Ch. 10 Pricing Wal-Mart vs. Target Price Comparison

1. Ch. 10 PricingWal-Martvs. Target Price Comparison Sandy Burnett Chelsee Nielsen

2. Chapter 10 Key Points: Interaction Between Pricing Objectives and Other Decisions:

3. Pricing Objectives: • Target Return Objectives • Profit Maximization Objectives • Skimming Objectives • Penetration Objectives • Sales-Oriented Objectives • Status-Quo Objectives

4. Pricing Policies: • Pricing Above the Market • Pricing at the Market Level • Pricing Below the Market

5. Specific Pricing Strategies: Customary Pricing Variable Pricing Flexible Pricing One-Price Pricing Price Lining Trading Up Trading Down Multiple-Unit Pricing Bundle Pricing Leader Pricing Loss leader Pricing High-Low Pricing Bait and Switch Pricing Private Label Pricing

6. Mark-Ups and Mark-Downs

7. vs. “Expect More Pay Less” 4th Largest Retailer in U.S. Target Market: Urban communities Middle-aged, on-the-go women with children looking for convenience & value but also keeping up to date with the hottest trends. Income level: $30,000 & up “Always low prices” World’s Largest Retailer Target Market: Rural communities Middle-aged, on-the-go women with children looking for convenience, & value while keeping within their household budget. Income level: $35,000 & below

8. vs. Perceived Marketing Position: Offering merchandise at low prices with more of a trendy flare. Earned reputation of offering trendier merchandise, cleaner environment, and better service than their competitor Perceived Marketing Position: Offering merchandise at low prices Earned reputation of always offering the lowest prices against competitors

9. Wal-Mart vs. TargetCustomer Remarks: • “You know why Target is so clean? No one shops there, so there’s no one to mess things up.” • “I’ve always found cheaper prices at Wal-Mart” • “Where Wal-Mart has that dollar-store vibe, Target makes you feel as though you are shopping at some sleek, upscale city shop.” • “Where Wal-Mart has dingy aisles loaded with cast-offs and marked down boxes of cereal, Target has perfectly packaged goodies all lined up in a row.” • “Wal-Mart has cashiers who look like they'd rather shoot you than serve you. Everyone smiles at Target.” • “Wal-Mart has those annoying senior-citizen greeters at the door, who scare the crap out of your teenage daughter when they remark how well-developed she is, or who insist so hard that you take their damn flier that they will follow you around the store and stick one down your pants if they have to.”

10. vs. Article:From Cockeyed.com hosted by Fatwallet.com which is a internet source for retailer ratings, price comparisons, and cash back programs • Conducted a price comparison between Target and Wal-mart over a 20 item shopping list in stores in Sacramento, California. List:included variety of items fromeach product category: Apparel Electronics Domestics Hardware Consumables Housing Chemicals Entertainment Health & Beauty Sporting Goods

11. 20 Item List:

12. Price Comparison

14. Price Comparison

15. Price Comparison

16. Wal-mart Wins. But Not By Much: • Wal-mart had a lower price for the total of all 20 items. The Wal-mart advantage for this batch was $4.89, or 4.06% of the total price.  • Wal-mart had a lower price on 12 of the 20 items. Their mean price advantage on these 12 was 81 cents, but  the difference was usually less than a quarter. • Target had a lower price on only six items. The mean price advantage on these six was also 81 cents, but the median advantage was 55 cents.

17. Sandy & Chelsee’s Price Comparison: Target: Herbal Essence Shampoo, $ 2.94 (Standard size) Crest White Strips $24.89 Revlon Nail Polish $ 2.89 Revlon Curling Iron $12.99 Ruffles $ 2.24 Pack of Coke (12) $ 3.33 Hammer (lowest price) $ 3.99 Women’s jeans (lowest price) $13.99 National Treasure DVD $19.99 Kitchen Stool (lowest price) $15.00 Yoga Mat $19.99 Total $122.24 Wal-Mart: Herbal Essence Shampoo, $ 2.84 (Standard size) Crest White Strips $26.83 Revlon Nail Polish $ 3.88 Revlon Curling Iron $12.43 Ruffles $ 2.58 Pack of Coke (12) $ 3.50 Hammer (lowest price) $ 2.87 Women’s jeans (lowest price) $12.77 National Treasure DVD $19.88 Kitchen Stool (lowest price) $16.86 Yoga Mat $16.44 Total $120.88

18. Price Comparison Grand Total of 11 items: $120.88 Wal-Mart $1.36 $122.24 Wal-mart Wins. But Not By Much: • Wal-mart had a lower price for the total of all 20 items. The • Wal-mart advantage for this batch was $1.36, or 1.11% of • the total price.  • Wal-mart had a lower price on 6 of the 11 items. The mean price advantage on the six items was $0.94. • Target had a lower price on 5 items. The mean price • advantage on these five was also $1.06 which is higher than Wal-Mart’s price • advantage

19. Price Comparison Grand Total of 11 items: Wal-Mart $1.36 $120.88 $122.24 Consumer Perception: Wal-mart always has the lowest prices on their merchandise. Fact: Wal-mart does not always have the lowest prices on their merchandise. • Things to Consider When Price Comparing: • Individual Preference • Fashion • Quality

20. References: www.cockeyed.com/citizen/target/walmart_versus_target01.html Dunne, P., & Lusch, R. (2005). Retailing (5th ed.). South- Western:Thompson.