Research Problem/Issue
Discuss about the Environment Of Walmart Inc.
This report analyzes the environment of WalmartInc to identify the factors that affect consumer behavior for this market. The retail industry is very dynamic and unique and it is therefore important to understand the behavior of consumers so as to be able to serve them appropriately. The retail industry is also very competitive and there are very many players in this industry and hence its very crucial that the players in this industry understand the customers are that they can be able to serve them better( Seth, & Randall, 2011). Walmart is the world leading supermarket chain retailer by revenues. The company operates in many countries such as Brazil, Canada, Chile, Japan, and India. In 2016, Walmart was the biggest company in the world in terms of revenue with revenue estimated at $480billion(Mandel et al., 2017).Walmart also became the biggest employer in the world with 2.3 million employees in 2017 (Mandel, Rucker, Levav, and Galinsky, 2017).This report analyzes the behavior of consumers who purchase specifically from the Walmart stores. The theory of reasonable action, the EKB model, and the Motivational need theory are discussed in this report ( Lichtenstein, 2011). These theories are analyzed in relation to the Walmart retail store customers. The theories of consumer behavior are based on psychology, economics, and human behavior. Understanding consumer behavior helps in creating a message that catches the eye and the imagination of the consumer.
Walmart is a global leading retailer that operates worldwide and it deals with a wide range of products. The retailer has been facing increased competition from new firms who offer products at very cheap prices(Reny, 2015). In order to be able to survive in this ever increasingly competitive environment, it is important for Walmart to understand the factors that influence the customers to buy from the company and not from the competitor. The report uses the EKB model, theory of reasoned action, Hawkins Stern Impulse buying and the Motivation Need Theory to analyze the behavior of Walmart Stores Inc ( Spellman, 2016). This helps in identifying the recommendations that need to be made in order to improve the organization.
What is the target audience of Walmart StoresInc?
What is the market position of Walmart retailer?
Who are the competitors of Walmart?
What value does the company offer consumers?
Why do consumers prefer buying from Walmart as opposed to competitors?
Research Questions
What are the psychological factors that affect consumer behavior?
What are the social factors that affect the behavior of Walmart customers?
The study aims at understanding consumer atmospherics and how they affect Walmart customers to help make recommendations on the changes that the company should apply to meet the needs of consumers.
The study is important in helping to understand how customers behave and how the company can use this information to influence the demand of the customers to improve the performance of the company. This will help Walmart to put together strategies that will help to attract more customers to and increase its market share.
Consumer behavior is the study of individuals and organizations and how they make their buying choices. These factors may be psychological, motivational and behavioral. These factors have different effects on the behavior of customers. It is therefore important to understand these factors in order to be able to serve the needs of the customers in a better way. Different authors have defined different theories that explain the behavior of consumers. Ali, (2017) explains that consumer thinks and feel differently concerning the alternative products that are at their disposal. The way in which a consumer thins about a product is very critical in determining whether or not the customer will buy the product. The thinking of a customer towards a particular brand or product may be influenced by the past experience of the customer or by the attitude that a customer has toward the product or brand.
Armstrong, Adam &Denize, (2014) argues that the reasoning of a customer influences the buying decision of that consumer. Customers reason differently when they are faced with choices. The reasoning is defined as the action of thinking about something in a logical and sensible way. Some customers buy without taking too much time to think about the product they are buying or the choices they are making. The reasoning of an individual customer may be influenced by factors such as the level of education of the consumer, level of exposure and their knowledge of the industry.
The buying behavior of a customer is also influenced by the environment of the customer. The environment, in this case, means factors such as culture, media, and friends. The practices, beliefs, and traditions of the social influence the buying choices of a consumer. According to Lamb, Hair &Mcdaniel, (2012), these factors shape the attitudes of the customers towards a particular product or brand and hence influence whether or not the customers buy the product. The peers of the customer influence consumer choice especially for lifestyle commodities. The other environmental factor that influences buying behavior of an individual customer is access to information(Xiao, Ford and Kim, 2011). A customer with access to information is more likely to make an informed decision as compared to a consumer who has little information about the product and the brand.
Research Objective
There are also a variety of personal factors that affect the buying behavior of an individual. The personal factors are characteristics that are specific to an individual person and may not relate to other people. These personal factors include the unique habits an individual, interests of an individual and the opinions of an individual. The decision-making pattern of an individual in other aspects apart from purchasing plays a role in determining the buying behavior of an individual customer. The age of an individual also affects their buying behavior (Haghshenas, Abedi&Ghorbani, 2013).The spending patterns of older people are different from those of the younger people. The gender of an individual also plays a huge role in determining consumer behavior.
Social factors also influence the behavior of consumers greatly. A person`s family influences the buying behavior of customers. The family of an individual determines their preferences and consumer tastes. The social interactions and the work environment also influences the behavior of an individual. In addition to this, the social class of a person influences their buying decisions.
Some of these theories include; Theory of reasoned action, EKB model theory, motivational need theory and the Hawkins Stern Impulse Buying theory. The theory of reasoned action was developed by Martin Fishbein and IcekAjzen in the 1960s( Academy Of Marketing Science&Dato, 2014). The theory of reasoned action revolves around the significance of the pre-existing attitudes in the process of the customer making a decision. The theory explains that the consumer acts on a behavior based on their intention to achieve a particular outcome. The theory reasons that consumers are rational and they always act in their best interests. The theory argues that consumers are specific meaning that consumers take a specific action when the expected result is specific. Between the time the consumer decides to act to the time the action is completed, the consumer retains the ability to change their decision (May 2013). Therefore, it is important that a marketer is specific and associates a purchase with a positive result.
Enge, Kollet, and Blackwell (EKB) model elaborate the theory of reasoned action further. The EKB model lays out a five-step process that consumers use when making a purchase decision. The first step in this model is where the consumers absorb the material they see through the various advertising modes (Altman &Zube, 2009). These may include television, newspaper and online advertising. The consumer processes this information and compares the expectations and past experiences of the product. After a particular period of thought, the consumer moves to the decision making a stage where they make a choice based on rational consideration. Customer expectations are the most useful consideration for customers when making decisions under this model.
The Significance of the Study
The other framework used analyzing the consumer behavior of Walmart customers is the motivational/need theory. This theory is based on Abraham Maslow hierarchy of needs. The theory argues that people act to fulfill their needs based on five elements. These include;physiological,safety,love,esteem and self-actualization (Sinha, 2010). It is important for business organizations to tailor the marketing message based on the consumers` hierarchy of needs. This is because consumers prioritize their consumption based on the Maslow hierarchy of needs pyramid.
The study is conducted using qualitative research methods. The data collected is descriptive in nature and cannot be accurately measured.
The research is conducted based on the secondary sources of information. The data used in the study is collected from books,peer-reviewed journals, thesis, dissertations as well as online sources. The different sources of data for this research provide useful information that can be analyzed and compared to give accurate results that are critical in answering the research questions ( Cole, 2015).
Data analysis for the study is based on content analysis. The hypothesis is compared with the results of the study in order to help answer the research questions. Tables, graphs, and charts are the methods of data presentation used in this study.
The section of the report analyzes how the theories of consumer behavior apply to Walmart retailers. Walmart targets consumers of both the middle class and low-income earners. The slogan of the company is “Save Money. Live Better”. The company offers the products at the cheapest prices in the market. The retailer sells all the major products including household commodities, fruits, and vegetables as well as electronics. Walmart strives to ensure that it remains dynamic to ensure that it meets the needs of consumer (Sokolowski, 2011)s. In order to do this, the company carries out continuous market surveys in order to understand the needs of consumers. It also offers customers an opportunity to make suggestions that would improve the service and the products offered by the company.
One of the factors that affect the behavior of Walmart consumers is their level of income. Most of the Walmart customers are price sensitive ( Luo, 2010). This means that a slight change in the price of a product has a huge effect on the demand for the product. A customer with little income purchase basic commodities which are cheap and affordable to them. Consumers in the higher income bracket purchase luxury brands and products since they have more disposable income. The economic situation of an individual determines the amount of money they have at their disposal for spending and hence influencing their buying behavior(Dahl, 2013)
Literature Review
Personal factors such as the lifestyle of an individual, peers, as well as their tastes and preferences. An individuals` lifestyle defines the kind of products they consume. For example, an individual may prefer to buy a particular type of cloth because their lifestyle defines the kind of clothing they were (ViriyaBoonmuang, 2016). Walmart customers buying behavior is also influenced by peers. A person’s friends have an impact on the things a person likes and the ones they may not like. If a customer has friends who like buying from Walmart, there is a high probability that they will influence their friends to buy from the retailer as well.
Age is also another factor that defines the behavior of Walmart customers. For example, customers who are parents mainly between the age of 30 and fifty-five years are likely to buy products for kids such as toys. Young consumers between the age of seventeen and thirty are likely to buy classy and trendy clothes ( Ireland, Hoskisson&Hitt, 2012). Young people spend more money compared to old people who are above the age of sixty years.
Another atmospheric that affects the behavior of Walmart consumers is the reference group and social status. The reference group influences the attitudes and the behavior of an individual and hence influencing their buying patterns and the kind of products they purchase (Rishi, 2015). The way in which the society views someone also influences their buying behavior. A person who is seen to be of the high social class will mostly go for expensive and premium products.
Psychological factors such as the attitude of customers towards the Walmart brand also influence their buying behavior. The attitude of a customer towards the brand or product could be influenced by past experience or what they hear about the product or brand.
Different individual consumers have different motivations which drive them to buy a particular product. The needs of an individual are ranked according to Abraham Maslow hierarchy of needs model. Consumers buy products depending on the level that their needs fall in the pyramid.
Time was a major limitation of this study. The research was carried in a short period of three weeks and hence making it difficult for carrying enough literature review and to collect all the information needed for the study.
The other limitation of this study is that only secondary sources of information were used. Lack of primary data means that the information is not first hand and it, therefore, could be highly biased.
Conceptual Framework
Conclusion
The report analyzes the factors that affect the consumer behavior of Walmart customers. The company operates globally and in the year 2016, it was ranked by the Forbes magazine as the biggest company in the world based on revenue. The company attracts consumers with different income levels and belonging to different social classes. The research problem investigated in the research is the factors that affect the buying behavior of Walmart customers and how this affects the company. The research questions are clearly stated to help guide the researcher in achieving the objectives of the study. A thorough literature review is done to identify past literature on consumer behavior and how it can be influenced to benefit organizations. The theories of consumer behavior and the methodology used in this study is also stated in the body of this report.
Walmart needs to carry out regular market surveys. This will help the company to understand the customers and hence help to fulfill the needs of the customers.
Walmart can shape the attitudes and beliefs of customers towards the brand and the products by carrying out promotional campaigns such as Television adverts and contributing to social causes in order to improve the brand image of the company.
The company should offer products that cater to both high-income earners and low-income earners. By doing this, the company will ensure that it is able to influence the buying behavior of both the high-income earners and the low income. Customers from different social classes will also be comfortable purchasing from the Walmart stores.
Walmart should improve its services in order to influence the buying behavior of customers. The after sale services of the company needs to be improved and customers need to be treated better so as to attract new customers and to retain existing customers.
References
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