Joey Lee's Blog

What comes to your mind when you see the logo of Walmart? Low prices? Large supermarket? Or shopping place? All those are relevant, but those are not the thing I want to talk about. I am more interested in the underlying reason of this phenomenon. Why is walmart so successful in retailing and beat it’s competitors in the prices? Economy of scale doesn’t account for the difference completely. And I just learnt about the reason in a more clear and thorough way. In “The World is Flat” from Thomas L Friedman, has briefly explained this situation. His states that Walmart is excellent in managing their supply chain and cause Walmart to cut their price for almost everything. One of the communication channel is relying on the information system between the manufacturer  and the store. There are several technological advantage for Walmart to deploy. They have used the RFID (Radio-frequency-identification) in their shipments. It is far more easy to track and identify the specific items within the cargo. So the manufacturer and the stores could know about the place and estimated arrival time of the shipments and plan accordingly. What is more, they have connected their sale system with it’s client. Once one of the item has been scanned in the cashier and been sold, the system will notify the manufacturer and require to restock the item. It does improve the lagging period which conventional supply chain system. Not only it provides a real time record for both the supplier and walmart, it also facilitate the transactions between the supply chain. Over stocking and out-of-stock situation will be minimized, thus Walmart has a less chance to disappoint their customers. After all these smooth flow of items, Walmart could have a larger and faster pace for selling products to customers. Hence the demand from Walmart will further increased and gaining economy of scale. Walmart also gaining more bargaining power for them and their customers. Their well managed supply chain system cut their costs in a unprecedented way, it helps Walmart to lower their prices and boost the sale. Amazingly, Walmart’s sale-oriented approach is working, and at the same time their profit also shooting to the new height. All in all, Walmart knows the essence of the supply chain management is vital for their low prices. Seamless cooperation between the manufacturer and retailers is becoming more important and efficient than before. Only if other firms learn this and further pursue a more cost efficiency approach in supply chain management will grant them a more promising growth and future.

Can you still remember last year, when the america sub-prime mortgage triggers the economic tsunami, everything seems falling apart in US? One of the most serious industry is automobile. And of course, as the largest car company in US, General Motors suffers a lot. They are the collateral damage from the economic downturn.  Why? Simple answer, GM is lacking behind way before the actual downturn. As the biggest automobile firm, GM managements fails to adapt themselves in the new trend. Critics are complaining that GM’s car design is already hardly keep up with the demand of public. As we all know, innovations and new products made by R&D department is crucial for a firm to grow in the future. However, GM’s management is assuming that their loyal customers will not give up and switch their choices of cars. But they are wrong. Typically speaking, branding does provide a firm with loyal customers. They are less likely to be price sensitive and does not change their preferences. Overconfident causes GM to fail in a progressive way. Their design is so similar in their different product lines such as GMC and Chevrolet. And what is more, they fail to being “green”. Environment awareness is raising for the consumers. They value this as an important perk for choosing a car. What make it worse, GM products such as Hummers consumes gas so heavily. GM is losing their market shares to Japanese cars such as Toyota and Honda. Due to fact that they are making hybrid cars and using less fuel. And GM goes bankrupt, as many people expected. But that’s not the end of story. After almost like a year, Financial report states that GM is now recovering and eating up foreign market shares such as Asia and Europe. One reason is that GM is rebuilding their reputations and promoting their new revolution. And another reason is that they are now taking new steps, for investing electric cars, which is the Volt. GM is the first few car companies that initiates the electric car. So as the pioneer, GM is now gaining back the market shares and cultivating the loyal customers in the future. So we’ll see, how the giant gets back to the table!

Since last time I speak, there is another new product comes out from Apple Inc., the new MacBook Air ! And here we go again the new wave of craze. It also proves my point last time, product in the marketing mix of Apple is dominating in their strategies. The slimmer new generation of MacBook Air once again showing off Apple’s products are leading and their technology is so capable of performing stuns.

P3: Places (Distribution)

Apple Store is surely the first place you will think of when come to Apple’s products. Their stores are both actual and virtual. Actual stores are present in metro areas and shopping malls, which provide them the conventional methods of selling goods. What is more appealing is that, the virtual one, or the online stores are the main places for their distributions of products. Relying on the shipping services, now the customers can order a product of Apple online and get them at their doorsteps of houses. This is not a new method of servicing, but it does provide a more convenient way for customers to purchase. Apple also get advantages by doing such thing. They could reduce the Apple store in real world and cost them less to pay for renting and labors. Thus this kind of distribution is maximizing the profit margin of Apple, and at the same time providing customers with extra benefits.

P4: Price

Speaking of price, Apple does provide competitive price to earn their market shares, in certain sectors, like the cell phone. However, there are lots of complain about the pricing of Apple’s products from the market. This is kind of controversial at first glance. By establishing brand and customer loyalty, price sensitivity becomes less important for Apple’s customers. This is partly due to the uniqueness and branding effect of Apple’s stuff. In my opinion, I think Apple has divided their products into several sectors. And after that, they further develop specific plans for different products. For example, a more aggressive strategy for the IPhones will result in more competitive pricing. And a less competitive market like iMacs will cause a more expensive pricing. Loyalty is worth mentioning in pricing because eventually Apple’s customers will be more adaptable to the price in the future.

Apple, one of the most powerful electronics producer, is getting its marketing shares in various aspects. From cell phones to server computers, it is not surprising to see the trace of Apple’s product. Don’t believe it? Look around, IPhones, Mac Book are popping up in your sight around you. Surely the innovation is the main weapon in Apple’s arsenal, but the marketing in fact does promote the popularity of it’s products. What are the strategies? Here we go, 4 Ps for the Apple company.

P1: Promotion

One of the most appealing top news in a year, it must be the press conference of Apple. The CEO of Apple Steve Jobs shows up with his new product(s), and it likely becomes the another craze. Believe it or not, first forget about the criticisms when the products are introduced, the press conference surely does drawing attentions from the world. It becomes everyone’s daily conversations. “Hey did you know Apple’s new Ipad?” “Oh yeah, that blows me away!” Besides, what makes Apple becomes attractive is the confidential details of it’s new products. This kind of privacy gives the public some kind of curiosity and urge to know what is the product. Human is always curious to know what they don’t. Apple clearly seize this kind of human nature and make use of it wisely. That’s one of the promotion magic from Apple

P2: Product

What gives Apple’s identity? It makes everyone recognize  their products like instantly. That’s the ace card they are playing. Product differentiates from others is a necessity for a firm, Apple does that with ease. Their innovation and design are simple but it actually builds it’s own identity. What is more powerful is Apple is infusing values to their products. Let’s have a test shall we? What Apple products make you think of? Yup, “Fun, beauty, innovative”? That surely gives their customers certain degree of values which are attractive enough to purchase Apple’s products. And most of the time, their products are having ground breaking functions, which will help them to attract new customers and expand their market shares.

Stay tune for the next 2 Ps! 😛

And here we go commercial time!