Pricing, Marketing and Wal-Mart

Paper Summary:

This paper argues that Wal-Mart's controversial retail pricing strategy for toys known as "loss leaders" was justified during the Christmas holiday season of 2003. The term "loss leaders" is defined and shown why it is a valuable marketing tool. The paper then examines the consequences of Wal-Marts approach, with particular emphasis on other toy retailers. Although the paper presents the criticisms of Wal-Mart's marketing approach, in the end, the author believes "loss-leaders" is a viable approach in a competitive marketplace.

From the Paper:

" "Loss leaders" is a term commonly used in retail pricing, and refers to the deep discounting of popular items in an effort to draw customers into a store. The concept relies on the consumer purchasing not only the loss leader item, but also additional items at regular or marked-up prices. In this way, the store can increase traffic and overall sales, thereby recouping any losses from the loss leader products (Gillooley, 129). In 2003, Wal-Mart employed this pricing strategy in their toy department near the holiday season in an effort to increase overall traffic. As the largest retailer of groceries, toys, and furniture in that year, the retailer relied on customers to enter the store for loss leader pricing, and to purchase additional items at regular prices (Lohr, C5)."

Sample of Sources Used:

• Fox, Mark A. "Market Power in Retailing: The Case of Wal-Mart." Popular Music and Society 28.4 (2005): 501-505.
• Gillooley, David. Retail Product Management: Buying and Merchandising. London: Routledge, 2001.
• Grant, Lorrie. "Wal-Mart Doesn't Plan to Toy Much With Prices." USA Today 11 Oct. 2004: B8.
• Hotten, Russel. "Tough Game for the Big Players in Toys." The Evening Standard 17 Dec. 2004: 46.
• Lohr, Steve. "Is Wal-Mart Good for America?" New York Times Week in Review 7 Dec. 2003: C5.

More papers on Pricing, Marketing and Wal-Mart:

• Term Paper # 108405 : "Marketing Mix: Wal-Mart"
• Term Paper # 100867 : "Loss Leader Pricing"
• Business Plan # 142190 : "Wal-Mart Expansion Proposal"

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