Wal-Mart Case Study

Name: Ahmed Hashim

Reg: 1511-110-027
Subject: Strategic Marketing
Sir Ahmed Butt
Date: May 6, 2013

Table of Contents
1.
2.
3.
4.
5.
6.
7.

Acknowledgement...........................................................................3
Introduction to the Case..................................................................4
History of the Case..........................................................................5
Executive Summary.........................................................................6
SWOT Analysis................................................................................9
Strategic Marketing Objectives......................................................12
Marketing Driven Strategy.............................................................13
a. Competitive Space Analysis..................................................13
b. Segmentation of Markets..............................................................14
c. Positioning Strategy......................................................................15
d. Product Strategy............................................................................15
e. Pricing Strategy............................................................................16
f. Promotional Strategy....................................................................17
g. Channel Strategy..........................................................................18
8. Recommendation...................................................................................20
9. Annexure...............................................................................................20

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Acknowledgement
I would like to thank Sir Ahmed Butt for taking this opportunity to do a case
study on Wal-Mart. I would also like to thank my fellow classmates for
letting me work and coordinate with me in this research. I would also like to
thank my parents and friends who helped me a lot in finishing this project in
short amount of time.

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Introduction to the Case

There is big there is Wal-Mart, with $245 billion in revenues 2002, Wal-Mart
is the worlds largest company. It is three times the size of the No.2,
retailer, every week, 138 million shoppers visit Wal-Mart 4750 stores, last
year 82% of American households made at least one purchase at WalMart, Wal-Mart every day low price is more than a slogan. New England
Consulting estimates thats Wal-Mart saved its U.S customers $20 billion
last year alone, Factor in the price cuts other retailers must make to
complete, and the total annual saving approach $ 100 billion. Its no wonder
that economists refer to a broad Wal-Mart effect that has suppressed
inflation and rippled productivity gains through the economy year after year.
Americas largest private employer is widely blamed for the sorry state of
retail wages in America. On average Wal-Mart sales clerks associates in
company parlance pulled in $ 8.23 an hour or $13861 a year in 2001. WalMart insists that it pays competitively, citing a privately commissioned
survey that it meets or exceeds the total remuneration paid by rival
retailers in 50 US markets. This is a good place to work, citing an employee
turnover rate that has fallen below 45% from 70% in 1999.
Critics counter that this is evidence not of improving morale but of a lake
employment alternatives in a slow growth economy. A federal judge in
California began a consideration a plaintiffs petition to include all women
who have worked at Wal-Mart since late 1998, 1.6 million all told in a suit
alleging that Wal-Mart systematically denies women equal pay and
opportunities for promotion.

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History of the Case

There is big there is Wal-Mart, with $245 billion in revenues 2002, Wal-Mart
is the worlds largest company. It is three times the size of the No.2,
retailer, every week, 138 million shoppers visit Wal-Mart 4750 stores, last
year 82% of American households made at least one purchase at WalMart, Wal-Mart every day low price is more than a slogan. New England
Consulting estimates thats Wal-Mart saved its U.S customers $20 billion
last year alone, Factor in the price cuts other retailers must make to
complete, and the total annual saving approach $ 100 billion. Its no wonder
that economists refer to a broad Wal-Mart effect that has suppressed
inflation and rippled productivity gains through the economy year after year.
Americas largest private employer is widely blamed for the sorry state of
retail wages in America. On average Wal-Mart sales clerks associates in
company parlance pulled in $ 8.23 an hour or $13861 a year in 2001. The
Federal poverty line for a family of three was $ 14630. Wal-Mart insists that
it pays competitively, citing a privately commissioned survey that it meets
or exceeds the total remuneration paid by rival retailers in 50 US markets.
This is a good place to work, citing an employee turnover rate that has
fallen below 45% from 70% in 1999.
Critics counter that this is evidence not of improving morale but of a lake
employment alternatives in a slow growth economy. It is a ticking bomb
The company now faces revolt of sorts in the form of 40 Lawsuit charging it
with forcing employee to work overtime without pay and a gender
discrimination case. A federal judge in California began a consideration a
plaintiffs petition to include all women who have worked at Wal-Mart since

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late 1998, 1.6 million all told in a suit alleging that Wal-Mart systematically
denies women equal pay and opportunities for promotion.
Wal-Marts marketplace clout is hard to overstate. In household staples
such as toothpaste Shampoo and paper towels. Wal-Mart is also
Hollywoods biggest outlet. Wal-Mart controls a large and rapidly
increasing share of the business done by most every major U.S consumer
product company 28% of Dials total sales, 24% of Del Monte Foods, 23%
of Clorox, 23% of the Revolt/s and on down the list. Suppliers growing
dependence on Wal-Mart is huge issue not only for manufacturers but also
for the U.S economy. Wal-Mart appears to be in no imminent danger of
running afoul of federal antitrust statutes.
CEO H. Lee Scott Jr and other Wal-Mart executives are aware of the rising
hostility the company faces and trying to smooth its rough edges in dealing
with the outside world. But they have no intention of tampering with its
shopper centric model. E dont turn a deaf ear to any criticism has to say.
Wal-Mart cites customer preference as the reason it does not stock CDs or
DVDs with parental warning stickers and why it occasionally yanks items
from its shelves.

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Executive Summary
Wal-Mart was a relative latecomer to international retailing. The move
overseas was driven in part by flagging domestic growth. By 1997, WalMart possessed 41 Wal-Mart and Sams Club stores within Mexico and
also had 89retail outlets (under various names) within its control. During the
next few years, Wal-Mart expanded into Puerto Rico and Canada. It
developed its presence in Argentina, Brazil, China and the United Kingdom
1999). In Britain, Wal-Mart was able to successfully transplant theirs
strategy after acquiring ASDA. Wal-Marts superior processes in supply
chain and IT have ensured that it was able to provide the customers with 7
% lower prices than its competitors.
During that same time, its competitors had also begun expanding into new
markets. Clearly dominating the US retail market, Wal-Mart expanded into
Germany (and Europe) in late1997. Wal-Marts strategy to export the
successful, packaged corporate formula resulted insignificant cross-cultural
communication issues with constituents in Germany. Executive
management failed to anticipate the clash of cultural differences between
German traditions and the Wal-Mart way. Upon closer inspection, the
circumstances of the companys failure to establish itself in Germany give
reason to believe that it pursued a fundamentally flawed internationalization
strategy due to an incredible degree of ignorance of the specific features of
the extremely competitive German retail market.
Moreover, instead of attracting consumers with an innovative approach to
retailing, as it has done in the USA, in Germany the company does not
seem to be able to offer customers any compelling value proposition in
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comparison with its local competitors. Further, Germany had limited store
hours, price regulations (prohibiting retailers from selling below costs), and
stringent zoning requirements.

SWOT Analysis
1. Strengths:
The customer are loyal to Wal-Mart to reasonable extent
Wal-Mart is maintaining formidable position against competition
Wal-Mart is maintaining good company relationship with suppliers
and manufacturers both local and over seas
Wal-Mart needs improvements in its strategic direction including
redlining the vision and mission and reformulating the corporate
strategy we should have the theme of market driven organization
Wal-Mart is profoundly strong financially
Wal-Mart has best systems operations managed procedures in the
retailing industries.
2. Weaknesses:
Certain shoppers have different perspective related to Wal-Mart
Wal-Mart is facing fierce competition in retailing industry
These policies related to suppliers and vendors are not suppliers
friendly
Labor relations including CBA is slightly unfair
Marketing management needs innovative thinking introducing
strategic marketing inclusive of making the organization move
HRM needs improvements in all the finding areas of HR
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3. Opportunities:
The Wal-Mart is taking care of the social responsibility. Designing
with it Business Model consistent with it including the merchandise.
The stores are currently only trade in a relatively small number of
countries. Therefore there are tremendous opportunities for future
business in expanding consumer markets.
Wal-Mart is internalizing the laws related with industry in a moderate
fashion.
The industry is facing consistency in retailing policies.
The Wal-Mart has equipped all its stores with latest technology.
Wal-Mart is aggressively contemplating to have more presence b.
This strategy more will provide inputs for growth strategy.
Opportunities exist for Wal-Mart to continue with its current strategy
of large, super centers.

4. Threats:
The economic condition is providing the slow less, more importantly
due to 9/11.
Intense competition
Opposition and resistance from communities
Affects of the subprime crisis
Being a global retailer means that you are exposed to political
problems in the countries that you operate in.
The cost of producing many consumer products tends to have fallen
because of lower manufacturing costs. Manufacturing cost has fallen
due to outsourcing to low-cost regions of the World. This has lead to
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price competition, resulting in price deflation in some ranges. Intense

price competition is a threat.
Strategic Marketing Objectives
As a major international public company, Wal-Mart has lots of objectives.

Maintain positive, steady growth,each quarter.

Experience a growth in new customers who are turned into long-term
customers.
Realize an increase in occupancy each subsequent year.
Develop and execute a global ecommerce strategy
Accelerate global online channel growth
Have accessible stores available for all of the customers needs
Keep improving Sams Club
Maintain excellent customer service Give the customers what they want:
quality products at affordable prices
Implement a four-point plan to improve comparable store sales says: This
statistic [comparable store sales] allows investors to determine what portion
of new sales has come from sales growth and what portion from the
opening of new stores.)
Implement productivity initiatives
Balance their commitment to aggressive growth with their long-term plan
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Achieve positive comparable store sales [through four-point plan]

Enhance shareholder value.
Marketing Driven Strategy
Market driven strategy is considerably the most popular organizational
approach in running the business nowadays, as the strategy allows the
company to obtain a better understanding of the market, as well as their
customers; thus, it allows company to achieve competitive advantage, and
develop a long-term relationship with the customers.
The fundamental logic of this strategy is that the market and the customers
that form the market should be the starting point in business strategy
formulation; which therefore an understanding of the market and the
customers that form the market is essential.
The characteristics of market driven strategies include:

Becoming market oriented

Determining distinctive capabilities

Finding a match between customer value and organizational capabilities

Obtaining superior performance by providing superior customer value

a. Competitive space analysis

To what extent is WMs competitive advantage sustainable?

At the time discount stores were located within large towns, WMs
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strategy was to put good-sized stores into little one-horse towns that
everyone else was ignoring.
WM alternative was to build their own distribution centers so that they
could buy in volume at attractive prices and store the merchandise.
WM earn the trust of their customers every day by providing a broad
assortment of quality merchandise and services at everyday low prices
(EDLP) so that their customers trust that the prices will not change under
frequent activity.
WM introduced Remix system designed to reduce inventories, speed
deliveries to stores, and eliminate stock-outs. WM ordered supplies on a 5day rather than 4-week basis which would lead to lower inventories in
distribution centers and retail stores.
Its direct import initiative involved, purchasing directly from overseas
suppliers rather than through importers, and second, taking the control of
import logistics.
In 2003 WM announced the adoption of radio frequency identification and
became the leading pioneer of this technology.
Individual store managers were given considerable decision-making
authority in relation to product range, product positioning within store, and
pricing. Decisions over pricing and merchandising were made either at
head office or at regional offices.
In 2008 WM changed their logo and redesigned their stores, the new logo
looked organic, trying to say that they are an eco-aware company.
WM was a pioneer in applying information and communication
technology. WM was among the first retailers to use computers for
inventory control, to initiate EDI with its vendors, and to introduce bar code
scanning for point-of-sale and inventory control.
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WM was pioneering the use of data-mining for retail merchandising.

WMs web of information system extends far beyond
b.Segmentation of a Market

There are three core customers of Wal-Mart:

Brand Inspirational
People with low incomes who are fixated on brand names like
Kitchen Aid;
Price-Sensitive Affluent
Wealthier shoppers who love deals; and,
Value-Price Shoppers
Those with like low prices who can't afford much more.
Hispanic, urban and affluent segmentations can be helpful for the Wal-mart
instead of making store segmentations.
Some customers are brand conscious they really do not worry about the
price. Hispanic they are hard working do not pay attention on the brand due
to low income they should be value price shoppers.
Urban people have categorized in various segments:
Commercial sectors: they would be interested in bulk shopping
Educational sectors: they would be interested in services of stationeries.
Social class and groups would be categorized as per their requirements
what they have geographically, demographically and life style
characteristics.

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c. Positioning Strategy
Wal-Mart ranks no.1 in the fortune 500 list for the second consecutive year
with a revenue of 421,849.0 Million USD and made a profit of 16,389
Million USD during the FY2011. It was founded in the year 1962 by Sam
Walton.
Strategic positioning is a key component of a successful business strategy.
Wal-Marts general strategy is to place itself as the low-cost leader when
compared to competitors. The company applies this strategy in every
business pursuit. To give an example, the company has partnered with
True-Connect to offer a low-cost Wi-Fi alternative. The pre-paid service
allows users unwilling, or unable, to purchase monthly data plans for
mobile devices another alternative for obtaining mobile broadband.
This focused low-cost leadership is just the most recent example of WalMarts drive to expand into product and service markets. Other examples
include entries into the soft drink industry (Sam's Choice colas), pet food
market (Ol' Roy dog food), and perishables (Great Value brand). Each
product's purpose is to offer a lower cost alternative to other brands in the
same industry/market.
It should be like LOW PRICE WILL KISS QUALITY
d. Product Strategy
Wal-Mart is a multinational retailer; in short it has every product or a brand
which a person could see in his day to day life. The broad range of product
categories include movies, crafts, gifts, college essentials, Electronic items,
home appliance, jewelers, photo centre, toys, outdoor living, funeral,
grocery, video games etc
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e. Pricing Strategy
Wal-Mart business model doesnt include manufacturing of any product; it
procures products across the globe in large quantities in order to enjoy
benefits of economies of scale. This makes price of Wal-Mart to offer
products at 15% lower price than other retailers. Wal-Mart uses different
pricing concepts to get focus of the customers and compel a purchasing
behavior through discount strategies. Sam Walton coined the term Always
lows prices and Everyday low prices; according to this each product is
offered at different discount prices based on the time and demand of the
hour. The consumer electronics are offered at a very low price compared to
other retailers.
f. Promotional Strategy
Wal-Mart has its own in-store promotional activities which includes sales
promotions through product bundling and its pricing strategies. The online
store of Wal-Mart earns major revenues from through customers placing
online gifts. The pricing strategies adopted by Wal-Mart like Everyday low
prices, value of the day increases the sales turnover. The online store
uses strategies to pull customer by attractive slogans like Grab it before its
done which pushes customer to take a purchase decision immediately
before the deals get expired
g. Channel Strategy
On a global level, Wal-Mart is reliant on hypermarkets (Supercenters) for
the majority of its revenues, with its other key channels comprising warehouse clubs/cash & carries and general merchandise discount superstores
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(or discount stores as they are known by Wal-Mart US). The discount
superstore channel will decline in importance, with regular grocery supermarkets and superstores likely to be the third-largest sales channel.

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Recommendations
Wal-Mart should also ensure that all items sold are appropriate for the
customers in the location where they are marketed. Due to increased
customer population, Wal-Mart should ensure continuity in items sold in
every store in order to avoid stock unavailability. Moreover, I recommend
the expansion of distributions chains for Wal-Mart stores in order to
adequately reach all its customers. They should also enlarge their
operations by opening more stores in different places to serve the growing
customer needs. Wal-Mart stores should adopt internet retailing in order to
improve their services. Lastly, Wal-Mart should expand their store sizes in
order to stock more products and sell wide range of items to improve their
customer satisfaction capability.

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Annexure:

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