Walmart vs. Target
WALMART AND TARGET: A COMMUNICATION COMPARISON Prepared for Professor Devon Bazata Business and Professional Writing Prepared by Kathryn Haines Fall 1, 2012 WALMART AND TARGET: A COMMUNICATION COMPARISON INTRODUCTION Many discount retailers have come and gone over the years, but Wal-Mart and more recently Target, have employed business models that continually deliver profits, even in the struggling economy of the United states in recent years.
Wal-Mart and Target both have expanded rapidly since their inception and while Wal-Mart has become an international retailer with stores in fifteen countries and all over the United States while Target has stayed closer to home with stores in Canada and the United Sates. Both retail giants provide well designed stores, online shopping, bargain pricing, large selection and for the most part, good customer service. Target seems to excel in the customer service area though while Wal-Mart is just adequate.
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Wal-Mart stores are warehouse design and bargain shoppers appreciate that they can buy tires and groceries at the same time while Target stores are more of a department store design and shoppers enjoy bargains but the trendy products provide for a different type of shopper. The product mix for these retail superstars is similar but their customer base is very different which allows both companies to succeed. There are many similarities but the differences are what makes these companies great.
The fact that both companies are successful even when the economy is down shows their dedication to to providing the products that their individual customers want and need and their ability to adapt to be more competitive with each other. Wal-Mart and Target’s success can directly be attributed to their marketing and the communication styles they employ. Although both Wal-Mart and Target’s advertising, merchandising and communication styles are different, the desired result is the same just with a a significantly different customer base.
Wal-Mart targets the bargain shopper that has less money to spend while Target aims to appeal to the customer that is more slightly more affluent. Their target customers can be seen in pricing and product quality of similar products offered. Wal-Mart offers the lower price but also lesser quality items while Target’s prices may be slightly higher their merchandise quality is significantly higher. The difference in each stores customer base is what allows both companies to succeed in the same BIG BOX retail market. HISTORY Wal-Mart Wal-Mart Stores, Inc. with headquarters located in in Bentonville, Arkansas, was founded in 1962 by Sam Walton, with the opening of the first Wal-Mart discount store in Rogers, Arkansas. The company was incorporated as Wal-Mart Stores, Inc. , in 1969 and became publically traded in 1972. Even though it is publicly traded; the Walton family still is the largest shareholder and still retains control. Wal-Mart’s 8,500 stores in 15 countries provide sales and service to customers over 200 million times each and every week. Wal-Mart is considered the world’s largest public corporation and with 2010 sales which topped $405 billion, I can see why.
Wal-Mart employs more than 2 million employees worldwide making them the largest private employer. As a leader in business, Wal-Mart has consistently ranked first among retailers in Fortune Magazine’s Most Admired Companies and other business categories. Consumers typically accept Wal-Mart as a great place to shop because of roll back prices shown by a yellow smiley face but Wal-Mart also has a positive impact on the economy because consumers dollars stretch further and the many job opportunities offered to all, including people with disabilities and the elderly. Target
Target Corporation, with headquarters located in Minneapolis, Minnesota, was founded in 1902 and was originally named Dayton Dry Goods Company. The first Target store was opened in 1962 and through growth and expansion became the largest division of the Dayton Hudson Corporation. Because of the success of Target stores, the company was renamed Target Corporation in August 2000. Target Corporation has three main divisions: Target Stores, Mervyn’s, and Marshall Field’s. Target Stores, the second largest discount retailer, offers products geared to attract a more affluent discount shopper.
The Target customer is much younger than other discount BIG BOX stores with an average age of just 40, mostly female, have children and are college graduates. The distinction in customer base is important due to the emphasis on quality at lower prices. Target separates itself from its competitors by offering more up-to-date and stylish products, better quality, while still keeping prices lower. The attractiveness of the store presentations and the employee attentiveness also gives Target an edge against other BIG BOX discount retailers. Target’s sales revenues have consistently grown since 2008, in spite of economical challenges.
Ending sales for 2011 topped $69 million, a $2 million increase over the previous year. Sales increases show that their marketing, advertising and communication styles are working to bring in new customers and to retain the customers they have. Summary Wal-Mart and Target are both discount BIG BOX retailers which have made the most of their strengths and have drawn upon the differences in their customer bases, product mix and business strategy. Even though both retailers provide similar products, Wal-Mart’s lower price with less quality contrasts with Target’s better quality at a lower price.
Wal-Mart focuses on price while Target’s focus is quality which explains their differing customer base. Each retailer has found their own niche in the same market and has taken advantage of marketing, advertising and communication styles which fit that niche. WAL-MART vs. TARGET: Communication Styles Becoming leading BIG BOX discount retailers did not happen by accident. Each company has taken advantage of marketing and advertising to build communication styles which work for customers and employees alike. Through the use of websites, they have tried to broaden their reach to customers.
Although their advertising, press releases and community outreach may be different, both companies try to reach as many people as possible and portray themselves as the best company to buy from and work for. Websites Wal-Mart is a leader in the discount retail industry but that success does not necessarily translate to online supremacy. Wal-Mart began its venture into online sales twenty-one years ago but still struggles. The website is attractive and fairly easy to navigate but searching is difficult because the parameters are too broad.
Online pricing can be different than in store also and according to Joann Martinez, an employee of five years, that can cause customer service issues. According to comScore Media Metrix analysts; Walmart. com is distinctly back of the pack in terms of total online sales, ranking only 170th most visited website in the world and only the 40th most visited website in the United States. Granted, 6. 5 million visitors is significant but compared to Amazon’s 25. 6 million visitors, it is lacking in relationship to total retail sales in store..
Wal-Mart’s poor showing online can be attributed to their typical customer base because, the customers that shop at Wal-Mart are usually not online shoppers. Their customers like to go to the store and walk out with the item they needed and they usually have less money to spend. The online shopper wants to save time and has more money to spend and many more options to consider. The best thing that Wal-Mart’s website does is to allow interaction between purchasing online and picking up in store. This allows shoppers accustomed to Wal-Mart stores to online shop and still get immediate satisfaction.
Wal-Mart’s online retail operations are not their profit makers but allowing a customer to order online and pick up in store has boosted their online sales. According to Wal-Mart General Manager Maria Santini, “ The past few years have seen a significant increase in site-to-store sales which increases the bottom line. ” During our interview Ms. Santini expressed a wish that the stores would be able to offer access to Walmart. com in store for those customers who do not have a computer available to them. Wal-Mart’s customer base is their worst enemy for online sales but their success in this demographic is proven for in store sales.
To be successful online, they need to research their primary competitors and find out what makes their sites more attractive to online shoppers. A screen shot of the website follows: WAL-MART Target Store’s website is not as popular as Wal-Mart’s but in relationship to total sales, it does much better. According to comScore Media Metrix analysts, it is the 313th most visited website in the world and is ranked 60th in the United States. Target began online retailing fifteen years ago and their customers are typically women.
A division of Target Stores, the website is designed to allow customers to purchase products online or locate them in their local Target store with online search options. Target’s website offers similar layout to stores but does not offer food and other household products. Target’s website and online shopping was originally called target. direct, and it was designed to stand alone with Rivertown Trading marketing division. In 2002, target. direct partnered with Amazon. com to provide order fulfillment and customer service for Target. com for a contracted price. In 2009, Target created the new Target. om website, without the use of Amazon. The new website began in 2011, prior to the onset of the holiday season. The new site pictured below is colorful, upbeat and easy to navigate. It presents a friendlier online shopping experience and the interaction with the stores is superb. Target’s Team Leader Matthew Graybeal stresses the importance of customer service whether they are an in store shopper or an online shopper by stating that “Each and every customer is important and contributes to the well being of Target Corporation as a whole. ” I believe that attitude is what makes Target a leader in customer service.
TARGET As you can see, the relationship between visitors and actual completed purchases for both Target and Wal-Mart’s websites are below for 2009. Even though the information is older, I felt that it provided a baseline for comparison of traffic and sales. Success of each company’s website hinges upon the number of visitors each year and the number of visitors that they can change to customers. While both websites provide the basic needs for each customer, Target’s site is less cluttered which I believe gives them an edge over Wal-Mart in this area. [pic] GRAPH 1
In the above graph, you see that Walmart. com clearly has more visitors than Target. com. Although when taken alone, this data shows Wal-Mart’s website is more successful but when taken in combination with their yearly revenues, Target. com is clearly more appealing. Wal-Mart boasts revenues which are 300% above that of Target’s revenues but that difference does not translate to amount of visitors to Walmart. com. Walmart. com only provides 20% greater traffic than visitors to Target. com which in my opinion is a minute difference relative to the other data. pic] GRAPH 2 In the graph above, similar to the previous graph, the data is very clear and proves that Target. com is much more successful than Walmart. com. This graph shows that among the visitors to each site shown in GRAPH 1, visitors to Target. com were more likely to buy and follow through with their purchases. An expansion on the data in Graph 2 follows: TARGET. COM WALMART. COM VIEWED THEIR CART 8,114,834 6,431,966
BEGAN CHECKOUT 1,217,225 707,516 COMPLETED PURCHASE 97,378 49,526 As you can see expanding the data shows that visitors that completed purchases at Target. com is almost double those who completed purchases at Walmart. com. The ultimate goal is have completed purchases and Target. com seems to be better at doing that than Walmart. com. Press Releases Press releases for both companies have similar tone and subject matter.
Both companies have numerous release regarding the opening of new locations, the offering of new products and in Wal-Mart’s case there were many releases employee programs and incentives, which were designed to improve their image in that arena. The press releases of both companies seem to be similar in that they are focused on the customer and what they want and while Wal-Mart’s press releases are more matter of fact; Target’s press releases are much more upbeat and provide excitement the more that you read; ultimately enticing a reader to see what the excitement is about and visit ither a store or their website. That strategy is the difference between the two companies press releases as they pertain to consumers. Financial press releases show significant differences in structure between the two companies but the structure stays true to consumer based releases with Wal-Mart being matter of fact about sales increases and focused on the numbers selling themselves while Target was upbeat and excited about the numbers. Clearly, the releases reflect their business philosophy and what they want consumers, employees and investors to see or feel.
Target expresses a more emotional side in their overall strategy which includes why their employees are called team members and management called team leaders. Most recent releases from Wal-Mart focus on consumer initiatives while also giving the public insight into what additional resources offered to associates. Wal-Mart’s negative publicity regarding associate treatment has fueled a need for them to be defensive and provide information which shows how well they treat their employees. There are also releases regarding partnerships in different areas and community giving such as scholarships.
Their press releases seem to be targeting their core customer base in most cases with the matter of fact approach and get to the point subject matter. Target’s press releases have a completely different approach mainly because their customer base is different. Many of their press releases have an emotional undertone but always provide upbeat language and excitement. While the subject matter of the press releases are similar, Target’s focus on community awareness and giving back is shown through the number of programs it sponsors and the quick response to emergencies with donations and aid.
The tone of these press releases has a distinct emotional component which appeals to their typical consumer, women with children. Target seems to strive to belong to the community which their stores are located and their employees live and encourage their employees to be active in their communities also. Target Team Leader Matthew Graybeal stated that; “Target Stores want to be viewed as partners with the community and its residents. ” That sentiment is working and makes Target a more appealing place to shop. Both BIG BOX giants prove that they are true to their core philosophy with he tone of their press releases. The each have a goal to achieve with each release and I believe that they each achieve what they are striving for. Since Target’s consumer focus also is my demographic, their emotional tone elicits the response from me that they expect and their releases are more appealing to me and most likely others within this demographic. Advertising Both Wal-Mart and Target have developed and honed their marketing strategies over many decades. Their versatility and variety of techniques have always been tailored to draw customers in from their designated customer base.
Both companies employ weekly print ads, creative television ads and online promotions. Wal-Mart recently has had to change its advertising agenda to showcase corporate philanthropy and to combat the significant negative publicity it has received regarding treatment of employees. To do this Wal-Mart had to go on the defense which caused them to add over a hundred million dollars to its advertising budget. Wal-Mart’s advertising, whatever the media, showcases low prices and quality goods. Wal-Mart uses all different media to get it’s message across to all consumers within their customer base.
Each different media is used in unique ways to promote Wal-Mart’s quality products at low prices. Their radio ads are used to promote anticipated product releases and in demand products while consistently reinforced by newspapers ads and circulars. Their print advertising emphasizes sales on already discounted items and are designed to get the customer in the door. Their advertising and marketing plan is to be above their competitors but in this struggling economy, competitors have realized their strategy and have answered with price matching.
Target has been more innovative over the years in their advertising approach and has shown that the unique does have some advantages. In August 2005, Target purchased all ad space available for that issue of the magazine, New Yorker which has an immense readership of over 3 million. Target also used fashion shows and pop-up stores to win customers. “Consumers are educated, and retailers have to come up with a compelling offer that stands on its own. It’s also more important [for retailers] to understand who their customer base is and how they’re going to grow that base.
In the past, you could somewhat predict what your sales would be one to three years out. Now that’s tough to do. “(Butler, 2012). Target’s customer base has not changed but their strategy in attracting consumers has shifted. Target not only focuses on their customer base but also tries to appeal to other groups as well. Their television ads are designed to appeal to the whole family by using music and trendy product presentations. Even though Target has designer products and better quality, they still must emphasize value and low price to compete with Wal-Mart.
The use of Spot the Dog and “See Spot Save” slogan shows how a consumer can save money at Target. Although Target is considered a discount BIG BOX retailer, their consumer base is different than other discount retailers and their advertising shows that difference. Community Outreach Wal-Mart has adopted a more community conscious program recently to improve its negative reputation, Wal-Mart has improved upon employee benefits, became more environmentally conscious and realized that community interaction and outreach is in the business’s best interest.
Target’s success in new stores is directly a result of neighborhood interaction and a willingness to contribute to the communities they wish to partner with. Annual Reports The annual reports for Wal-Mart and Target are very similar. Even though the focus is the financial aspect, the reports are exciting. Advertising is apparent in each of the reports which are colorful and fun to read and look at. The Wal-Mart annual report starts with a CEO message that while to the point is still powerful and inspires confidence. From there the report gives a history of Wal-Mart and provides a look at the financials then and now.
This report focuses on every aspect of the business beginning with where they were, where they are and where they want to go. It provides vision, addresses problems and provides an overall picture of the direction for years to come. The annual report is attractive to investors and provides employees with a look of what they are a part of. Overall the report was surprising and enticing, which is what it was meant to be. Surprisingly, Target’s annual report and Wal-Mart’s were similar. The annual report was colorful and after a message from the President, presented sales figures and financial information in an eye catching way.
The rest of the report focused on where they were, where they are and where they want to go and the their marketing message is also apparent here. Their report is interesting and draws upon the strengths that Target has already shown in employee relations and innovation which shows that if the strategy is working, stick with it. While both companies have delivered great reports; Wal-Mart’s seems to have strayed from its usual to the point, no frills tactic in an effort to improve its image. Target’s report was as expected and stayed true to their business strategy throughout. Summary
Each company has done an amazing job with their communication choices and staying true to their respective strategies. Wal-Mart’s increase in community outreach, whether defensive or not, shows that they are here to play and they will not let Target or any company, have any advantage. Each has proven to be a leader in their customer base and this can only improve as the economy improves and innovation takes the forefront. CONCLUSIONS Wal-Mart and Target are both very successful discount retailers that have earned their top rankings. Each company has striven to provide the best roducts for the best price to their customer base with resounding success. Each has a different strategy to achieve their goals and , with profits reported for both companies, they seem to be on track Wal-Mart’s to the point, matter of fact approach and Target’s more emotional approach work well with each brands business strategy. Advertising has been their bred and butter and Target’s unique approach and community interaction has give them a slight advantage in those areas while Wal-Mart’s continuity provides results on a consistent basis.
WORKS CITED Data and Tables Retrieved from comScore Media Metrix (2012) http://www. comscore. com/metrix/ Graybeal, M. (2012, October). Interview by K. Haines [Personal Interview]. Martinez, J. (2012, October). Interview by K. Haines [Personal Interview]. Santini, M. (2012, October). Interview by K. Haines [Personal Interview]. Zmuda, Natalie. (2012). Walmart, Target, Kmart, Kohl’s Lead 50 Years of Retail Revolution. Quote from Dan Butler; Advertising Age, 91(9) REFERENCES Barwise, P. and Meehan, S: Simply Better; Harvard Business School Press
Fishman, C. (2009): The Wal-Mart Effect: How the World’s Most Powerful Company Really Works–and How It’s Transforming the American Economy; Penguin Press Millerwood Communications. (2012, February). Retrieved from http://millerwoodcommunications. typepad. com Business page. (2012, September). The New York Times Retrieved from http://topics. nytimes. com/top/news/business/companies/wal_mart_stores_inc/in dex. html D’Innocenzio, A. (2012, October). Target to match some rivals’ online prices. Boston Globe. Retrieved from http://www. boston. om Target Annual Report. (2012) Retrieved from http://corporate. target. com/annual-reports/… /annual_report… /Target_2012. Target Home Page. (2012) Retrieved from http://www. target. com Wal-Mart Annual Report. (2012). Retrieved from http://www. walmartstores. com/sites/annual-report/2012/WalMart_AR. pdf Wa-Mart Home Page. (2012) Retreived from http://www. walmart. com Zmuda, Natalie. (2012). Walmart, Target, Kmart, Kohl’s Lead 50 Years of Retail Revolution. Advertising Age, 79(9), 8. GANTT CHART ———————– [pic]