Wal-Mart: Marketing Services Analysis

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Executive summary

Wal-Mart Inc. has been in existence since 1962. The retail store chain has significantly expanded in the global market segments in Europe, America, and Asia. Its powerful retail brand with “Everyday low price” slogan depicts its successful money-for-value pricing policy and strategy (Zook, &Graham 2006, p.15). Even though Wal-Mart has managed to develop a strong and vibrant physical environment, proper service provision process supported by technology, and timely product placement, its people management as a process of service marketing is a problem and creates unnecessary negative publicity, hence destroying its image. They need to develop people management strategies, more so its employees to extend the service marketing success to the customers.

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Introduction

Wal-Mart Stores, Inc. is a United States’ public corporation that operates a series of supermarket stores globally. Founded in 1962 by Sam Walton, Wal-Mart is the largest full-line discount in the world in terms of sales and revenue. It is also billed as the single largest employer in the United States. Its initial rapid expansion initiatives were concentrated in the outskirts of small towns and buying out small businesses around these regions (Zook, &Graham 2006, p.17).

Recently, however, the company has diverted its growth initiatives in big cities around the world. Wal-Mart With has its operations in North and South American regions, Europe, Asia, representing one of the largest companies in terms of global presence. However, Wal-Mart has managed to only successfully penetrate a limited number of market segments in these regions namely UK, Mexico, Japan, Indian, Argentina, Puerto Rico and Canada. Their entry in other countries like Germany and South Korea for example failed to bore fruit, forcing them to withdraw the ventures (Sang-Hun 2006).

The company has a powerful retail brand, with “Everyday low price” slogan depicting its value for money marketing policy (Zook, &Graham 2006, p.15). Its core competency relies in its ability to apply various form of information technology to support its internal operations. Their weakness lies in its size. The company expansive units of operations may present a possible weakness that small traders can capitalize on. It means they may fail to concentrate on specific products and services, hence inability to cut a niche for the particular services. Focused competitors may therefore concentrate on particular areas of specialization and outdo them. This has been seen in some insurance services as will be elaborated later in the report.

Retail Product and Services

Much of the supermarkets stores’ success is attributed to its merchandising foresight, good pricing strategies supported by cost-conscious production, efficient marketing communication, good logistics in terms of distribution system (Zook, &Graham 2006, p.17). Its well established online retail section that mainly concentrates in toys and electronics has also given the company an edge over other chain stores. In fact, Wal-Mart has combined a full line of groceries and general merchandise, combined with wide range of services such as pharmaceutical services, dry cleaning services, and studios, hair-dressing, insurance services among other various services.

Website and Online Services

Wal-Mart has a powerful website that supports its online retail services. The company has managed to adopt a website visitor analysis programs that they use to track and analyze online customer behavior. This program is supported by the software eLuminate marketing tool. It helps identify what customers need most in the store shelves. The analysis of the website visitor is also an important process that helps marketing department access information about the visitors and at the same time help in the facilitation of online customer service (Grant & Neupert 2003).

According to Gap Model, Wal-Mart may be considered to have listened and known what its customers needs through its online services. The simple use of technology is to increase efficiency in customer service. It eases the way customers purchase their products. However, the most critical part of it is for the company to understand the complex customer demand before they can know what service to improve.

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Internet Marketing Alliance

Towards the end of last decade, many marketing alliances emerged between major retailers as internet companies increased in number. Wal-Mart stores, the world’s largest retailer partnered with American Online, signaling their intention to bring their services to closer to people.

The two companies agreed to develop a low-cost Web service for consumers who had not got access and at the same time help each other promote their services. It subsequently followed that Wal-Mart customers were supplied with software that allowed them to set up the service through AOL’s CompuServe service (DePamphilis 2007). The aim of Wal-Mart was to funnel as many customers as possible to its newly designed website. The target services were in pharmacy, photo center services, and travel services.

The Insurance Service Marketing

Although many of these services became a success, Wal-Mart’s health insurance cover for its employees has not been a huge success. Of all 1.6 million its eligible employees in the United States, the company has only insured slightly over 40% (Sang-Hun 2006). The low penetrability of the insurance service among employees is attributed to its high cost in terms of premiums. It subsequently means that their employees seek health insurance from somewhere else, mainly from state or community health care programs.

Furthermore, Wal-Mart’s rival in the Insurance service Costco has managed to insure over 95% of its workers who are eligible for the healthcare program (Sang-Hun 2006). Notably, Wal-Mart’s average expenditure on each employee is $3,500, far much less than the industry’s average of &4, 850. Others have accused Wal-Mart of paying its employees so little to afford a comprehensive healthcare.

The cheap public insurance program is what has not gone down well with Wal-Mart’s health care program. Studies show that more children of Wal-Mart employees are increasingly being enrolled in the community healthcare programs (Milne 2007, p.28). It is the company’s failure to get the right insurance design for its employees and their immediate families. Categorized under The design and Standards Gap, Wal-Mart has been unable to design their insurance services to appeal more to its employees. to make matters worse, the company has been accused of malice in healthcare provision, particularly when a memo was distributed indicating that the company was in verge of replacing older and disable employees with young ones, to reduce health care costs.

Such kinds of publicity are not good for service marketing as the performance does not much the promise of good quality service. Everybody knows that Wal-Mart has all along relied on its customer-focused value-for-money strategies for all its product and services. The company used word of mouth to popularize its product and services, a strategy that has worked on their favor for long period of time.

That is, they spent very little on advertisements. In fact, in the 1990s, Wal-Mart spent only 0.5% of every sales dollar on advertisements. This was far much below the average spent by its competitors like Kmart (2.5%) and 3.5% for Roebuck and Company (Milne 2007, p29). The first ambassadors of good message were its employees. Wal-Mart mainly used their employees to spread information on their best product and services offers- a phenomenon that has just shown how much their human capital has been important to them.

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Moreover, Wal-Mart emphasized a lot on patriotism and national causes. It all started in the mid 1980s when the public had started feeling the pain of trade deficit. To boost public confidence and increase trade activities with the nation, the company launched its “Buy American” program and reinforced it with “Made in the U.S.A” signs on its merchandise displays (Grant & Neupert 2003, p.88). The slogans were extended to services they provided to the people. Considering the healthcare provision demands and how it has shaped the public thinking, Wal-Mart has not lived up to its expectation of patriotism in terms of healthcare service provision.

Employee Satisfaction

In the recent past companies have realized that employee satisfaction is one of the most critical aspect success attainment. It goes without saying that organizations have resorted to expend great deal of resources in terms of money and time to facilitate initiatives aimed at ensuring employee satisfaction. As Caruth & Handlogten (2001) observed, satisfied employee will ensure improved productivity, and most of all increase customer satisfaction through exemplary services.

But do many firms realize what is needed to satisfy employees? Why do employees find it easy to leave one company for another, irrespective of pay package? According to Caruth & Handlogten (2001), it all depends on what treatment employees receive at work place. In fact, management theorists have in several occasions postulated that job satisfaction is even more important than monetary or material compensation in times of packs and reward schemes.

That is, when employees get fair and just treatment, they are likely to stay happy and productive for the benefits of the company. Low productivity may be so challenging to a company as it creates the dilemma of whether to replace or improve employer-employee relationship. Carr (2000, p.208) candidly states, “one thing is important about employee management: if you do not appropriately address issues of affecting employees, their services will be poor and you will suffer.” Wal-Mart has several issues affecting its employees that need immediate address.

Apart from its unappealing healthcare policy, Wal-Mart is not in good terms with labor unions, who have accused the retailer of using its position to deny employees some necessary benefits and inappropriate hiring process. Wal-Mart workers have been known for their reluctance to join labor unions. Wal-Mart is blamed for its tactics to prevent its employees who wants to join the unions or form a union.

For example, managerial surveillance has been considered one of their most commonly used strategy to shoot down any intention to join the unions by the employees (Lamb, Hair & MacDaniel 2008). The other strategy is closing of any store whose employees have chosen to unionize or join a larger union. Considering several cases that have arisen as a result of lack of its employees’ unionization, Wal-Mart has not been in good publicity in the recent past (Lamb, Hair & MacDaniel 2008). There are several lawsuits that the company has battled and sometimes lost.

Employee Motivation Concept

The modern management experts agree that a motivated employee will surely increase company’s profitability. Even many managers have conceived neither the idea that motivated employees will increase service provision and develop strong customer relation, it is apparent that many f these organizations have not clearly understood what entails the basic components of this concept (Carr 2000).

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The common assumption is that physically conducive environment, excellent service provision to the customers, adequate brand identity through wide product and service provision, appropriate promotion mix, and proper pricing strategy are enough ingredients in the service industry (Francis, 2003). The expanded marketing mix includes people. Toping the list of the most important people are employees and what motivates them.

The other misconception is that monetary compensation is the top most important way of employee motivation. In fact, surveys have indicated that monetary compensation in terms of increased packs and pay packages is ranked way below other psychological satisfaction that employees expect from a working relationship. But still, money is usually a major source of satisfaction, or dissatisfaction if not properly handled. Milne (2007) highlights the most important elements of motivations to include: achievement, recognition, empowerment, opportunities for growth, and corporate policies (Milne 2007).

Employees get the feeling of achievement in their jobs and career when they feel motivated to work, hence they become more dedicated to their organizations. Employees also find it satisfying when they are recognized from colleagues and employer for whatever contributions they bring at work. This kind of recognition may be in the form of being engaged more with organizational issues (Hong, Yang, Wang et al. 1995).

Motivation can also come from are empowerment. Employees can be given freedom to get involved or participate in issues that may affect their work life, including unions. They may also be empowered through on-job trainings to increase the hope of career development, consequently enhancing productivity. Wal-Mart has not empowered its employees. There is a lot of manipulation as far as performance and involvement in certain issues is concerned. It is evident that Wal-Mart has concentrated much in physical environment of their enterprises and failed to develop every group of people involved in their expanded marketing mix services.

Conclusion

Wal-Mart has successfully advanced its marketing services and expanded their product services provisions. Their have diversified their products and services ranges through physically well designed physical services and excellent brand development, appropriate product placement, competitive pricing strategy, and fastened process of service retail through technology. However, the people aspect of their expanded market mix for services is not adequate. Their unpopular and unfavorable healthcare service to its workers and their anti-union policies is not good for successful marketing service. Their insurance premiums in the healthcare service are high, yet their employees’ pay is low, hence they are kept out of the service despite being eligible.

The company has also shunned the role of trade unions, and imposed several barriers to unionization of its employees. Several accusations have been leveled against the company in relation to their employee treatment, denying them opportunities to join unions and plan to replace old and disable employees with the young energetic ones. Everyone knows Wal-Mart’s use of employees to market themselves. Such marketing initiative is known to be cheap and can only be achieved through people management, led by employees.

Recommendations

  1. Wal-Mart’s priority should be on how to keep its image intact and build satisfied employees. It therefore means that well-being of the workers through adequate and favorable healthcare policy should be made part and parcel of marketing service goal.
  2. The company also needs to develop more incentives in helping its employees fell part of the service delivery process. Once identified, incentives raise service productivity, which is subsequently reflected in the customer.
  3. Wal-Mart needs to acknowledge the role played by trade unions in relation to service marketing. The people relations depend on the image employees portray the company, which eventually build the company’s public relations.

Reference List

Caruth, D. & Handlogten, D. (2001) Managing Compensation (And Understanding It Too): A Handbook for the Perplexed. London. Greenwood Publishing Group.

Carr, A. (2000) Critical Theory and the Management of Change in Organizations, Journal of Organizational Change Management, Vol 13, No. 3, pp. 208-220.

DePamphilis, D. (2007) Mergers, Acquisitions, and other Restructuring Activities. New York, Academic Press.

Francis, H. (2003) HRM and the Beginning of Organizational Change. Journal of Organizational Change Management, Vol. 16 No. 3, pp. 309-327.

Grant, R., & Neupert, K. (2003) Case in Contemporary Strategy Analysis. Chicago, Harvard University Press.

Hong, J., Yang, S., Wang, L. et al. (1995) Impact of employee benefits on work motivation and productivity. The International Journal of Career Management, Vol. 7, No. 6, pp. 1014.

Lamb, C., Hair, J. & MacDaniel, C. (2008) Essentials of Marketing. Chicago, Cengage Publishers.

Milne, P. (2007) Motivation, Incentives and Organizational Culture. Journal of Knowledge Management, Vol. 11 No. 6, pp. 28-38.

Sang-Hun, C. (2006) “Wal-Mart Selling Stores and Leaving South Korea.” New York Times.

Zook, M., &Graham, M. (2006). “Wal-Mart Nation: Mapping the Reach of a Retail Colossus”. in Brunn, Stanley D.. Wal-Mart World: The World’s Biggest Corporation in the Global Economy. Routledge. pp. 15–25.

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