Ch. 10 PricingWal-Mart vs. Target Price Comparison

Sandy BurnettChelsee Nielsen

Chapter 10 Key Points:

Interaction Between Pricing Objectives and Other Decisions:

Pricing Objectives:

• Target Return Objectives• Profit Maximization Objectives• Skimming Objectives• Penetration Objectives• Sales-Oriented Objectives• Status-Quo Objectives

Pricing Policies:

• Pricing Above the Market

• Pricing at the Market Level

• Pricing Below the Market

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

Mark-Ups and Mark-Downs

vs.

“Expect More Pay Less”4th Largest Retailer in U.S.

Target Market: Urban communitiesMiddle-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 communitiesMiddle-aged, on-the-go women with children looking for convenience, & value while keeping within their household budget.Income level: $35,000 & below

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

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.”

Article: From Cockeyed.com hosted by Fatwallet.com which is a internet source for retailer ratings, price comparisons, and cash back programsConducted a price comparison between Target and Wal-mart over a 20 item shopping list in stores in Sacramento, California.

List: included variety of items from each product category:

Apparel ElectronicsDomestics HardwareConsumables HousingChemicals EntertainmentHealth & Beauty Sporting Goods

vs.

20 Item List:Product Walmart Target

Target Advantage (Walmart Advantage)

Target savings percentage

Crest Whitening Expressions Toothpaste $2.36 $2.39 ($0.03) -1.3%

Basketball $5.46 $4.99 $0.47 8.6%

Pearl Tampons 20ct. $3.62 $3.79 ($0.17) -4.7%

Hair Flattening Iron $9.63 $8.99 $0.64 6.6%

Revlon ColorStay Liquid Foundation 1oz. $9.82 $9.84 ($0.02) -0.2%

boys socks 6-pair $5.88 $3.99 $1.89 32.1%

disposible camera w/flash $3.67 $3.99 ($0.32) -8.7%

thick silver frame 5x7 $2.94 $7.99 ($5.05) -171.8%

13 gallon trash bags $2.94 $2.94 $0.00 0.0%

plastic colander $3.66 $1.99 $1.67 45.6%

cheapest jeans $10.97 $12.99 ($2.02) -18.4%

coffee maker $9.43 $9.99 ($0.56) -5.9%

windex 32 oz. Sprayer $2.48 $2.49 ($0.01) -0.4%

screwdriver set $3.47 $3.34 $0.13 3.7%

bottled water 16.9 oz - 12pack $2.50 $3.74 ($1.24) -49.6%

potting soil $2.49 $2.49 $0.00 0.0%

blank Memorex CDs $14.73 $14.69 $0.04 0.3%

AAA batteries 4-pack $2.74 $2.79 ($0.05) -1.8%

6 plug power strip $2.84 $2.99 ($0.15) -5.3%

Envanescence CD $13.88 $13.99 ($0.11) -0.8%

Total $115.51$120.4

0 ($4.89) -4.1%

Price Comparison

Price Comparison

Price Comparison

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.

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

Price Comparison Grand Total of 11 items:

$120.88$122.24Wal-Mart $1.36

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

Price Comparison Grand Total of 11 items:

$120.88 $122.24

Things to Consider When Price Comparing:Individual Preference FashionQuality

Wal-Mart $1.36

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.

www.cockeyed.com/citizen/target/walmart_versus_target01.html

Dunne, P., & Lusch, R. (2005). Retailing (5th ed.). South- Western:Thompson.

References: