Business Ethics

Kmart has five competitors which are Wal-Mart, Sears, Target, Kohl’s, and JC Penny. Each of Kmart’s competitors has different business competitive strategies, mainly focus on low-cost strategy and differentiation strategy.

Firstly, Wal-Mart which applied the lowest costs (low prices) used the cost leader ships strategy which is a every-day-low-pricing (EDLP) strategy that aims at the board mass market and requires �aggressive construction of efficient-scale facilities, vigorous pursuit of cost reductions from experience, tight cost and overhead control, avoidance of marginal customer account, and cost minimization in areas like R&D, service, sale force, advertising...By this way, Wal-Mart can cut out that enormous expense and keep prices on both private-label and national brands as low as possible. Because of its lower costs, the cost leader is able to charge a lower price for its products than its competitors and still make a satisfactory profit. Although it may not necessarily have the lowest cost in the industry, it has lower costs than its competitors. Having lower-cost position also gives a company or business unit a defense against rivals. Wal-Mart's strategy is to reinforce their price leadership. Wal-Mart rarely holds up these brands as a selling point to investors. Lower-cost allow companies to continue to earn profit during times of heavy competition. It is the reason why the slogan of Wal-Mart is �Always low prices’.

Target had distinguished itself as a merchandiser of stylish upscale products. It means that Target used differentiation focus strategy which concentrates on a particular buyer group (stylish upscale products). Target continues to focus on more expensive, more stylish, and higher quality merchandise than other discount chains. From its origin as an offshoot of an upscale department store, Target has always focused on the market niche as the upscale discounter. It operates stores in all regions of the country, the Target discount chain has yet to enter all of the states. Kmart's and Target's strategies are needed to differentiate these retailers and allow them to compete with Wal-Mart, albeit on different levels. Kmart trots out Martha Stewart and Target promotes its ever-growing portfolio of exclusive, seemingly high-profile partnerships. Proprietary brands at both Kmart and Target are often credited as strengths and growth drivers for those chains. Target has been even more aggressive in this area. It has numerous house brands that support its image as an upscale discounter. Target avoided competing against Wal-Mart head-to-head and was perceived as outperforming it on specific dimensions: cleanliness of stores, shopping environment and experience, and shorter waiting time to pay. Those criteria must have been important to all shoppers, especially those for whom price was not everything. It is hard to believe Wal-Mart did not also pay attention to those factors. Target, long known as the purveyor of the well-designed product, is increasingly spotlighting its low-priced goods. "Hello good buy" is the tag line for ads that now focus as much on the price of its products as they do on their style. After all, in a down economy, hand-painted toilet-bowl-brush covers that cost several bucks more than the next one are seldom a major consumer priority. Target will still offer apparel from trendy designers, which, along with the new Converse All-Star apparel and footwear line, should fill any gaps in its clothing lines. The folks shop at Target for health and beauty aids.

Like Target and Kmart, Sears also apply differentiation strategy. Sears was struggling with slumping sales as customers turned from Sears’ mall stores to stand-alone, big-box retailers, such as Lowe’s and Home Depot, to buy their hard good. Sears Holdings is the leading home appliance retailer in North America and is a retail sales leader in tools, lawn and garden, home electronics, and automotive repair and maintenance. Sears try to create the differentiation by building a good system of warranty for its tools and products.

Both Kohl’s and JC Penney emphasized soft goods, such as clothing and related items. These two companies used differentiation focus strategy which concentrates on a particular product line segment and fine the differentiation in a targeted market segment (clothing and related items). This strategy helps company to focus its effort to have better serve the special needs of a narrow strategic target