Wal-Mart's Mid Life Crisis: Restoring Public Perception

After decades of successfully maintaining a golden reputation as a “good corporate citizen,” Wal-Mart’s image began to take a turn for the worse. From sexual discrimination accusations to the hiring of illegal immigrants, Wal-Mart faces a plethora of accusations that have tarnished their public image. Attacks from local communities opposing Wal-Mart’s expansion plan and disputes over wages and benefits have added to their bad publicity and further changed the way that we think about this retail giant. Wal-Mart grew to such success by offering a wide diversity of products at low prices that the average person can afford. For consumers on a tight budget, it is a store that offers most everything that one could need at prices smaller retailers cannot compete with. For years, budget conscious consumers have enjoyed the benefits of this affordable one-stop shop, but now the implications of what it takes to maintain such a competitive advantage have come to light and Wal-Mart faces some very difficult decisions to restore consumer confidence in their brand.



Wal-Mart’s competitive advantage of offering extremely low prices has been the key to their success, but now many of the issues that they face threaten their ability to offer such low prices. Eliana Dockterman explains that Wal-Mart is the country’s largest private employer, and “has been the target of labor protests and congressional criticism in the past for its low wages."  Research at the University of California showed that Wal-Mart employees in California are forced to rely on public assistance programs which end up costing the U.S. taxpayers $86 million per year. Finding a solution to this issue is not as clear as it might seem. Offering more generous wages and benefits packages would certainly satisfy employees that struggle to get by financially, but it would also increase the company’s overhead expenses requiring product price increases to sustain profits. Since Mal-Mart targets low-income families, price increases effect demand which decreases revenue, more of which would be needed to be profitable with the new higher overhead. To appease critics, Wal-Mart would need to reconsider their entire corporate strategy and risk losing valuable market-share in their moment of vulnerability.

Changing consumer attitudes have affected the way that many companies conduct business today. Wal-Mart’s mid-life crisis is reflective of these changing attitudes as consumers are becoming more socially and environmentally conscious, expecting companies to adopt a sense of social responsibility. A recent global survey shows that “76% of executives believe that corporate social responsibility contributes positively to long-term shareholder value, and 55% of executives agree that sustainability helps their company build a strong reputation."  Perhaps many of Wal-Mart’s current problems could have been avoided with more proactive marketing measures that adapted to these social trends as they developed rather than moving forward as usual and responding to problems as they arose. Continuing to market based on the competitive advantage that brought success without continuously consulting the market will only work for so long, as consumers are constantly changing.

Moving forward, it is vital that Wal-Mart develops a comprehensive plan and adopts a holistic marketing approach with a “broad, integrated perspective."  This complex approach would encompass various marketing activities to include internal marketing, integrated marketing, performance marketing, and relationship marketing. Vital to the success of any marketing plan includes good internal marketing to hire, train, and motivate “able employees who want to serve customers well."  For Wal-Mart, this plan must also address satisfying compensation and benefits demands to ensure that employees represent the brand appropriately. This could be achieved by offering more generous wages that the company can afford without losing profitability and establishing an in-house wellness facility to mitigate employee healthcare expenses. Wal-Mart should also emphasize customer satisfaction and encourage employee support of charitable organizations to create an internal awareness of the company’s mission to adopt a socially responsible reputation.

Relationship marketing would focus on restoring the company’s brand image through building solid relationships with people and organizations that influence the success of the company. This would be achieved by reaching out to key constituents, admitting past mistakes, and displaying a genuine concern to address the needs of those affected. Wal-Mart marketers should segment these key constituents into separate groups in order to send relevant messages and offers that address the needs of each group or individual. Broad messages displayed on television advertisements and billboards should incorporate a message of corporate social responsibility alongside the companies low price competitive advantage in order to maintain current market-share while positioning new company values into the brand perception. Mal-Mart is currently featuring an ad campaign to show “The Real Mal-Mart” to customers by demonstrating how Wal-Mart helps customers save more money, how it provides opportunities for employees, and how it keeps prices low by creating efficiencies. These ads end with a tag-line, “That’s the real Wal-Mart,” aiming to undermine negative claims against the brand as being a false representation of what the company is all about.

Integrated marketing is the process of creating, communicating, and delivering value through each individual marketing activity having all other activities in mind. Wal-Mart should ensure that all marketing activities are integrated and communications deliver a consistent message so that each contact reinforces and improves the effectiveness of all others. The results of marketing efforts should be anticipated and closely monitored for improvement through performance marketing. This means examining not only financial performance but also “market share, customer loss rate, customer satisfaction, product quality,” as well as the “legal, ethical, social, and environmental effects of marketing activities."  This would mean reaching out to collect both quantitative and qualitative data through surveys, questionnaires, social media and discussion forums, offering physical and digital feedback mechanisms, focus groups, etc. Wal-Mart and all of its constituents should perceive the company as being a customer-oriented organization with customer interest at the heart of its decisions and operations.

For decades, Wal-Mart has been perceived as a company that delivers high customer value by offering a wide range of products at extremely competitive prices. The company went stagnant as its reputation has been damaged by several claims regarding the social impact of its practices and the ethical implications of its operations. To recover its brand image, Wal-Mart must empower the customer by listening closely to their concerns and needs while making adjustments as necessary through a holistic marketing approach. The company must focus on each segmented group of constituents to address the needs of each in order to build loyal, long-lasting relationships. Interacting with the customer is vital to understanding market needs and maintaining a competitive advantage in a dynamic marketplace that is constantly changing. Wal-Mart should strive to position itself as a socially responsible company that cares about its customers and employees, as well as its greater social impact as a multinational corporation that directly and indirectly affects the lives of millions of people all around the world.

References

Kotler, P., & Keller, K. L. (2012). Marketing Management (14 ed.). Upper Saddle River, NJ: Pearson, Education Inc.

Maich, S. (2004). Wal-Mart's Mid-Life Crisis. Maclean's, 117(34), 45.

Zwiebach, E. (2013). Ad Campaign Seeks to Boost Wal-Mart's Image. SN: Supermarket News, 61(24), 30.

Dockterman, E. (2013). Walmart and Protestors Clash Over Wages. Time.Com, 1.

Torelli, C. J., Monga, A., & Kaikati, A. M. (2012). Doing Poorly by Doing Good: Corporate Social Responsibility and Brand Concepts. Journal Of Consumer Research, 38(5), 948- 963. doi:10.1086/660851