Kmart

1. List the identified key characteristics of the product at each level and describe the significance of each characteristic to the target market.

A key component of the success of Kmart is the optimization of supply chain and inventory management stems. While products are stored in the inventory and thus accumulating costs, Kmart can organize the system such that inventory arrives only when it is needed to reduce significant inventory costs for retailers and also the cost of losing customers to competitors. Every item in Kmart purchased is scanned and stored in a database, which directs the store to replenish the items and to purchase more stock from the supplier. Through the database system, suppliers are able to see when to increase or decrease production to meet retailer’s needs.

In relation to achieving the target market conducted by Kmart, an efficient supply chain leads to a more satisfying customer service. The stories are rarely under stocked, and thus customers are more satisfied with items that are advertised as discounts, for example, and are available at the store when they go to purchase them.

Another key characteristics to Kmart success is pricing. Kmart is able to offer general merchandise and extensive range of home brand products at lowest prices possible because Kmart relies on other brands instead of marketing its own brands. This reduced the marketing and maintenance costs significantly, and thus Kmart is able to sell with lowest prices possible. At the same time, Kmart is able to maintain a high brand loyalty from the private brands marketed in Kmart. By offering lowest prices possible, Kmart can reach a further level in achieving its potential target market.

2. How will you price the product? Explain your pricing policy in full and give reasons for your decision.

Depending on the total costs incurred from each supplier to the retail store (Kmart), each product is priced to cover these costs plus a profit margin. Again,...