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Essay / Research Paper Abstract
This 5 page paper responds to three questions, using student-supplied sources. The first discusses the company's pricing strategy on toys in 2003. They offered deep discounts that caused significant harm to other toy stores. The second discusses value-based pricing and fixed price pricing strategies and the need to communicate value. The last question discusses loss leaders and why Wal-Mart used this pricing strategy in 2003. Bibliography lists 4 sources.
Page Count:
5 pages (~225 words per page)
File: MM12_PGslmr5.rtf
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Unformatted sample text from the term paper:
Us, FAO Schwartz and KB Toys (Grant, 2004). If Wal-Marts objective was to eliminate mush of their competition, they succeeded. FAO Schwartz closed its doors and KB is under bankruptcy
protection (Grant, 2004). Toys "R" Us closed two of its properties, Imaginarium and Kids "R" Us and there is talk of the company closing altogether (Grant, 2004). In more business-terminology,
Wal-Mart used numerous loss leaders on the most popular toys to take customers away from its competitors (Grant, 2004). Sean McGowan, analyst at Harris Nesbitt, said that "Wal-Mart felt they
left money on the table by cutting prices deeper than they needed to in order to get the sale" (Grant, 2004). McGowan went on to say that in 2004, Wal-Mart
planned to sell an item only $1.00 below competitors instead of the $5.00 difference on many items in 2003 (Grant, 2004). The company would not comment directly on the pricing
strategies, instead, the representative simply spouted the Wal-Mart mantra: "We will continue to focus on bringing value to our customers throughout the entire store" (Grant, 2004). Wal-Marts success if built
on providing the most value to the customer for the least money. The companys competitive strategy is cost leadership. It always has been and it always will be. They will
slash prices to entice customers to come through the doors. The consumer expects lower prices and relatively adequate service in the stores and they receive it. 2. Alternative
Pricing Methods Nagle and Cressman (2002) explain the difference between "price setting and pricing strategically." Price setting means the company sets the price and then sees if consumers will pay
it (Nagle and Cressman, 2002). Companies will then adjust the price to the amount consumers are willing to pay (Nagle and Cressman, 2002). It is like a negotiation (Nagle and
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