Wal-Mart: Getting Back to Growth Old Guard vs. Change Agent Conflict and the Impact on growth.(Instructor's Note)
Brotspies, Herbert, Sellani, Robert J., Journal of the International Academy for Case Studies
The primary subject of the case is the development of a marketing strategy for Wal-Mart to improve "same store" U.S. sales growth during 2006-07. Wal-Mart must identify new growth opportunities and develop strategies to attract those consumer groups to Wal-Mart. Complications arise when Wal-Mart goes outside the retail industry for its marketing talent, resulting in a clash of values. There are conflicting managerial views of strategy implementation. The proposed strategy of upgraded merchandise and value pricing is resisted by the "old guard" strategy of selling large quantities of average merchandise at low everyday pricing. In addition, continual negative press presents additional marketing challenges to overcome.
The case has a difficulty level of undergraduate seniors in marketing strategy, retailing, market research, and master's level course in managerial marketing or business strategy. The case is designed to be taught in one class and can be taught in one of two ways. Students can be divided into teams of four students to prepare a case analysis defining the problem, developing alternative solutions, and providing a recommended solution and course of action. A second method is to use the end questions as a springboard for the case class discussion. For either alternative, the case can be taught in one and a half hours. Student preparation time should be expected to be eight hours in total for the group, about two hours per student. On an individual basis, a student should be able to read the case and complete the case questions in three hours.
Wal-Mart has been successful in opening retail discount mass merchandising stores across the United States, mainly in smaller, rural cities, where limited competition exists from small mom and pop retailers. As part of growth plans, Wal-Mart began opening stores in larger, suburban and urban areas and now faced competition from Target and other specialty retailers. Soon, same stores sales growth slowed and growth from new stores was limited by many communities objecting to Wal-Mart locating stores in their town.
Management was concerned whether the low price strategy could sustain growth. Several managers were hired to craft a new strategy moving away from price into more stylish fashion and "value propositions." The fashion initiative failed and management brought in outside marketing people to select a new advertising agency to attract upper income shoppers to Wal-Mart, a difficult strategy given the current Wal-Mart customer was lower income. Conflicts soon arose within Wal-Mart on strategy changes with merchandising and marketing departments having different views on products and pricing. Complicating the problem was the fact new marketing people were culturally different than the old time Wal-Mart staff. Wal-Mart's negative imagine in the community presented additional marketing challenges. After conducting market research on current and potential customers, management faced product, pricing, and customer target decisions in a new competitive environment.
This case was prepared solely to provide material for class discussion. The authors did not intend to illustrate either effective or ineffective handling of a managerial situation.
The objectives of this case include:
* To have students understand the capabilities and strategies leading to a firms' success can be vulnerable to a changing competition and business environment.
* To have students learn that a firms' marketing strategy of expanding beyond its core customer base to a different or additional customer base is challenging and can conflict with existing customers.
* To have students appreciate that company culture and organizational structure can enhance marketing plans and strategies or possibly stand in the way of accomplishing change. …