Marketing Mix of Walmart: 7P's
Walmart Inc Marketing Mix: 7P’s
|Company Name||Walmart Inc.|
|Industry Served||Retail (Physical & E-commerce)|
|Countries served||27 countries under 58 banners.|
|Headquarters||Bentonville, Arkansas, United States.|
|Founded||July 2, 1962 (1st Walmart Store opened in Rogers, Arkansas)|
|President & CEO||Doug McMillon|
|Net Revenue (2019)||$514.4 billion|
|Net Income (2019)||$7.2 billion|
|Employees (2019)||2.2 million|
|No. of Stores. (2019)||11,361|
|Leading Competitors||Costco, Best Buy, Target, Amazon, Lowe’s, Kroger, Walgreen’s Boots Alliance, Home Depot.|
Walmart is the largest physical retail chain of the world with $514.4 billion in net revenue in fiscal 2019 and 11,361 stores operational worldwide. Apart from physical retail, the company is also expanding its footprint in the US and abroad through the help of e-commerce. The company was founded by Sam Walton who started his business in 1945 and the first Walmart store opened in July 1962 in Rogers, Arkansas, United States. Today, Walmart has expanded its international footprint to 27 countries and serves more than 275 million customers each week under 58 banners. Apart from its everyday low prices, the brand is also known for its dedication to customer service as well as a large range of merchandise. While the level of competition in the retail industry is quite high, the challenge has grown with the rise of e-commerce giants like Amazon and Alibaba. Walmart also started investing in e-commerce some years ago and now its revenue from e-commerce has touched $25 billion. Walmart also acquired the Indian eCommerce brand Flipkart to grow its online presence in India. However, the competitive advantage of Walmart lies in its EDLP pricing and unique business model which have helped it consistently beat the competition and grow its market presence stronger.
Read a marketing mix of Walmart Inc including the seven P’s to understand its marketing strategy and business.
Walmart is mainly a physical retail brand. However, in recent years, the company has also grown its range of offerings available online. The retail giant is well known for its large assortment of products. Its business is divided into three main operating segments that include Walmart US, Walmart International, and Sam’s Club. Walmart US is the largest of the three reportable segments with operations across all the fifty US states. IN 2019, this segment accounted for more than 60% of the total net revenue of Walmart Inc. Walmart US sells merchandise in three main categories that include Grocery, health and wellness as well as general merchandise.
The grocery category of merchandise sold by Walmart US includes a full line of grocery items as well as consumables like health and beauty aids, baby products, household chemicals, paper goods, and pet supplies.
The health and wellness category includes pharmacy, optical services, clinical services, and over-the-counter drugs and other medical products.
The general merchandise category includes entertainment products, hardlines, apparel as well as home furnishing and seasonal products. Apart from these, Walmart US offers fuel and finances and related products. Private label brands include a large part of the branded merchandise sold by Walmart US.
Private label brands sold by Walmart include:
"Athletic Works," "Bonobos," "Equate," "Everstart," "George," "Great Value," "Holiday Time," "Mainstays," "Marketside," "ModCloth," "No Boundaries," "Onn," "Ozark Trail," "Parent's Choice," "Time and Tru" and "Wonder Nation." The Company also markets lines of merchandise under licensed brands, some of which include: "Better Homes & Gardens," "Farberware," "Russell" and "SwissTech."
The product strategy of Walmart International is similar to that of Walmart US in the health and merchandise category. Apart from its US private label brands, the company has also developed market-specific brands for sales through Walmart International. Walmart has developed several market-specific brands like "Aurrera," "Cambridge," "Lider," "Myntra," "Jabong," "PhonePe," and "Extra Special." Some of the private label brands that the company markets and sells globally include "Equate," "George," "Great Value," "Holiday Time," "Mainstays," "Marketside," and "Parent's Choice”.
Sam’s club is a membership-only warehouse club that offers merchandise in five categories including 1. Grocery and consumables 2. Fuel and other categories 3. Home and apparel 4. Technology, office and entertainment 5. Health and wellness.
In this way, through its three reportable segments, the company offers a very large range of merchandise and caters to the needs of a wide range of customers. Sam’s Club offers a large range of private label brands that also serve the needs of the higher end of the market.
Walmart started from Arkansas in the United States where its headquarters are located. Now, it is an international brand and sells across 26 countries apart from the United States under 58 banners. The United States is the core market of Walmart with the largest number of stores of all countries and accounting for the largest part of the company’s net revenue. Apart from its physical stores which number 11,361 ( fiscal 2019), the company also serves its customers through online channels. In fiscal 2019, the company acquired a majority stake in Flipkart.com which also includes Myntra and Jabong. The company is building an omnichannel ecosystem to serve its customers better and also growing its number of fulfillment systems.
Some of the leading markets of Walmart Inc include the U.S., Africa, Argentina, Canada, Central America, Chile, China, India, Japan, Mexico, and the United Kingdom. The company has established an extensive distribution system to serve the stores and customers in the US as well as abroad.
In fiscal 2019, Walmart US shipped almost 77% of the merchandise it sold through its 156 distribution facilities. These distribution facilities are located strategically throughout the United States. The rest of the merchandise sold at Walmart US stores were shipped directly from the suppliers. Moreover, the company has 33 dedicated fulfillment centers to serve the customers that buy products online. Sam’s club has 22 dedicated distribution facilities to serve Sam’s Club stores throughout the United States. The Number of Walmart US retail units in 2019 was 4,769 and that of Sam’s Club was 599. In this way, the total number of stores by Walmart Inc operational in 2019 in the US was 5,368. However, the total number of Walmart International retail units in 2019 was 5,993. Internationally, Walmart has established 226 distribution facilities to serve its stores in various corners of the world from Africa to the UK and India. In this way, the company has maintained a strong global presence.
Walmart is the leading physical retail brand of the US with the largest market share and a large and loyal customer base. However, its competitive advantage is mainly based on its pricing strategy. The retail industry in the US is highly competitive. Apart from the rival physical retail brands like Costco, target and best buy, the rise of Amazon has also come as a challenge for Walmart’s dominance. However, since its early days, the company has focused on lower pricing to gain market share and strengthen its competitive advantage. Over time, Walmart established a large and global supply chain which has helped it keep its prices low and in fact lower than all other players in the US retail industry.
The pricing strategy used by Walmart is competitive pricing. EDLP or EveryDay lower Prices is behind the significant competitive advantage of Walmart. Under the EDLP pricing philosophy, Walmart charges the lowest prices every day so that the consumers are confident that the prices will not change with promotions. Prices are a very important consideration in the global retail industry. What drives customers in huge numbers to the Walmart stores in the US and abroad is its competitive pricing. The company prices its products lower than its competitors. EDLP pricing philosophy has helped the company gain a significant competitive advantage which ensures higher customer loyalty. This advantage is further strengthened through a focus on customer service.
However, EDLP is just one side of the coin because gaining a price advantage also requires a lot of cost-cutting on the part of the retailer. The other side of the EDLP strategy is EDLC or Everyday lower costs which means the company makes efforts to reduce operating costs wherever possible throughout its global operations. Apart from that, the large and global supply chain of the company is also a critical source of competitive advantage which has helped the company maintain its EDLP pricing scheme despite growing competitive pressure. The Everyday low costs commitment has helped the company pass the savings to its millions of customers worldwide.
Walmart is a well established physical retail brand that has started expanding its business through e-commerce. The main source of popularity of Walmart as a retail brand is its EDLP philosophy. The company offers the lowest prices every day which has led to strong popularity and customer loyalty. In 27 countries, the company serves its customers under 58 banners. The company started its e-commerce operations in 2000 and since then e-commerce has continued to gain as a part of its global business operations. Everyday lowest prices coupled with the highest focus on customer service have helped the brand maximize its influence in the US market and grow its popularity and sales.
The company needs nearly no introduction in the US where it has more than 4,700 stores in 50 states apart from Sam’s Club stores. The company uses various store formats including Supercenters, Discount Stores and Neighborhood Markets. These stores do not just work as sales outlets but also as channels of promotion from where the company showcases its merchandise and informs customers about new arrivals and a vast range of other products they might like to buy. The company also uses its own website and e-commerce app for sales and promotions in the markets where it operates.
The other channels the company utilizes for promotions include press and social media. While the brand regularly receives heavy press coverage, it also runs marketing campaigns from time to time to drive higher sales. In fiscal 2019, the company spent around $3.5 billion on advertising. With growing competition in the global retail industry, the company has also grown its investment in advertising. The company is actively using social media for promotions and customer engagement. It has more than 32 million followers on Facebook. It uses its Facebook account for brand promotions as well as to promote the organizational culture and engage fans and followers from around the world. The company has developed localized sales and promotional strategies for its various markets around the world. In the US, Sam's Club offers free shipping for e-commerce customers who are Plus members. Such strategies help drive membership higher apart from improving customer loyalty.
Walmart has been notorious for its cost-cutting practices in its history. Since its foundation, the company placed a heavy focus on cutting down costs heavily to pass the savings to customers. In the past, the cost-cutting measures adopted by the company also affected the employees who complained of lower wages compared to other retailers. However, the company has changed its culture and human resource practices a lot during recent years and apart from increasing hourly wages, it has also introduced several new benefits to keep its employees happy and satisfied. In fiscal 2019, the company employed 2.2 million people. Walmart calls its employees associates. According to its 2019 annual report, Walmart is a tech-driven and people-focused brand and investing in its associates is a strategic priority for the brand.
It has started new learning centers for its employees as well as specialized training programs that are focused on developing retail leaders of tomorrow. According to its 2019 annual report, the starting wages at Walmart are now 50% higher than four years ago. Moreover, the associates are also benefiting from other privileges like expanded parental leaves. Smart and well-trained associates are serving customers in thousands of its stores around the world and the company is working to maximize job satisfaction for its associates which have helped the brand create the difference.
Walmart is known for offering the lowest prices. However, it also takes a lot of cost-cutting and process optimization to achieve the lowest costs in the market. Apart from an optimized supply chain and distribution network that caters to Walmart stores and customers globally, the company has also optimized internal processes for improved inventory management and to save both time and money. The position and competitive advantage that Walmart has achieved would not have been possible without heavy process optimization. To make shopping easier and more convenient, the company is investing in digital technology and developing a dedicated distribution network for e-commerce. This has helped the company drive its e-commerce sales higher and maintain higher customer and employee satisfaction through improved order handling and delivery.
Several new technologies have helped Walmart optimize in-store sales as well as the inventory management system to achieve higher operational effectiveness. For example, an autonomous scanner checks the side counters to help Walmart improve stock levels. Apart from that, there is an autonomous floor cleaner carrying a camera to gather data on product features and share with a FAST unloader system in the backroom to prioritize items for restocking.
Sam’s Club stores are also growing more digital than before. Customers can bypass the checkout line with the Scan & Go app and to improve the speed at which these tasks are carried out the company is testing computer vision to replace the barcodes. Now that customers are shopping in an Omni fashion or from both online and offline channels, Wlamrt’s priority is to improve processes and reduce friction by leveraging technology.
In the physical retail business, there is a lot that counts as physical evidence. While the growth of digital transactions has nearly eliminated the need for paper bills, branded packaging, and merchandise, as well as the physical infrastructure, also count as physical evidence. Apart from its more than 11,300 retail stores, the company has also established distribution facilities and serves customers under 58 banners in various parts of the globe. Other forms of physical evidence include the private label credit cards and gift cards of Walmart. Sam’sClub also uses branded packaging for shipping the products and merchandise ordered online.
|APA||Pratap, A. (2020, February 8). Marketing Mix of Walmart: 7P's. Retrieved February 8, 2020, from https://notesmatic.com/2020/02/marketing-mix-of-walmart-7ps/|
|MLA||Pratap, Abhijeet. “Marketing Mix of Walmart: 7P's.” Notesmatic, 8 Feb. 2020, notesmatic.com/2020/02/marketing-mix-of-walmart-7ps/.|