Walmart Marketing Strategies - Case Study Example

Running head: WAL-MART ANALYSIS 20th February Background of the company Wal-Mart was founded in1950 by Sam Walton in Arkansas. From 1960s to 1970s, Sam Walton opened the second store in Rogers Arkansas and decided to keep the sales price low due to the competition. This decision made the company to attain high sales volume. During this period, the company expanded and obtained 24 stores in the state of Arkansas. The company in the same period had an approximate $ 12.6 million from the yearly sales. Later in 1968 the company was able to open another store outside Arkansas. The stores were in Missouri, Claremore, Oklahoma and in Sikeston. The company kept on expanding and in 1977 it had a store in Illinois and acquired Mohr-value stores later the acquisition of Hutcheson Shoe Company followed in 1978. Since the company aim is to make sure that people save money for a better living, it kept on entering new markets where it introduced pharmacy and jewelry among other products. In 1980s to 1990s, Wal-Mart had expanded to southern eastern United States and had opened stores in locations like Georgia, Carolina and Florida among others. In 1988 Wal-Mart was operational in more than 27 states and officially become national wide retailer. In 1990s, Wal-Mart sales had increased to $32 billion; later in 1991 the company expanded to Delaware, Massachusetts and New Hampshire and further opened a store outside United States. The first store outside United States was located in Mexico City. In 1992, Sam Walton was given a medal by President George Bush for his performance, later Walton died in April the same year (Vance, 1997). After the death of Walton, lee Scott became the CEO. Wal-Mart economic conditions Due to the improving US economic conditions since 2012, the demand for Wal-Mart products has drastically increased. As the result the company has been able to expand locally and globally, an aspect that has made it to remain competitive within the retail industry. The worries that have been generated due to the government establishment of fiscal policies such as establishment of infrastructure that includes increased tax did not deter consumers from purchasing Wal-Mart brands. Based on its employment policies and the criticism of poor working conditions, Wal-Mart has note to be losing quite a number of employees resulting to increased rate of unemployment locally. However, the US government has continued to offer support to the supermarket thus resulting to creation of more job opportunities locally and globally. Ethical issues Wal-Mart supermarket has great value for its customers. The workers’ views are that the society and the consumers are vital and thus they need to be provided with quality brands and services. Wal-Mart’s culture of integrity is promoted by Global Ethics. This entails developing and upholding the company policies for ethical behavior for all the stakeholders. The three issues that are covered by Global Ethic includes serving as a guide for ethical decision making, leading a continuous ethics education as well as communication system and providing a confidential and anonymous reporting system. Wal-Mart promotes integrity by establishing a globally ethics education internationally. Additionally, through the consistent education program in the US market, that includes instructor-led training and e-learning, the company has benefited from strong support from the government as well as consumers. Wal-Mart has also established Integrity in Action Award program. This entails a plan that recognizes associates who shows integrity through continuous actions as well as inspiring others. The associates are encouraged to share their stories as a way of encouraging other while at the same time sustaining the company’s culture. Wal-Mart marketing strategies One of the notable marketing strategies that are adopted by Wal-Mart is online marketing. With the increased customers who are emulating online purchasing, Wal-Mart has responded to their needs by using online marketing that targets all its customers locally and globally. In order to face off its competitors in the US and foreign markets, Wal-Mart adopts the technique of low prices. Based on the fact that every customer is always for the lowest prices, Wal-Mart has been able to attract large number of customers through its reduced prices. Another key marketing strategy that Wal-Mart emulates is being easily accessible. By establishing thousands of stores in the global market, the supermarkets has been able to reach quite a large number of customers thus resulting to increased sales and profit for the company. Additionally, by becoming easily accessible, customers are able to contact Wal-Mart 24 hours a day. In this way, the supermarket is in a position to use the feedback from its customers that it uses to provide products that meet their needs. Wal-Mart unique marketing techniques also involve appealing to as many people as possible. The supermarket provides products of all types including groceries, beauty products, toys, electronics and home cleaning products among others. By providing wide range of products, the company has been able to expand its overall customer’s base thus increasing its total sales. Wal-Mart SWOT Analysis Strengths Customer loyalty-due to the mission of saving individuals money, the consumers have strong loyalty towards the company products. Affordable pricing- as indicated in the mission that the company aim is to save money and improve the living standards, it makes the consumer to be part and parcel of Wal-Mart due to fair prices. Recognized brand- the company offer brands which are recognized by the consumers. Weaknesses No formal mission statement- the mission statement sounds like a slogan, poorly structured and too short. No reaction on incompetent employees- since the consumers are used to the company, the employees like to maintain status quo and the management does not react (Thomas and Bernadette, 2007). No female employees- this means that empowerment of female is not recognized and it is a weakness due to lack of equality. Opportunities On line shopping- this makes the company to increase its sales volume since individuals can easily conduct business online. Strong distribution- due to opening of stores in different locations, the distribution network of the product is easy. Unexploited market on the European- since the market is unexploited it leads to retailers distributing different brands in other parts of location (Dess, 2012). Threats Competition- strong competition exists between Wal-Mart and the rivals like Target, Carrefour, Burlington stores, Big Lots Inc and Cencosud S.A among others. Political instability- since the company operates in different parts worldwide, political upheavals exist. Price competition- price competition is stiff since different companies tries to outdo the other through prices. Wal-Mart SO strategies Being a market leader in the retail Wal-Mart can use that competitive advantage and make sure that the customers can bargain and still offer discounts. During hard economic times the sales volume of the competitors reduces but Wal-Mart can take this advantage since it offers the products at affordable prices. Due to online shopping, customers’ expectations are achieved and this makes it possible for the consumers to order products online. The distribution network makes it possible to meet the consumer demand since different brands are sold at low price and are available in major stores. Wal-Mart brands that are recognized worldwide provide an opportunity of sale increase since the brands are affordable at lower cost. Wal-Mart ST strategies Since Wal-Mart is known due to strong brands, it is likely for the company to face competition, though this can be reduced through offering its products at low prices. The brands that are produced have been able to sustain in the market in time of political and economic problems. The products that meet consumers’ requirements create a favorable environment that will be able to reduce the competition. Since the company is able to share stock and profit with the employees, the competitors cannot get access to the Wal-Mart secrets since the employees own the company. Due to customer loyalty, the competitors are easily outdone Wal-Mart WO Strategies Given the high possibility of increased retail business in the future, Wal-Mart has to set a clearer mission statement in order for it to increase its profits. The company may face stiff competition in India among other countries. Based on the fact that the technology has made consumers in the international market to have a similar buying pattern, it is vital for Wal-Mart to inform its customers about new brands through the internet just like other retail outlets Wal-Mart should also expand its distribution system by exploiting the market in the developing countries Asian, African and European markets are still not fully exposed to retail outlets. This implies that Wal-Mart should utilize this chance and enter these markets by offering quality brands of low prices especially during the time of low performing economy Wal-Mart should offer flexible benefit scheme to its employees in order to make them feel motivated thus improving their performance With the improved technology globally, Wal-Mart should improve its storage techniques to avoid destruction of its products As the demand for food products increases in the emerging markets, Wal-Mart should expand its food brands in order to meet the need of its consumers in the new markets. Wal-Mart WT Strategies To address the stiff competition that Wal-Mart face in the local and international market, the company should focus on existing product line or allocate funds towards advertising campaign in order to put pressure on the competitors Wal-Mart should undertake extensive study of the foreign market and adapt its unique culture to establish more outlets in the European and Asian market The company should avoid involving itself in any political issue in the foreign countries to avoid losing its customers. However, Wal-Mart should ensure that it strictly follow the outlined business regulations Wal-Mart should regularly evaluate its prices to ensure that they remain competitive but affordable by the consumers. In this way, the company will effectively face off the competitors in the retail industry. Wal-Mart should emphasizes on maintaining productive female workforce and provide them with higher benefits to avoid losing them to other companies. The firm should offer more training in order to improve the performance of the incompetent employees. This will result to increased revenue for the company thus enhancing the expansion process for the company Wal-Mart should establish research centers in the foreign market to ensure that it produces brands that are in line with the needs of the consumers (Kotler and Keller, 2012). Additionally, the company will thus effectively face off the competitors in the markets. Wal-Mart industry analysis Wal-Mart supermarket operates in a very competitive retail industry both locally and globally. Being a company that values product diversification, Wal-Mart faces strong sales competition from other departments, specialty stores, drugs outlets and supermarkets in US and other countries. The supermarket direct competitors include Costco and Target. Costco is the largest discount outlet which is effectively able to compete with Sam’s Club that is maintained by Wal-Mart. On its part, Target is a big threat for Wal-Mart at all levels due to the fact that it has also diversified its product portfolio. For example, the low price strategy that is followed by Target is the same technique that is utilized by Wal-Mart. As a result, Target is gaining more market share by establishing more grocery outlets in the international market. In the international market, Wal-Mart is faced by competitors that include Carrefour, Tesco and Metro. The major aspect that has made the three supermarkets to be a threat for Wal-Mart is that they are expanding more stores globally. However, as compared to the three international competitors, Wal-Mart is the biggest in terms of revenue. After Wal-Mart, Carrefour is the second in terms of sales. With the growing customers needs in US and across the world, Wal-Mart is likely to be faced with stiff competition from other supermarkets in the foreign markets. Wal-Mart financials According to 2011 income statement, Wal-Mart net income applicable to common shareholders was 16,389,000, 2012 it was 15,699,000, 2013 it was 16,999,000 while in 2014 it stood at 16,022,000 (WMT Company Financials 2011-2014). Total liabilities and equity as indicated by the company balance sheet was 204,751,000 in 2014, 203,105,000 in 2013, 193,406,000 in 2012 and 180,782,000 in 2011. As indicated by 2011 to 2014 cash flow statements, Wal-Mart net cash flow in 2011 was 16,389,000, 2012 it 15,699,000, 2013 it was 16,999,000 while in 2014 it stood at 16,022,000. The company current ratio in 2014 was 88, 2013 it was 83, and 88 in 2012. Competitors financials Net income applicable to common shareholders (figures in $ million) 2014 2013 2012 2011 Target Corporation 1,971 2,999 2,929 2,920 Carrefour 419,520 389,529 290,243 239,867 Costco Wholesale Corporation 2,058 2,039 1,709 1,462 Source- (Costco Wholesale Corporation Company Financials 2011-2014) Long term bond ratings according to Fitch Company Ratings Wal-Mart ‘AA’ Target Corporation A- Carrefour BBB Costco Wholesale Corporation A+ Recommendations for Wal-Mart Based on the cut-throat competition in the retail industry from Tesco and other competitors, Wal-Mart should make efforts to enter emerging markets. The demand for retail products in the developing markets has been on increase due to increase in population as well as improved economic conditions. As a result, the supermarket will enjoy strong positive customer brand relationship resulting to improved sales. Just like the sponsorship that Barclays has adopted in the area of English premier league, Wal-Mart should embark on sponsoring social events in the emerging markets as a way of creating strong awareness. Additionally, the company should undertake strong marketing techniques to face off the competitors in the developing countries who have established their operations. As more companies embark on entering the retail industry, Wal-Mart should prepare itself to face stiff competition from the rivals. This implies that the supermarket should launch more brands in the global market in order to ensure that it remains competitive. Regular training of Wal-Mart will also make them more productive. This is based on the high level of motivation that will be triggered by the training. As a result, the company will address their increased level of job turnover thus creating a strong positive image on the eyes of the public. References 5 year stock charts. Available from Yahoo Finance. Dess, G. (2012). Strategic management: Text and cases. New York: McGraw-Hill/Irwin. Goldstein, D and Lee, Y. (2005). The rise of right-time marketing. The Journal of Database Marketing & Customer Strategy Management 12 (3): 12–25. Kotler, P and Keller, L. (2012). Marketing Management. New York: Pearson Education Limited. Thomas J and Bernadette K. (2007). The Use of and Misuse of SWOT analysis and implications for HRD professionals. Human Resource Development International 9 (4): 83–99. Vance, S. (1997). Wal-Mart: A History of Sam Waltons Retail Phenomenon. New York: Twayne Publishers. WMT Company Financials 2011-2014. Available from http://www.nasdaq.com/symbol/wmt/financials?query=income-statement. Read More