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Wal-Mart Marketing Strategy

Essay by   •  January 10, 2011  •  1,318 Words (6 Pages)  •  3,199 Views

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Just as students do their homework for a good grade, so must companies by developing sound strategic marketing plans. In business the bottom line is about revenue and how to increase revenue for the shareholders. However, your market strategy and plan can be the difference between success and failure. Let me start by defining two of the more popular marketing strategies, mass and targeted. Mass marketing is a marketing philosophy which the seller views the market as a homogeneous whole, and, therefore, has only one marketing program (the same product, the same price, the same promotion and the same distribution system) for everyone. Whereas, a target market is that particular segment of a total population on which the retailer focuses its merchandising expertise to satisfy that submarket in order to accomplish its profit objectives. Target marketing is also known as “niche” marketing. I am asked whether, instead of or in addition to the markets it currently serves, should Wal-mart serve the following markets: African Americans, the Affluent, Empty Nesters, Hispanics, Suburbanites and Rural Residents? My short answer to this question is yes, with a continued focus on their niche customers the suburbanites and rural residents. Moreover, the African American, affluent empty nesters, Hispanics populations would require focused target strategies (differential) to satisfy their specific wants/needs. ACNielsen defines micromarketing as, "the art of targeting customers at the account and store levels by matching marketing efforts to the characteristics of shoppers at specific stores." In other words, micromarketing is all about tailoring and customizing product assortment, shelf placement, pricing, services, trade promotions, even store layout and design to appeal to and satisfy the needs, demands, and expectations of consumers in a store's trading area (the area around a store in which it competes for business). (Copper, 1997). I will prove my argument by demonstrating that Wal-Mart can and must practice both “mass” and “target” marketing approaches to continue their superiority in the industry. Furthermore, I’ll provide specific Target Market examples for each new segment.

Wal-Mart has experienced many obstacles during its expansion into the urban market. “To get there, the company is experimenting with a pair of separate-but-equal endeavors. It's making nice with urban politicians and anti-Wal-Mart activists through a new ad campaign that touts its improved health insurance policy and charitable giving programs. At the same time, its adding upscale goods to draw in a wider shopping audience interested in more than rock-bottom prices.” (VanRiper, 2006). Even with this strategy Wal-Mart has been forced to pull out of other urban areas due to union intervention and employee wage increase concerns. Wal-Marts target marketing activities will have to be uniquely different and focused on customer’s items of value to succeed long term.

Developing a long-term market niche is complicated and difficult to implement. First, it must be incorporated into the companies marketing strategy. The marketing plan in turn defines a business strategy, which outlines objectives, develops policy and allocates resources to meet specific objectives. In the case of Wal-Mart, successful mass marketing of suburbanites and rural customers will allow for a “strategic window” to target products and services to the African American, affluent, empty nesters, and Hispanic customer groups. Target segments must be continually analyzed for new products as “one-size-fits-all” does not appeal to these segments. A strategy must then be established for each group (Porter’s differential strategy in this case) by designing all the market mix elements (product, place, price and promotion) to meet the needs of the target market.

The main factor affecting Wal-Mart’s decision to target new market niches is investor confidence. “If Wal-Mart can't succeed in Chicago, the retailer's urban strategy will have suffered a critical blow at a time when investors have grown increasingly frustrated with Wal-Mart's lack of growth. Its stock now trades around $45, down 25 percent from March 2004 compared with a 35 percent gain in the Standard & Poor's 500 index in the same time period.” (Jones, 2007). Chart 1 demonstrates Wal-Mart’s slowing growth trend.

CHART 1

It is evident that Target Marketing is more than feasible but a must to reverse its decreasing stock price trend. Building more stores is not the answer in today’s retail market. Targeted segments, such as, African Americans, the Affluent, Empty Nesters, Hispanics, Suburbanites and Rural Residents, Wal-Mart must change from focusing on comparable-store-revenue growth to aiming at specific type customers to boost sales. Chart 2 illustrates individual market segments and the recommended marketing strategy for each.

CHART 2

Market Segment Target Mass Porter’s Generic Strategy

Suburbanites x Cost Leadership

Rural Residents x Cost Leadership

African American x Focus

Affluent x Focus

Hispanic x Focus

Empty Nesters x Focus

Obviously, Wal-Mart’s phenomenal success with suburbanites and rural customers is through mass marketing; most notable is their famous slogan, “Always low prices” which is recognized by 67% of the population and firmly defines their mass marketing strategy

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