Question

Sam Walton, founder of Walmart, had an early strategy for growing his business related to pricing. The “Opening Price Point” strategy used by Walton involved offering the introductory product in a product line at the lowest point in the market. For example, a minimally equipped microwave oven would sell for less than anyone else in town could sell the same unit. The strategy was that if consumers saw a product, such as the microwave, and saw it as a good value, they would assume that all the microwaves were good values. Walton also noted that most people don’t buy the entry-level product; they want more features and capabilities and often trade up. Choose one side, either defending this strategy or casting this strategy as an unethical act and create a discussion post with your viewpoints as to why you feel this is a valid strategy or is unethical.

Answer 1

I feel that this strategy is ethical and valid and in fact is an example of a highly intelligent strategy devised by Sam Walton. The opening price point strategy enables the company to make the customer realize about his/her latent needs and wants. A consumer has got several needs and wants that often do not manifest themselves in a tangible manner and Walton’s opening price point strategy helps a consumer tap and activate his/her latent needs and wants.

The opening price point strategy lures and attracts a consumer towards a product and makes the consumer realize the benefits of the product and how the purchase and use of the product can add incremental value for him/her. As such the consumer is able to make an informed choice and in no way is this strategy luring the consumer by creating a false perception of value across higher price points. The perception of value is created only once the consumer understands the functionality of the product and how the product can add more value in the life of the consumer.