Wal-Mart as Americas Largest Grocery Retailer - Case Study Example

Wal-Mart Introduction Founded by Sam Walton Wal-Mart today is America's largest grocery retailer. Today it has existence different countries of the world including the United Kingdom, Japan, Argentina, Brazil, and Canada. Right from the beginning Wal-Mart adopted a competitive strategy based on pricing. Low or affordable pricing and mass marketing became its hallmark. Due to large volumes Wal-Mart was able to manage its competitive edge. However, things started changing on the retail landscape in America and elsewhere demanding a more focused approach towards different target markets. By this time Wal-Mart became famous as discount store and people did not have the notion that it can target specific groups. In order to counter this image Wal-Mart decided to open new stores targeting new markets in a different way. Their strategy to target six main group of African-Americans, the affluent, empty-nesters, Hispanics, suburbanites and rural residents made headlines as their attempt to change their image. As apart of this strategy new shops were opened in localities like Chicago. Affluent Demographics The change in Wal-Mart's strategy came to fore front when they tried to target the affluent demographics in America. They opened their store in Plano, Texas in the locality where there were more upscale stores targeting this particular segment. They tried to change the outlook of their stores and the assortment of items on sale accordingly. Items like microbrew beer, expensive wines, and high-end electronics that were not typically found in a Wal-Mart store was placed in this outlet designed in a different way with wooden floors, wider aisles, a sushi bar & a coffee/sandwich shop. Affluents are better educated and less affected by adverse economic conditions and prefer stores that introducing new merchandise to keep customers coming back. Wal-Mart knew that they were not doing enough business with the more affluent customers. It is not easy to gain social acceptance by the Wal-Mart where others have spent years and years of brand building efforts. The success for Wa-Mart in this particular demographic is not coming so easily as it is hard move from low-end to high-end. Targeting African Americans: Black or African Americans have their own peculiarities and tastes and require special attention as they are a sizable group among Americans. When Wal-Mart opens an outlet in areas where they are densely populated they have to focus their efforts on the needs and wants of this population. The shop that opened in Chicago is the link in this regard. The shop has exclusive offerings for the men and women belonging to this community. "When Wal-Mart Stores Inc. recently opened a new store here with a heavily African-American clientele, it stocked the men's apparel section with an exclusive line of clothes featuring baggy jeans and trendy sports jackets, made the department 30% larger than at typical stores and moved it to the front corner" (Zimmerman A1). Their strategy in targeting this particular segment is better than the other segments it is targeting. They have made available items of exclusive interest and have also given some focus on image building and community participation. For example, Wal-Mart has been celebrating Black History Month to relate to its African American market by hosting host a series of in-store events and activities. These kinds of efforts help making inroads in news segments of the market without which gelling in is not possible and giants like Wal-Mart will also face difficulties in surviving. Hispanics Hispanics or Latinos as they are commonly called are one of the fastest growing ethnic groups in the United States of America. "Roughly one in seven Americans is Hispanic. Hispanics constitute the largest minority group in the United States. As of July 1, 2004, Hispanics accounted for 14.1 % of the population, around 41.3 million people" ('Hispanic', Demographics section). Even though this group has assimilated in the mainstream, yet they have their peculiar culture, different lifestyle, distinct music, colorful dances and even unusual cuisines. Exclusive outlets could be opened in places like Southern California. The product line could have medium range of prices while an exclusive premium section could also be launched to cater to exclusive clients with exclusive designs. Hispanics are now the largest minority group in US and even Hispanics is a diverse group. The researches have shown the proclivity of female population of this group towards clothes and fashion. Hispanic women in particular are very fond of makeup, cosmetics and clothes. They love to pamper themselves with fashionable clothes and stylish make up. A large number of companies cater to Hispanic women with products like Hair care, Make up, Moisturizers, dental products and clothes. Purchase power of this demographic group has also increased making them an attractive target group. Hispanic women also have a hankering for branded products. Wal-Mart can only succeed if they indulge in market research and understand these different and diverse groups and make their strategies accordingly. If they do not do that then they would face difficulties. They will have to change their product, placement, promotion as well as pricing strategies to cater to a particular group. In order to be exclusive, a certain product line should be there so that they can charge further premium for the offer of exclusivity. The pricing strategy should to cash in on the increasing purchasing power of communities like Hispanics. The range of price decided will attract people from different sections of society. Suburbanites, Rural & Empty Nesters: Just like Hispanics, African Americans and Affluent, these groups also have their own distinct needs. Rural landscape requires a different strategy as compared to the people living in suburban areas. Similarly Empty nesters have a different disposable income and require a unique strategy to attract them. Targeting a new group requires some adjustment. A company that is more dependent on a uniform product, pricing and even distribution strategy is facing many difficulties targeting these diverse groups. "The complex challenges facing Wal-Mart have most experts doubting whether its three-year plan is realistic. Notes Wendy Leibmann, 'it takes a long time to change people's attitudes and shopping behavior.' And Kevin Price adds that those changes are going to be circumscribed by the image of Wal-Mart that's already embedded in shopper's minds" Changes after Ecommerce Organizations are availing the opportunities provided by ecommerce. Many small and large firms have also been using this opportunity as for example one can purchase a t-shirt from a website belonging to a developing country. There are many ways such small firms can have greater audiences if they move to bigger portal like eBay. These new Internet based portals became the hub of activities in ecommerce. Companies like eBay & Amazon.com appeared on the horizon and established themselves on the lines of mail order firms. Web outlets or ecommerce websites are open 24/7 and the customer base is not limited to a particular geography. In business world the emphasis has been on customized marketing and ecommerce offers this unique opportunity of one on one marketing. Wal-Mart can not stay with the same price fit all policy in this Internet and ecommerce age when customized marketing is the key word. With ecommerce companies like Wal-Mart no longer afford to continue mass marketing and are looking for ways to diversify in this regard. Though walmart.com is among the top ecommerce web sites but customized marketing feature is still not dominant. Image Building The importance of image building and promotion is crucial in the marketing mix of the brand without which no success is guaranteed. For example, if Wal-Mart is targeting affluent demographics then they should show some affiliation with high end designer labels like other high end stores do or even better. The management could use identifier, brand's trademark logo on exclusive products to deliver the message of luxury, prestige and multicultural identity to its clients. Another important feature of the marketing by the brand could be the patronage given to it by the celebrities particularly belonging to Hollywood. Star power and patronage of celebrities have helped brands in achieving the iconic status. Many celebrities like Cameron Daz, Alfonso Ribeiro, Carlos Ponce, and Christina Aguilera having Hispanic backgrounds or R& B and Hip Hop artists belonging to the African American community have gained immense popularity over the years and could be used to become brand ambassadors if Wal-Mart has particular social groups like Hispanics or African Americans in mind. Conclusions Wal-Mart has an identity and is more associated with a price conscious target market. It has built its image around the same concept. Merely changing the dcor and assortment of t=items cannot guarantee success. Targeting new customers requires efforts in all areas from marketing to distribution and image building. Internet can be an important place to start customized marketing and Wal-0mart like others can also make inroads in this territory. Without concerted efforts chains like Wal-Mart won't succeed and it would get the cold shoulders in certain target markets. Wal-Mart has also been facing criticism with respect to its corporate philosophy & HR &management practices. It needs to work in these areas as well. References: Jones, Sandra (2006, Sep. 27). Wal-mart opens doors in Chicago ; West Side store is 1st in city for retailer; company eager to add more. Chicago Tribune Final Edition. Chicago, Ill. p. 1 Zimmerman, Ann (2006, Sep. 7). Thinking Local: To Boost Sales, Wal-mart Drops One-Size-Fits-All Approach: World's Largest Retailer Will Target Six Groups in U.S.; Changing Product Mix: Guns Out, Home-Fitness In. The Wall Street Journal. p. A1 Agins, Teri (2007, Jan. 22) Goodbye, Mainstream. Where do you find the latest fashion trends these days Everywhere, says David Wolfe. The Wall Street Journal. p R7. 'Hispanic'. Wikipedia Encyclopedia. 29 July 2007 'Wal-Mart'. Wikipedia Encyclopedia. 29 July 2007< http://en.wikipedia.org/wiki/Wal-Mart> Wellman, David. Sweating it Out. Retail Merchandiser Magazine Online. 29 July 2007< http://www.retail-merchandiser.com/index.phpoption=com_content&task=view&id=14660 > Read More