Expansion of Walmart Globally
The global environment must be analyzed before a company pursues expansion into new geographic markets. Through global market segmentation, a company can identify and group customers or countries according to common needs and wants (Keegan & Green, 2017). Asia represents a hot market for value-retailers, especially for Walmart. Walmart has been expanding their business in other countries in Asia, but has yet to establish a store in Pakistan. By placing a Walmart store in Pakistan, marketers should take into consideration the trade barriers, proximity, currency and culture. The regulations and costs of doing business are very different from country to country. \"What has proven to work well is when these retailers go in and are respectful of the local culture, the local customs and the local style of retail,\" notes Strasser (Mattson-Teig, 2012). In addition, forecasting from existing retailers in Pakistan would be able to assist marketers in determining what would be successful or detrimental before setting up a Walmart in Pakistan.
Utilizing the Walmart STP strategy
Walmart\'s strategy has been to acquire local companies, improve operations, and use their lower cost of capital to expand more aggressively in these foreign markets (Mattson-Teig, 2012). Walmart heavily uses the Segmentation, Targeting and Positioning, or the STP strategy when deciding to market their store in a new area.
The types of segmentations that Walmart uses are demographic, geographic, behavioristic, and psychographic.
Walmart [uses] its wealth of sales and inventory data to segment based on demographics, allowing it to market to specific age, ethnicity and income brackets (Brian, 2006).
• Age: Individuals of all age ranks
• Gender: Both males and females
• Marital status: Single individuals, but typically families -- young families with small children and families in the middle class
• Income: Walmart reaches out to the lower, middle class and the poor in the society who strive to meet their daily needs
After determining the demographic segment, figuring out where to place a Walmart store is crucial for expanding their business. In recent years, a growing, rapid urbanization has led to the increase of growth of retailing in Pakistan. Improvement in per capita income of local consumers also played a vital role in generating volume sales of store-based and non-store retailers (Euromonitor International, 2016). Establishing a Walmart store in major cities, including Karachi, Lahore, Islamabad and Faisalabad would bring in local customers and would also increase the number of sales. Walmart also uses geographical segmentation that involves grouping customers based on their physical location. For example, Wal-Mart does not stock snow shovels in [tropical] cities because there is hardly snowfall in that side of the country (Capon, Noel, & James, 2011). Utilizing this method will reduce the markdowns on unsold inventory.
Many families that shop in supermarkets are usually in the low- to middle- class ranks, making them cost conscious when it comes to purchasing products. While convenience is often the deciding factor for purchasing products and services, many consumers are increasingly becoming brand-conscious and altering their shopping habits (Euromonitor International, 2014). Because of their tight budgets, families will most likely purchase products at time of need or when a particular product is on sale for that day. Supermarkets started to be known as places for family trips. It was observed that all family members of a household preferred to visit the retail format to shop for groceries once a month (Euromonitor Internnational, 2016).
Walmart's motto, according to their website, “Save money, live better” is to build a connection with their customers by claiming that after purchasing products at their store, they will save a lot of money with a peace of mind that they are not breaking the bank. Walmart continues to retain their customers and bring them back to their store because of their consistently low prices. The products they sell at the store are same brand names that other companies and other stores sell, but for a cheaper price. This is a huge advantage for Walmart.
The target market are inquiring Pakistani families who are willing to try something new and have the experience of one-stop shopping with wide selection that are not available in many other stores. Customers in Pakistan would buy Walmart products because it is cheaper than other stores and thus, affordable among the lifestyles of Pakistanis. In addition to the low prices offered at Walmart, another benefit of their products is the varied selection. Walmart has almost all kinds of items that people need both in their everyday life and special occasions: from kitchen supplies to car items, from bathroom stuff to sport equipment, from organic flowers to garden seeds (Aubekerova, 2007).
Walmart uses mono-segment type of positioning and accordingly, Walmart marketing management appeals to single customer segment who place greater value on the price attribute of products compared to other attributes (Dudovskiy, 2016).
Positioning In Advertisements:
Advertisements are usually the first places businesses position themselves. They are displayed in a variety of ways everywhere. Overall, Walmart is a family-friendly supermarket, so being able to target their ads would not be very difficult. Displaying toiletry and household supply advertisements can be one way to attract customers. Another way could be exhibiting groceries being sold in an air-conditioned store. Most of Pakistan's grocery markets are outdoors and can be spoiled quickly.
Positioning In Sales Location:
Pakistanis know that Walmart is a money-saving retailer but in order to catch their attention and shop at the store, advertisements must be properly placed in areas where it can grab people's attentions. Pakistanis heavily use public modes of transportation on a daily basis to commute; therefore, putting Walmart ads on trains, busses, and taxis is an efficient tool. Another form of advertisement placement is on billboards or on buildings. Using huge banners could capture the attention of anyone who passes by it and can bring in more customers to the store.
Positioning Through Price:
As previously mentioned, Walmart sells their products cheaper than their competitors. Using the Price-Value Matrix chart below, Walmart would be categorized in the Low price, High quality section. They are known for selling big brand name products and for a considerably low price.
Walmart strives to attract new customers on a daily basis by using various types of advertising mediums. One highly effective tool of advertising is by using word of mouth. This is especially a great tool whenever a store opens in a new area. In this case, a new Walmart store in Pakistan will entice locals to check out the store and tell others about their experience.
In this digital age, technology is increasing rapidly. People around the globe are using the Internet daily, whether through their smartphones or on their computers. Advertisements on the Internet can be bothersome but have actually been proven to be successful. Walmart has an app where existing customers can shop and make purchases. By having the sales flyers in the app, customers can check out the deals while waiting for a friend instead of playing mobile games (Page, 2016).
Recently, Walmart has launched its first-ever Asian American advertising campaign. The innovative television ads feature first-hand testimonials of Asian American families who have made Wal-Mart their retailer of choice (PR Newswire, 2005). In addition to the television ads, the campaign is also spoken entirely in their own native languages. Walmart recognizes its importance of reaching out to their Asian American consumers from all ethnic backgrounds.
Direct marketing message
Walmart, like other retailers, use a lot of direct marketing to improve the customer's experience, profitability, and overall performance. By figuring out a way to target Walmart shoppers, marketers have found that the old-fashioned direct-mail coupons is a highly effective tool. Each month, Valpak mails its familiar blue envelopes stuffed with coupons to 45 million unique households in 115 different Nielsen Designated Market Areas (Retailing Today, 2009). About 10,000 houses will receive a different kind of Valpak envelope that includes a combination of coupons based on the demographics, traffic patterns and postal carrier routes. According to Retailing Today (2009), since nearly half of all coupons distributed are redeemed at Walmart stores, direct-mail couponing has emerged as a viable alternative for companies with distribution at Walmart who may lack the brand equity to be eligible for participation in the resources to employ other in-store tactics. Unfortunately, Valpak only delivers these coupons to the United States; however, Valpak can increase their business by going international. If Valpak delivered to homes in Pakistan, this would greatly help Pakistanis take advantage of huge savings due to their tight budget.
Another direct marketing tool that Walmart uses is the online survey on the receipt. By finding out the customer's shopping experience, customers are encouraged to go online to the website listed on the receipt and enter in a code, also listed on the receipt, and answer questions. At the end of the survey, Walmart rewards the customers by entering them into a drawing to win a prize. [Walmart] uses queries to pull the information that they were looking for in certain instances and use the data displayed in the queries to make improvements in marketing (Pompe, 2014). This is an incentive for anyone from United States to Pakistan. People love winning prizes and this would be a good direct marketing tool in Pakistan.
A new and innovative method that Walmart has recently implemented is the “Savings Catcher” app for the smartphone. After a customer has finished his shopping, he can use the app and scan his receipt to compare Walmart prices to another store's prices. This is a great idea for Pakistanis to utilize because they can compare the prices they spent on to the prices of smaller shops around the area.
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