Walmart Case Study
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Abstract
Explores the marketing strategies employed by Wal-Mart Corporation and their efforts to compete in the “new” economy.
Includes an assessment of Wal-Marts expressed and apparent positioning and value proposition based upon internal documents, public relations statements, web page and advertising.
Includes an assessment of Wal-Marts competitive position and strategy.
Includes an assessment of Wal-Marts marketing mix.
Introduction
The new economy, characterized by sophisticated technology, global communication and “knowledge as a commodity” demands a great deal from organizations that intend to remain competitive. Wal-Mart corporation does not just compete in their field, they dominate it.
Wal-Mart is the largest retail operation in the world today. According to the Wal-Mart corporate website at
Definitions
Marketing mix:
How much is spent and what percentage of marketing dollars go to advertising instead of other types of more highly targeted marketing communications. (Hill and Rifkin, 1999)
New Economy:
The way that business is conducted, characterized by a dozen or so themes: a) knowledge as a commodity b) digitalization c)virtuality d) molecularization e) networking f) disintermediation g)hyper media h) innovation i) customer as product designer j) immediate, k) global and l) discordant. (Tapscott, 1997)
Organizational Culture:
A common perception held by the organizations members; a system of shared meaning. (Robbins, 2001)
Discussion
Method
To assess an organizations marketing strategies we look at three separate aspects of its approach to reaching the public. First, an examination of the companys expressed or apparent position and value proposition are studied. This is accomplished using various documents, including, but not limited to internal documents, public relations statements, web pages and advertising.
Next, a study of the companys competitive position and strategy is conducted. This includes the dimensions of their competitive strategy and methods of maintaining their competitive advantage.
Discussion (continued)
Method (continued)
Finally, an assessment is made of the companys marketing mix. Marketing mix is a measure of the funds that have been allocated to advertising instead of other types of more highly targeted marketing communications, which types of advertising they were and in what proportion they were selected.
Wal-Marts Value Proposition and Expressed Position
Value Proposition
The retail world is tough. Wal-Mart competes with stores like K-Mart, Target, Caldor, Bradlees and Woolworth. The last three of those operations are out of business and K-Mart is presently undergoing Chapter 11 reorganization. Target has managed to remain afloat, but has not seen growth anywhere near that of Wal-Mart. Why? All of these retailers sell basically the same things. Yet, Wal-Mart consistently outperforms all of the others. The answer lies in the Wal-Mart value proposition and marketing activities.
The Wal-Mart value proposition is really simple – the key to the market is price (Treacy, 1995). Wal-Mart calls this policy EDLP which stands for Every Day Low Price. The premise is indeed simple. Consumers dont need to wait for a sale to shop at Wal-Mart because they are getting the lowest price available there every day (Gilliam, 1993). Anyone who has ever visited a Wal-Mart store knows that they are huge and carry a wide variety of merchandise. Thus, people find shopping at Wal-Mart to be very efficient. They make one stop, have all of their needs met and get the best price.
Discussion (continued)
Wal-Marts Value Proposition and Expressed Position (continued)
Expressed Position
Wal-Marts Value Proposition becomes their Expressed Position through every interaction they have with the public. Their few television and radio commercials, magazine ads, even the signs in their stores proclaim EDLP. Since Wal-Marts stated strategy is to have the lowest price everyday, the company does not need to spend a great deal on advertising. Wal-Mart does not need to run sales regularly or have specially priced items in its weekly circular. In fact, Wal-Marts advertising budget is generally one-third of the industry standard (Sparks, 1994). A quick check of the past few Sunday papers in my recycling bin notes a number of K-Mart and Target circulars, but nothing from Wal-Mart. Yet, I know where to go for the best price and the widest variety of merchandise.
Oddly enough, many retail companies try to compete on a basis other than price. They do not want to be commoditized and considered the low-price leader in a marketplace. However, Wal-Mart is incredibly successful by making itself into a commodity. Wal-Mart does not want to have a strong relationship with its customers. They dont care to build brand loyalty or image. Wal-Mart is simply recognized as the place to go for the best price.
Discussion (continued)
Wal-Marts Value Proposition and Expressed Position (continued)
Realizing the Dream
When working with its suppliers, however, established relationships need to be much stronger. To Wal-Mart, a supplier is not merely a commodity provider, but a true partner that helps contribute to the companys business issues. This distinction is unique. Wal-Mart markets itself to the consumers one way and markets itself to the suppliers another. Wal-Mart is known among suppliers for negotiating tremendous price breaks. Wal-Mart does this by researching every aspect of a suppliers product. They look into details like the cost of ingredients, packaging, shipping and advertising. They