This article from the WSJ reports that Wal-Mart is considering expanding its price-match program to include online sellers as well as bricks-and-mortar stores. This article from Yahoo! has more details about the Savings Catcher program.
TOPICS: Pricing
SUMMARY: Wal-Mart is testing a program to match online prices from rivals like Amazon this holiday season, a move that could make the discounter more competitive but cut into profits.
CLASSROOM APPLICATION: Students can evaluate two aspects of Wal-Mart's price-matching strategy. First, they can examine the factors that caused the company's to switch its pricing strategy from not matching online prices to matching online prices. Second, students can study whether the price-matching strategy is anti-competitive in the sense of resulting in higher posted prices.
QUESTIONS:
1. (Introductory) Why did Wal-Mart introduce its online and mobile tool Savings Catcher?
2. (Advanced) Will Wal-Mart's price-matching strategy lead to Amazon setting higher prices? Evaluate the effect of the introduction of Wal-Mart's price-matching strategy the increase in Amazon's profits from lower the price it sets for a particular product?
3. (Advanced) What is the effect of the quantity of Amazon's sales of a particular product on Wal-Mart's profit from shifting from not matching to matching Amazon's prices?
Reviewed By: James Dearden, Lehigh University1. (Introductory) Why did Wal-Mart introduce its online and mobile tool Savings Catcher?
2. (Advanced) Will Wal-Mart's price-matching strategy lead to Amazon setting higher prices? Evaluate the effect of the introduction of Wal-Mart's price-matching strategy the increase in Amazon's profits from lower the price it sets for a particular product?
3. (Advanced) What is the effect of the quantity of Amazon's sales of a particular product on Wal-Mart's profit from shifting from not matching to matching Amazon's prices?
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