Week 2-strategic plannning: Chapter 18-Sales promotion and personal selling

Walmart (strategy to beating competitors)

At some point Sam Walton made the decision to achieve higher sales volumes by keeping sales prices lower than his competitors by reducing his profit margin. By 1970, he had eleven Walton's stores Inspired by the successes of other discount department store chains, Walton opened the first store in his own discount chain in Rogers, Arkansas that year. Responsible for the purchase and maintenance of signage, Walton's assistant, Bob Bogle, came up with the name "Wal-Mart" for the new chain. By 1967, the company grew to 24 stores across the state of Arkansas, and had reached $12.6 million in sales, and by 1968, the company opened its first stores outside of Arkansas in Sikeston, Missouri and Claremore, Oklahoma.

Monday, November 1, 2010

Chapter 18-Sales promotion and personal selling

Wal-Mart is promising aggressive price discounts, which means pitiful profits for everybody else. For example, Wal-Mart will be selling a Hewlett-Packard Pavilion ze2308wm notebook computer for $398, an HP Photosmart E317 digital camera for $98.88; a Lexmark all-in-one printer, scanner and copier for $39.88; and a 12-cup coffeemaker, food chopper or 2 quart slow cooker for just $4.24.

The authors examine incumbent retailers’ reactions to a Wal-Mart entry and the impact of these

reactions on the retailers’ sales. They compile a unique dataset which represents a natural

experiment consisting of incumbent supermarket, drug, and mass stores in the vicinity of seven

Wal-Mart entries and control stores not exposed to the entries. The dataset includes weekly store

movement data for 46 product categories before and after each entry and allows them to measure

reactions and sales outcomes using a before-and-after-with-control-group analysis. They find

that, overall, incumbents suffer significant sales losses due to Wal-Mart entry, but there is

substantial variation across retail formats, stores, and categories both in incumbent reactions and

in their sales outcomes. Moreover, they find that a retailer’s sales outcomes are significantly

affected by its reactions, and the relationship between reactions and sales outcomes varies across

retail formats. These findings provide valuable insights on how retailers in different formats can

adjust their marketing mix to mitigate the impact of Wal-Mart entry.

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walmart

Over the last decade or so Wal-Mart has become involved in thousands of lawsuits for a variety of reasons. The majority of the suits are class action lawsuits in which employees are suing for unpaid wages. They have also run into many discrimination cases in which employees are suing for being profiled out of money or out of jobs. For instance, there were two separate cases, one in 2004 and one in 2005 in which African Americans were suing two different Wal-Marts for denying them jobs based on race. These became so popular that the reverend Jesse Jackson spoke during both of the proceedings. There are also many lawsuits in which women are suing Wal-Mart for discriminating against them. In one article written in 2004 USA today mentioned 32 different lawsuits that involved women suing Wal-Mart. All of this has not affected Wal-Mart financially however, according to Fortune 500, Wal-Mart still had $351 billion in revenue ($11 billion in profit) in 2007, a new high for the corporation.