WalMart

1
Wal-Mart

• Global Marketing Research

2
Presentation Outline

• Company History
• Industry Overview
• Market Overview
• Cultural overview

• Article summary
• Marketing challenges
• Marketing solutions
• Recommendations

3
Company History

• May 9, 1950 Opened Waltons 510
• 1962 Walton opened his first discount store in
  Rogers, Arkansas
• 1978 branched out into pharmacy, auto service,
  and jewelry
• 1991 entered the international market in Mexico
  City
• Between 1995-1997 Wal-Mart had stores in all 50
  states, Mexico, Canada, Argentina, Japan, Puerto
  Rico, United Kingdom, Brazil, China, and Germany
• On July 26, 2006 Wal-Mart announced its complete
  pull-out of the German market

4
Industry Overview

• Includes about 5000 stores with combined annual
  revenues of 130 billion
• Highly concentrated with the top 8 companies
  holding 100 of sales
• Population growth and consumer spending drive
  sales
• Major products apparel (20 of sales), personal
  care products (15), electronics and groceries
  (7 each) and toys (6)
• Large volume purchases allow companies to buy
  most merchandise directly from manufacturers and
  enjoy volume discounts

5
Market Overview

• Population 82, 000, 000
• Population growth rate 0.044
• Government Federal Republic
• GDP (purchasing power parity) 2.807 trillion
• GDP (official exchange) 3.3 trillion
• Labor force 43.54 million people
• Agriculture 2.8
• Industry 33.4
• Service 63.8
• Household income/consumption lowest 10 3.2
• highest 10
  22.1

6
Cultural Overview

• Social market economy
• Dress conservatively
• Strongly individualistic
• Punctuality is very important
• Large drinkers, but public drunkenness is not
  accepted
• The eldest are most important
• Need a lot of personal space

7
Article Summary

• Wal-Mart entered Germany in 1997 and withdrew in
  2006
• Assumed German customers wanted the same services
  and products as Americans
• In other foreign markets, Wal-Mart was successful
  because they learned from mistakes in Germany
• Some German locations didnt match Wal-Marts
  corporate image

8
Marketing Challenges and Solutions

• German male customers consider smiling employees
  flirtatious
• Wal-Mart stopped requiring sales clerks to smile.
• Wal-Mart used an ethno-centric approach
• In future endeavors, Wal-Mart adapted to the
  market
• Germans are not interested in relocating for a
  job
• Wal-mart had to find headquarters in Germany near
  their local executives
• In the U.S., Wal-Mart has a clean-cut image.
• They had to scout locations in Germany that were
  large, in good areas, and not near sex shops
• German companies work hand-in-hand with unions
• Wal-Mart was unwilling to deal with unions
  because they thought unions were communist
• Germans dont shop in one-stop super centers
• Wal-Mart couldnt adapt to this challenge and
  withdrew its German operations

9
Recommendations

• Wal-Mart needs to develop a polycentric operating
  plan that adapts to each location
• Investing in more research before entering a
  market
• Follow their own example in Brazil and Mexico,
  where they acquired local chains and left behind
  the Wal-Mart name

10
Questions?

• Could Wal-Mart have done anything differently?
• What research methods should Wal-Mart have
  implemented?
• Would you have decided to withdraw from Germany?