Walmart's Pricing, Quality Perception, and Customer Loyalty Through the Lens of Behavioral Economics

Abstract

Behavioral economics is the economic analysis into consumers’ irrational decisions. By capitalizing on specific irrationalities and cognitive thought processes, consumers’ perception of products can be manipulated. Walmart, a retail food corporation focused on abundant “deals for days,” struggles to balance its products’ perceived quality to its low, bulk prices. The paper proposes solutions for successful food retailer Walmart to enhance shopper experience through improving discount sway, shopping stimulations, and customer loyalty; the utilized biases are anchoring, the first impression bias, and the sunk cost bias, respectively. From creating specific layouts to rearranging online interface price arrangements, behavioral economics can regulate Walmart consumer perspectives and decisions.