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Walmart

Marketing Strategy

Company Description
Wal-Mart Stores, Inc., is an Americanmultinational retail corporationthat
operates a chain ofhypermarkets,discount department storesandgrocery stores.
Headquartered inBentonville, Arkansas, the company was founded bySam Waltonin
1962 andincorporatedon October 31, 1969. As of January 31, 2016, Walmart has
11,528 stores in 27countries, under a total of 72banners.
Walmart's investments outside North America have seen mixed results: its operations
in theUnited Kingdom,South America, andChinaare highly successful, whereas
ventures inGermanyandSouth Koreafailed.
Walmart's reputation is for "low prices", compared withTarget'sfor selling "cheap
chic" andCostco'sfor offering low-price, limited-selection "retail treasure hunts",
where "one's shopping cart could contain aUS$50,000diamond ring resting on top
of a 64-ounce vat of mayonnaise".

Wal-Mart business description taken from the


companys financial report:
Wal-Mart Stores, Inc. helps people around the world save money and live better anytime and anywhere in

retail stores, online, and through their mobile devices. We earn the trust of our customers every day by providing
a broad assortment of quality merchandise and services at everyday low prices ("EDLP"), while fostering a culture
that rewards and embraces mutual respect, integrity and diversity. EDLP is our pricing philosophy under which
we price items at a low price every day so our customers trust that our prices will not change under frequent
promotional activity.
Our operations comprise three reportable business segments: Walmart U.S., Walmart International and Sam's
Club.
During fiscal 2015, we generated total revenues of $485 billion, which was primarily comprised of net sales of
$482 billion. Walmart U.S. is our largest segment and operates retail stores in various formats in all 50 states in
the U.S., Washington D.C. and Puerto Rico, as well as its online retail operations, walmart.com.
Walmart International consists of the Company's operations in 26 countries outside of the U.S. and its operations
include numerous formats of retail stores, wholesale clubs, including Sam's Clubs, restaurants, banks and various
retail websites.
Sam's Club consists of warehouse membership clubs and operates in 48 states in the U.S. and in Puerto Rico, as
well as its online operations, samsclub.com.

Name
Industries served
Geographic areas served
Headquarters
Current CEO
Revenue
Profit

Wal-Mart Stores, Inc.


Retail (Discount department stores
and warehouse stores)
Worldwide (11,453 stores in 27
countries)
Bentonville, Arkansas, U.S.

C. Douglas McMillon
US $485.651 billion (2015) 2%
increase over US $476.294 billion
(2014)
US $16.182 billion (2015) 1.7%
increase over US $15.918 billion
(2014)

Employees

2.2 million (2015)

Main Competitors

Costco Wholesale Corporation, Dollar General


Corporation, Dollar Tree, Inc., Kohls Corporation,
Macys Inc., Sears Holdings Corporation, Target
Corporation and many other retailers/wholesale
companies.

Short History

Marketing strategy
It is incredible to think of exactly how big this
company is, but they couldnt have gotten this big
without the proper marketing strategies, so lets go
over some of their tactics:

Low Prices
Prices and Pricing Strategy. Walmart uses an Everyday
Low Price (EDLP) pricing strategy. In fact Everyday Low
Price advertisements are frequently seen in Walmart
stores. The objective of this pricing strategy is to attract
large populations of customers. This strategy supports
Walmarts generic business strategy, which is cost
leadership. The company has low costs and low prices.
However, the large sales volume enables Walmart to
generate profits. Thus, in the marketing mix, the pricing
component is the main contributor to Walmarts
competitiveness.

Easily Accessible
One of the main things about Walmart is that they are
extremely accessible, they have thousands of stores all
around the world and if you dont live near one, you could
always use their internet store and buy from there. Being
this accessible makes marketing to people much easier
since the customer doesnt need to work hard to do
business with them. Customers are also able to contact
them 24 hours a day, which helps with the customer
satisfaction aspect of the whole business.

Promotion (Promotional Mix or


Marketing Communications Mix)
Walmarts promotional mix is composed of advertisements, sales
promotions, personal selling, and public relations. The company
advertises on newspapers and websites. Walmart uses sales promotions in
the form of special deals and discounts. Personal selling happens at
Walmart stores, where sales personnel persuade customers to try new
products or package deals. In terms of public relations, the company uses
press releases to inform customers and investors about policies,
programs and strategies. The firm also occasionally sponsors charity
programs. Thus, the promotion component in Walmarts marketing mix
helps improve the companys ability to attract customers to its stores and
helps build brand recall.

Appeal to As Many People as


Possible
Walmart offers products of all types, from beauty
products, home cleaning products, toys, electronics, to
even groceries. Anyone could find something they have a
use for there, which gives them a much broader appeal to
all personality types.

Social Media Campaigns


All large companies, including Walmart, have focused a lot
of resources on social media campaigns This is because it
is one of the best types of marketing due to its consistent
results. There are many different social media strategies
that are out there, but the two that have proven to be the
best would be blogging and video sharing and then linking
those content posts with your social networking profiles.

Industry analysis
Walmarts largestmerchandising category is groceries. It accounts
for 56% of salesor $188 billion1. According to the USDA (U.S.
Department of Agriculture), Walmart was the largest seller of
grocery items in the US in 2013. It was followed byKroger (KR),
Safeway (SWY), and Publix Super Marketsin that order.
The groceryindustry is fragmented. Ithas many players. The
industry also has few barriers to entry. Competition is fierce. The
margins are low becausefirms seek to offer lower prices than
other companies in the industryin a bid to spur sales.

Player concentration
As a result, scale is important. Larger playerslike Walmart,
Kroger, Costco (COST), and Safewayenjoy economies in
purchasing, supply chain management, and other fixed costs.
They canoffer lower prices than smaller companies.
Walmarts everyday low price, or EDLP, strategy stems from
these economies. It also helped the retailer garner market
share from other companiesby strategic pricing. It has
strategic pricing through programs like the Savings Catcher,
Save Even More, Ad Match, and price rollbacks.

Non-grocery competition
wellness productsamong others. It usually purchases these
products from vendorslike Apple (AAPL), Samsung (SSNLF), VF
Corp. (VFC), and Disney (DIS). Walmart is one of the largest
customers for VFCorp.
Entertainment is its second largest merchandise category.
Entertainment accounts for 11% of sales. Other companies in
entertainment retailinclude Best Buy (BBY) and Amazon (AMZN
), among others. In the health and wellness category, Walmart (
WMT) competes with the pharmacy chains mentioned above.

High growth and low


profitability
Walmarts international revenue is growing fast. International revenue grew at
a compound annual growth rate, or CAGR, of 7.3% fromfiscal year 2009 to
2014. It grew to ~$136.5 billion. That makes the International segment the
fastest growing revenue segment. Overall, Walmarts revenue growth came in at
a slower 3.4% over the period.
However, the International segments total revenue and operating income
trailstheUS operations. The International segments profitability is also lower.
This is partially due to high front-end costs involved in driving expansion efforts
overseas. Its also due to the merchandise mix. In the trailing 12 months
through 3Q15, the operating income margins came in at 3.9% for Walmarts
International segmentcompared to 7.6% for Walmarts US segment.

High growth and low


profitability
Walmarts international revenue is growing fast. International revenue grew at
a compound annual growth rate, or CAGR, of 7.3% fromfiscal year 2009 to
2014. It grew to ~$136.5 billion. That makes the International segment the
fastest growing revenue segment. Overall, Walmarts revenue growth came in at
a slower 3.4% over the period.
However, the International segments total revenue and operating income
trailstheUS operations. The International segments profitability is also lower.
This is partially due to high front-end costs involved in driving expansion efforts
overseas. Its also due to the merchandise mix. In the trailing 12 months
through 3Q15, the operating income margins came in at 3.9% for Walmarts
International segmentcompared to 7.6% for Walmarts US segment.

Why supercenters?
The shift towards larger stores fulfills multiple objectives for the retailer.
First, the market size for the segment is estimated at $585 billionthe largest
among all of the store formats.
Second, it gives the company the opportunity to provide its full array of
merchandise.
Third, a robust network of supercenters allows the retailer to use these as
fulfillment centers for its online sales. It can also use the supercenters
asdistribution points for its smaller-format stores. Walmartplans to roll out
about 120 new supercentersin fiscal year 2015. It plans to open 6070 new
supercenters in fiscal year 2016. This includes convertingexisting discount
stores to the supercenter format.

Economies of scale
In the last 12 months, Walmart earned over $483 billion in
revenue. Thats more than the following four companiescombined
Costco (COST), Kroger (KR), Tesco (TSCDY) (TSCO.L) in the
United Kingdom,and Carrefour SA (CA.PA) (CRRFY) inFrance.
Walmart spent over $358 billion to purchasemerchandise for its
stores in fiscal year 2014. That kind of scale gives the company
immense bargaining power with its suppliers. At the same time,
its a huge task to juggle the largenumber of suppliers from across
the world.

Cross-docking
Cross-docking is an inventory management system. The retailer (XRT)made
it popular. Through cross-docking, inbound shipments are unloaded directly
into outbound trailers at distribution centers. Cross-docking can lower the
time required to transport merchandise. Also, itlowers the inefficiencies in
the system. Itsaves the retailer billions in storage costs.
It gives theretailer leeway to implementits everyday low price, or EDLP,
strategy. The EDLP strategy is important to gain trust among customers.
This philosophy emphasizes the retailers commitment to offer low prices to
the customer everyday. This ensures that buyers dont stay away in the
hope of frequent promotional activity. Lowering supply chain costs also
helps in the economics of implementing programs.

Walmarts e-commerce
growth
Walmart(WMT) operates e-commerce sites in 11 countries
including the US. Formost organizations, $10 billion in annual ecommerce sales would be considered significant. At Walmartthats
only about 2% of the total sales1!
Itdoesnt mean that the retailer (XRT) isnt taking the channel
seriously. There are an estimated 600 million e-commerce visitors
per quarter in Walmarts US segment alone. Walmart is looking at
channel sales of ~$12.5 billion in fiscal year 2015. Outside the US,
Walmart is concentrating on the e-commerce markets in China, the
United Kingdom, and Brazil.

Share buybacks
Walmart has been creating value for shareholders by using its strong cash flows for
share repurchases. Repurchased shares are retired. This lowers the number of shares
used to compute the earnings per share, or EPS. This provides a boost to the EPS for
existing shareholders.
Walmart repurchased about $46.2 billion worth of stock fromfiscal year 2009 to fiscal
year 2014.In June 2013, Walmarts board authorized a new $15 billion share
repurchase program. The company seeks to counter the impact of slowing sales
growth and market share cannibalization by e-retailers on returns to investors.
In the first nine months of fiscal year 2015, Walmart purchased 13.4 million shares at
an average cost of $75.82. The purchases cost ~$1 billion in all. Repurchases have
been accretive to shareholders. The companys stock was trading at $85.89as of
February 12, 2015.

Conclusion
Walmart has been busy improving its digital and mobile shopping interface.
Recently, it alsodeveloped a new shopper recommendation engine to
personalize product searches. Over the past two years, Walmart increased
the number of products available online by three timesin the US. Over the
past year, Walmart increased the number of products available by ten times
in Brazil and two timesin China.
Wal-Mart is trying to become a better place to work. The company is raising
its minimum wage to $9 an hour and offering a 6-month training program. It
also announced a plan to fix worker's schedules, giving them more time to
make plans in their everyday lives.Executives say that they hope these
measures will attract better workers and improve retention.

Marketing Essay
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