POSITIONING ON PRICE IS DIFFICULT, EVEN FOR WAL-MART
Sunday, August 21, 2011 at 2:15PM
It's not an easy time to be Walmart. First, economic worries are hanging heaviest on lower-income shoppers, its core audience. Next, there's a growing sense among those shoppers that Walmart's "Everyday Low Price" positioning is eroding, and that there are better deals in dollar stores, supermarkets, and even at Target. Click here to read the full story from MediaPost.
COMMENT: The research we've done over many years reveals that shoppers do not perceive Walmart as having the LOWEST prices on every individual item (which they don't. Deep discounters like Aldi and Sav-a-Lot often beat Walmart on head-to-head item prices). Instead, consumers see Walmart as delivering an OVERALL lower shopping cost. This gives competitors room to make tactical promotional moves on specific items undermining Walmart's price position. This is an important consideration for your own business if you choose to position on price. Any competitor can buy market share by lowering prices, even at a temporary loss. Defending the "lowest price" position takes courage, agressiveness and a sharp eye for potential competitive challenges. Don't adopt this strategy if you're not committed to it fully.
Consumers who seek the lowest price are a determined bunch. Just like coupon clippers, who are loyal to the deal, these shoppers are loyal to the price, not the seller. They go wherever they have to to find the best price. Walmart's counter strategy has always been "we match any advertised price" and that does lock in certain shoppers. But, for many price-a-holics, the hunt and the conquest are just as important. Successfully finding the lowest price is a validation of their shopping expertise, an important psychic reward for their hard work.
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