Place (Distribution) is at the Heart of Walmart’s Success

   Sagar

Walmart is unarguably the largest and leading retailer in the global retail industry with the net sales of $482.2 billion in the financial year ending 2015. The success of the company is based on various elements and strategies, and the effectiveness can simply be noted from the fact that it serves nearly 250 million customers every week, managing and operating over 1050 retail stores across the world in over 26 countries with more than 71 brand identities and corporate banners (Walmart, 2015).sagar2

However, the moist important yet interesting fact about the Walmart is defined as its supply chain and distribution strategy which is also considered as the industry benchmark. The main reason is the fact there is no other corporate player in the global marketplace owning the similar size of business portfolio and along with such diversified market existence. It is also revealed from the research studies that the place and distribution strategy that is designed and executed by Walmart is not only the key to its success, but also a source of its competitive advantage.

The company also claims that the primary reason behind its fast pace growth, continuous financial success and diversified product, market and customer portfolio is its distribution strategy which is further supported by the logistics and operations. The effectiveness of Walmart’s distribution strategy can also be noted from the fact that it claims to be seriving more than 250 million customers every week, which in practical context can only be possible, if the strategy is truly effective (Walmart, 2015).

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The company i.e. Walmart has established highly automated and centralized distribution units which operate round the clock and 365 days. In order to ensure that customers in each of its targeted regions are served and entertained effectively, the company has established multiple distribution centres in every regional zone. For instance, in the case of United States, over 45 distribution units are established which are dedicated to import goods from around the world and ensure each of the store within the US is managed with the demanded products. These 45 regional distribution units are further supported by over 150 distribution centres that are in direct contacts with retail units across the region. It is also important to understand each of the distribution centres caters the need of 75 to 100 retail stores (Walmart, 2015). This distribution strategy can further be defined as hierarchy which operates in most unique and systemized way to ensure the errorless flow of products from the suppliers to customers at their door step.

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Taking the global distribution context into consideration, it is observed that the company in total has established 158 distribution centres which are claimed to be the keys to organisational success. Unlike any other retailer in the world, the Walmart’s distribution network is also claimed to be the world’s largest and most effective within the retail industry. Its logistics activities are performed with the help of more than 6,450 tractors and over 54,000 trailers which are operated by more than 7,000 drivers (Walmart, 2015).

sagar5Furthermore, each of its distribution centres has high-tech and modernized systems to moves hundreds of thousands of cases each day. In addition, each distribution centre caters 90 to 100 stores on average that are strategically located with an aim to provide rapid responses to the connected retail stores.

A part from the activities and operations within the context of distribution and place strategy, the company is also found to believe that its workforce assists it to generate enough power to cater its stores as well as every customer at the same time. Walmart therefore puts extra focus on its recruitment, selection, training as well as development and considers it as a part of its distribution strategy. Since the distribution activities involve the logistics too, the company ensures that each of its drivers is not only qualified, but also experienced. The strict company’s policy can be noted from the fact that it only hires drivers those have driven minimum of 300,000 accidental free miles (Walmart, 2015).

sagar 6sagar7In addition, the company also accepts its corporate social responsibility and ensures that its distribution and logistics activities are environmental friendly (Walmart, 2015). For this, the Walmart does not only follow the self-designed and self implemented code of conduct, but also ensures that the global standards in relation to corporate social responsibility are met at all times (Walmart, 2015).

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References:

Walmart, 2015, Our Story, retrieved 20th May 2015, <http://corporate.walmart.com/our-story/>

Walmart, 2015, Walmart Logistics, retrieved 20th May 2015, <http://corporate.walmart.com/our-story/our-business/logistics>

Walmart, 2015, Truck Fleet, retrieved 20th May 2015, <http://corporate.walmart.com/global-responsibility/environment-sustainability/truck-fleet>

Walmart, 2015, Reducing Carbon Emission in Our Stores and Global Supply Chain, retrieved 20th May 2015, <http://corporate.walmart.com/global-responsibility/environment-sustainability/greenhouse-gas-emissions>

By- Sagar Lakhisarani and Siyu Yue

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Shopping at ColesWorths? What’s the real cost?

Marketing Management Blog T1 2015

Fintan Magee

It’s a race to the bottom; to be the cheapest. In Woolworths parlance it’s “Cheap Cheap” whilst over at Coles aging rock-stars are pointing “Down Down” at their genitals with large red hands. The two dominant players in the Australian supermarket industry are engaged in a price war and most of us won’t bemoan the fact that both have decreased their prices over the last three years – Woolworths by 11 per cent and Coles by 6 per cent.

coles v woolcoles v woo

However, there is a cost to be borne in what most would view as healthy competition. Consider the plight of their channel partners; farmers, manufacturers, processors and distributors. Coles and Woolworths are the 19th and 15th biggest selling retailers in the world and, between them, command a staggering 74% market share of our supermarket/grocery sector. They both wield incredible power over their channel partners with a number…

View original post 365 more words

Blogging – blurring the lines between consumer and advertiser

Jason Chuck & Nathan Cahill

It isn’t difficult to remember a time when marketing was controlled almost entirely through advertising agencies. Word of mouth was limited by the reach of communication tools, which was primarily one-to-one (e.g. telephones, letters, etc.). With the advent of the internet, that dynamic has shifted dramatically, with ordinary consumers now able to converse at the same one-to-many scale as traditional advertising businesses. One of the key platforms for this change is the humble blog (much like this one), which has given rise to influential consumers which companies have begun marketing to directly.

Blogger-business relationships have gained a high level of popularity for the mutual benefit that both parties receive. For businesses, reaching out directly to influential bloggers allows them to target specific segments in a more organic and “authentic” manner than traditional targeted advertising; for bloggers, this relationship can provide access to products and services they may not normally be able to present for their readers, in turn increasing their readership and reputation.

Firmoo, an online glasses retailer, has built its reputation through a large network of bloggers.

Firmoo, an online glasses retailer, has built its reputation through a large network of bloggers.

Word-of-mouth promotion is nothing new, of course. It has long been considered one of the most valuable forms of marketing – in fact, 92 per cent of consumers believe recommendations from friends and family over any form of advertising. With the advent of online publishing, consumers have been able to put their own opinions online and engage with others, expanding that circle of trust from friends and family to relative strangers. These can be small industries in themselves – e.g. “mummy bloggers”, who write about their experiences as parents, provide advice and tips, and of course some discussion on the products and services they use.

How does a business integrate good press from bloggers into their marketing strategy? While there are countless articles online on how to properly manage blogger relationships, each with different tips, one of the recurring themes is treating the exchange as a partnership. Bloggers are neither purely consumer nor advertiser; neither are they client or employee. In the present connected world where everyone can make themselves heard, treating key “influencers” with respect goes a long way to generating positive, organic word-of-mouth promotion.

Do you follow any blogs? Would you buy products based on their reviews?

References:

http://www.forbes.com/sites/kimberlywhitler/2014/07/17/why-word-of-mouth-marketing-is-the-most-important-social-media/

https://hbr.org/2003/09/a-blogger-in-their-midst

The Price of Water

Marketing Management Blog T1 2015

In the United Arab Emirates fresh water is not a natural resource.  Water is either desalinated or imported.   May is here and we are heading into the heat of Summer (or alternatively known as the heat of Spring, Summer and Autumn….and a bit of Winter).  The car temperature today was 41◦C, soon it will be a daily 50◦C.  Water is such an important product and so bottled water is a highly demanded product.

Task Spotting and The National newspaper has uncovered some interesting information on bottled water from both a qualitative and quantitative perspective:

From a qualitative perspective,  92% of those surveyed, pay for bottled water while eating out and 94% felt it was overpriced.  However from a quantitative perspective, there is a price variation of up to 900% for 500ml and 500% for 1500ml, inferring the product is selling at these prices.  How does this strong…

View original post 71 more words

Advertising Strategy

An advertising strategy is a plan to reach and persuade a customer to buy a product or a service. The basic elements of the plan are 1) the product itself and its advantages, 2) the customer and his or her characteristics, 3) the relative advantages of alternative routes whereby the customer can be informed of the product, and 4) the optimization of resulting choices given budgetary constraints. In effect this means that aims must be clear, the environment must be understood, the means must be ranked, and choices must be made based on available resources. Effective product assessment, market definition, media analysis, and budgetary choices result in an optimum plan—never the perfect plan because resources are always limited.

DEVELOPING THE STRATEGY

Positioning Statement

Formal advertising strategies are based on a “positioning statement,” a technical term the meaning of which, simply, is what the company’s product or service is, how it is differentiated from competing products and services, and by which means it will reach the customer. The positioning statement covers the first two items in the listing above.

Implicit in a good positioning statement is what the industry calls the product concept, namely a cluster of values that the product or service represents and the associational frameworks in which it fits. A hunting knife will thus have a very different product concept than a pair of pink silk slippers that glow in the dark. The product concept will later guide the choice of copy, images, and message content to be used in actual ads (the “copy platform”). The positioning statement must also implicitly include the profile of the targeted customer and the reasons why he or she would buy this product or this service. At a later stage, more data on the “target consumer” is then developed as the strategy is fleshed out.

Target Consumer

The target consumer is a complex combination of persons. First of all, it includes the person who ultimately buys the product. Next it includes those who, in certain circumstances, decide what product will be bought (but do not physically buy it). Finally, it includes those who influence product purchases (children, spouse, and friends). In practice the small business owner, being close to his or her customers, probably knows exactly how to advise the advertising agency on the target consumer.

Communication Media

Once the product and its environment are understood and the target consumer has been specified, the routes of reaching the consumer must be assessed—the media of communication. Five major channels are available to the business owner:

  • Print—Primarily newspapers (both weekly and daily) and magazines.
  • Audio—FM and AM radio.
  • Video—Promotional videos, infomercials.
  • World Wide Web.
  • Direct mail.
  • Outdoor advertising—Billboards, advertisements on public transportation (cabs, buses).

Each of the channels available has its advantages, disadvantages, and cost patterns. A crucial stage in developing the advertising strategy, therefore, is the fourth point made at the outset: how to choose the optimum means, given budgetary constraints, to reach the largest number of target consumers with the appropriately formulated message.

Implementation

The advertising campaign itself is distinct from the strategy, but the strategy is meant to guide implementation. Therefore across-the-board consistency is highly desirable. Copy, artwork, images, music—indeed all aspects of the campaign—should reflect the strategy throughout. This is especially important when multiple channels are used: print, television, and direct mail, for instance. To achieve a maximum coherence, many effective advertisers develop a unifying thematic expressed as an image, a slogan, or a combination which is central to all the elements that ultimately reach the consumer.

BIBLIOGRAPHY

Berkowitz, Ira. Vault Career Guide to Advertising. Vault, Inc., April 2004.

Gordon, Kim T. “Selecting the Best Media for Your Ad.” Entrepreneur. September 2003.

Ries, Al,and Laura Ries. The Fall of Advertising and the Rise of PR. HarperCollins, May 2004.

Stafford, Marla R., and Ronald J. Faber. Advertising, Promotion, and New Media. M.E. Sharpe, October 2004.

Marketing Management Blog T1 2015

In the United Arab Emirates fresh water is not a natural resource.  Water is either desalinated or imported.   May is here and we are heading into the heat of Summer (or alternatively known as the heat of Spring, Summer and Autumn….and a bit of Winter).  The car temperature today was 41◦C, soon it will be a daily 50◦C.  Water is such an important product and so bottled water is a highly demanded product.

Task Spotting and The National newspaper has uncovered some interesting information on bottled water from both a qualitative and quantitative perspective:

From a qualitative perspective,  92% of those surveyed, pay for bottled water while eating out and 94% felt it was overpriced.  However from a quantitative perspective, there is a price variation of up to 900% for 500ml and 500% for 1500ml, inferring the product is selling at these prices.  How does this strong…

View original post 71 more words

Be afriad… Be very afraid!

You have an important message. Your message needs to be heard. You want to change the world… make a difference, but how? We are constantly being bombarded with advertisements in our day-to-day life. How do you cut through the noise of the everyday and make a message really stick?

Do you pull together the best designers and advertisers to come up with something unique and influential? Do you call up your favourite celebrity and have them spruik your message to their multitudes of fans?

No, you don’t.

You go straight for the jugular… yes, you heard right. You scare the living daylights out of your audience to make a lasting impression.

Fear is a powerful motivator! It can be very persuasive and is commonly used by advertisers to encourage their audience to change their behaviour. Generally speaking, this tactic works best with awareness campaigns for issues such as health, safety, politics and the environment.

Who could forget the chilling Grim Reaper 1987 AIDS Campaign? The campaign launched with a prime-time television commercial featuring The Grim Reaper bowling over terrified human pins in an underworld bowling alley and no one was safe.

 

 

The commercial taught us that HIV/AIDS is a widespread epidemic that didn’t discriminate. Men, women, children and even babies were at risk. The follow-up campaign emphasised that prevention is the only cure and was distributed through popular marketing channels such as television, newspapers, cinemas, magazines and radio.

An unprecedented 97% of people surveyed were aware of The Grim Reaper campaign, suggesting that HIV/AIDS was at the forefront of the public mind. People believed that The Grim Reaper was responsible for increased awareness and behavioural changes. The campaign had prompted public debate and the desire for more information.

While fear campaigns are a popular marketing strategy, not everyone agrees they are the best tactic. Some argue that using fear to promote a cause may do more harm than good. The Grim Reaper HIV/AIDS awareness campaign was extremely successful at getting attention, but was largely criticised for scaremongering, exaggeration and frightening children. So, the challenge is: how do you voice your message in a way that makes people want to change their behaviour or take action without crossing the line?

Today, it’s difficult to escape fear-inducing messages. One of the most common is the anti-smoking campaign. The evidence on the effectiveness of fear appeals is mixed but I’m sure everyone can recall at least one anti-smoking advertisement. The aim of many of these campaigns is to discourage undesirable behaviour, namely, smoking. Anti-smoking advertisements usually take the form of a showcase; they feature real-life smokers who have had serious health issues due to their habit. These ads are generally accompanied by frightening statistics and display the physical side effects and damage smoking can cause, no matter how gruesome.

blind_1  Ads_4_0Anti-smoking ad

According to the Australian Bureau of Statistics, smoking is recognised as the ‘largest single preventable cause of death and disease in Australia’ (AMA 2005). About one-fifth of people 18 years and over were smokers in 2007, this number has decreased down from 23% in 2005 and 24% in 2001. A factor they attribute to the ‘high level of investment in anti-smoking campaigns’ (Australian Bureau of Statistics 2010).

So there you have it. It is proven that fear mongering and scare tactics make a lasting impression on their audience, increasing the rate of behavioural change and increased awareness.

In your opinion, do fear campaigns work? How do marketers promote awareness without crossing the line of social acceptability? Do fear campaigns have an impact on you? Please feel free to share you thoughts and comments in the comment section below.

References

Winn, M 1991. ‘AIDS prevention through health promotion : facing sensitive issues’, Geneva : World Health Organization, retrieved 5 May 2015 <http://apps.who.int/iris/handle/10665/41459&gt;

Manyiwaa, S & Brennanb, R 2012. ‘Fear appeals in anti-smoking advertising: How important is self-efficacy?’, Journal of Marketing Management, Volume 28, Issue 11-12, 2012, retrieved 6 May 2015

Robles, H, A 2012.  ‘Fear Appeals Used in Anti-Smoking Campaigns’, Applied Social Psychology (ASP), retrieved 6 May 2015 <http://www.personal.psu.edu/bfr3/blogs/asp/2012/04/fear-appeals-used-in-anti-smoking-campaigns.html&gt;

Australian Bureau of Statistics 2010. ‘1370.0 – Measures of Australia’s Progress, Health, Smoking, retrieved 7 May 2015 nsf/Lookup/by%20Subject/1370.0~2010~Chapter~Smoking%20%284.1.6.6.1%29>