INTERNATIONAL MARKETING

WALMART’S DOMESTIC AND GLOBAL MARKETING STRATEGY

FACULTY OF ECONOMIC AND BUSINESS

SATYA WACANA CHRISTIAN UNIVERSITY
2021
I. Background
Walmart is a big multinational retail corporation that operates a chain of
hypermarkets, discount department stores and grocery stores in America. At first the founder,
Sam Walton, bought a branch of Ben Franklin stores from the Butler Brothers to sell products
at low prices to get higher-volume sales at a lower profit margin. In 1962 he finally can build
his own store “Walton’s Five and Dime” (now Walmart) in Rogers, Arkansas. With his
business philosophy that was based on the simple idea of making the customer number one
believing that by serving the customer's needs first, his business would also serve its
associates, shareholders, communities, and other stakeholders, the store grew big and became
one of the largest grocers in the United States. This company makes 3 different types of
outlets: 1) Wal-Mart stores, which offer clothing, linens, small appliances, hardware, sporting
goods and similar items; 2) Sam's Clubs, which offer bulk items to customers who purchase
warehouse memberships, and 3) Supercenters, which combine the inventories of a discount
store with a full-line supermarket. After becoming the biggest in America, Sam Walton made
a decision to open stores in International markets such as Mexico, Canada, India, some
Europe and Asia countries with the same strategy that’s offering lower products that can
fulfill the company mission “helping people around the world save money and live better –
anytime and anywhere – in retail stores and through e-Commerce” and vision “to make every
day easier for busy families”.
II. Topic
In the marketing world, there are 4P (Product, Price, Place, and Promotion) or it is
referred as a marketing mix where it became a key factor in the marketing strategy. This
strategy can help companies to have specialized and efficient marketing. Let’s see Walmart's
strategies based on the 4P (Product, Price, Place, and Promotion) strategy.

1. Product
The first one is Product. Walmart’s primary product is its retail service, including
retail service fulfilled through e-commerce. The product is based on customer everyday needs
such as food, home & household, automotive, sporting goods, paint & hardware, stationary,
and health & beauty aids. The company also offers on-demand digital content streaming
services, as well as house brands or private-label brands, such as Great Value and Sam’s
Choice. They make Selling and promoting a product that people want is easier than trying to
introduce innovation in the market, that’s why Walmart brings what customers want to the
market, and this implementation is not only in the United States, but also all over the world.
In 2005, as said by Lee Scott, Walmart CEO, the company made a commitment on
implementing environmental measures to increase energy efficiency and announcing goals to
be supplied 100 percent by renewable energy, create zero waste and to sell products that
sustain people and the environment.

2. Price
The second one is Price. The main strategy that Walmart has is the EDLP strategy or
the EveryDay Low Price strategy, where they offer low prices to consumers throughout the
year instead of offering these low prices only on sales events. This strategy started when Sam
Walton first opened “Walton’s Five and Dime” store with a business model that was focused
on giving prices as low as possible. This strategy is the one that helped Walmart attract a
large number of customers and become a big and successful retailer in the world. But we
know that everything has advantages and disadvantages. The advantage of EDLP itself is that
it can reduce the demand fluctuation that occurs on sales promotion because the price
changes less frequently and leads to fewer incidents of overstocking/ understocking. Not only
that, it also can reduce the marketing costs such as advertising and labor costs, because the
store doesn't need to promote each sales item and advertise sale events and for labor they
don't need to change price tags each time there’s a promotion. The disadvantages of EDLP
for Walmart is that they will have a lesser profit margin. Even though their profit margin is
lesser than other competitors, Walmart can still have a profit through their high sales volume.
Despite the thin margin, Walmart is also required to control their costs. In order to control
their costs Walmart uses their bargaining power (influence) to press its suppliers to cut down
their costs, cutting down unwanted layers of operations and eliminating any wasteful
processes can helped Walmart bring operating expenses under control, also have a direct
sourcing instead of having a middleman also can help press their expenses.

3. Place
The third one is Place. A company needs to have a strategy in terms of a place that’s
strategic so the business can run well. Walmart has more than 10.600 stores which is spread
in the United states and across 27 countries. This company has 3 store segments, there are
Walmart U.S, Sam’s Club, and Walmart International. In the domestic store, Walmart U.S
places its store in or near an urban area and consumer population centers to maximize market
reach and the accessibility of the consumers. Based on research by Zook & Graham’s on
density patterns surrounding Walmart stores reveals that “60% of the entire U.S population
lives within 5 miles of a Walmart location and 96% are within 20 miles” and that there is an
inverse relationship between population density and the number of stores. Walmart also
placed the store close to each other and distribution centers are within 200-mile radius of
stores, allowing a low delivery cost and a high in-stock position for each store. Walmart’s
location strategy in its home market consists of optimally locating distribution centers, then
providing a number of retail stores dedicated to each distribution centers which provide an
efficient level of utilization.
Next, to enter the International market, Walmart needs to consider what country to
enter first. There are some considerations of each country. The European retail market is a
mature one and there are some competitors that have the same formats as Walmart
remembering that they (Walmart) are new comers, so it became less attractive to Walmart
implying that it will be dangerous and a new entrant would have to take market share away
from an existing player. The Asian market had a huge potential but had a geographical distant
issue and different cultures from the U.S that became an entry consideration. In the end,
Walmart's first entry is near America such Canada and the America Latin. For the
International mode of entry, Walmart used a joint venture and did acquisition to some
potential companies in the selected country. In 1991, The first Walmart International store
opened in Mexico through a joint venture with Grupo Cifra SA de CV, a leading Mexican
retailer. Walmart got a successful expansion because of the Walmart pricing strategy that
suited the aspirations of the local Mexican population, a large majority of whom were in
favor of low priced products. After their succession in Mexico, it then followed in Canada
where Walmart acquired Woolco, a poorly performing player that was available for purchase
at economical price, and because of this acquisition the company became a healthy
organization and Canada's highest volume discount retailer. It also followed in China where
Walmart did an acquisition of Trust-Mart’s network and became successful, and in the United
Kingdom where the company acquired ASDA stores. Walmart strategies have a similarity in
these countries. They can acquire or joint venture some of the strongest/ weak companies that
they see as profitable and can become a leading retailer in that country after their
intervention. The most important thing in this strategy is about understanding their cultures
and values. For example, China. As the Chinese like very fresh seafood, Walmart managers
strove for their food to be presented as “fresh” and “installed live fish tanks and cut the fish
right there as an extreme way to know the freshness exists and it has worked to achieve the
success of the company market abroad. But sadly, even though Walmart made an effort to
understand each target country's culture and value, it didn’t work on several countries like
Germany and South Korea. In Germany Walmart got cultural misunderstandings because of
the lack of cultural knowledge, for example like smiling when dealing with customers in
Germany is considered as flirting. Not only that, Walmart failed to understand the role of
labor unions in Germany where they’re connected to each other. While in South Korea
Walmart failed to understand the cultural shopping habits where Korean like high quality and
fresh foods that’s sold in the market and also the stores location which were too far from the
city centers.

4. Promotion
The last one is Promotion. Promotion is a type of marketing communication used to
inform target audiences about a certain product, service, brand, or issue. Promotions are
including personal selling, advertising, sales promotion, and public relation. Walmart uses
some strategy to promote their product and attract the consumers by using its unique slogan
that is related with low prices such as “everyday low prices” and “save money, live better”.
Walmart personal selling strategy happens in the store itself when the selling employee
persuades the customer to try the product or give information about the discount/ sales in the
store. On the advertising, Walmart uses media such as television, billboard, newspaper,
websites to spread the information. Next is sales promotion where it’s in the form of sales or
discounts that the store gives. And last one is public relations where usually the company
uses press releases to inform the customer and investors about the policy, programs or
strategies.
Walmart Effect
Walmart has been a successful company since they use the right strategy and can
commit to it. As a big retail company in the world, Walmart has its influence in some aspects,
and researchers called it the “Walmart Effect”. Basically Walmart Effect refers to the
economic impact felt by local businesses when a large company like Walmart (WMT) opens
a location in the area. It also can be the economic effects attributable to the Wal-Mart retail
chain, including local effect and broader effect. The Walmart effect can have positive and
negative impacts. The positive impact is that it can increase the welfare of the people,
because of the Walmart low cost products that can save the customers money. Also it can
increase the worker productivity. The negative side is that it can hurt the local business
around the store, because of the low prices strategy in Walmart products, the other small
businesses also need to cut the prices and lower the wages so they can still have customers
and get revenue. But actually the effects of Wal-Mart stores may depend on the type of area
in which they are located. In rural and less dense countries Walmart may have a larger impact
because there are fewer other large-scale competitors before they enter. Alternatively, in
these areas the stores may be more likely to create jobs.

Problems
A company may need to make a decision that’s related to their goals, but they can’t
avoid the risks that they will face because of their decision making process. Even Walmart
can have problems in some aspects as a result of their strategies and decision making process
to become a big retailer. Walmart has been fighting with employees, labor organizations, and
unions since the 1970s. Walmart employees complain of their inability to be hired full-time, a
lack of medical benefits, and inconsistent scheduling that makes their lives difficult. Most of
the $2.7 billion turnaround program was implemented, but employee hours have been cut,
resulting in lower net pay than before. As a result of the low price strategy, the main problem
that Walmart faces is to control the labor costs because labor costs are the biggest costs that
Walmart have and to remember that Walmart’s have more than 2.2 million associates. Also
many research says that Walmart is an anti-union or "pro-associate," arguing that its
employees do not need to pay third parties to discuss problems with management as the
company's open-door policy enables employees to lodge complaints and submit suggestions
all the way up the corporate ladder. Some of the stores have a policy that doesn't allow any
union, but most of Walmart's International associates are unionized but its level and forms
vary. Walmart’s also faced some issue including racial and gender discrimination that result
of being law-suited and hurt the company name. Walmart also face issues in the International
market, such as child labor in India and the culture adjustment and strategy that determine
their succession to expand their stores in abroad.

Nowadays Condition
As the world is changing and developing, the development of technologies follows.
It’s crucial that many companies compete to adapt and invent technologies that’s beneficial
and effective to help the customer comfortability and the company succession especially in
the pandemic situation. Walmart has used e-commerce in order to adapt with the era and to
compete with other companies such as Amazon. In this pandemic situation, many customers
don’t go out often because of the virus. Thanks to technology people now depend on it. As a
results, Walmart reported that same store sales were up 10% for the quarter due to increased
sales of food and other consumables, as well as health and wellness products. Their sales can
grow up to 74% because of the e-commerce sales that Walmart has and becoming the second
largest e-Commerce retailer in the United States. Their history of e-commerce itself is
because Walmart once had an acquisition with Jet.com and it gave a boost to their online
commerce. Investing in Jet, Walmart was able to rapidly learn and deploy “basket
economics”, an approach to e-Commerce that relies on packaging and delivering products to
customers in a localized, efficient and transparent way. So in this situation Walmart is
benefited because average people do online shopping and then do stock-piling. And also
thanks to its many stores and strategic places, customers can do in-store pickup services. In
other word to face the pandemic situation, Walmart uses the omni-channel commerce
strategy, where it is a multichannel approach to sales that focus on providing seamless
customer experience whether the client is shopping online from a mobile device, a laptop or
in a brick-and-mortar store.
III. Conclusion
From Walmart we can learn that to become a big company, it needs courage to make
a risky decision in order to fulfill the company goals. We need to look out at our surroundings
in order to find the problems that occur in society and give them the solutions that we can
make. Just like Sam Walton did when he used the low price strategy to meet his mission
about helping people save money. Also find the right marketing strategies to help the
company grow and successful in the market, such as the way Walmart location strategies
connected with their product and pricing strategy that makes them became an attractive store
in the market. And know the advantages and the disadvantages of each strategy, so company
can find a solution to cover the shortcomings. We also learn from Walmart that a company
needs to have research and knowledge about other countries' culture, what habits that they
have, what value that they hold on in the society, and the norms and regulations in that
specific country. This was to minimize failure in expanding globally, just like Walmart
International stores in Germany, South Korea and some of Asia countries because of the lack
of knowledge. A company needs to have critical mind and innovation in order to give pivots
when an urgent situation is occurred, just like Walmart e-commerce in this pandemic
situation that can give satisfaction to customers by giving them accessibility to shop online
and in-store pick-up service.
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