Nonprice Competitive Strategy, Stages in the Industry Life Cycle - Wal-Mart - Case Study Example

University Name Department Student name & admission number Course name Course code Lecturer Submission date Introduction Majority of firms have drawn their attention in overcoming barriers of competitive rivalry because of consistently gains seized from such changes (Bray, M., Waring, P. and Cooper, R. 2011)As working environment and practices change among existing firms and circumstances evolve, firms are forced to review their operations to remain vibrant and maintain their competitive edge. For every firm, coping with competition, if not managing it remains to a foreseeable upshot regarding the roles and responsibilities played by various stakeholders within organisations (Mike 36). Marcus Corporation is one of the leading Nonprice Competitive Strategy Nonprice competitive strategy entails firms differentiating their products on basis of attributes and quality rather than price. This strategy is believed to be more profitable means of selling products than selling products for lower prices and it tend to avoid threats of price war with key competitors (Armstrong & Gary, 2005). Presently, Wal-Mart has concentrated in offering quality service with extensive distribution. The supermarket also pursues customers focus along with other sustainable competitive advantages rather than concentrating on price as a marketing tool. Each firm around the globe is working hard to secure its position in the market and seize a particular number of customers. Sustainability and CSR among leading supermarkets like Wal-Mart remain key non-pricing factors. Sustainability in businesses is meant to implement practices that support and enhance economic safety, social wellbeing and environmental protection as they work hard improved performance. Sustainable development entails three components, namely, environmental protection, social equity, and economic prosperity, form the basis for a reporting paradigm. “Corporate social responsibility” (CSR) entails organization’s responsibility to respond to its stakeholders’ economic, legal, ethical and philanthropic concerns and issues. Generally, society cannot function without the economic, social and philanthropic benefits that firms offer. Businesses and management that employ a stakeholder approach commit to serving broader goals, in addition to economic and financial interests, of those whom they serve, including public Carlson, JR, Carlson, DS. & Ferguson M. (2011), There is also a rising trend of spending in the social sector and improving the company’s reputation as firms that are socially responsible. Increasingly, hotels are launching campaigns stressing on their corporate social responsibility (CSR), which includes things like keeping the environment clean, causing lesser pollution, helping the underprivileged children and doing good for the society at large (Kotler, 2008). These have become some of the most reliable and easy means of reaching out to the audience, not to mention the cost effectiveness of each of these methods. The social responsibility legitimizes and promotes economic objectives of business. When the social life is improved, the business can have good customers, employees and community. Stages in the Industry Life Cycle The phenomenon of industry life cycle has been common models that business people and Wal-Mart stores have used to gauge the performance industries and products lines. Different stages require different decisions to sustain growth and development. In retail industry, different supermarkets and stores experience different life cycles besides being in the same industry because of varying life cycle stages. Wal-Mart stores’ decisions and strategic plan will mostly vary based on the life cycle it’s placed at the moment of that plan (Armstrong & Gary, 2005). The distinctive stages of industry life cycle include introduction, growth, maturity and decline. Introduction The introduction stage of a new industry is characterised by provision of unique product/s that has been developed and patented. It’s in this stage that a firm uses a focused strategy to market the product as it establishes a market niche. The Wal-Mart stores will create an early perception of superiority in product quality, technology used and supply chain to be adopted so as to gain a competitive advantage. The company’s distribution strategy serves as strength as it controls most of the supply chain and distribution of its products (Porter, 1991). At introduction stage, the distribution strategy is integrated, combined with their high technology as customer behaviour has also taken a different way nowadays and consumers of modern days want innovative products. Growth As market demand grows from the introduction stage, the life cycle curves at growing rate. The growth stage calls for a considerable amount of capital. The main strategy of marketing at this point is to try and differentiate firm’s products from that of competitors within the same industry. The current supply chain policy for my chemist is to adopt new technology in necessitating client demand patterns (Carlson, JR, Carlson, DS. & Ferguson M. 2011), This will help Wal-Mart stores in cutting costs and become more agile business in the industry as it rationalize the sourcing and distribution channels, along with inclusion of operational efficiencies. This strategy assumes a service market or product market and hence refocuses on a certain niche. The niche may be a certain clientele group, segment of service line or geographical location. This strategy may be important since it entails the trade-off between profitability as well as sales volume. The Wal-Mart marketing strategy has however been successful over the last periods where it has stood out uniquely and more interesting is that they never place logos on their products (Armstrong & Gary, 2005). The research and development funds are deployed here to initiate changes in the product to meet client’s needs and hints. The main concern at this stage is market rivalry since there is broad acceptance of the product in the industry with more new entrants who intensify the competition level. The life cycle curve at this point is very steep showing that there is fast growth in the industry. Wal-Mart have positioned itself strategically while entering the new market so as to come at par with their competitors and matching their points of parity far create some type of point of differentiation. Market penetration is one of the product-market growth strategies proposed by Ansoff which indicates the effort of a company to penetrate a market where its products have already been offered in order to attract new customers. Maturity The industry life cycle at this point is becomes flatter which demonstrate a slow growth. It is characterised by growth in sales and earnings hence seen as “cash cow” products. Some competition is experienced from late entrants who try to secure market share for the existing products in the industry (Wuhi, C. 2010), At this stage, the marketing effort ought to remain strong and focus on the unique features of the product so as to differentiate a firm’s products from those of the competitors. With a changing marketing environment, it is becoming necessary for Wal-Mart to make the use of articulate means to engage customers and to attract them towards themselves. It might be believed that some of the customers are tired of being marketed to and hence need a change; this change has to come from the producers themselves by analyzing the marketing environment through market research while making strategic decisions at the market. Decline In any industry, decline is mostly inevitable. In case the product innovation has not been consistent with the pace of competing products or to some point when innovations or technology is outdated, sales will undergo a decline in the life cycle (Neath, G & Wuhi, C. 2010)At this point, sales are declining at an accelerating rate. Slowed industry growth has also contributed to increased competition to seize the market share so as to continue with profit growth which is admired by investors. High storage costs due to slow industry growth has forced rivalry firms to compete and gain the largest size of market share as possible to foot the costs. The shake-out in the industry among competitors forces some to exit the industry. At some point it leads to mergers and acquisitions to enhance competitiveness and diversification in the industry. Porter’s 5 Forces The main competitors of Wal-Mart are Kmart, Target, ShopKo and Meijer, Canada's Zellers. Porter’s Five Forces has served Wal-Mart as key elements in evaluating the retail industry in Europe and has helped it measure up the competitiveness in the market. The five forces have included threat of new entrants, threat of substitute products, bargaining power of buyers, bargaining power of suppliers and competitive rivalry among existing firms (Porter, 1991). Competitive rivalry of Wal-Mart and its competitors in the retail industry has affected the industry’s total profit through downward pressure on prices, raised innovation, raised advertising and also raised product improvements (Porter, 1991). A rise in competitive rivalry among existing supermarkets has brought the retail industry closer to the theoretical “perfect competition” state. The most important elements of competitive rivalry in retail industry have been industry growth, number of firms, product differentiation, and storage costs as well as existing barriers. Large number of firms in the industry which have contributed to increased competition for the existing clients and product resources. More so, the competition has been greater because the industry players are same in size and power, as they rival for market dominance (Stitzer, 2010) Slowed industry growth has also contributed to increased competition to seize the market share so as to continue with profit growth which is admired by investors. High storage costs due to slow industry growth has forced rivalry firms to compete and gain the largest size of market share as possible to foot the costs. And lastly, the existence of high exit barriers has forced firms to persevere and stay in the industry for a longer period than expected. Conclusion There is need for serious revamping of the Wal-Mart stores by concentrating on best strategy. Based on the present situation of airline, differentiation strategy may suit the business at the moment, as it is likely to lead to profitability. This is because; differentiation may lead to exclusivity in provision of services as a result of customer loyalty. Differentiation strategy is suitable where target customers are not price-sensitive, in competitive markets, and places where customers have specific needs which are common in airline industry. Given that cost leadership strategy requires a firm to be a cost leader, it may not suit Wal-Mart since the store is still in vying position. Moreover, the cost leadership may work well where the store is the best and in reality Wal-Mart is not. References Armstrong, D. & Gary, A. (2005). Marketing: An Introduction, 7/e (New Edition). South Asia: Pearson Inc. Bray, M., Waring, P. and Cooper, R. (2011), Strategic Marketing: Theory and Practice, McGraw-Hill, Sydney. Carlson, JR, Carlson, DS. & Ferguson M. 2011. Deceptive impression management: Does Deception pays in established workplace relationships. Journal of Business Ethics, 100(3), 497–514. Kotler, NL. 2008. Corporate Social Responsibility. Sage Publication. New York: Wiley Neath, G & Wuhi, C. 2010. Corporate management. SAGE: New Jersey. Porter, M. E. 1991. Towards a Dynamic Theory of Strategy. Strategic Management Journal. Stitzer, T. 2010. Organizational strategy and business ethics. New York: Cengage Learning. Taylor, P. M. (2010). Economics. New York: Cengage Learning EMEA. Read More