Wal-Mart’s Positioning Problem
Wal-Mart is an incredibly strong brand. It has very high awareness and an exceptionally clear positioning: Wal-Mart stands for low prices. The company is relentlessly focused on reducing costs and giving consumers the lowest prices.
But Wal-Mart has a very big problem; many people no longer think Wal-Mart has the lowest prices. The Wall Street Journal is reporting today that recent studies indicate most consumers in the United States think other stores are cheaper. A Morgan Stanley study, for example, revealed that 60% of Wal-Mart shoppers don’t think Wal-Mart has the best prices.
This is a huge problem for the Wal-Mart brand.
People don’t shop at Wal-Mart for the exceptional service or for the marvelous shopping experience. Indeed, going to Wal-Mart can be rather painful. People go to Wal-Mart because it is cheap.
But if people start to think other stores have lower prices, then Wal-Mart’s entire value proposition erodes. Dealing with weak service is fine when the prices can’t be beat. It is much less acceptable when you are paying a premium.
The biggest problem is that this is a perception issue. People have trouble keeping track of exact prices, so perceptions are important. If people think a price is low, then it is appealing regardless of the actual price. If people think they could get a lower price somewhere else, then they will likely go somewhere else, regardless of whether the prices actually are lower.
So Wal-Mart won’t be able to fix this issue by just ensuring that prices are low, or even by advertising that prices are low.
Wal-Mart has a major problem indeed.
…As far as returns to Wal Mart ,They only allow 3 I believe in a years time without a receipt! …So if your like me, and lose receipts, well you may be s.o.l.! Another way I learned to save money is coupons! Iv never saved the crazy amounts the women on the EXTREME COUP. SHOWS… do, but iv said $50 to $60 dollars at a time. WELL…I endured one harassing trip to a local Wal Mart that left me never wanting to go back! (take to long to explain the whole story!) It was an embarrassing scene caused by several employees and a manager! Had the whole front of the store staring and trying to figure out what I had done…WHICH WAS NOTHING, EXCEPT TRY AND SAVE MONEY! My coupons did all match, but it was like they had a problem with me saving money…like a had stole something! They said if I didnt like it, I could call corp., Too Bad! I did, but it didnt do shit! They gave me the run a round about who did what, who’s to blame, and one manager even wanted to blame me!…but also stated that “…WELL, IN THE END YOU SAVED MONEY DIDNT YOU? SOMETIMES THESE THINGS HAPPEN…BLAH!, BLAH!, BLAH! I called him an ass, and hung up. WAL MART ADVERTISING CRAP ABOUT WANTING TO SAVE YOU MONEY…SHOULD REALLY BE, “WANTING TO TAKE YOUR MONEY…”
Alfonso,
The TSG is a joke to many who have actually tried to return products with which they were not satisfied. There several exceptions to the “guarantee”. Even if your item qualifies for return, depending on the day, the customer service rep and any other context, you may find yourself out of luck.
Sounds great on paper, but without consistency in execution/enforcement it’s not a value proposition I’d bank on.
Hi Tim, Great blog, I had no idea it was yours. you gave me lessons in an executive program at Kellogg.
I think Wal-Mart has other values as important as low prices, such as its Total Satisfaction Guarantee. “If you do not like the product, simply return and no questions about.”
It is a very important value of the brand.
regards
This reminds me of an interview we ran with Stanford neuroscientist Baba Shiv. He argued that there was a problem when brands tried to compete on price at all, as it put consumers into a rational rather than emotional mindset when interacting with their products, ultimately leading to less loyalty and greater switching behaviours.
So yes, looks like Wal-Mart does have a problem 🙂