Tuesday, February 2, 2010

Wal-mart

My understanding from one of my professors (sorry, I know 3-year-old class notes aren't a useful site) is that most electronics companies have tiers of products. It's not that they make a product JUST for one store necessarily. But high-end stores sell the top tier of electronics, mid-range sell a lower tier and discount places sell the bottom tier. The differences will tend to be small, like the expensive one has a timer and lit screen, mid-range has lit screen, bottom tier has neither. Cases may be made of a slightly lower graqde of plastic. None of those changes will drastically change production methods or cost. This is why you may see a cd player cheaper at Wal-mart than Best Buy, but if you go to get the price match deal, it is never the exact same product number and they won't match.

Now, Wal-mart may have their own tier if they do enough volume at a manufacturer. A fellow student who worked in retail said that Wal-mart is famous for demanding that manufacturers give them costs low enough to threaten the company's profit. The company is left choosing between missing out on that volume and name presence or taking a huge profit drop and meeting the demanded cost-cut.

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