teachthe4ps.com - For instructors of marketing.

Wal-Mart has long been positioned as the low-price leader.  Leveraging its supply chain and logistics system, competitors couldn’t match Wal-Mart’s cost structure.  Now at least some consumers perceptions are changing.  In this Wall Street Journal article, “Wal-Mart Loses Edge” (August 16, 2011, non-subscribers may need to click here) we read about recent consumer surveys that show the retailer losing its “lowest price” positioning.  In one survey of 1500 Wal-Mart shoppers, “86% no longer thought it had the lowest prices” while in another survey the number was 60%.  Whichever the number, this is a big problem for a retailer that has long enjoyed a well-deserved reputation for low prices.  While Wal-Mart’s perception of value fades, stores like Dollar Tree are seeing their perception of value rise.

While fewer consumers perceive Wal-Mart as the low price leader, what is the reality?  The article reports mixed objective evidence.  In comparisons with Target, with one study by Morgan Stanley showing that in Chicago Target is about even with Wal-Mart (though Wal-Mart was more than 20% lower priced than Safeway and Supervalu) and another study by Goldman Sachs showing Wal-Mart 6.2% lower than Target overall.

This case study could provide interesting fodder when you discuss positioning.  We define positioning in our books as “how consumers think about proposed or present brands in a market.”  You can remind students that perception is what counts among consumers.

You might recall that a few years ago Wal-Mart changed its tagline from “Always Low Prices – Always” to “Save Money.  Live Better.”  Wal-Mart wanted to appeal to a more upscale crowd and develop a greener image.  Perhaps this change de-emphasized the previous price positioning.  The new dual positioning may not be as clear to consumers — opening opportunities for dollar stores to take the lowest price mantel from Wal-Mart.

This opens the door to a good discussion with your students.  Asking them:  What should Wal-Mart do now?  Change its positioning?  Or try to re-gain the low price position?  Given its history and strengths, it seems clear to me that the retailer needs to regain the consumer perception of value.  Perhaps there is a need for more advertising?  Or should the store revisit the everyday low pricing model it has traditionally used — perhaps the hi-lo pricing models of some competitors have helped confuse the market and harmed Wal-Mart’s positioning.  Also posted at Learn the 4 Ps.

The article, “Wal-Mart Sees Small Stores in Big Cities,” (Wall Street Journal, October 13, 2010 – link to Google search back door for non-subscribers) describes a change in strategy for Wal-Mart.  The recession has given a boost to dollar stores (see earlier post, “Stores Scramble to Accommodate Budget Shoppers“) and other Wal-Mart competitors — while the world’s largest retailer was busy trying to enhance its appeal to middle-class customers.  Apparently the move alienated Wal-Mart’s core blue-collar customer.  Now the retailer is looking to move into urban areas with stores a quarter to a third the size of its supercenters. The article provides a good example to use when you cover retailing.

This article talks about new RFID technology being used by Wal-Mart — “Wal-Mart Radio Tags to Track Clothing” (Wall Street Journal, July 23, 2010).  The RFID technology can be really helpful in managing inventory — but also raises privacy concerns.  The new retailing video in our books’ video package has something on RFID (new videos for users of Basic Marketing or Essentials of Marketing — not available until November 2010).

A lot of people don’t like Wal-Mart — especially their competitors.  So how do you keep the low-price rival from your neighborhood?    Why not fund groups that oppose Wal-Mart?  This article “Rival Chains Secretly Fund Opposition to Wal-Mart,” (Wall Street Journal, June 7, 2010 – link takes you to a backdoor for non-subscribers) has so many different ethics angles that can be discussed.  Some students will question Wal-Mart’s ethics — from putting small stores out of business to not funding health care for its employees.  They might argue that the ends justify the means.  When you read the article you find out that the consulting firm that runs the antidevelopment campaigns employs some pretty shady tactics.  So is Saint Consulting Group acting ethically?   What about the rival stores that fund the campaigns?   You could ask students about which of the three parties (if any) is behaving unethically?  And why?

…and I was not impressed. But somehow, it shot up to #1 (with more than 1.6 million views last week) on Visible Measures Top 10 Viral Video chart — knocking the Evian roller skating babies out. What do you think?

The Wal-Mart vs. Amazon battle continues to become increasingly intense (see “Price War Brews Between Amazon and Wal-Mart,” New York Times, November 23, 2009). These two competitors have already engaged in price wars over toys, books, and DVDs this holiday season.  Now Wal-Mart is cleverly using one of their strengths relative to Amazon — their physical stores — to their advantage.  This a nice example of competitive advantage, SWOT, and logistics.  Check out “Wal-Mart Uses Its Stores To Get an Edge Online” (see The Wall Street Journal, December 15, 2009 – subscription required, or search the net using the article title).