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Introduction Of Principles Of International Marketing
International Marketing is encompassed by the activities of a business to sell their associated products or services across the world in order to gain more customers resulting in gaining more profits and increasing brand name and market share. Many large business organisations use several types of international marketing strategies and the 4Ps of the marketing mix are the most popular among the others. The thesis statement of the essay demonstrates in which way Walmart use various strategies of product adaptation or product formulation according to the international market in which the company wants to expand its business. In which ways those strategies are different from the used strategies of Walmart and the challenges encountered while adapting those will be discussed in this essay. Furthermore, a brief compare and contrast will also be illustrated between the usage of adaptation or standardisation strategies of Walmart and its major competitors in the British market such as Amazon, Costco and Tesco.
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Body
Brief Introduction of the Company
The American multinational retail industry Walmart was established by Sam Walton in the year 1962 in Rogers, Arkansas (Walmart, 2022a). It has its headquarters situated in Bentonville, US. Walmart has 10,500 retail units in 24 countries across the world with an employee strength of approx 2.3 million people (Walmart, 2022a). The Gross profit of Walmart in the financial year 2022 is approx 24.4% (Statista, 2022). The worldwide revenue of Walmart amounted to 573 billion US dollars (Statista, 2022b). The Online sales of Walmart in the international market amounted to 18.5 billion US dollars (Statista, 2022b). In the financial year 2022, the international net sales of Walmart are approx 101 billion US dollars (Statista, 2022c). As per the reports of Statista, the market share of Walmart in the US is 6.3% (Statista, 2022b). There exist several kinds of operating divisions of Walmart namely, “Walmart discount stores”, “Walmart supercenters”, “Sam's club stores” and “Walmart neighbourhood markets”.
A. “Their adaptation and/or standardisation strategies in the British market.”
In order to establish a business and retain the business in the British market, the American multinational retail industry Walmart has adopted the 4Ps of marketing mix strategies. The 4Ps of the marketing mix refer to the strategies associated with Price, Promotion, Product and Place.
Walmart's Product strategy- The product strategy of Walmart in order to attract more UK consumers and retain them in their retail business is by focusing on high sales rates by providing more budget-friendly products to the consumers of the British market. Walmart introduces the “Everyday Low Price (EDLP)” in the UK market while introducing its products (Walmart, 2020). The aim of this EDLP is to maintain the expenses of consumers. Walmart has come up with the feature of a “Money-Back Guarantee” to its customers while selling fresh fruits and vegetables if the original state of the products is hampered. In the UK market, Walmart offers a wide collection of products ranging from groceries, hardware, appliances, furniture, beauty and wellness essentials and health essentials too.
Walmart's pricing strategy- The pricing strategy of Walmart has come up with the “Everyday Low Cost or Everyday Low Price” plan while selling products in the British market (). This pricing strategy has gained the attention of a large number of UK retail market consumers. In addition, the “Cost leadership pricing strategy” has been followed by the management of Walmart in order to make the sales volume high by selling products at a cheaper price and lower costs.
Walmart's promotion strategy- In order to promote its business, Walmart has owned a chain store of ASDA in the UK, as ASDA is one of the renowned and second largest supermarket industries in the United Kingdom (Walmart, 2021). Walmart has taken the wholly owned market entry strategy by owning ASDA in the UK market in order to promote its products and services in the associated market (Walmart, 2021). For Walmart to promote its products in ASDA supermarkets, the branding slogan is “Saving you money every day” instead of their own saying “Saving money, live better”. With advanced supply chain management and advanced technology, Walmart has been able to provide 7% lesser products cost than the other competitors of Walmart that existed in the UK market.
Walmart's Place strategy- Walmart has a supermarket store in the United Kingdom known as ASDA superstores. Walmart captures the supermarket of the UK in comparison to its US-based “hardware meets home goods store” via ASDA (Business Insider, 2019).
B. "Whether these strategies are different to the ones used in other international markets. Why and/or why not?"
As going green is trending in the United Kingdom, thus the ASDA of Walmarts has been focusing on selling more gardening products in its supermarket store. As many initiatives have been taken by the UK government as well as by the UK people on sustaining the green environment, thus this specific product strategy on selling more gardening essentials in the stores of ASDA is considered one of the major different marketing strategies to enter the international market by Walmart. In addition, the ASDA has been offering the services like “scan & go” while checking out process (Business Insider, 2019). This specific service has not been offered by the other stores of Walmart located in the international market. Furthermore, Walmart has taken the wholly owned subsidiary strategy of international market entry mode to enter the market of the United Kingdom but it has entered the Indian market by complying with Indian government rules of Foreign direct investments for foreign e-commerce firms in order to protect the local Indian firms from external competitive rivalries. The products such as vegetables and fruits in the ASDA store of Walmart have been showcased in the front row of the stores which has been using the trick of designing them psychologically in order to give an experience of entering a place which is fresh and natural subsequently. In the UK market, Walmart sells theirproducts directly to its customers but in the Indian market, Walmart opted for “Cash and Carry” stores. The major disadvantage of cash and carry stores is the cash-carrying system. Nowadays people have the tendency to pay digitally, which is a more hassle-free method of payment when purchasing something. Walmart partnered with Sainbury's and ASDA and make “Walmart's wholly-owned UK retail subsidiary” in order to expand its retail business in the international market of the United Kingdom (Walmart, 2018). The wholly-owned subsidiary is responsible for enabling major investments in various areas such as quality, price and range of the products offered from which the customers of Walmart will get benefitted tremendously.
C. “The challenges of adaptation and/or standardisation strategies used in the British market compared to other international markets.”
Standardisation is one of the keys for the company to penetrate the UK market for fostering growth. In the hindsight, Walmart can make a relevant profit for the overall products sale and all the other services that are being provided. However, being an international company, Walmart might face some grave issues in the UK market while implementing the marketing mix of 4p. Although the NQI or National Quality Infrastructure of the UK has specific marginalization's for the standardisation of adaptation, the overall market challenges can be overwhelming (Gov.uk, 2022). There are some of the major challenges that Walmart has to face in the UK market while expanding and they are different from the international market as well.
Green transition
The UK has been going through some of the crucial phases of its green transition and making all the products and packaging eco-friendly for the assurance of more sustainability. With the help of that, the British government is hoping to regain some of the weather advantages for the mitigation of global warming. The policy of “Net Zero Strategy” or the “Build back greener” is the trademark policy implemented by the UK government and that is the reason why the companies must adopt it fairly quickly (Gov.uk, 2022). By taking this step the UK government has selectively underwhelmed the power of big companies like Walmart. This has made the situation of adaptation more complicated for companies. The packaging of the companies is the most essential part of their growth and sustainability of the economy. With clear indications of green packaging and sustained growth in the UK market, Walmart has to face this issue severely.
Technological adaptation
From the global context of the innovation and use of technology, the UK is one the 4th position in the global innovation index (Global innovation index, 2022). With the technological advancement in the UK market, the company might face some grave issues. The majority of the company is still lagging in the advancement of technology in the UK. Use of blockchain technology, AI and machine learning are new tools that are needed to be calibrated and used for the betterment of production and supply chain enhancement as well. Without rapid technological advancement, the company might find it difficult to adapt to the UK market.
Virtual space and human resource
All the top brands in the retail market are creating a platform for customers to check out all the essential items they require for the betterment of their services. With the adaptation of the store-to-door policies, the companies need to face tremendous issues as they now give the essential market a head spin for virtual delivery. Although the strategy of “hardware meets home goods store” is sufficient in the USA market, the inefficiency in the supply chain may have the upper hand in disrupting the market for the company (Business insider, 2019). With the technological advancement of the UK market has a direct impact on HR and thus losing high-quality workers is a pressing issue for the company to face.
D. “Critically discuss the similarities and differences between the standardisation and/or adaptation strategies used by your chosen brand or company in the British market and by its major competitor.”
The international market and the UK market have some similarities in the marketing mix and some of the aspects tend to miss the satisfaction of being in the British market. Walmart needs to deliver all the crucial predicaments for the betterment of the growth in the UK market in the foreseeable future. It can be said that the company has faced some major challenges due to the essentiality of the UK market and its broader paradigm. The competitor that has been considered for the comparison is Tesco.
Product
Walmart has some of the major products that have been dominating the international market and thus it has a greater impact in the UK market as well. However, as a UK brand, Tesco has an advantage that cannot be denied. The basic similarity that has been encountered between the two rivals is the quality of the products in the offering. According to Rita et al. (2019), product quality is the key for organisations to foster more growth in the market and thus by doing that acquire more customers for the long term. In the UK market, the main difference that the company has to face is that Tesco uses the sight of the local brands and has been using them for decades. But as an international organisation, Walmart needs to change their product range according to the demand of the UK market.
Price
For the international market, Walmart uses a Cost leadership pricing strategy which has been effective in the UK market as well. As mentioned by Islami et al. (2020), the pricing strategy of cost leadership is the best one for the retail sector in any of the possible markets. With the help of this strategy, Walmart can penetrate the UK market just as the international market. On the other hand, Tesco has also used the cost leadership strategy for decades. That is the similarity that can be found in both rivals in terms of two different markets.
Place
The major difference between both the rivals and both the markets is the place. In the international market, the use of physical stores is the key for the company and thus getting ahead in the market as well. However, the UK market demands virtual space and some of the key uses of technology for better service. Walmart majorly uses physical stores in the international market and that is the reason why the virtual space idea needed to be implemented. With the help of virtual space, Tesco has adopted the most crucial pathway to the penetration of the UK market. By doing that the company can move forward in the market with more categories of products and a range of services.
Promotion
Lastly, Walmart has taken the wholly owned market entry strategy by owning ASDA in the UK market in order to promote its products and services in the associated market (Walmart, 2021). But on the other hand, Tesco is actually opting for the promotion strategy of “Whoosh”. With the guarantee of super-fast delivery in just 60 minutes, the company is promoting the best quality products and getting ahead in the UK market (Tesco PLC, 2022).
Recommendations
Recommendation 1: Use Artificial Intelligence and Automation technology to improve the supply chain management
Walmart can improve their supply chain management by adopting Automation technology and artificial intelligence resulting in increased supply chain visibility. As opined by Hartley and Sawaya (2019), robotics and artificial intelligence play a major role in improving the performance of supply chain management. Furthermore, an adaptation of robotics in order to manage the warehouses is also highly recommended to Walmart for further business enhancement.
Recommendation 2:To train the employees in order to educate them on advanced technologies used in the business operations
Additionally, the required training is essential for the employees to have proper knowledge regarding the advanced automation and robotics technologies used for maintaining the supply chain management is also recommended to Walmart. Walmart can organise several seminars on advanced technologies to raise technical awareness resulting in making technically sound employees.
Recommendation 3: To Provide more Customer-centric services by offering more customer-friendly services
As Walmart has been facing an issue regarding its apparel space which has launched specially for customers who are young and have higher income rates, thus Walmart can take the cost-effective strategy to sell their apparel at a relatively lower price to attract consumers of all income groups to gain more profits from apparel space. In addition, Walmart can focus on the changing needs of customers while buying food items as the current food trends go towards having foods that are organically produced and providing health benefits. Furthermore, Walmart should strengthen its online shopping sites by updating its websites and offering as many discounts as possible on products to attract the attention of its consumers.
Conclusion
The 4Ps of marketing mix strategies consist of the product, pricing, promotion and place strategy as an adaptation or standardisation strategy used by Walmart when it entered the British market in order to retain more profits and expand its business internationally has been described thoroughly in the entire essay. The difference in utilisation of the 4Ps by Walmart in international markets other than the British market has also been depicted here critically. The cost leadership pricing strategy and a wholly owned subsidiary of Walmart as ASDA has also been illustrated here with suitable company instances. Some issues related to UK Governmental regulations faced by Walmart while expanding its business in the vast UK market have been demonstrated here. Major challenges faced by Walmart in the form of ASDA as they got a tough competitive rivalry from the large retail competitors like Tesco, Amazon and Costco present in the associated market has also been elaborated here with a compare and contrast presentation.
References
- Business Insider, 2019. We compared Walmart in the US to its UK sister store Asda, and while both offer a variety of food, Asda takes it to the next level. Available at: https://www.businessinsider.in/retail/we-compared-walmart-in-the-us-to-its-uk-sister-store-asda-and-while-both-offer-a-variety-of-food-asda-takes-it-to-the-next-level/articleshow/70267227.cms [Accessed on: 17/11/2022]
- Global innovation index, 2022. UNITED KINGDOM. Available at: https://www.wipo.int/edocs/pubdocs/en/wipo_pub_gii_2021/gb.pdf [Accessed on: 17/11/2022]
- Gov.uk, 2022. Net Zero Strategy: Build Back Greener. Available at: https://www.gov.uk/government/publications/net-zero-strategy [Accessed on: 17/11/2022]
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- Hartley, J.L. and Sawaya, W.J., 2019. Tortoise, not the hare: Digital transformation of supply chain business processes. Business Horizons, 62(6), pp.707-715.
- Islami, X., Mustafa, N. and Topuzovska Latkovikj, M., 2020. Linking Porter's generic strategies to firm performance. Future Business Journal, 6(1), pp.1-15.
- Rita, P., Oliveira, T. and Farisa, A., 2019. The impact of e-service quality and customer satisfaction on customer behavior in online shopping. Heliyon, 5(10), p.e02690.
- Statista, 2022a. Walmart: gross profit margin worldwide FY2006-FY2022. Available at: https://www.statista.com/statistics/269414/gross-profit-margin-of-walmart-worldwide-since-2006/ [Accessed on: 17/11/2022]
- Statista, 2022b. Walmart - Statistics & Facts. Available at: https://www.statista.com/topics/1451/walmart/?#topicHeader__wrapper [Accessed on: 17/11/2022]
- Statista, 2022c. Walmart International: net sales FY2019-FY2022, by country. Available at: https://www.statista.com/statistics/269416/sales-of-walmart-international-by-country/ [Accessed on: 17/11/2022]
- Tesco PLC, 2022. Whoosh – superfast delivery within 60 minutes. Available at: https://www.tesco.com/zones/Whoosh [Accessed on: 17/11/2022]
- Walmart, 2018. Walmart and Sainsbury's announce combination of Sainsbury's and Asda, Walmart's wholly owned UK business. Available at: https://corporate.walmart.com/newsroom/2018/04/30/walmart-and-sainsburys-announce-combination-of-sainsburys-and-asda-walmarts-wholly-owned-uk-business [Accessed on: 17/11/2022]
- Walmart, 2020. We Mean It When We Say It: Every Day Low Prices - Anytime, Anywhere. Available at: https://corporate.walmart.com/newsroom/2020/03/26/we-mean-it-when-we-say-it-every-day-low-prices-anytime-anywhere [Accessed on: 17/11/2022]
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