Question

Your friend has developed what he be-
lieves is a novel floor cleaning product.

The advantage to this product, he tells

you, is that because of the unique chemi-
cals used to create the cleaning fluid,

people are able to use a fraction of the
amount of fluid to clean floors compared
to the amount of fluid that is necessary
when using traditional, well-established
products. Your friend is convinced that
even Walmart will be willing to pay a
handsome amount to him in order to
stock and sell his product. Use your
knowledge about the power of buyers

to offer your friend a different perspec-
tive as to how Walmart might deal with

him as he tries to sell his product to this
giant firm.

Answer 1

As per Michael Porter's five force analysis, the dominating force to be analysed here is :

Bargaining Power of Buyers

Bargaining Power of Buyers is high if the buyer is a well established firm as many of the manufacturers and suppliers would be willing to display their products on the shelf.

In this case, Walmart is a well established and retail giant and all the manufacturers and suppliers would be willing to display their products on Walmart's shelf as the chances of the product being sold increases if the retailer is a big giant like Walmart. So the suppliers or the manufacturers need to negotiate and give some monetary benefits (in the form of cash benefit or discount) to the retailer so that retailer would agree to display their products. I would advise my friend that he needs to negotiate with Walmart and offer some monetary benefits so as to convince Walmart to display his novel floor cleaning product on Walmart's shelf.

Moreover, Walmart purchases in bulk quality directly from the manufacturer so as to get the product at reasonable prices. Thus I would advise my friend to offer heavy discount to Walmart in bulk purchasing so as to convince Walmart to display the product.