Pricing Strategy

Topics: Management, Supply chain management, Lean manufacturing Pages: 6 (2181 words) Published: October 20, 2010
RUNNING HEAD: Wall-Mart’s Pricing and Supply Management

Wall-Mart’s Pricing and Supply Management
Cesar Venegas
Webster University

The traditional goals and philosophies that Sam Walton, founder of Wal-Mart, has left behind, is still leading Wal-Mart as one of the most successful retailers in history. He believed in three guiding principles: 1. Customer Value and Service; 2. Partnership with its associates; 3. Community involvement. Respect to Wal-Mart’s secrets to success, Walton has been quoted saying, “It has to do with our customers’ expectations every hour of every day.” One of his deepest beliefs was that the customer is always right and his stores run mainly on this principle. Strategic pricing is also one of his many top formulas regarding his business accomplishments. Sam Walton implemented viable pricing strategies such as the frequent use of odd number pricing, various different standard mark up and odd number pricing. Wal-Mart also emphasizes on the strategy of odd number pricing. Other companies tend to compete with these prices and sometimes are successful with lower prices to match or beat your price. "Their highest priority is making sure everybody at all times in all cases knows who's in charge, and it's Wal-Mart. Wal-Mart's "everyday low price" philosophy is running their stores quite successfully. When comparing two prices such as $14. Tommy Hilfiger wants to emphasize the quality of the products compared to Wal-Mart, a discount retailer who is strictly based on low prices. Many businesses, mainly small companies, use odd number pricing. s and solid market penetration to elevate his company's progress in the business world. This approach works best when authentic businesses have been taking advantage of the market by charging more then well-suited prices. Wal-mart would offer a men's shirt for $14. This strategy has been tested and has proven that people tend to buy items, which are odd number priced, more than, a price ending of zero.

Pricing is an important strategic move, and the decision to determine pricing shapes the business and determine if it’s successful. Pricing is an important component also in marketing, it is so important that it is identified as one of the 4p’s in marketing mix—product, pricing, placement and promotion. There are two different theories about pricing and how to determine it, these are customer value based pricing or competition based pricing. Pricing strategy will determine the amount of the price, and the lowest possible price is not always the best fit with a given product. Competition based pricing are apparent in major corporations. Such complexities involve internal and external environmental factors. These forces can affect so many supply chain areas from supplying raw materials, manufactured products, transportation and storage to retail businesses. Such a corporation dealing with these complexities is Wal-Mart. To understand Wal-Mart’s supply chain management system, its core operational values ensures the right things are at the right place at the right time with Wal-Mart’s products sold at lower cost and creating value. However, the flow of information and funds are also just as important ensuring the flow information and funds are at the right place and time. Through any type of supply chain management system, especially Wal-Mart’s supply system, internal and external environmental factors have some form of relationship that is managed between operations management and lean manufacturing. Identifying these relationships can lead to process improvement opportunities which may result or lean towards cost reduction. Manages internal

Wal-Mart stock items on the shelves using inventory that may have been supplied from Wal-Mart stock room or distributor using truck supply by a third party. “Wal-Mart conveys point-of-sales data as well as replenishment orders to the warehouse or distributor, who transfers the replenishment order via...

References: Burt, David N., Dobler, Donald W., & Starling, Stephen L. (2003). World Class Supply Management (7th ed.). New York: McGraw-Hill.
Lean Manufacturing. Retrieved on December 15, 2008 from,, Peterman, M. (2001, January), Lean Manufacturing Techniques Support; The quest for quality:
Quality in Manufacturing 12(1), 24.
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