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Tag: Cost Leadership Strategy

  • All About Defensive Marketing (With Examples)

    There are four main types of marketing techniques that are being commonly applied these days – offensive marketing, defensive marketing, guerilla marketing, and flanking marketing. Among these, defensive marketing is known to be the most revered one due to the low risks attached to it. Read on to know everything about defensive marketing and some well-known examples too!

    What is Defensive Marketing?
    Top 3 Types of Defensive Marketing
    Pros and Cons of Defensive Marketing
    FAQ

    What is Defensive Marketing?

    As the name suggests, defensive marketing incorporates a protective approach towards the consumers, irrespective of the skyrocketing competition. Once this mode is put into practice, much of the experimentation processes come to a halt. It is essential to understand that the company’s actual “defense” is regarding its position in the market, not the products sold.

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    Top 3 Types of Defensive Marketing

    The following three types are the best way to provide a deep insight into the core aspects of defensive marketing. Whichever form is applied, the test remains the same – the status of the company should not be degraded due to fluctuations in the market. This categorization is solely based on the means applied. They can be applied individually as well, based on the needs.

    Position Defense

    The existing position of the respective company in the market is to be maintained at any cost. One of the most important strategies applied is the deepening of all old bonds catering to customer satisfaction. This one is more prone to be the victim of offensive players.

    Mostly, a single best-selling product is set as the focus. Accordingly, other parameters are modified to suit the economic conditions while building the brand name continuously.

    Example of Position Defense

    The automobile giant Mercedes prefers to stick to the same routine, irrespective of similar attempts being made by Toyota.

    On the other hand, Apple does not focus on increasing the RAM of iOS devices by copying other brands. This helps the tech-savvy people rely on the quality.

    Ultimately, the standards remain high and the position does not plummet at all.

    Mobile Defense

    A lot of changes are made in the direction of “not losing the current position”. The steps taken are mostly for backing up the company so that the diversity in products helps in compensating at all levels. The changes include broadening the target market, enhancing promotional mechanisms, adding more products to the catalog, and altering market segments each time.

    Example of Mobile Defense

    The widely known Indian Tobacco Company (popularly abbreviated as ITC) forms the best example for this category of developmental defense marketing. ITC has spread its scope to food ventures (the daily essential Aashirvaad wheat), and other significant commodities. Agribusiness is also a new inclusion, leading to even more profits with the increase in demand.

    Counter-Offensive Defense

    It is not just an exclusive type of marketing, but also another way of promoting defensive strategies. The simplest way to defend the position is to nullify the various downgrading attempts made by attacking companies. Mainly, the attack is dodged in such a way that it turns beneficial for the recipient company. Prices are reduced and products are improved.

    Example of Counter-Offensive Defense

    Almost all beauty brands have incorporated organic products in order to suppress the increasing popularity of purely organic brands. This increases the range and helps them grow at the same time. If the organic companies begin including synthesized products to tackle this attack, this would be regarded as a counter-offensive move in the direction of probable profits.

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    Pros and Cons of Defensive Marketing

    Pros of Defensive Marketing

    • The quality is top-notch due to reduced modifications.
    • Customer satisfaction is ensured at all levels.
    • The scope of devaluation is increased.

    Cons of Defensive Marketing

    Conclusion

    Now the doubt is – how is it a breakthrough? In such uncertain times, taking calculated risks has become the new norm. In other words, defensive marketing is an apt real-life depiction of how an investor or strategist looks before leaping. It is widely believed that this type of marketing is widely being used to balance the economy and maintain the flow of incoming ideas.

    FAQ

    What is the difference between defensive marketing and offensive marketing?

    In defensive marketing, the organization focuses on its own betterment while offensive marketing techniques are driven by downgrading principles.

    The trends can be easily identified through a budget decline, use of media in promotions, propagation of defensive newsletters, and much more. These trends help in further streamlining the strategies so that the past mistakes do not overpower the sudden change in marketing technique.

    What are the top strategies useful in the implementation of defensive marketing?

    There are five Ps that make defensive marketing successful – pricing, partial distribution, product improvement, prudent advertisement, and the powerful awakening of the market. They help in managing even the most obsolete brands and making them shine in no time.

  • Business Model of Walmart: Success Strategy of Multinational Retail Giant

    Walmart is a US-based multinational retail firm that owns and operates a network of superstores, grocers, and discount stores. It is the world’s largest company by revenue and has revenue of $559,200 and 2,300,000 employees all over the world. It is a family-owned and operated publicly traded company. The business is owned by the Walton family. In 2019, it was the biggest grocery store in the United States. ‌‌’Cost leadership’ is at the foundation of Walmart’s business model. When a corporation represents itself as the cheapest maker or provider of a certain goods or services in a competition, it is referred to as cost leadership. The approach is tough to implement since administration must continuously strive to reduce costs at all levels in order to stay in business.

    Walmart – Cost Leadership Strategy
    Walmart – Key Services
    Walmart – Success Strategy
    How Walmart makes money?
    Conclusion
    FAQs

    Walmart Business Model

    Walmart – Cost Leadership Strategy

    Walmart uses cost leadership strategy for its business. Let us know about cost leadership.

    What is Cost Leadership?

    A cost leadership strategy entails positioning a business’s products as the most affordable. This system has the ability to be quite successful. Nevertheless, it is extremely difficult to implement because it necessitates cutting expenses and transferring the benefits to consumers. One of the most prominent instances of an effective cost leadership strategy is Walmart.

    It’s a strategy for lowering expenses and producing the cheapest items in a marketplace or sector to obtain profit margins. Buyers are aware of the services accessible to them in today’s commercial world, which is quite complicated and complicated. Competitive pricing is one way for businesses to set themselves apart. Businesses with the lowest manufacturing costs can show the same level of quality of the product for a considerably lower price than their competitors.

    Walmart Cost Leadership Strategy

    Walmart is by far the most well-known cost leader, having employed a cost-leadership approach to becoming the world’s largest corporation. Walmart’s promotional taglines, such as “Always Low Prices” and “Save Money. Live Better,” signal to targeted users the company’s focus on cheaper products. Additionally, Walmart takes full advantage of its massive sales volumes to sell the products with razor-thin profitability. Walmart’s cost-cutting plan is bolstered by its value-chain strategy. One of the biggest distribution network achievements in business is Walmart’s inbound and outbound logistics.

    Walmart’s inbound logistics are guided by three core themes: use the lowest product line connections by operating directly with manufacturers; form strategic relations with suppliers for the longer run and focus on high bulk purchasing; while using cross docking to efficiently manage, which entails unpacking products from an inbound truck directly into the outbound truck without storing in between the process.

    Walmart Business Empire

    Walmart – Key Services

    Walmart is generally known as an all-in-one store. Walmart sells things in a wide range of categories. Walmart is known for selling groceries and clothing items. Electronics are available for purchase as well. Walmart sells music downloads, movies, books, and jewelry, among other things. The store sells infant products, and sports equipment in addition to daily furniture.

    Walmart | American Multinational Retail Company | Company Profile |
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    Walmart – Success Strategy

    Walmart has formed a powerful and dedicated client base by living up to its objective and continually striving to deliver everyday low costs to its shoppers over the course of its 50-plus-year period. Buyers know they can expect inexpensive costs when they come into a Walmart. Following are some strategies that are used by Walmart to stay at the top:

    Management of the Supply Chain‌‌
    Walmart’s supply chain management approach has been improved, and the company is working to reduce expenses and operating costs even more. Walmart was one of the first corporations to interact directly with suppliers, thereby handing resource management over to the sellers. Variations in inventory flow can be balanced out by using “vendor managed inventory” (VMI), eliminating overabundance and overstocks.

    Walmart was among the first companies to indulge in inventory management technologies using a software system. Data like in-store point-of-sale, storage inventories, and real-time transactions were channeled into cloud computing under this system. Suppliers were given more information so they could know when to deliver extra products. Walmart can lower costs even more by constantly inventing and synchronizing each level of its distribution network.

    Increasing Negotiation and Reduced Costs‌‌
    Walmart’s massive size and economic output allow it to influence vendor engagement, lowering prices. Walmart accounts for up to 70% of revenue for several general merchandise companies. Such companies would not have been able to function without Walmart as a sponsor. It offers Walmart complete control over its pricing and practice guide.‌‌

    Walmart can potentially cut expenses by operating its own truck network and improving its transit system. Cross-docking is a warehousing method that Walmart has used. This system transfers goods from an incoming truck to an outgoing truck in real time. This allows things to be relocated swiftly without any need for costly warehousing. Walmart could transfer on profits to customers in the form of cheaper prices as a result of reduced product expenses and a more effective inventory control operation.

    Modern Business Strategy
    Walmart has maintained the same business model of “everyday cheap pricing” for about 50 years . Walmart is the largest retailer by volume and has locations all throughout the country. Walmart can appeal to a diverse range of consumers thanks to its four major types of outlets: bargain stores, superstores, Sam’s Clubs, and neighborhood markets.

    It has approximately 11,500 retail locations, and 90 percent of Americans are expected to reside around 15 min of a Walmart. Walmart’s client base is enormous; over 260 million people visit its retail shops and e-commerce platforms each week. With such a large consumer base, Walmart was able to generate $559 billion in sales in 2020.

    How Walmart makes money?

    Walmart makes money through supplying products and services straight to customers and businesses. Walmart makes money from the products it sells, like groceries, health and wellness products, electronics, clothing items and many other products. It also generates revenue from the services provided like VUDU streaming services, financial services, clinical services and health insurance services.

    Conclusion

    Walmart is a business giant and has always taken the right steps towards the company’s growth. With millions of employees and thousands of stores all over the globe, Walmart is becoming more and more accessible to customers. With the right strategies and buying the stock in bulk, it ensures cheap prices for the buyers and maintains its mantra of ‘Everyday Low Prices’.

    FAQs

    How does Walmart makes money?

    Walmart sells various products and services to the buyers at cheaper prices, thus creating a loyal customer base.

    Does Walmart own Dollar Tree?

    No, Walmart does not own Dollar Tree.

    Is Walmart available in India?

    Yes, there are 29 Best Price Wholesale stores in India which are owned and operated by Walmart.

    How many Walmart’s stores are there in the world?

    There are around 10,500 Walmart stores that operates under 48 banners in 24 countries and eCommerce websites.

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