Wal-Mart Company’s Marketing Strategies in Germany

Introduction of the company

Wal-mart is a company that deals with general merchandise and grocery. The company’s history runs from 1962 when it was founded with the first store in Rogers, Ark. By the end of the decade, the company had expanded to 276 stores, and it became an international company in 1991. The company has emerged as an employment source across the world and a leader in sustainability and was ranked among the first retailers in Fortune Magazine’s 2009 Most Admired Companies survey. The company stores are available in countries such as United Kingdom, Mexico, Argentina, United States, and Puerto Rico among others.

Marketing strategies in the German market

The company has succeeded through the implementation of suitable marketing strategies in places like Germany where analysts would have seen the impossibilities such as the already existing many retailers in the market before the entry of Wal-Mart, the danger of not succeeding with its low-price strategy because of the already existing strategy of selling brand name goods by other manufacturers, and the existing environment in employment circles-the German unions, highly-paid workers as well as high unemployment. In 2002, the company accumulated approximately $250 billion in revenues. In the aforementioned year, an estimated 82% of US consumers bought at least one item at Wal-Mart, and the company realized 138 million customers in its 4750 stores (Adler & Ben-Akiva, 1976; cited in Chiou, 2009: 1). The company which represented at one time 9% of the US retail spending (Basker, 2005a; cited in Chiou, 2009: 1), also ventures in selling items like DVDs, videos, and CDs (Basker, 2005b; cited in Chiou, 2009: 1). The author maintains that the company maintains an advantage in the retail sector because of the low-price strategy, among other strategies like the convenience of one-stop shopping, and increased proximity. Wal-mart is an example of mass merchants in the home video industry. Mass merchants have been able to offer convenience shopping as well as a one-stop shop for customers by offering a wide range of selection of products from entertainment, clothing, and household supplies. It has been found that Wal-Mart competed more intensely with mass merchants than with stores of other types (Bhat, 2001; cited in Chiou, 2009).

The company can reduce its costs of sales through cross-docking which makes it possible to achieve economies of scale. The company can replenish the shelves 4 times faster than its competitors because of the ability to continuously supply goods to the store within 48 hours and often without having to inventory them, as a result of the cross-docking system. The ability to replenish shelves offers a competitive advantage to the company. In addition, the company can achieve the benefits of buying in bulk and distributing them on its own.

In Germany, the company has renamed stores, restocked them with common shopping practices and wider aisles. The everyday Low Prices (EDLP) strategy has caused many competitors to lower their prices too. In Europe, the company offered competition to marketers causing the retailers to merge to survive. The company has succeeded in the world market as a result of focusing on a single-business strategy. Therefore the company has not applied diversification to boost or enhance its survival and competitive advantage.

The company has also introduced a strategy called free-trade-zone distribution centers which enabled them to save nearly $500,000 annually. The company can track the performance of its commodity in the market through technology and ship them to places where they are doing better. Having begun with a strategy of having a mega-size, the company entered into offering a variety of commodities and services. The company has ventured into more innovative marketing strategies to retain as well as to add more customers. The company has been able to venture into other services such as offering clinic healthcare services within their store.

Wal-mart has diversified its operations such as shopping and maintaining contact with its customers, selling and advertisement such as online or e-marketing. E-marketing which has been explored by various companies including Wal-Mart, has resulted in a reduction of operational costs, quicker services, and reduction of inconveniences to customers in addition to enhancing customers to save while purchasing through the internet. The company has also targeted capturing the young generation as the potential sales drivers through entertainment and electronics. The Jonas Brothers, which featured young musicians being promoted by the company, for example, would have fostered the walmart.com music downloads and enable it to be more competitive against companies like iTunes and Amazon.com among others. Key sponsors of this included the companies for consumable products (Duff, 2009). The company has ensured maintenance and increase of publicity through promotions and advertisements such as the Jonas Brothers to boost its retailers’ online operations.

Wal-mart has invested in marketing communication strategies such as the self-service kiosk, television, and the mass media to aim at certain target markets to make them aware of the products they are offering. Some of the communication strategies can boost others such as the use of mailing to make customers aware of the self-service kiosk.

Conclusion

The establishment of the supply system is necessary to ensure that a company like Wal-Mart offering a wide range of products continues to conveniently serve its customers. Wal-Mart did not concentrate on depending on one particular supplier and also made sure that the suppliers were connected to them through electronic means. Not one supplier formed 4% of all the supply volumes to the company (Trustees of Dartmouth College, 2002). While other retail outlets distributed (on average) less than 50% of their merchandise through their distribution centers, the strategic distribution of the stores and the distribution centers meant a lot to Wal-Mart because of saving time and costs. Wal Mart distributed 85% of all the merchandise. There was the strategic placement of distribution centers to serve several stores (150-200 according to Trustees of Dartmouth College, 2002). The stores were placed as far apart but still within a day’s drive from the distribution stores. Investment in technology has helped to share information across the network of Wal-Mart’s suppliers, distribution centers, and network of stores. In the early years of establishment, while competitors like Kmart aimed at large towns with populations greater than 50,000, Wal-Mart focused on building stores in rural areas. While the competing retailers focused on advertised “sales”, the company’s strategy was to guarantee “everyday low prices”. The management system ensured that the performance of each store, region, district, and the department could be tracked. Profits of every store were tracked by consideration of the store’s inventory investment center. The company devised a strategy where the costs as a result of pilferage could be shared by the victim store’s employees through an incentive plan. It was possible to track the daily sales performance by filling in the “Beat Yesterday” ledgers and comparing them against the numbers from one year prior (Trustees of Dartmouth College, 2002).

Reference

Adler, T. M. Ben-Akiva. (1976). Joint-Choice Model for Frequency, Destination and Travel Mode for Shopping Trips. Transportation Research Record. 569, 136–150

Basker, E. (2005a). Job Creation of Destruction? Labor-Market Effects of Wal-Mart Expansion. Review of Economics and Statistics. 87, 174–183

Basker, E. (2005b). Selling a Cheaper Mousetrap: Entry and Competition in the Retail Sector. Journal of Urban Economics. 58, 203–229

Bhat, C. (2001). Quasi-Random Maximum Simulated Likelihood Estimation of the Mixed Multinomial Logit Model. Transportation Research B. 35, 677–693

Duff Mike. (2009). Jonas Brothers Push Propels Wal-Mart Strategy Toward a New Generation of Customers. Web.

Lesley Chiou. (2009). Empirical Analysis of Competition between Wal-Mart and Other Retail Channels. Journal of Economics & Management Strategy. Vol.18.Iss. 2. p 285-322. Web.

Trustees of Dartmouth College. (2002). Wal-Mart Stores, Inc. 2009. Web. 

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