Table of Contents
a. Introduction of Company. b. Objective of Walmart. c. History of Establishment. d. Mission and Vision. e. Service Provided f. Internal Organization Environment * Target Market * Market Segmentation – Demographic * Potential Market Area * Store Format * SWOT Analysis g. Recommendation. h. Conclusion. i. Bibliography. j. Appendices
1.0 Introduction of Company Walmart is the largest retail store in the US. It has over 3, 700 stores countrywide and many others internationally. Despite these positive results, there is a need for injection of new ideas in order to ensure that the retail giant sustains its position as a market leader. 2.0 Objective and Goals of Walmart
Walmart has always aimed at increasing sales through its friendly prices. This image has stuck with the company for a very long time. Not only is the company associated with low prices, but it has a variety of items under one roof. These qualities favor the rural clientele. The company is driven by a commitment to business excellence. This is seen by the quality of care accorded to customers once they report to their retail stores.
This is ensured by the participation of employees in this business goal. The company has cultivated a culture of perfection in that they always want to be on top. The Company is driven by the pursuance of technological improvements. This is achieved through the use of new technologies in service delivery. Creativity and innovation is another business objective for the company. Through the efforts of their employees, the company aims at maintaining their market positions by brainstorming and looking for new ways of attracting potential clients. (MSNBC, 2007b) 3.0 History of Establishment.
Wal-Mart is a mega-retailer and its was founded by Sam Walton in 1962 in Bentonville, Arkansas. It started with $700,000 in its first year and scaled up to $5.4 million by 1974.
The retailer continues to grow while others struggled with inflation and recessions. In 1980, Wal-Mart became the youngest US retailer to exceed $1 billion in net sales. During the 1980s, Wal-Mart began to further expand and thus pushing some retailers to closing some of their regional stores. The company engaged in diversification by creating membership-stores such as Sam’s Club, smaller, more conventional pharmacy/grocery stores called Neighborhood Markets, and finally Supercenters with a wide selection of consumer goods. And, in 1991, Wal-Mart became the world’s largest retailer.
In 2002, UBS performed an industry study and discovered that Wal-Mart had achieved 12% lower prices on average than its competitors. Wal-Mart had been able to implement its Every Day Low Price strategy by focusing on 1) developing a sophisticated logistics system with heavy information technology investments, 2) efficient distribution system by placing retail stores close to distribution centers and using RFID technology, and 3) being a non-union employer.
Wal-Mart was a relative latecomer to international retailing. It started in 1991 by opening two stores through a joint venture in Mexico. Then, by 1997, it had 41 stores in Mexico and had also expanded to Argentina, Brazil, China, Germany, Korea, Japan and the UK. In 2003, Wal-Mart now with 1,288 international stores had sales growth of 18.8% (above investor expectations) because of strong performance in Mexico, Brazil, and the UK. In Britain, Wal-Mart was able to successfully transplant their US strategy after acquiring ASDA.
It implemented its supply-chain management technology and was able to provide customers with prices 7% lower than competitors. This ultimately led to Wal-Mart raising its ASDA assets’ price margins and market share. During that same time, its competitors had also begun expanding. K-Mart entered the European market in 1992 and began expanding. Also, Costco had stores in the UK, Taiwan, Korea, Japan, and Mexico by 2003.
4.0 Mission and Vision The Walmart Mission Statement is "To help people save money so they can live better." A mission statement states why the company is in business and how they will conduct their business - what they stand for. It should really address 'What are they going to do for their customers and stakeholders - suppliers, employees, and communities.' It defines the company’s purpose.
WalMart Company Vision is to give ordinary folk the chance to buy the same thing as rich people, where Walmart are a global retailer committed to growing their company by improving the standard of living for their customers and serving communities around the world. They earn the trust of their customer’s everyday by providing a broad assortment of quality merchandise and services at everyday low prices while fostering a culture that rewards and embraces mutual respect, integrity and diversity.
5.0 Service Provided Walmart operates 4,300 stores and facilities in the United States alone. International facilities span the globe and number 4,000. The retailer offers a variety of services, including retail goods, pharmacy, financial, wireless and photo lab services. Retail goods
* Walmart offers retail goods in a variety of categories. Customers can buy electronic products such as MP3 players, digital cameras, printers, laptops and computers. Walmart offers music VCD, DVD or VCD movies, books and jewelry. In addition to home furnishings, the retailer also offers baby products, sporting goods and grocery items. Photo Services
* Walmart offers photo lab services inside stores and online. Customers can drop off their photographs for developing via a store kiosk. They can also upload their digital photos via the corporate website. Pick up photos at a store location or have them sent to a home address. The photo lab offers customers the option to develop the prints in an hour. Pharmacy
* Walmart began offering customers all kind of prescriptions for customer such as vitamins, health care and so on. Walmart offers monthly prescriptions for pickup in-store or mail order services for long-term medications. The savings are due in large part to Walmart's catalog of over 300 generic medications. Financial Services
* Walmart offers several financial services. These include credit cards, debit cards, bill payment, money transfers, check cashing and check printing. Walmart offers a store credit card without an annual fee. Obtain a debit card in-store or online. Walmart offers money transfer services through Money gram. Customers can also purchase money orders and gift cards, send bill payments, order printed checks and cash checks.
6.0 Internal Organization Environment 6.1 Target Market Walmart target markets are customer of all age that are using Walmart services and products. Walmart in Malaysia try to suite the culture, environment and lifestyle of customer in Sabah. Local products also sold in the store where Walmart try to suite the customer need in Sabah.
6.2 Market Segmentation - Demographic Demographic segmentation Walmart in Sabah consists of dividing the market into groups based on variables such as age, gender family size, income, occupation, education, religion, race and nationality. The main demographic segmentation variables are summarized below:
Age Consumer needs and wants change with age although they may still wish to consumer the same types of product. Walmart try to suite the customer need due to the products design, package and promote products differently to meet the wants of different age groups. Gender
Gender segmentation is widely used in consumer marketing. Walmart in Malaysia want all their products are suitable for all ganders to use it examples include clothing, jewelry, magazines, toiletries and cosmetics
Income Another popular basis for segmentation. Walmart target affluent consumers with luxury goods and convenience services. By contrast, Walmart focus on marketing products that appeal directly to consumers with relatively low incomes. Social class
Walmart believe that a consumers "perceived" social class influences their preferences for jewelry, clothes, home furnishings and other products & services. There is a clear link here with income-based segmentation where social class influences the purchase of goods in Walmart store due to sales increased. Lifestyle
Walmart are increasingly interested in the effect of consumer "lifestyles" on demand. Unfortunately, there are many different lifestyle categorization systems, Walmart designed their advertisement and marketing as a way of winning new marketing clients and campaigns, by participated in the carnival or campaigns Walmart can promote their own products, service and store to customer around Sabah.
6.3 Potential Market Area The market potential of this area is include firstly cover customer who live around jalan bundusan area such as Beverly Hills Apartment Phase 1, 2 and 5, also Bundusan Villa Apartment. Secondly covers are customer around Luyang, Penampang, Taman Sri Kepayan and Lintas. Thirdly cover customer around Kampung Ulu Kiamsam, Kampung Moyog and Kota Kinabalu. All these potential market may contribute the successful of Walmart in Malaysia especially in Sabah. 6.4 Store Format
The store format are Hypermarket which have a large superstore, combining a supermarket and departmental store, offering full lines of grocery and general merchandise all under one roof. Ideally a 40:60 mix of food to non-food item is kept in the stores. Typical size square feet of this Walmart Hypermarket are around 15,000 to 100,000 square feet, it all depend on the cost budget to build the building and operation.
The reason why we choose hypermarket to open as Walmart are because hypermarket have most extensive merchandise mix, also product and brand choice all under one roof that may create superior value for money. As we can see people around Sabah are more comfortable to shopping in a big store which is walmart can give less price and they buy the entire product in bulk. Hypermarkets also have enough parking lot for customer who come to hypermarket.
6.5 SWOT Analysis Here is a brief SWOT Analysis of Walmart in Malaysia when Walmart entering Malaysia especially in Sabah. At some point Sam Walton, the founder of Walmart, made the decision to achieve higher sales volumes by keeping sales prices lower than his competitors by reducing his profit margin. From this a huge retail empire has grown with nearly 3000 stores in 14 countries yielding the World's largest company in terms of revenue. His mission was: "to help people save money so they can live better."
Here is a simple SWOT analysis of Walmart in Malaysia:
Strengths In one store they offer a huge selection of goods at very competitive, if not the best, prices in a one stop store. Because of their size they can get huge discounts from suppliers and so pass these savings on to the customers. They manufacture they own branded goods as well as supply goods from local suppliers and other major brands. Their size and buying power is a great strength. They also are frugal in their management style very careful with how they spend their money and manage their resources. Weaknesses
Just controlling such a huge organization is a huge undertaking and in particular managing the employees. Suppliers are always under pressure with regard to price and their ability to supply when required. Because of the low prices customers often question and are concerned at the quality of the goods. This is offset to some extent by the satisfaction guarantees offered.
Opportunities Expansion into other states and forming partnerships to enter these countries is probably the main opportunity employing 'more of the same' strategy. Taking over companies overseas and local is also possible. Home delivery of orders placed through the internet is a big opportunity. Most stores are on the edge of town and as fuel costs rise people are less likely to want to travel. Creation of Walmart convenience stores is a strong possibility. This overcomes local objections and increased travel costs. In recessionary times people are looking to save money.
Threats Local competing vendors hate the possible arrival of Walmart and a lot opposition is likely. Also competition from local convenience stores is likely to increase as travel costs to Walmart increase. In Malaysia the expansion of the Giants, G-Mart, Econsave and CKS mart is growing fast.
These companies offer limited stock but are local and are cheap. Giants is the local store of the grocery business, with efficiency being the name of the game with only 1000 or so stock items against the normal 20,000 to 30,000 items in Walmart. Although Walmart is huge, competition from similar companies is also likely. Being successful, they are open to attack on any ethical stance - low pay and poor work conditions, supply of goods from 'poor' cheap labor countries, and environmental issues.
7.0 Recommendation Walmart has done a lot in the past in order to secure its position as a retail market leader. These include offering low prices, offering good customer service and constant innovation. However, lately the company has grappled with low customer traffic. Market saturation in the middle income market segment, poor international performance and bad public relations as a result of their employee practices.
The company should adopt the following strategies in order to ensure future growth; adopt penetrative strategies international markets introduce good product packages for products favored by affluent clients and improve health insurance plans within the company. These will go a long way in sustaining the company's positions as in Malaysia. 8.0 Conclusion
Malaysia has many sources of perishable goods that can be found in Sabah such as vegetables, fruits, fish, meat and chicken. Walmart may invest and will have more incentives to buy domestically and build productivity-enhancing infrastructure, this can change the scenario and boost the good demand product in the Agricultural sector. Retailing will generate the demand for processes food products and stimulate investment and technology transfer in the food processing industry.
This also can accelerate the economic growth where we need the private investment not only in financial sector but also in agricultural sector. So for my opinion opening Walmart in Malaysia especially in Sabah are the best decision because of Malaysia has the best know how to provide the right set products to the right set of customers and Malaysia customer are hungry for new ways of shopping. Walmart Company also has tremendous sourcing efficiencies which will bring economies of scale from day one which can contribute to investment in Malaysia economic.
Bibliography. The books, journals and websites listed below were used as a source of consultation in preparation of this case study: Principles Of Marketing, by Pearson Education Inc. Principles Of Marketing An Asian Perspective, by Pearson Education South Asia Pte Ltd. Wal-Mart Takes on the World, by Thau and Brabara The Wal-Mart You Don’t Know, by C. Fishman www.citeman.com www.scribd.com
Appendices Philip Kotler, Gary Armstrong; Principles Of Marketing; Eleventh Edition; Pearson Education, Inc; Upper Saddle River, New Jersey 07458;2006 Philip Kotler, Gary Armstrong, Swee Hoon Ang, Siew Meng Leong, Chin Tiong Tan, Oliver Yau Hon-Ming; Principles Of Marketing An Asian Perspective; First Edition; Pearson Education South Asia Pte Ltd; 23/25 First Lok Yang Road, Jurong Singapore 629733; 2011 Thau, Barbara. "Wal-Mart Takes on the World." HFN, September 3, 2001: 8. C. Fishman, “The Wal-Mart You Don’t Know,” Fast Company, December 19, 2007. http://www.citeman.com/8292-definition-of-a-retail-strategy-enables-areas-within-the-organizations.html#ixzz2DibxcP4l http://www.scribd.com/doc/21040477/Retail-Formats