What is Walmart’s marketing strategy? In this case study, you’ll find everything about Walmart: marketing plan, current market position, significant issues, etc. Don’t miss Walmart SWOT analysis and some good examples of the company’s strategies.
Executive Summary
Walmart is the largest retail store in the world with over 11,527 stores across 28 countries. This giant American retailer has registered impressive performance in the American markets over the years since its inception over 50 years ago. Currently, the firm faces stiff competition in the market, especially in the online retail market. The objective of revising its online marketing strategy will shorten the time it takes to deliver products to customers once they make their purchase. The new strategy will promote efficiency in the firm and improve customer satisfaction. It will also strengthen the firm’s brand in the online market.
Walmart Overview
Walmart is a leading multinational retail store which was established by Sam Walton in 1945 after purchasing Ben Franklin Stores. Walton was interested in starting a discounted shop where he could sell high volumes at high prices. This strategy proved very effective because the Second World War was just coming to an end. Although the war was not fought in the United States’ soil, the country took part in it and the economy felt the impact.
Coming up with a retail store that sells discounted products was, therefore, a wise decision because the shoppers were struggling with reduced purchasing power. The firm gained popularity very fast. The firm opened its first discounted store in 1962 in Arkansas and was incorporated in 1969. Since then, the firm has experienced massive growth to become one of the largest firms in the world in terms of sales and number of employees.
Currently, it is estimated that Walmart has over 11,527 stores across 28 countries in the Americas, Europe, Asia, and Africa. It employs about 2.2 million people in various countries. Greg Penner is the firm’s current chairman while Doug McMillon is the chief executive officer. The firm has made an emphatic entry into the e-commerce market not only in the United States’ market but also in Europe and other parts of the world.
Walmart Financial Overview
The financial resources of a firm define how stable it is in the market. A stable firm must have effective ways of managing its financial resources to promote growth. Sound financial acquisition, planning, and utilization is very critical, especially for a firm that operates in a highly competitive market such as Wal-Mart. This company’s success in the global market is partly credited to its superior ways of managing its finances.
Over the last five years, the firm has experienced impressive growth in sales and revenue. Its financial position over the last three years has also considerably improved. The table below is a summary of the firm’s financial position over the last five years.
Table 1: Operating results and financial position of Wal-Mart.
The table shows progress made by Walmart in terms of sales, revenue and income over the past five years. There is also an indication that there is a positive trend in the financial position of this firm. The above data can be presented in graphical form for the purpose of understanding the trend.
As shown in the above graph, there was a sharp increase in sales, operating income, and total revenues from 2011 to 2013. From 2013, the growth continued but at a slower rate compared to the previous years. The graph indicates that this firm has a bright future in the market if it continues with the growth.
The graph above shows that the financial position of this firm has been strengthening over the years. Inasmuch as the firm’s long-term debt is still high, Wal-Mart’s total assets is also increasing.
Walmart’s Current Market Situation
The retail market is considered one of the most lucrative markets in the world. However, it is delicate, highly competitive, and with small profits that must be properly managed to achieve the desired success. It is important to critically look at this industry to determine how Walmart fairs on and some of the external issues it should be conscious of to remain competitive in the market.
Market Description
The retail industry has experienced massive growth over the years because of its relevance to the global society. The industry plays a very important role in breaking bulk and selling products in the quantities needed by clients. In the United States, which is the main market for Wal-Mart, the retail industry has experienced rapid growth over the past five decades. The same case has been witnessed in other parts of the world.
According to Massengill (2013), the retail industry is one of the most competitive industries in the world because of the number of players. In the United States, there are numerous retailers which offer the same products to the American customers. They have the same suppliers, which mean that what they offer to the customers is uniquely similar. Firms are forced to find ways of making their products unique through unique floor plans, displays, packaging, and customer service. In the United States alone, Walmart has over ten major competitors which have formidable market share. There are other hundreds of thousands of small and medium retailers scattered all over the country targeting the same clients as this company.
In order to have a pool of loyal customers, segmentation and target marketing becomes a very critical tool. For Wal-Mart, the segmentation has been done based on the financial position of the clients. Customers who are conscious about the amount of money they spend can visit its discounted stores conveniently located in various parts of the cities all over the country. For those interested in additional services, Uncle Sam’s Club serves them best. The management has come up with unique positioning to attract its clients in different segments.
Product Review
Wal-Mart, being a giant retail store, offers a wide range of products to its customers all over the world. For each product line, clients are provided with a variety to choose from based on their tastes and preferences. For instance, when one intended to buy a television set from any of its stores, various brands such as Sony, Samsung, Sanyo, and Apple are available. Each brand has its unique features and come at different prices. It is upon the customer to choose any of the products based on their interests. The table below is a summary of this information.
Table A2. 1: Segment Needs and Corresponding Features/Benefits.
Competitive Review
The retail market in all the 28 countries where this firm operates is very competitive. In the United States alone, there are over sixteen established retailers which are directly competing with Walmart for various market segments. The competition is very stiff because these firms offer almost identical products. For instance, when it comes to electronics, all these retailers have similar suppliers such as Samsung, Apple, Sony, and Nikon among others. They are forced to use pricing, packaging, customer service, and after sale services to make their products unique. The table below analyzes some of the top competitors of Walmart within the United States’ retail market
Table A2. 2: Competitive Products.
Channels and Logistics Review
Walmart is known for its unique way of meeting the needs of its clients. According to Manna (2008), the channel of distribution and the logistics that a firm uses determines its ability to meet the needs of its clients in the market. Given that Walmart is a retailer its channel must reach directly to its clients. The firm currently uses two main strategies to ensure that its products reach its customers within the right time.
The first strategy is through its retail stores. A study by Lichtenstein (2011) reveals that Walmart has conveniently located retail stores where its customers can get the products they need on their way home. The firm has learnt the art of brick-and-mortar distribution strategy because of its many years of experience in the market. The firm has not only located its stores conveniently but also organized its floor plan to motivate its clients to make purchases.
One of the main advantages of brick-and-mortar stores to the retailers is that it promotes impulse buying among the visitors. The stores have beautiful displays that make the customers easily attracted to various products. If the customer intended to purchase a single item, then it is easy for such a customer to be attracted to a number of other products, which will increase the number of total items purchased in a single visit.
The second channel that Walmart uses to reach to its customers is through e-commerce. As Manna (2008) says, technology is slowly transforming the approach that shoppers take to purchase the items they need. In the United States, and many other countries where this firm operates, the size of the middle class has continued to grow. It is now common to find cases where both parents are gainfully employed and spend most of their time at work.
Because of their desire to climb the corporate ladder, most of the parents spend most of their time at work. They have limited time to go shopping as was the case in their past. As such, they find online shopping very convenient for them. Walmart has promptly responded to the changing technologies in the market and currently its products are available in the e-market. Customers only need to visit the website of the company and identify the products that they need.
They can then purchase that item after specifying the quantity needed and the preferred place of collection. In the past, the clients were required to pick their purchases at their preferred Walmart stores. However, the firm is now forced to change this strategy because of the stiff competition in the market. The firm currently delivers its products in most of the locations in the United States if the client purchases a given volume of products. It means that the firm’s logistics must be ready to deal with the increased demand.
According to Lichtenstein (2011), for a firm to be successful in the current competitive market, it requires a proper logistical strategy that will enable it access the materials it needs in time. For Wal-Mart, most of the products that it has in its stores all over the world are delivered by the suppliers. Its main responsibility is to ensure that these products are available conveniently to the customers in various stores. The current logistical challenge that Walmart faces is to ensure that the items purchased through e-market platform is delivered to the customers at the right time. The firm has a number of vans to facilitate delivery of these products to their clients in various locations once their purchases have been approved. It uses the large trucks to distribute various products to its stores all over the country.
Walmart SWOT Analysis
Conducting a company analysis helps in determining its ability to overcome various challenges within the external market. A SWOT analysis helps in understanding a firm’s internal strengths and weaknesses and external opportunities and threats. This analysis will help in predicting the future of Walmart not only in the American markets but also in other markets all over the world. The table below is a summary of the analysis.
Table A 2.3: SWOT Table.
It is important to critically discuss the issues identified in the table above in order to understand how they affect the firm’s operation in the market.
Strengths
As shown in the table above, Walmart enjoys massive financial wealth that has been accumulated over the years. A study by Lichtenstein (2011) shows that for several years in the recent past, Walmart has been ranked the largest firm in the world in terms of value of sales, beating top brands such as Apple, Coca Cola, and ExxonMobil. This financial strength means that Walmart can easily sponsor various expansion projects are research with ease whenever it is necessary. The firm can also meet all its financial obligations without having to resort to borrowing.
Walmart has been in operation for a very long time since it was established in 1962 (Massengill, 2013). This experience has been instrumental in helping the firm overcome market challenges, especially the stiff competition that it has been facing. When this firm started its operations 54 years ago, the retail market was not as crowded as it is today. This firm has seen numerous other retail stores emerge and become successful, while others have failed. It knows what can bring about a failure of a retail store and therefore, knows how to do things right to remain relevant in the market.
The strength of this firm’s brand is another area of strength that gives it a competitive edge over its rivals. Walmart is currently one of the top brands in the market. It is trusted because it has been offering quality to its customers for the last half a century. The strength of its brand has made it easy for this firm to expand to other markets beyond the United States. A team of skilled and highly dedicated employees and able managers have also helped this giant retail store achieve success. The employees are always innovative when handling various tasks within the firm. The management has remained a source of motivation and always giving its employees a sense of direction in the market.
Weaknesses
It is important to appreciate that despite the numerous areas of strength discussed in the section above, there are a number of weaknesses that this firm has which may have negative impact on its ability to achieve success in the market. The firm’s large size makes it less flexible in the market compared with other relatively small retail outlets. It is not easy to change from one system or approach of doing business to another given the size of the firm.
It means that in cases where the firm is not the innovator, it becomes difficult for it to become early adopter because of the work and financial consequences of the needed change. Low pricing strategy has worked well for this large retail store within the American market. However, it has been one of the main reasons why this firm has been unable to survive in other markets. The low pricing strategy means that the profits that the firm gets from its sales are also low.
Opportunities
The market has a number of opportunities that Walmart can take advantage of to achieve greater success. The growing middle class in its current market is one of its greatest market opportunities. China is home to the highest number of the middle class in the world. The population of the middle class in India and Brazil is also growing very steadily. Currently, this retail store is operating in the United States, Europe, China, Japan, India, Brazil, and a host of other very populous nations.
Since the end of the 2008 economic recession, many economies have recovered and the purchasing power of the middle class has been on the rise. This is an indication that the clients of this firm have a greater purchasing power.
The world is becoming a global village due to the emergence of improved means of transport and communication infrastructure. About fifty years ago when Walmart started its operations in the United States, there were numerous challenges that made it difficult for the firm to expand its operations beyond the borders of this country. However, that is no longer the case in the modern society. Globalization has made it easy for the firm to expand their operations beyond the borders of their parent country. That is why the firm has penetrated to the international markets.
Emerging technologies have presented a number of opportunities to this firm which have helped improved its overall sales in the market. The online marketing technologies came at the right time when the firm was struggling with the problem of how to meet the busy schedule of the working class. This technology has reduced cost associated with brick-and-mortar stores. The emerging technologies have also improved internal communication within the firm, making management activities simpler than they were before. These technologies have also helped in improving security at the firm’s retail stores. Lichtenstein (2011) says that Walmart has learnt how to take advantage of the opportunities in the market to achieve greater success.
Threats
The market presents a number of threats that this firm must find a way of dealing with as it seeks to remain competitive in the market. One of the biggest threats in the market that this firm is trying to deal with is stiff competition. The retail market has attracted numerous firms which are interested in tapping into the opportunities which the market presents. As a result, there has been an influx of retail outlets which target the same target market not only within the American market but also other global markets where the company operates. It forces the management to find a way of dealing with this competition. Since its inception, the company has been using low pricing as the way of dealing with the threat of stiff market competition.
The threat of terrorism is very real in the current society. Terror groups such as ISIS and Al Qaeda are currently targeting soft sport such as shopping centers to unleash their attacks. This has been witnessed in Asia, Africa, and Europe. The threat is real in the United States and the government is trying to find ways of dealing with it. Such attacks may have devastating effect on the operations of this retailer.
In some countries such as India, reports have indicated that sometimes the political class interferes with the business community, especially during the electioneering period. They demand that firms charge low prices and increase employees’ salaries as a way of achieving political mileage. In other cases, the political class would demand bribes from multinationals as a way of avoiding any form of interference. Such forms of interference affect the ability of the firm to achieve success. High tax in other countries where this firm operates has also been an issue that threatens its ability to successfully expand to the global market. The top management unit of this firm is struggling to find ways of addressing these weaknesses.
Walmart’s Objectives & Issues
It is important to look at the objectives and issues that this company faces as it seeks to expand its growth both locally and internationally. The objectives help in defining how to deal with various issues when they arise.
First Year Objectives
The management of Walmart is currently focused on improving e-commerce strategies (Roberts & Berg, 2012). For a long time, this retailer had ignored online platform as a way of marketing its products. However, as time went by, this firm realized that it could not ignore the need to sell its products in the online platform. A research that was conducted by the management of this firm revealed that it was losing its market share to firms like Amazon.com that had learnt the art of selling products in the online platform. Currently, the firm is operating a successful e-market through its website.
However, there is a concern that the online sales is not operating at optimal levels. Firms such as Amazon.com are now delivery their products to their customers within 48 hours after their payment is received. However, Walmart still has issues with its timely delivery. It takes 36-48 hours or even more for its products to reach its clients once they make payment. The sales and marketing department is currently working very closely with the logistics department to ensure that goods once purchased online are delivered to the customers on the same day. It requires improved communication, coordination, and efficient logistics.
Second Year Objectives
The objective of Walmart in the second year after perfecting its e-commerce is to spread its operations to other developing nations, especially in Africa. Walmart made a successful entry into the South African Market in 2010 when it bought Massmart Holdings Limited in a deal worth USD 4 billion (Frazier, Maltz, Antia, & Rindfleisch, 2009). The management is trying to spread out to other African markets, especially in East and West Africa. In the next two years, the firm plans to open new stores in this vast region through acquisitions and takeovers.
Issues
As the firm gears up to achieve the above two objectives, there are a number of issues that it has to deal with. The first objective of same day delivery will require this firm to hire more employees and to have more vans for this purpose. It means that it will be forced to spend more as it seeks to be efficient in its online operations. However, the management has been working on ways of cutting down costs to improve the firm’s margin given that it sells most of its products at considerable low prices.
The conflict of interest may need to be addressed by finding ways of making the new project as least costly as can be possible. In its quest to get to expand its market share, this firm will have to deal with the issue of stiff market competition. The firm’s strategy of buying existing retail stores is very appropriate because in the process it will be eliminating competition.
Walmart Marketing Strategy
The marketing strategy that a firm uses determines its ability to achieve success even in turbulent markets such as the retail industry in which Walmart operates. It is important to look at the marketing strategies used by this company based on the 6 Ps of the marketing mix elements as discussed in the sub-sections below.
Product
Walmart offers a wide range of products from furniture, clothing, and farm tools, to foodstuffs, electronics, and stationery among others. Given that most of these products are manufactured by other firms, this company has limited capacity to use product as a competitive advantage over its market rivals. It forces it to use pre and after sale services to make their products unique. Sometimes the firm uses packaging as a way of achieving competitive edge over its market rivals.
Price
Since its inception, Walmart has always used pricing as a strategy of gaining competitive edge over its market rivals. In the United States, it offers the best deal in terms of pricing compared to all other market rivals. The pricing strategy has earned this firm a loyal following in the market, especially among the middle class who want the best prices for every product that they purchase. They know that at Wal-Mart, they will be offered a discount on every product that they purchase.
Place
The place element is very important, especially for a retailer such as Wal-Mart. This company has conveniently located stores where their customers can purchase their products easily on their way home or to work. The emerging technologies have also made it possible for this firm to purchase its products through online platforms. Its website acts as an important e-store where most of its products are readily accessible.
Promotion
Promotion plays a critical role in strengthening a firm’s brand in the current competitive business environment. In the current market, it has become very important for firms to use various platforms to promote their brands and their products. This company uses mass and social media marketing to reach out to its customers in the market.
Position
The retailer is positioned as a discounting store where clients get the best price deals for every product that they purchase. The firm promises its customers high quality products at the cheapest prices that they can ever get in the market. The strategy has earned it a pool of loyal customers.
Marketing Research
In the ever changing market environment, marketing research helps firms to understand the changing trends and to come up with ways of managing them to ensure that they remain relevant. Walmart has a team of market researchers who are actively involved in monitoring the changing trends in the market.
Walmart Action Programs
The Gantt chart below shows the steps that the marketing team should take in re-launching a superior e-marketing.
Walmart Budgets
The budget that the firm needs to achieve its objective of running a successful online market is estimated to be about $ 5 million. The table below is a summary of the expected expenses.
Table 3: The budget.
This project is meant to improve efficiency of the firm, cut costs, and attract more customers. Just like in advertising, it is not possible to conduct a break-even analysis because it will not give direct returns that can be calculated.
Controls
The improved online marketing platform is meant to promote operational effectiveness, customer satisfaction, and brand image. Once implemented, the firm will be able to receive and process orders within a short period. Once the order from a client is successfully processed, the firm will move with speed to process such order so that a timely delivery can be made. The ultimate aim is to ensure that goods are delivered to the client on the same day that they make payment. If this is achieved, then there will be improved customer satisfaction. Satisfied customers will help promote positive image of this firm through viral marketing.
References
Corporate Reports. (2015). Walmart Annual Report 2015. Web.
Frazier, L., Maltz, E., Antia, K., & Rindfleisch, A. (2009). Distributor Sharing of Strategic Information with Suppliers. Journal of Marketing, 73(2), 31–43.
Lichtenstein, N. (2011). Wal-Mart: The face Of twenty-first-century capitalism. New York, NY: New Press.
Manna, R. (2008). Just-In-Time: Case Studies of Supplier Relationships across Industries. Journal of Applied Business Research, 24(1), 75–83.
Massengill, R. P. (2013). Walmart wars: Moral populism in the twenty-first century. New York, NY: New York University Press.
Roberts, B. & Berg, N. (2012). Walmart: Key insights and practical lessons from the world’s largest retailer. London, UK: Kogan Page.