Sam Walton made the (what now seems) simple realization that people living in rural areas need basic living products too, and that such markets were being completely ignored by other retail chains. So rather than competing in big cities, almost all of Wal-Mart’s early expansion activities were in small to medium-sized markets. Now the company is trying to do the same thing overseas. This could lead to the question of how small of a market is still “big enough” to support a store like Wal-Mart. What about a grocery store? What about a fine dining restaurant? What about an oil change shop?

This is a really tricky question to know about the “volume” or “magnitude” of a market and suggest how big enough it is being a relatively small market. I think that the primary question would be to ask, what is the purchasing power of the average customer in that market? If the market has a healthy amount of people with an emerging middle class and good opportunities for jobs, it could be still big enough with a relatively small populations. The point is that a proper research of the market would be necessary in my opinion before jumping into it.

Answer 2:

This was indeed a very effective but also a very good strategy that Sam Walton used and it does come to show that even a small market such as some rural locality could end up becoming a profitable consumer base for the firm.  The goal here is to look at what is the overall market size, market scope and therefore, the underlying market potential regardless of it being a rural or an urban market.  Sam Walton came to the realization that indeed there was very little to almost no competition that was found in and around the different rural locations and a large chunk of the country was still rural.  So if someone added up all of those rural locations together, that would end up becoming quite a big market and this meant also a very big potential.  So it was this factor that should be considered for grocery stores and that for fine dining restaurants.  Although they all tend to operate in different industries and among different consumer social classes, what is common among all of them is to see the relative potential of the market in which they would be operating.  So for an oil change shop, it again would have to look for those types of particular locations that don’t have a number of other oil shops in the vicinity.  If that is the case, then it could be a good idea for it to start its operations there due to lack of competition and due to its ability to be able to tap into that local market that exists there. So the larger goal here should be to see how or where the market is and how to tap into it.