Walmart implemented the following marketing strategies to achieve success in its discount retail business:
Product Assortment Activities
Hard goods, consumables and soft goods accounted for 60% of the Walmart’s revenues. Walmart stocked a mixture of nationally branded and private label products. Walmart actively managed the product assortment at a store on the basis of sales data, and qualitative criteria such as exclusivity, impulse purchasing and ease of a store display. The activity was supplemented by introducing volume producing item activities where the top managers searched and displayed high revenue producing items.
For effective customization or tailoring the product assortment to meet the demographic needs and to connect with the local customers, Walmart implemented Walmart Store of the Community Program. Modular Category Assortment Planning System (MCAPS) was implemented to customize the product assortment. On the basis of MCAPS, various product assortments were created for different product categories across the Walmart stores by the Walmart executives along with the product suppliers.
Pricing Activities
Walmart adopted everyday low prices (EDLP) retailer strategy and offered discounted products in the form of roll back program where three to four key products were offered at 10% discount for a period of 75 days and suppliers enrolled in the program enjoyed volume sales and preference from Walmart in product assortments . Store managers had the power to beat the lowest prices in their area by 5%.
The company conducted price checks on the competitor stores of Kmart and Target. Around 2-4% price variation existed between Walmart and its competitors in the markets and more than 10% in supermarkets.
Distribution Activities
Walmart decided to implement forward integration by constructing a warehouse to buy products in bulk and store the merchandise. Walmart invested in its own warehouse to implement the forward integration. Walmart’s distribution network consisted of 84 Walmart distribution centers along with 19 Sam’s Club distribution centers and 19 international distribution centers.
The distribution centers functioned as hubs in the hub and spoke network. A truck would pick up the merchandise from the suppliers and bring it to the distribution center where it was sorted and delivered to stores within 48 hours.
The corporate traffic department of Walmart coordinated the activities and the trucking capacity was supplied by the common carriers and Walmart’s private fleet. The trucks picked up new shipments from vendor’s factories and warehouses in their territory after delivering the merchandise to the stores.
Walmart had utilized cross-docking technique for inventory management where it transferred the merchandise directly from the inbound trucks to the store bound trucks without the need to store the inventory in its warehouses. Walmart was one of the early adopters of RFID technology which enabled the store to manage its supply chain management effectively. Walmart used RFID tags to automate the supply chain management and this reduce the supply chain management costs by 6%.
Figure 1. Cost of RFID Tags .
Promotion Activities
Walmart promoted its Everyday Low Pricing (EDLP) retailer's image through advertisements, sponsorship of community events and in-store excitement.
Walmart’s advertising to sales ratio was 0.3%. The district merchandise managers coordinated local radio and cable advertising and store managers stuck deals with selected suppliers for market level promotions. Walmart distributed promotional flyers to 40 million households every month. Community sponsorship involved sponsorship of charity events, funding scholarships and in-store charity events. Walmart provided an in-store television made it one of the largest media providers and influenced in store consumer shopping decisions. Walmart store managers were highly incentivized and had greater autonomy in deciding whether to source locally, match competitor pricing or run exclusive promotions.
CRM Activities
Customer convenience and customer relationship management was in the form of a warm greeting on entering the store and the installation of UPC scanners which facilitated quicker check outs. Major credit cards were accepted at the store, thus offering convenience to customers.
Differentiation Strategies
Walmart’s stores had cheap and cheerful ambience and were strategically located near the distribution centers. The discount stores and supercenters were located in smaller towns and rural areas where Walmart was the leading retailer. Walmart stores were open 24 hours a day Monday through Saturday and a few hours on Sunday. The supercenters operated full time. The company ensured that it kept its internal customers i.e. the employees of the company happy. The personnels were trained to serve the store customers in the best possible manner and assist the customers while making their purchase at the retail store.
Diversification strategies
Walmart plans to expand into vacation planning, internet access, flower delivery and DVD rental services. The company plans to sell financial services to customers who did not own a bank account.
Internationalization/Market Expansion Strategies
Walmart has expanded its business operations in new international markets such as Mexico, China, Brazil, Canada, Indonesia, South Korea, Germany, Britain, Japan, Puerto Rico and Argentina. The international expansion shall provide Walmart with a new marketing platform with an international customer base for its products.
Works Cited
