Mass market brands have been facing challenges as many consumers have been struggling to deal with today’s higher prices. Both McDonald’s and Wal-Mart are examples. But, these two prominent brands are taking markedly different approaches to their challenge.

Apparently, McDonald’s plans to offer some lower prices by introducing a new five dollar meal. Wal-Mart, on the other hand, is trying to increase its business from somewhat higher income consumers that shop at its stores. These Wal-Mart customers are less concerned about price than are the many lower income consumers who shop there. Thus, Wal-Mart’s approach to iits pricing appears to be the opposite of what McDonalds is doing. Wal-Mart is essentially making some moves away from focusing so heavily upon lower prices.

This raises the issue of whether or not lowering prices is good solution to today’s economic challenges.

The classic textbook marketing solution, of course, is to build the right brand image that can command a higher price. Starbucks, for example, did an excellent job with this, though it, too, has faced some challenges in the recent inflationary economy. However, McDonald’s also has a strong brand. Yet, McDonald’s is said to be planning lower priced five dollar meals to help address the economic circumstances that may be keeping lower income consumers away from its restaurants.

What McDonald’s is planning seems to contradict principles of classic consumer marketing and brand building. But, when consumer financial situations become extremely dire, a strong brand may no longer be enough to get those consumers to buy at a high price. Many of these consumers simply do not have the money to spend, even if they do have extremely favorable perceptions of the brand. So, some price cutting may be justified, even if it is not ideal.

Unlike McDonald’s, Wal-Mart is dealing with today’s economic challenges by striving to put somewhat less emphasis on low prices. A recent Wall Street Journal article discussed Wal-Mart’s challenges. The article, which ran on May 16, 2024 and was written by Sarah Nassauer, is titled “Wal-Mart’s Reign Is Under Threat.” It is subtitled “America’s biggest company by revenue hunts for ways to continue growing.”

The article reports that Wal-Mart faces increased competition from Amazon in addition to dealing with the economic struggles of its core low to middle income customers. Describing how Wal-Mart is handling these challenges, the article says, “The company is looking for more ways to chase high income consumers—a group Wal-Mart defines as households that earn more than $100,000 a year.” Although the article reports that Wal-Mart has “all-encompassing goals such as lowering prices and building trust with shoppers”, the article points out that Wal-Mart is focusing on non-price areas as well. The article says, “Internet data show Americans rate Wal-Mart nearly as high on convenience as they do for low prices.” According to the article, Wal-Mart’s CEO “wants the company to focus on making some of its general merchandise better appeal to everyone, including high income consumers.”

As I see it, Wal-Mart is on the right track with its efforts to do a bit more targeting of higher income shoppers. These shoppers are better able to spend than their lower income counterparts and more of them are now shopping at Wal-Mart. But, I’ll also warn, however, that Wal-Mart needs to be careful not to make the classic mistake so often made in these circumstances. Wal-Mart must take care not to overemphasize high end consumers to the point where the company starts failing to meet the needs of its core lower income shoppers.

However, if Wal-Mart pays attention to its data, and introduces higher end items gradually, Wal-Mart’s approach to the recent inflationary economy can work far better than merely offering lower prices to today’s financially strapped consumers. If done right, Wal-Mart’s approach can do well.

So, in conclusion, there is more than one way for companies to deal with today’s economy where so many consumers are struggling financially. Even a traditionally low priced merchandiser like Wal-Mart is not limited to competing solely on price.