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goes off." Marketing Excellence >> Walmart Walmart, the giant chain of discount stores, is the third-largest company in the world, with more than $473 billion in revenue and 2.2 million associates (or employees). Its phenomenal success story began in 1962 when Sam Walton opened his first discount store in Rogers, Arkansas. Walton sold the same products as his competitors but kept prices lower by reducing his profit margin. His customers quickly caught on, and the company took off almost immediately. Walton's EDLP (Every Day Low Price) strategy remains the foundation of Walmart's success today. Through the company's economies of scale, Walmart is able to of- fer customers top brand-name products for the lowest possible price. Walmart expanded throughout the United States in the 1970s and 1980s by acquiring many of its competitors and opening new stores. The first Walmart backlash, combined with increased competition, con Supercenter-a discount store beefed up with food tributed to the decline. Target, for example, reemerged on the retail scene with revamped stores, merchandise, outlets and other amenities such as an optical center, tier of discount shoppers. Target stores were well Walmart had become the nation's number-one retailer, and their wider, cleaner aisles displayed merchandise with $32 billion in revenue and stores in 33 states. The company's international expansion began with a store better. Even Target's television commercials features outside Mexico City in 1991 and has grown to more than more attractive models and trendier clothes from high- 5,600 international locations, some under a different end designers. One analyst stated, "Target tends to brand name. have more upscale customers who don't feel the ef Walmart thrives on three basic beliefs and values: fects of gasoline prices and other economic factors as "Respect for the Individual," "Service to Our Customers," much as Walmart's core customers might." During the and "Striving for Excellence." Sam Walton's original 10- mid-2000s, Target outperformed Walmart in same-store foot rule" promise that whenever I come within 10 feet sales growth and profit growth. In addition, Walmart lost of a customer, I will look him in the eye, greet him, and the exclusive rights to use the smiley face in its market- ask if I can help him." --still governs today, embodied ing campaign. by the "greeters" at the front door. In addition, Walmart Walmart launched a series of new initiatives to help embraces the communities it enters, develops strong improve sales and its image. First, it introduced a highly local relationships, and works hard to foster its brand successful $4 generic drug campaign, a program even- image in the area. The company donates significant tually copied by Target. Walmart also launched several amounts of money to local charities through its "Good environmentally friendly initiatives such as constructing Works" program, hires local individuals, and purchases new buildings from recycled materials, cutting transporta- food from local farmers. tion costs and energy usage, and encouraging customers Walmart's marketing strategy has evolved over the to buy more green products. Next, the company imple years. Early efforts were based on word of mouth, positive mented a massive store remodeling effort called Project PR, and aggressive store expansion. In 1992, Walmart Impact. Stores ended up cleaner, aisles were less clut- introduced its well-known tagline "Always Low Prices. tered, and merchandise became easier to reach. Always," which effectively communicated the company's Finally, Walmart replaced its long-running slogan core brand promise and resonated with millions. In 1996, Walmart launched its price rollback campaign featuring Television commercials went beyond the EDLP message "Always Low Prices" with "Save Money. Live Better." the familiar yellow smiley face as the star of the campaign. The company's stock soared 1173 percent in the 1990s. and highlighted other positive contributions, including Walmart hit a few bumps in the road as it entered the savings, employee health care coverage, and fam Walmart's improved energy costs, 401(k) (retirement 21st century. Critics protested its entry into small com- ily savings. Walmart also used the new campaign to munities. Researchers at lowa State University found highlight its unique product mix and low prices and to that within 10 years of a new Walmart opening, as many attract consumers hurt by the recession. Same-store as half the small stores in town went out of business. Walmart also faced multiple lawsuits from employees who during the recession. Analyst believed Walmart's prod sales rose, and the company's stock price improved complained about poor work conditions, exposure to uct mix-45 percent consumables (food, beauty, health health hazards, and pay below minimum wage. In some items) -- was better fitted for a poor economy then bases, employees said Walmart tailed to pay for overtime. Target's-20 percent consumables and 40 percen prevented them from taking rest or lunch breaks, and high turnover rate in the 2000s and an abundance what you want to have." of negative media coverage. According to one Walmart survey, 70 percent of employees left the company within home and apparel products. One analyst explained, discriminated against women. These problems led to a "Walmart sells what you need to have as opposed to After the recession, Walmart sought new strategies to maintain its momentum and expand its consumer the first year of employment due to lack of recognition base. After decades of making its stores bigger, it began From 2000 to 2005, Walmart's stock price fell 27 of less than 50,000 square feet and Walmart Express launching smaller-format stores-Neighborhood Markets percent, and it remained low through 2007. Negative shops of about 10,000 square feet-to fend off the and inadequate pay. COLLECTING INFORMATION AND FORECASTING DEMAND CHAPTER 3 97 growing dollar-store chains. Walmart also increased its presence on social media to help connect with its con- sumers, gain feedback, and build loyalty. Today, Walmart has stores in 27 international mar- kets and serves more than 250 million customers a week through Walmart Supercenters, Discount Stores, Neighborhood Markets, and Sam's Club warehouses. 2. Walmart performs very well when the economy turns sour. How can it protect itself when the economy is on the rise? Explain. Questions Sources: Dave Goldiner, 'Exxon Tops Wal-Mart on 2009 Fortune 500 List," New York Daily News, April 20, 2009. "Wal-Mart Seeks Smiley Face Rights, BBC News, August 5, 2006, David Ng. "Wal-Mart vs. Target, Forbes, December 13, 2004, Michael Barbaro, "A New Weapon for Wal-Mart: A War Room," New York Times, November 1, 2005; Kenneth E. Stone, "Impact of the Wal-Mart Phenomenon on Rural Communities." Increasing Understanding of Public Problems and Policies (Chicago: Farm Foundation, 1997), pp. 189-200, Suzanne Kapner , "Wal-mart Enters the Ad Age, CNNMoney.com August 17, 2008; Jack Neff, "Why Walmart Is Getting Serious About Marketing," Advertising Age, June 8, 2009, Sean Gregory, "Wal-Mart's Project impact: A Move to Crush Compettion," Time, September 9, 2009; "Store Wars: When Wal-Mart comes to Town," PES, February 24, 2007: Sean Gregory, "Wal-Mart vs. Target: No Contest in the Recession," Time, March 14,2009: Andria Cheng, Corporate News: Wal-Mart Lays Out Strategy." Wall Street Journal, October 11, 2012, B.8: www.walmart.com. 1. Evaluate the evolution of Walmart's marketing cam- paign and tagline over the years. What does the company continue to do well? What are the pros and cons of its most recent strategic marketing plan