Simple marketing hits the mark - Wal-Mart

Discount Store News, Oct, 1999

When it comes to marketing strategies, Wal-Mart sticks to its knitting. From the start, Wal-Mart's advertising focus was all about Every Day Low Pricing, and it remains true today. "What we were obsessed with was keeping our prices below everybody else's," said Sam Walton in "Made in America." "Our dedication to that idea was total."

On this, the retailer has never wavered: Offer customers the products they want at the lowest possible prices. While many of the methods Wal-Mart uses to achieve this goal have become more sophisticated, its advertising strategy remains very much the same. And like most other aspects of Wal-Mart's operations, it continues to be influenced by Walton himself.

"Sam really respected our customers," said Paul Higham, senior vp of marketing. "Everything he did provided us a great example of customer respect and service. Today we make every effort to have our advertising continue to reflect Sam's message of inclusion and respect.

"Our advertising simply reflects what happens in our stores," he said. "Truth is, our culture of trying to take care of our customers and one another powerfully influences the outcome of our ads."

The thrust of Wal-Mart's TV commercials has been consistent over the years. The ads project homey images and use real associates and customers (not actors) to relate all the reasons why it's nice to shop at Wal-Mart. The 10-year-old tactic has duel benefits.

"We continue to get an incredible number of favorable comments from our customers," said Higham.

The marketing department also gets calls and letters from associates wanting to be in the ads. The signature smiley face is practically a punctuation mark in Wal-Mart's low-price, down-home message.

The company did depart slightly from its standard TV ads in summer 1999 when it launched two spots targeting the youth market for Back to School. In one ad designed to point up the improved fashionability in the apparel department, college-age girls talked about what fun it is to shop at Wal-Mart for clothes.

Going after the youth market is not Wal-Mart's mainstay and is plainly a bid to attract the next generation of shoppers. But even in these more contemporary spots, the value equation is clearly present.

By unwaveringly maintaining its EDLP policy throughout its history, the retailer imparts a consistent message to consumers-- "low prices save you money."

It also saves Wal-Mart money. By sticking with a direct mail monthly circular, shunning high profile sales and running minimal TV spots that feature real people rather than models and celebrities, Wal-Mart maintains the lowest ad costs in the business.

Of all the mass discount chains, Wal-Mart spends the least on advertising, less even than many much smaller specialty retail chains. In the fiscal year ended Jan. 31, 1999, the company incurred just $405 million in advertising costs on sales of $137.6 billion. That's a mere one third of one percent--well below the industry average of approximately 2% of sales.

Its circular not only costs less to produce than other retailers' Sunday supplements, but paired with Wal-Mart's sophisticated data-mining capabilities it allows for highly targeted and more effective direct marketing.

The beauty of Wal-Mart's marketing program is it's simplicity. Wal-Mart has engendered a trust with customers that they will always find that low price, and chances are good that a product will always be in stock. The consumer understands this and responds. Advertising may not rank high in terms of dollars spent, but in its most basic form, it has proven to be priceless.