Discuss FIVE (5) factors for Wal-Mart from a marketing perspective that has contributed to the companys success.

University Degree Business and Administrative studies

MGT 346 MANAGEMENT AND MARKETING GROUP ASSIGNMENT 2

Question 1

Discuss FIVE (5) factors for Wal-Mart from a marketing perspective that has contributed to the company’s success.

1.1 The Price

When I am walking in the Wal-Mart stores, I rarely see $ 2.99 or $ 5.95 price which ate so close to an integer; but more to see is $ 2.73 or $ 5.22 as the price of cards. Why is this? Since 1962, the first Wal-Mart Discount City was opened in Rogers, Arkansas, (Carbaugh, 2010) nearly half a century, Wal-Mart’s founder Sam Walton, has been to provide the maximum possible lowest cost to consumers of goods as a fertile Mart's business objectives. Wal-Mart's success is also due to the simple and ordinary sense.

Sam Walton believed the combination of great service and everyday low prices would attract customers just like bees to honey, and he was right. (Bergdahl & Walton, 2007, p 271) As Bergdahl & Walton described (2007) that the products, selection, merchandising and low prices are so attractive to customers that they simply stop shopping anywhere else. The result for competitors can be devastating as their previously loyal customers switch their loyalties to shop for Wal-Mart’s every day low priced products.

How Wal-Mart can have made the low price every day?

In the 80's, Wal-Mart adopted a policy to require manufacturers to exclude from the transaction of sales agents, direct orders to the manufacturer, and it would reduce the purchase price of a 2% to 6% off, roughly equivalent to the amount of commission sales agents. Sometimes, in the buyer arduous negotiations, maybe the exchange for the results of the price that was less than the competition only a few cents less. But for consumers, every penny of the difference determines the consumer shopping in Wal-Mart but not to other shops. Wal-Mart will “everyday low” sales philosophy through the shop introduced to Europe, Asia, Latin America, has been widely accepted. "Always low prices” philosophy is for the retail sale of the overwhelming majority of consumers, that middle-income and low-income stratum. (, 2010)

In a marketing perspective way to read Wal-Mart, the price is the always measurement criteria within most customers, which brings Wal-Mart profit and success.

1.2 The Product

In Michael Bergdahl and Rob Walton’s (2007) said that as Sam Walton wanted to exceed his customer’s expectations of an ever changing mix of products and prevented customers from the thinking of the bargains were too good to be true, he tried to keep all merchandise in humongous quantities so as to ensure they were never out of stock. What’s more, Wal-Mart does have its own product and Wal-Mart began making its own brands in 1999. (Pharaba Witt, 2011)

People who have been to Wal-Mart, Wal-Mart's Sam domestic products selected, hardware tools, field sports hunting, Wal-Mart household paints, paper supplies, etc. Wal-Mart's own brand, there is a new experience, that is a cheap Wal-Mart brand and high quality in a commodity.

Wal-Mart's own brands in the creation of special attention to well-known companies with the marriage. June 1999, Wal-Mart entered into an exclusive with the General Electric Company General Electric Home Appliance brand agreement. As Wal-Mart and General Electric customers the high level of trust, quality and value of the brand that other brands cannot be compared. The marriages to the Wal-Mart and General Electric have brought great intangible effects.

Wal-Mart always attached importance to the development and use of its own brand, mainly in shopping malls and Wal-Mart's Sam's Club brand, which has established trust customers. Wal-Mart's own brands are made in the development of all are based on customer needs, and focus on the following aspects of the brand values: reliability, consistency, low price, excellent quality (greater than or equal to the domestic brand), and uniqueness. The own brand is established, it will become the Wal-Mart customer's favorite products, and Wal-Mart stores only in these commodities to buy and only to the equivalent of other well-known half the price of the brand sold by the customer favorite.

Though a marketing perspective way to read Wal-Mart, profit and success are based on the products as a retailer.

1.3 The Promotion

Michael Bergdahl (2004, p 237) suggested that marketing your business through local advertising can be one good to increase customer traffic and build you brand. Wal-Mart's store managers are very careful of the strict planning their advertising costs, and everything from the pro-competitive point of view. According to official statistics, Wal-Mart's advertising investment, the proportion is 0.5% of the turnover. In 1999, Wal-Mart's annual advertising costs 1.69 billion. At a time when Wal-Mart is the industry's sales has been ranked first. (Wal-Mart's advertising ideas, 2002)

However, Wal-Mart advertisements usually focus on public relations, community relations, recruiting, and everyday low price, but not talking about sales which is what other retails do. As everyday low price strategy came out by Sam Walton works on the philosophy, Wal-Mart’s does not need to put its products on sale. (Bergdahl & Walton, 2007)

Wal-Mart concentrates on its brand and the concept in advertising, which would like to tell you that you can have a good day in Wal-Mart and with Wal-Mart. For example, in an advertisement, Wal-Mart shows you a happy customer walking through the store or a “smiley face” slashing prices down the action alley.

Wal-Mart concentrating on the brand and the concept brings it a marketing perspective profit and success.

1.4 The Service

Michael Bergdahl (2004) had mentioned that focusing on providing the right products and outstanding customer service to your targeted customer is really the key to the retail ballgame. ...

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Wal-Mart concentrating on the brand and the concept brings it a marketing perspective profit and success.

1.4 The Service

Michael Bergdahl (2004) had mentioned that focusing on providing the right products and outstanding customer service to your targeted customer is really the key to the retail ballgame. "All associates work for the customers who buy our merchandise. In fact, the customers can fire everybody in our company. And they can do it by simply spending their money somewhere else. The greatest measure of our success is how well we please the customer, 'Our Boss'. "

- Sam Walton, Founder of Wal-Mart

Sam had a famous saying: "Please show your customers the eight teeth.”In Sam seems only a smile to reveal the extent of eight teeth, can be called a qualified "service with a smile.” Sam also taught staff: "When customers come from within 10 feet of you, you have to look at the customer's eyes and gently encourage him to give you advice and help.”This one is summarized as "ten feet attitude,” Wal-Mart employees as guidelines. (Wal-Mart: No secret to success, 2002)

Wal-Mart's “customer first” principle is famous, it is well known two provisions: the first article: "customer is always right"; the second provides that: "If the customer is just wrong, please refer to the first!” More distinctive, Wal-Mart's customer relationship philosophy is - the customer is the employee's "Boss.” (Rahman, 2008)

A happy environment for customers in Wal-Mart can be regarded as a marketing perspective strategy which works on the customer’s philosophy.

1.5 The Scale

Matt Haig said that the ultimate key to Wal-Mart’s success is scale. Wal-Mart is usually double and sometimes triples the size of its competitors’ stores. This enables Wal-Mart to buy products in very great bulk, and therefore make the prices per item cheaper. The big stores equal big discounts from supplier’s equal low prices for customers.

Wal-Mart's market saturation strategy is beat one of the business strategy. The so-called market saturation strategy, that is, within a certain time and certain to quickly layout to maximize the number of stores, quickly saturated the market; do not leave any chance to the opponent. Wal-Mart's approach is to each place to intervals of 20 miles or so, Wal-Mart stores full of dense, so that to the retail market becomes saturated. This will prevent foreign companies to enter, but also give full play to the efficiency of distribution centers, reducing picking costs (Pharmacy business strategy: to Wal-Mart school of business management - pharmacy, medicine, medicine - pharmaceutical industry, nd).

Moreover, Wal-Mart goes to global to expend its scale. Wal-Mart began operations in the world’s most populous nation in 1996, opening a Wal-Mart Supercenter and a Sam’s Club (John Yunker, 2002, p 551). Since 1991, Wal-Mart from the United States to expand overseas, has been vigorously promote globalization. In 1993, Wal-Mart the number of overseas stores only 1% of all stores by the year 2000 has grown to 25%, two years after and increased to 27%. From 1996 to 2000, the company's sales grew 27% in overseas business. Even if the global economic downturn in 2001 and 2002, the company operating overseas sales to 17% contribution. (Wal-Mart's Globalization and Localization, 2003) Now, Wal-Mart which 25% of its stores are located outside the United States, yet were in only nine countries, and Wal-Mart, like most major companies, is just getting started (John Yunker, 2002, p 551).

As globalization is now a not reversible trend, Wal-Mart goes to global scale is a wise investment for its long term success.

Conclusion

Wal-Mart now is the biggest retailer in the world, the success factor as a marketing perspective strategy includes the price, products, promotion, service, scale.

Although Wal-Mart has met problems such as at the beginning of globalization, (In the late 1990s, Wal-Mart decided to open stores in Germany as part of their strategic growth initiative, however it failed because of the different culture (Kyle Lundby, Allen I. Kraut, 2008, p 564).), it came over, which I think is the most important factor for Wal-Mart’s success.

Question 2

Discuss the management actions you would suggest to Wal-Mart in order for the company to operate more effectively and efficiently.

2.1 Planning

As we know planning is a process that managers use to identify and select appropriate goals and courses of action. There are three steps in planning process: deciding which goals the organization will pursue; deciding what courses of action to adopt to attain those goals; deciding how to allocate organizational resources to attain to those goals (Golding, N, 2009). As one of the world’s largest retailer, Wal-Mart has grown to be an immense success among American consumers. In order to operate the company more effectively and efficiently, Wal-Mart should do more works on their planning.

Firstly, based on the mission of Wal-Mart which is to offer low prices than other retailers with high quality and maximize returns for the benefits of its shareholders and employees, managers should make more strategies to improve on the sides of the quality of their selling products and the returns for the benefits of its shareholders and employees. On the side of high quality of selling products, Wal-Mart should purchase the high quality products from the suppliers. Nowadays, more and more customers like to purchase things in the international chain stores. They think the international chain stores have higher quality guarantee. So Wal-Mart should not only focus on the low prices, they also should guarantee the quality. Wal-Mart should introduce some goods and services that other retailers do not have. Like the retailer Tesco in the world, they provide many goods and services that other retailers do not have; they now have many supermarkets in the world.

Secondly, Wal-Mart should do more planning on the management of change. There are some problems such as people, structure, or technology in the organization. Then, managers should plan any alterations in them. Depending on the strategies, it requires the use of different structures because a differentiation strategy needs an organic structure for better control. However, after the managers develop the plans, they should do more works on coordinating the activities. Wal-Mart manager can hold some meetings to discuss the advantages and disadvantages of these plans. The workers should be done carefully because they are the last step to act the plans. With these jobs dome, the managers of War-Mart managers can bring into effect.

These management actions with good planning could be strategically utilized or adopted by Wal-Mart so as to improve the operations of the company.

2.2 Human Resource Management

Human Resource Management (HRM) includes all the activities managers engage in to attract and retain employees and to ensure that they perform at a high level and contribute to the accomplishment of organizational goals (Towers, David, 2007). Wal-Mart has achieved sustainable competitive advantages and one of the reasons is the success to navigate skillfully between poles that most companies think of as distinct (Matthias H. J, al, 2007). In order to operate the company more effectively and efficiently, Wal-Mart should do more works on their changes of human resource management.

Firstly, the managers of Wal-Mart should ensure that Wal-Mart has the right number and kinds of people in the right places and at the right time. And the employees are capable of effectively and efficiently performing their assigned tasks. Secondly, the managers of Wal-Mart should enhance the recruitment and selection standard. They must prevent from many poor quality people enter into Wal-Mart work. Wal-Mart should change some strategies in recruiting and selecting employees. And early select the people who have working experience and professional skills. Through the tests, interview, physical exam and reference check to select the person. It is very important that choose the high quality people to work in Wal-Mart. It is not only influence the work effectively but also influences the reputation of Wal-Mart. Thirdly, training the current employees to improve their personal skills. For example, the managers of Wal-Mart can train the employees’ attitude when they are working and they service the customers. Wal-Mart should tell all the staffs that must be smile in the working time.

Besides that, the Wal-Mart should to provide some awards to motive the employees. For example, the Wal-Mart can take some reasonable care for the safety and health of employees and to set up safety and health committee. For example, the Carrefour in China, they always provide awards to motive the staff to work efficiently and effectively. Of course, Wal-Mart should provide adequate insurance coverage for employees.

2.3 Improve Security

Customers spend more time in supermarket than in any other kind of retail environment. So the public security is very important. And it is an advantage that your supermarket have better security that to be attractive and efficient to function in a competitive market.

Wal-Mart should arrange more security guards in the supermarket patrolling; in helping the customers at the same time can control the supermarket safety question. And the flammable and explosive things cannot be occur in the Wal-Mart. Many supermarkets had purchased equipments so many years do not change and also do not have regular inspection. Wal-Mart should improve this situation, the fire control facilities and escape equipments, work implements such as cart, electrical appliances, etc should be change regularly, besides that, Wal-Mart should take out much money to train the staff to learn how to use the equipments and value the fire control facilities maintenance etc. At the same time, the staffs and employees in the Wal-Mart should enhance their general knowledge of security. For example, the employees should understand how to use the electric in suitable way. And the managers of Wal-Mart should monitors the employees’ bad lifestyle and help them to correct. The design of the supermarket is very important, that Wal-Mart should enhance. The Yichu Lotus in China does very well in this aspect; they control the supermarket security very carefully.

Besides that, in the accident harm aspect, Wal-Mart should set up special group to deal this problem and make sure the customers have immediately medical treatments. Through the appropriate program, regular education, regular exercise, check regularly and developing alertness heart to improve the security and make Wal-Mart become more and more successful.

2.4 Enhance Competitiveness

Customer spending has its limits and those limits were beginning to become visible on the horizon in late 2005. And the competitors like Target, JC Penney, Kohl’s, Macy’s and others were making increasingly noticeable efforts to win shares of customers. So in order to operate the company more effectively and efficiently, Wal-Mart should enhance its competitiveness.

Firstly, Wal-Mart should expand distribution internationally. They can open many stores all over the world and make Wal-Mart become the most popular retailer in the world. Secondly, Wal-Mart can through the innovation of marketing and management strategies to defeat the competitors. For example, provide some humanity services to attract customers, or low price to attract customers. And the most important is quality. Quality better than other retailers the customers will come to War-Mart. As we know, Dell driving actions to enhance competitiveness optimize operations. Dell was restoring competitive advantage of the company’s operating model, rationalize its operations and improve profitability and cash flow (Dell.com, 2008). I believe that Wal-Mart will enhance competitiveness and optimize operations like Dell Company after they take further actions to reduce total product costs across all areas, including operating costs and reducing numbers of employees. All those actions could be strengthen its competitive position and improve profitability and provide a well cost structure. As a result, Levi Strauss Company follow all those of action will make its more competitive and to be dominate position in the market.

Besides that, Wal-Mart should provide more service to the customers to attract more customers. For example, there should be some small shopping cart for children. Like Tesco which belong to England, the international retailer in the world, they have small cart for children and that can attract many children to shopping in Tesco. At the cashier desk can stored some small presents for children. When there are child customers, the server can give them some small presents which can prevent children from crying or being naughty and also make the parents can shopping long time. Among the invisible, this method can increase the sales volume. Other customers will enjoy the good environment inside the supermarket and all of them will satisfy with the services. For example, the Yichu Lotus in China they try to do like this way and it does better than other supermarket.

2.5 Innovation

In the world-wide market, there are many strong competitive retailer companies that against Wal-Mart such as Target, JC Penney, Kohl’s, Macy’s, which were making increasingly noticeable efforts to win shares. So I believe that in order to improve the running of the company, innovation should be adopted by Wal-Mart. As we know, nowadays, the person like to buy things in the international chain stores, new trends started to develop in the market.

In my opinion, I suggest that Wal-Mart should develop some products and good by themselves. And it can help them to create and enhance their branding. For example, the soap, the towel, the washing powder etc. These small things that the people everyday needs to use can be import by some semi-finished products and then through the process, after this, change to their own brand as Wal-Mart. The cost is low so the selling price can be lower than other retailers that make Wal-Mart have competitive. Besides that, Wal-Mart should import the product what the customer wants, indeed. In order to attract more customers, the most important thing the Wal-Mart should do is to focus on innovations which are product innovation and marketing method innovation. So I suggest that Wal-Mart use the way as Yichu Lotus in China. Yichu Lotus is also a supermarket in China. They sell many things they produce themselves that also have low cost. And Yichu Lotus has much humanity service such as some code case for customer to use. The customers can save their things into the box and the password they know themselves. It is convenience and free to the customers. So many customers like to shop in Yichu Lotus.

Base on above, innovation is the good way to improve the running of the company. So Wal-Mart should to do some innovation.

Conclusion and Recommendation

Now Wal-Mart’s achievement cannot leave with their effort, but they already have many aspects to improve. We discuss form the management perspective that the Wal-Mart should change and improve in their managing. From five actions that improve Wal-Mart to be more effective and efficiently which are planning, human resource management, improving security, enhancing competitiveness and innovation. If Wal-Mart can improve their management strategies that we can believe that Wal-Mart can be better than today.

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