Strategic Marketing Plan of Walmart

Strategic Marketing Plan of Walmart

Abstract

Walmart is the second-largest retailer in the world. It was on the largest until Amazon overtook it in 2019. Walmart has over 11000 stores, while Amazon mostly relies on e-retailing. Competition is a significant threat to Walmart, but investing in e-commerce will help to counter the challenge. The main objective is to double online sales of Walmart in the next 24 months. Walmart is involved in e-retailing, but the management has not exploited the practice to improve competitive advantage. Most of the resources of the company will be focused on enhancing online selling. This analysis explains the current state of the company, the objective of Walmart, and how it will be achieved.

Strategic Marketing Plan of Walmart

Where are we now?

Walmart is a corporation which operates hypermarkets globally. Walmart was founded in 1962 by Sam Walton (Webster, 2018). It is in the retailing industry and is the second-largest retailer in the world. The organization was the largest retailer in the world for years until Amazon overtook it in 2019 (Micu et al. 2019). However, Walmart still leads in the number of employees and total revenue collected annually. The company has approximately 2.2 million employees, with 1.5 of the workers stationed in the United States of America (Debter, 2019). Walmart has three leading brands which are Walmart US, Walmart International, and Sam’s Club. Walmart US operates in the United States of America, Walmart International is on the global market while Sam’s Club is warehouse retail for consumers with a membership of the club (Ellickson, 2016).

Sales made by each brand in 2020

(Statista. 2020)

Walmart boasts of the largest market share in the United States of America. The company serves 8.9 percent of the retailers in the country. However, Amazon is creating high competition for the organization. The market share of Walmart changed negligibly in the past six years. On the other hand, Amazon’s market share increased from 2.2% in 2014 to 6.4% in 2018. The change is high, which threatens the future dominance of Walmart.

Market share of Walmart versus Amazon

(Webster, 2018)

The target market of Walmart is not based on the region because the company targets both international and local customers. Demographically, the company targets all age groups, but most customers are between 18 and 44 years. Walmart also targets young people who do not live at home and newly married couples. The behavioral segmentation of Walmart caters to the degree of loyalty (Dudovskiy, 2016). The firm targets customers who are very loyal to brands because it is hard to lose them to the competition. The company also targets switchers. They are buyers who can purchase any brand from the store because they do not have particular brands that they like. Walmart targets the working consumers, low and middle social classes. The company is known to offer the lowest prices hence targeting consumers who operate on a “tight” budget.

Competition is high in the retail industry. The primary competitors of Walmart include Amazon, Costco, Tesco, Home Depot, Carrefour, and Kroger. These businesses focus on reducing their prices to enhance their competitive power in the industry. Most of the competitors, like Home Depot and Amazon, have invested in e-commerce to make it easy for customers to access their products. It is a “place” strategy because buyers do not have to visit the brick and mortar stores since they can make orders online and have products delivered to their homes. Competitors also invest in product promotion to improve awareness of their firms and products to customers. Still, product promotion offers buyers incentives to lure them from Walmart. Walmart offers the lowest price comparing with the competitors, and that increases the competitive advantage of the company. The firm also invests in advertisements and customer loyalty points in promotion strategies. These practices strengthen the competitive power of the organization.

Analyzing the company’s PESTLE framework, political regulations influence the practices of Walmart. The government exerts pressure on the organization to increase the wages of the workers. The government also has protocols on how firms should protect the personal and sensitive information of their customers (Elbeltagi & Agag, 2016). The economy of regions where Walmart operates determines whether the goals are achievable or not. The USA has the best economy in the world hence providing an opportunity for Walmart. The social analysis shows that consumers of Walmart often change their behavior, and one of the changes is the increase in reliance on smart devices and the internet. Technology is highly dynamic, and that has influenced the rise of e-retailing (Micu et al. 2019). Most phones are now smartphones, and the internet is easily accessible to consumers. It is a factor that eases the connection between businesses and potential buyers. The legal factor influencing the activities of Walmart is the regulation of accuracy and truthfulness in advertisements and online marketing. Companies should be truthful while advertising or selling products online. Environmental sustainability is an issue that concerns most companies, including Walmart. There are environmental regulations that should be met by companies such as the degree of emission of greenhouse gases. Walmart is focusing on using renewable energy 100% in the long-term and reducing environmental pollution. These factors influence the objectives and practices of Walmart while enhancing the competitive advantage.

Looking at the SWOT analysis of Walmart, one of the strengths of the company is the global presence. The company has over 11,000 outlets worldwide hence increasing the customer base. The other strength is the low prices, which are highly competitive advantage of the firm. The main weakness of the company is its weak online presence. It is a factor that made Amazon overtake Walmart as the largest retailer in the world. The main opportunity is the enhanced, and dynamic technology take makes it easy for Walmart to get into e-commerce. The main threat of Walmart is high competition in the industry. The competition in the market threatens the revenue, profitability, and number of customers of the organization. Therefore, the objectives should help to counter the threats of Walmart and overcome the weaknesses.

Where do we want to be?

The main challenge of Walmart is competition, especially from Amazon. Amazon has invested in e-retailing. However, Walmart can counter this threat by focusing on e-commerce to add to the sales from brick and mortar stores. Therefore, the project is to invest in online selling and marketing. The company has tried e-commerce, but it has not received the required attention from the management hence leading to negligible sales. Therefore, the objective of the company is to double online sales in the next two years. The goal will be measured by comparing the current online sales to sales after 24 months. It is an objective that aims at countering the online competition from Amazon and other competitors. Walmart wants to become the largest retailer in the world again, and that is by increasing its online presence because it already has enormous sales from physical stores. The other objective is to improve the net profits of the company by 19% in the next 24 months. Profitability and revenue are some of the primary factors that determine the competitive power of a company. The objective of doubling the online sales will help to enhance profitability hence influencing the second objective.

The target segment is consumers aged between 18 and 49 years. It is a group that often currently shops at Walmart, and makes up the largest group of smartphone users. According to (Pew Research Center. 2019), 96% of people with cellphones aged 18 to 29 years in the USA have smartphones, while 92% of people aged between 30 and 49 years use smartphones. They are the groups with the highest usage of smartphones hence regularly connected to the internet. Improvement in technology influences consumer behavior and many potential customers own devices that can connect to the internet, such as tablets and desktops and laptops (Izogo & Jayawardhena, 2018). The number of consumers using internet devices increases annually.

Adults who own internet devices

(Pew Research Center. 2019)

The brand position of Walmart will be based on the mission, vision statement, and objectives of the company. Consumers know Walmart for offering low prices in the market, and “saving customers’ money” will be the perception of consumers. Investing in e-retailing will increase the sales of the company, but creating an impression that customers can make online purchases for low prices will help to achieve the objective of doubling online sales in two years. It is an objective that will increase the competitive advantage of the company and overcome the competition pressure exerted by Amazon.

How do we get there?

Focus is the overall strategy that will be used to achieve the above-discussed objectives. Focus strategy is the process of a company concentrating most of its resources on a specific market or practice (Chernev, 2018). In this case, most of Walmart’s resources will be used to enhance e-commerce in the organization. Allocating most of the company’s resources towards achieving these goals will increase the probability of meeting the targets within the set timeline. For example, employees will be trained on the importance of e-commerce and its effects on the company (and all stakeholders). It is a process that will improve the motivation of the workers since they will feel appreciated by the management and crucial to the growth of the organization.

The marketing mix is crucial to increase the online sales of Walmart. First, the prices of products in Walmart should be competitive. Investing in e-commerce will increase the total costs of the company, but that does not mean the prices should escalate. Costs will be countered in time when overall sales of the organization increase (Pew Research Center. 2019). Offering competitive prices will retain existing customers and attract buyers from competitors. The product sold by Walmart will be of the best quality in the market to improve its competitive advantage. Again, deliveries will be made on time for buyers who make orders online. Amazon is reliable on e-retailing because it makes timely deliveries. Therefore, for the objective to be achieved, the organization will satisfy the needs of the customers by ensuring their deliveries are made on time. For the project to be successful, the company should adopt modern and improved technology (Micu et al. 2019). Technology is highly dynamic, and Walmart should be up-to-date to ensure the online technology is competitive in the industry. For example, continuously improving the website to ensure it is easily accessible to customers and easy to make orders.

For the place, the e-retailing website will be accessible to all devices that can access the internet. There will also be applications for Android, Windows, and Apple devices. It is a strategy of increasing the customer base because most of the devices use these operating systems (Izogo & Jayawardhena, 2018). Product promotion is crucial to double online sales of Walmart. The company will create awareness to consumers through online marketing and advertisements on mass media. Most of the consumers in the target market spend most of their time online, on digital and print media. Investing in advertisements will inform potential customers of e-retailing at the company and how they can access the website (Chernev, 2018). Some business projects fail because the target market does not know about the existence of the organization and the products they offer. Customers should be informed to be convinced to get involved with the project.

Did we get there?

Objectives should be measurable and should have a time-frame for when they should be fulfilled (on top of being achievable). The primary goal of Walmart is to double online sales in the next two years. To determine the results of the project will be to calculate the percentage change in online sales since the launch of the campaign to the end of 24 months. This objective links with the target of increasing the net profit by 19% in the next two years. The change in net profit will be determined by calculating the percentage change in profits. Both calculations involve subtracting the opening figure by the current figure (after two years) and multiplying by 100. It is essential to use a viable metric after the timeline has passed to determine whether the objective was achieved. Improving online sales will improve the competitive power of Walmart and threaten to overtake Amazon as the largest retailer in the world.

References

Chernev, A. (2018). Strategic marketing management. Cerebellum Press.

Debter, L. (2019). Amazon Surpasses Walmart As The World’s Largest Retailer. Forbes. Retrieved from https://www.forbes.com/sites/laurendebter/2019/05/15/worlds-largest-retailers-2019-amazon-walmart-alibaba/#53fac57d4171

Dudovskiy, J. (2016). Walmart Segmentation, Targeting and Positioning – Research-Methodology. Retrieved from https://research-methodology.net/walmart-segmentation-targeting-and-positioning/

Elbeltagi, I., & Agag, G. (2016). E-retailing ethics and its impact on customer satisfaction and repurchase intention. Internet Research.

Ellickson, P. B. (2016). The evolution of the supermarket industry: from A & P to Walmart. In Handbook on the Economics of Retailing and Distribution. Edward Elgar Publishing.

Izogo, E. E., & Jayawardhena, C. (2018). Online shopping experience in an emerging e‐retailing market: Towards a conceptual model. Journal of consumer Behaviour, 17(4), 379-392.

Micu, A. E., Bouzaabia, O., Bouzaabia, R., Micu, A., & Capatina, A. (2019). Online customer experience in e-retailing: implications for web entrepreneurship. International Entrepreneurship and Management Journal, 15(2), 651-675.

Pew Research Center. (2019). Demographics of Mobile Device Ownership and Adoption in the United States. Retrieved from https://www.pewresearch.org/internet/fact-sheet/mobile/

Statista. (2020). Walmart: sales share by division worldwide 2020 | Statista. Retrieved from https://www.statista.com/statistics/269415/share-of-walmarts-net-sales-by-division/

Webster, K. (2018). Walmart/Amazon Share Of Consumer Retail Spend | PYMNTS.com. Retrieved from https://www.pymnts.com/consumer-insights/2018/walmart-amazon-share-of-consumer-retail-spend/