IIBMS EMBA CASE STUDY SOLUTIONS – What is Wal-Mart doing with its latest campaign? What are the difficulties involved in such an effort


What is Wal-Mart doing with its latest campaign? What are the difficulties involved in such an effort

What is Wal-Mart doing with its latest campaign? What are the difficulties involved in such an effort

Advertising Management

 

Attempt Only 4 Case Study

Case I- The Day That Wal-Mart Dropped the Smiley Face

Retail giant wal-mart annually spends close to a half billion dollars on advertising, so the company’s decision in the first month of 2005 to run full-page ads in more than 100 newspapers was not really surprising. What was surprising was the copy in those ads, which said nothing about low-priced toasters or new music CDs. Instead, the ads featured a photo of workers in their blue Wal-Mart smocks and a letter from Wal-Mart CEO Lee Scott. Scott’s letter was blunt and to the point: “When special interest groups and critics spread misinformation about Wal-Mart, the public deserves to hear the truth. Everyone is entitled to their own opinions about our company, but they are not entitled to make up their facts.”

Not the sort of message many would expect from a company whose television ads often feature a yellow “smiley-face” flying around a Wal-Mart store lowering prices. But it is a clear sign that Wal-Mart believes it can no longer afford to ignore several societal trends that threaten the company’s success and profitability.

Wal-Mart is the largest and most successful retailer in the world. It employs more people than any other private company in the United States (almost 1.2 million) and has world-wide sales of over a quarter trillion dollars, more than four times that of its nearest competitor. The foundation of this impressive record is the company’s ability to keep it promise of customer-friendly service and low prices.

But with success comes attention and not all of it good. Several lawsuits claim Wal-Mart shorts overtime pay and one lawsuit claimed female employees face discrimination in pay and promotions. Wal-Mart’s expansion plans have also run into trouble, as some cities and states, citing concerns ranging from low wages, inadequate benefits, environmental damage, and harm to local economies, have passed laws to make it difficult or impossible for Wal-Mart to build its giant superstores.

In response to past criticisms of its diversity policies, Wal-Mart created company-wide postings of promotional opportunities, created a new position for a director of diversity, and slashed the bonuses of managers who fail to achieve diversity hiring targets. Scott himself stands to lose $600,000 from his annual bonus if Wal-Mart does not meet diversity goals. Recent years have also seen the CEO spend more time meeting with investors, community groups and the media.

But in recent years Wal-Mart has begun to use advertising as a way of addressing criticisms that the company is not a good employer. At first, much of this advertising was “soft-sell” emphasizing happy Wal-Mart employees. The new campaign is clearly more direct: The copy seeks to address misperceptions about employee wages and benefits, noting that full-time company employees are paid an average of $ 9.68 – substantially higher than what is required by federal law (%5.15). The copy also notes that a majority of Wal-Mart employees said benefits were important to them when they chose to take a job at the retailer. Complementing the ads is a PR campaign in select cities using employees and press conferences. In Tampa, Florida, for example, employee Michael Martin told reporters, “I’m making more after working four years at Wal-Mart than I did after nine years at Winn-Dixie.” Martin, a department manager, noted, “I left Winn-Dixie because I couldn’t get a promotion. Here I got one after six months.”

Why is the company using a new approach? “For too long, others have had free rein to say things about our company that just are not true,” said lee Scott, president and chief executive office. “ Our associates [Wal-Mart speak for employees] are tired of it and we’ve decided to draw our own line in the sand.” It is too soon to know if the campaign will succeed, although some are already skeptical. According to retail marketing consultant Jordan Zimmerman, aggressive mage campaigns like Wal-Mart’s are rare and costly.

And ads that directly address the company’s critics will not likely replace the company’s regular advertising (including the smiley face), which is not scheduled to change any time soon. But the new ads do constitute a small change in the nature of the dialogue Wal-Mart has with consumers and society. Only tie will tell if they help Wal-Mart to stay on top.

           

Questions:

  1. What is Wal-Mart doing with its latest campaign? What are the difficulties involved in such an effort?

  2. A recent Advertising Age article noted that Wal-mart customers are less likely to read newspapers and more likely to watch television than the population as a whole. Why, then did Wal-mart choose newspapers for its new campaign?

  3. Analyze this Wal-Mart campaign and explain its purpose referring to the discussion in this chapter of the roles and functions of advertising. What is its primary purpose? Do you think it will be effective at accomplishing that purpose?

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