Development of a Retail Leader: Wal-Mart
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Published: Thu, 11 Jan 2018
One of the known industries all over the world is Wal-Mart. Wal-mart is considered as a retail giant due to the company’s successful business over the years. With good management practices and unique marketing strategies, Wal-Mart was able to operate successfully not only in the United States but also in international market (Hayden et al, 2002). Â Wal-Mart Stores, Inc. was first established and founded by Sam Walton at Rogers, Arkansas in 1962. The business growth of the retail store was momentous that within a span of seventeen years in operation, Wal-Mart had already topped annual sales at one billion US dollars. By the end of January in 2002, Wal-Mart has been recognized as the largest retailer in the world a sales record of 218 billion US dollars. With this huge and continuous development, it is no wonder the retail store was able to operate at the global level. The global operation of Wal-Mart was marked by the establishment of its first international store in 1991 at Mexico City (Govindarajan & Gupta, 2001).
Through its international reach, an estimate of one hundred million customers are said to visit a Wal-Mart store found somewhere in the world. A total of 1.3 million associates worldwide are employed by the company and are distributed within its 3,200 stores in the United States as well at over a thousand other stores in Canada, Brazil, Mexico, Argentina, Puerto Rico, China, Germany, Korea and in the United Kingdom (Govindarajan &Gupta, 2001).
The retail stores of Wal-Mart are operated in different formats worldwide. In general, the business is divided into three main segments: Wal-Mart Stores, Sam’s Club and International Stores. The Wal-Mart stores are further subdivided into Discount Stores, Supercenters and Neighbourhood Markets. Sam’s Club on the other hand, is a business segment that consists of membership warehouse clubs. According to the New York Stock Exchange (2005), Wal-Mart Stores operates about 1,478 Discount Stores, 1,471 Supercenters, 538 Sam’s Club and 64 Neighbourhood Markets within the United States as of January 31, 2004. In addition to this huge local operation, Wal-Mart and its international segment conducts retail operation within eight countries and Puerto Rico. Wal-Mart’s international segment is made into several formats, which include retail stores, restaurants, discount stores, Sam’s Club and Supercenters. Aside from these operations, Wal-Mart also owns a 37.8% unconsolidated minority interest in one of Japan’s retailers, The Seiyu, Ltd. (New York Stock Exchange, 2005).
Strategic marketing Management Techniques of Walmart
Wal-Mart dominates the American retailing industry due to number of factors like its business model which is still a mystery and its effectiveness in not letting the rivals let know about the weaknesses. Wal-Mart made strategic attempts in the its formulation to dominate the retail market where it has its presence, growth by expansion in the US and Internationally, create widespread name recognition and customer satisfaction in relation to brand name Wal-Mart and branching into new sectors of retailing.
It is learnt that Wal-Mart strives on three generic strategies consisting of Focus Strategy, the Differentiation Strategy and overall cost leadership.Â Managers strive hard to make their organizations unique, distinctive and identify key success factors that will drive the customers to buy their products.Thus, firm specific resources and capabilities are crucial in explaining the firm’s performance. The Resource Based View (RBV) explains competitive heterogeneity based on the premise that close competitors differ in their resources and capabilities in important and durable ways. The company’s capability can be found through its functionality, reliable performance, like Wal-Mart superior logistics. (Helfat, 2002)Â Wal-Mart has firm infrastructure, well equipped in human resource with management professionals and technologically too.
Any organizations thrive hard to be successful for which it needs to have better resources and superior capabilities. Wal-Mart has strong RBV with economically and financially very strong enough to stand still in the time of crisis. Pereira states that dominating the retail market is its key strategy. Wal-Mart operates on low price strategy which is operated as every day low prices (EDLP) which builds trust among the customers.(Brunn, 2006)The strategy lies in purchasing the goods at lower prices and selling the goods to customer at much lower prices, cutting the price as far as possible and increasing the profit by increasing the number of sales. This ferociously increases the competition in the market and Wal-Mart competes with all its competitors till it is dominant it the market.
Wal-Mart is expanding seriously and rapidly which is also its strategic goal. Wal-Mart employs over 1.3 associates, owns over 4000 stores out of which 3000 are in US and serves around 100 million customers weekly.Â Wal-Mart has acquired many international stores and merged with some super stores like ASDA in UK. Wal-Mart far flung network of retail outlets has ensured that Wal-Mart interacts with and has impact on virtually every locality within US. (Helfat, 2002)Â The expanded strategy has led the hunger of Wal-Mart to many European Countries. It is learnt that three countries with no Wal-Mart stores became part of corporation’s international presence wherein the domestic retail chains were taken over by Wal-Mart including 122 Woolco stores in Canada, 21 Wertkauf stores in Germany and 229 ASDA units in United Kingdom. The takeover strategy by Wal-Mart keeps the company at forefront when entering into the new market and the number of competitors is also minimized. The strategies have helped the Wal-Mart to rein in number one position in international countries making it the largest retailer in the world.
It is seen that Wal-Mart has significantly the Porters five force model wherein through proper strategic planning and strategic implementation has led to removal of barrier entry, rivalry from competitors and pricing norms. In regard to substitutes, Wal-Mart in order to achieve its aim of customer satisfaction has selling goods under its own legal brand. Â Wal-Mart’s big box phenomenon has changed the retailing industry in the United States which is often considered as discount stores and makes profit through high volume of purchases and low markup on profits.(Parnell, 2008)Wal-Mart with its low cost and ever expanding strategy has made a dramatic impact since 1962 when Sam Walton first started his business. With this strategy, Wal-Mart has now over 4000 stores and outlets in US and other countries through acquisition and mergers.
Marketing Performance management
Marketing performance management (MPM) is a term used by marketing professionals to describe the analysis and improvement of the efficiency and effectiveness of marketing. This is accomplished by focus on the alignment of marketing activities, strategies, and metrics with business goals. It involves the creation of a metrics framework to monitor marketing performance, and then develop and utilize marketing dashboards to manage marketing performance. This strategy is used by several companies such as IBM, Intel, and Citrix.
Performance management is one of the key processes applied to business operations such as manufacturing, logistics, and product development. The goals of performance management are to achieve key outcomes and objectives to optimize individual, group, or organizational performance. MPM however, is more specific. It focuses on measuring, managing, and analyzing marketing performance to maximize effectiveness and optimize the return of investment (ROI) of marketing. Three elements play a critical role in managing marketing performance-data, analytics, and metrics.
Walmart has done a lot in the past in order to secure its position as a retail market leader. These include offering low prices, offering good customer service and constant innovation. However, lately the company has grappled with low customer traffic. Market saturation in the middle income market segment, poor international performance and bad public relations as a result of their employee practices. The company should adopt the following strategies in order to ensure future growth; adopt penetrative strategies international markets, introduce good product packages for products favored by affluent clients and improve health insurance plans within the company. These will go a long way in sustaining the company’s positions as the US’s retail leader.
And as the animosity against Wal-Mart becomes more widespread, here and in foreign countries, Wal-Mart is going to have to work harder to maintain their good reputation.Wal-Mart’s foundation will become increasingly more important for giving things back to the community.
In order for Wal-Mart to stay at the top of their game and follow the company strategy and achieve their key policy goals, they are going to have deal better with their stakeholders and make sure they guard their reputation well.
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