood market. Moreover, the enterprise contributes towards the development of the society as a whole. It has been observed that the food supply in the world must be increased by 70% by 2050 in order to meet the needs of the rising population. Walmart tries to include sustainability in its operation by involving the small holders in the process of sustainable agricultural intensification (Wal-Mart Stores, Inc., 2015h).Big retailer such as Walmart also faces many challenges to collaborate with smallholder such as lack of transportation, skill to grow high quality produces, access to local water and land and also lack of investment in acquiring seeds and other necessary equipments to grow produces efficiently and in huge amounts. Despite all these challenges, the large retail enterprise has collaborated with the local farmers and trained them in producing quality products. Currently, the produces from these small suppliers are supplied to the customer across 27 countries (Wal-Mart Stores, Inc., 2015h). Attitude Influencing Consumer Behavior Attitude can be described as a relatively universal and long-term valuation of an issue, offering, activity, event or person. Attitudes predict consumer behavior in a superior way when the involvement with the product or service and knowledge about the product is very high. Attitudes better predict consumer behavior when they are specific, accessible and are held with confidence (Hoyer, MacInnis and Pieters, 2012; Solomon, 2006). In order to support the aim of Walmart in helping consumer to save money and live a better live, Walmart launched the Live Better Index which is an ongoing parameter in measuring consumer attitudes and shopping behavior (Wal-Mart Stores, Inc., 2015i). The Index identified five products which are frequently purchased and are available in the stores across the American market. They include the compact fluorescent light bulbs, organic milk, organic baby food, extended life paper products and concentrated liquid laundry detergents (Wal-Mart Stores, Inc., 2015i). The survey reveals that 57 % of Americans are extremely concerned about the environmental aspect, 47% of them feel to be smart consumers if they purchase environment friendly products. Decision-Making in Consumer Behavior The decision-making process in consumer behavior involves process of identification of need, collecting information about the product, evaluate the possible alternatives and make the purchase decisions. The process is influenced by economical and psychological factors and the environmental factors such as social and cultural values (Kardes, 2002; Solomon, 2006). Enterprises can create the need for products by introducing innovative products that help the consumers to satisfy their wants efficiently. Consumers search for information when they decides to recognize the need to acquire a product or service. Thus, it is very important to promote the usefulness of any product offered by the enterprises. Enhancing the brand value of the company is also important as consumer seek for alternate products they tend to evaluate with those brands they know by their name. The enterprises can also affect the consumer behavior by providing superior shopping experience to them (Kardes, 2002; Solomon, 2006). Walmart offers a range of innovative products with discount on various deals that attract the highly diverse consumer base. Walmart has established itself as a highly valued brand with operations across 27 countries and with creative eCommerce sites and @Walmart labs facilitating smooth and easy shopping experience and guiding customers to make decisions about their purchases (Wal-Mart Stores, Inc., 2015b). Walmart believes that price, assortment, access and experience are the main factors leading to the customer’s choice for a retailer (Wal-Mart Stores, Inc., 2015j). Conclusion Walmart emphasizes on the well-being of its customers and on the sustainability aspect of the environment. It aims at saving money and gives people a better life with more savings. Providing superior service in the stores as well as easy and quick delivery in online shopping is extremely important in this era of intense competition in the retail industry particularly after the advent of eCommerce in the retail segment. Moreover, collecting information of customer’s perception about a particular product or service before designing its marketing strategy and the price structure of the product has also become necessary in current times. The identification of the factors that influence the purchase decision of a customer contributes positively towards sustaining its operations in the retail industry. Recommendations Walmart has concentrated on the price and diversity factors of purchase decisions and in the future it plans to emphasize more on the access and experience factors. It needs to take advantage of its effective pricing strategies and invest more on enhancing the access to its products to customers and be competitive on the assortment and superior service aspects. It has been observed that some of the supercenters, discount centers and the neighborhood markets of Walmart lacks cleanliness and hygiene factors and do not fulfill the standard set by the enterprise on the management of the retail stores. Consumers are dissatisfied by the shopping experience at this store and are attracted to the well maintained and clean stores of other retailer despite the high price they charge for the same service and products. Thus, it is recommended that Walmart should not cut costs by reducing the management staff at the retail stores and must emphasize on delivering superior shopping experience to its customers. Bibliography Callahan, P. and Zimmerman, A., 2003. Wal-Mart Tops Grocery List With Its Supercenter Format. 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