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Current Market Conditions Essay

2200 words - 9 pages

Current Market Conditions Paper
ECO 365
University of Phoenix
April 6, 2011

Introduction
In a society that has seen such a drastic downturn in the economy, people are searching for the best possible bargains they can find. People across the United States are looking for ways to save money; thus, searching for stores that will provide them with everything they need at a lower cost. Companies all over the United States are fighting to stay competitive and are seeking ways to restructure their company and still provide for consumers the best possible prices. Companies such as Wal-Mart do not have to change their structure to fit the demands of consumers because ...view middle of the document...

Although advertising has a wide range of costs and benefits, it is common with differentiated consumer products. There are various forms of advertising, such as, television, radio, direct mail, billboards, etc. Wal-Mart’s ability to advertise their products with minimal cost has increased their longevity in the world’s market. Wal-Mart uses advertising to foster competition by giving more information on pricing and availability. Wal-Marts’ advertising strategies reveal a signal of quality; because their willingness to spend money to advertise products is a sign that Wal-Mart has confidence in its quality. This makes it easier for consumers to purchase products from Wal-Mart even if the content of its ads is minimal.
Impact of New Companies Entering the Market
Currently, there are over 7,800 Wal-Mart stores worldwide and they are in 16 different markets throughout the world. Throughout the company, Wal-Mart employs over 2 million people and serves over 100 million customers a year. Any new company who wants to enter in the same market as Wal-Mart needs to be careful. With the reputation that Wal-Mart has established, they take much of the business away from other companies. As for those other companies having an impact on entering the same market, it will be minimal or non-existent unless the new company is specialized in something that Wal-Market does not offer. Now that Wal-Mart is branching out into other areas of the market, such as groceries, it is going to have a bigger impact on smaller local grocery stores that are in the same area.
Prices
Wal-Mart consistently advertises their low prices. When consumers visit Wal-Mart’s website or the store in person, they do find the prices at Wal-Mart to be more competitive. An advantage of Wal-Mart’s low prices is that it helps to keep the prices low of other competitors in the market. Consumers also find this store to be very convenient. Since many of Wal-Mart’s locations are becoming super centers, people can do most of their shopping in one trip. By keeping its prices low, Wal-Mart is helping its consumers to buy more for less. This keeps the consumer coming back. However, since Wal-Mart is a large retailer and it operates in a perfect competitive market, it has to be a price taker. Even with its increased sales, Wal-Mart has no control over prices. The company has to be very careful about its prices in order to maintain the market share. The prices cannot be too high or too low. If the prices are too high, Wal-Mart will lose its customers. This will result in losing sales as well as market share because there are many other competitors in the market that offer the same product. Too low prices will not produce any profit or market share gains for Wal-Mart. Thus, Wal-Mart must go with the market-based pricing approach.
Technology
Wal-Mart uses a wide range of technology. When a company fails to recognize the importance of technology, the company runs the risk of being...

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