Marketing Failures

[lonewolf2019]

"Giving more choices: After alienating customers by culling too many products from shelves, Wal-Mart is bringing the variety back by adding 8,500 items to stores."

finance.yahoo.com/family-home/article/112521/wal-mart-ready-battle-cnnmoney

This reminds me of Cokes huge marketing failure when they came out with the New Coke recipe.
Why would a company be stupid enough to try and fix something that wasn't broken? Do they like egg on their face?
Do they enjoy having to beg their customers to come back? I don't get it.

[hoops902]

Probably because keeping that massive variety of products stocked is a logistical nightmare that they were having problems with. I think the Wal-Mart case does not fall under marketing, it's operations. The other issue with Wal-Mart is that we dont' knwo what might have been broken.

In general though the "don't fix what isn't broken" works right up until someone says "no wonder you failed, you didn't keep innovating".

[lonewolf2019]

Yes, Operations, not Marketing. Thanks.
Innovating is good if it moves a company in the right direction.
While Wal-Mart was reducing its inventory, any customer could have told them they were making a huge mistake.
Why couldn't their highly paid operating managers have been smart enough to have realized it?

[hoops902]

Apr 21, 2011 11:40:09 GMT -5 @lonewolf2019 said:

Yes, Operations, not Marketing. Thanks.
Innovating is good if it moves a company in the right direction.
While Wal-Mart was reducing its inventory, any customer could have told them they were making a huge mistake.
Why couldn't their highly paid operating managers have been smart enough to have realized it?

Any customer could tell you that you're making a mistake by paring down your selection...but those customers dont' see the numbers either. If you can pare down your selection and save $5B in logistical costs and only lose $100M in sales...you've got to do it. I don't think anyone doubted the fact that some customers wouldn't like it, the problem came in the calculation of lost sales vs money saved. I don't think Wal-Mart went in thinking "customers will love having fewer choices". I think they just thought the economic tradeoff made sense. Who would have thought people cared so much about what brand of cotton swab they were buying?

[haapai]

The other issue with Wal-Mart is that we dont' knwo what might have been broken.

Amen to that sentiment. The article is none too specific about why the items were culled. It might not have been the logistical nightmare of keeping them stocked or their sales. Some of those items are pretty popular. I have to wonder how much of this was a feint to get better prices, smaller case sizes, or more reliable resupply from their suppliers.

[swamp]

I was really annoyed when walmart stopped carrying Era laundry detergent. I would have gone to another store if I had a choice.

[Savoir Faire-Demogague in NJ]

I think they just thought the economic tradeoff made sense

Typically, these sorts of actions take place because marching orders were received from the top to reduce inventory costs by X% or be out of a job.

Anyone who has worked at a real job for any length of time has worked on projects that are the fallout of "marching orders".

Been there.... worked on it.

[resolution]

I was under the impression they were doing it to try to increase sales of their Great Value brand, which gives them a higher profit margin than the name brands. The idea I read about was they would cut some of the lower price brand names that compete with their store brand. So a shopper could decide between higher price brand versus Great Value but not have a choice of other brand names that were closer in price.

[haapai]

It's also possible that they were targeting the space-hoggers. Both Era and Hellman's are two of the brands that come in the largest number of varieties and sizes. It's a transparent attempt to hold onto the shelf space. The spin-off varieties and sizes don't sell well, but their presence makes the core product very easy to find.

[swamp]

Apr 21, 2011 12:12:04 GMT -5 haapai said:

It's also possible that they were targeting the space-hoggers. Both Era and Hellman's are two of the brands that come in the largest number of varieties and sizes. It's a transparent attempt to hold onto the shelf space. The spin-off varieties and sizes don't sell well, but their presence makes the core product very easy to find.

Is there even a brand of mayo other than Hellman's?

[Angel!]

I noticed when top ramen & lo mein noodles disappeared from there shelves & I do go to other stores to purchase these items now. I can't recall missing anything else though.

Not the same thing, but I was very irritated when I went looking at TVs to find that 75% of what they have on display wasn't in stock. I went elsewhere for that purchase also.

[CarolinaKat]

Apr 21, 2011 12:17:45 GMT -5 swamp said:

Apr 21, 2011 12:12:04 GMT -5 haapai said:

It's also possible that they were targeting the space-hoggers. Both Era and Hellman's are two of the brands that come in the largest number of varieties and sizes. It's a transparent attempt to hold onto the shelf space. The spin-off varieties and sizes don't sell well, but their presence makes the core product very easy to find.

Is there even a brand of mayo other than Hellman's?

Duke's is the only Mayo brand in the world

Edited: Spelling Fail

[thyme4change]

I was under the impression they were doing it to try to increase sales of their Great Value brand, which gives them a higher profit margin than the name brands. The idea I read about was they would cut some of the lower price brand names that compete with their store brand. So a shopper could decide between higher price brand versus Great Value but not have a choice of other brand names that were closer in price.

Having spent years in both retail and consumer products manufacturing (including private label) this was my assumption, too.

Also, their marketing is always "lowest prices" and during the recession, the best thing to do was to cut out products that cost them too much money, put in their brand and make sure it is priced right. That way people who are trying to tighten the belt come in, buy your brand and feel good they saved money. Meanwhile, your profitability doesn't take a hit because your brand has a higher margin.

Now, they can go back to offering more selection because the economic tides are turning (at least the consumer activities are.) You've converted a bunch of people to your brand, so you can now let the competition re-enter, and you can make a big deal about it, which will draw people back into the store to see if their brand has returned.

Hopefully you get the best of both, convert those that were convert-able, and recapture those that are not convert-able.

[haapai]

Oooh Thyme! What can you tell me about the strategy behind having two store labels? My store stocks both a store brand and a frequently changing rock-bottom store brand in many categories. Can I expect that rock bottom brand to disappear or change its name or label any time soon?

[thyme4change]

Sometimes a smaller number of customers at a higher margin is much better than a larger number of customers at a loss.

We will see. I agree that at some point it will amaze all of us that WalMart is dead. K-Mart use to be a force in retail, now they are struggling. Sears owned the whole country, now they are doing okay. Montgomery Wards was a staple - now gone. Woolworth's have all been replaced by Dollar Stores.

[thyme4change]

I don't know - it is possible that the secondary private label is to keep a manufacturer on the hook. Single sourcing is a dangerous game to play if you are counting on your private label margins. But, it is just possible that one might have been a tradition - maybe your chain bought out another chain and decided to keep both names alive and well. Maybe it is to make you think you are getting choices when really it is the SS-Different Can. Maybe one label tests really well in one market, and the other label tests really well in another. If they are positioned differently pricewise, I can see a potential value to the store for both.

[haapai]

They change the name of the rock-bottom store brand every five years or so. So you can scratch tradition off the list of possible reasons.

At this point in time, the packaging for the secondary store brand is very reminiscent of the late-70's/early 80's black and white generics. Previously, the brand was Valu-time. There's a pong of cheapness deliberately associated with the product, but I can easily see it selling well among the middle-class and affluent shoppers who actually are the generic market. You can't beat its price point but a whole lot of people are ashamed to be seen buying or using it.

The primary store brand is more attractively packaged and carries a price closer to the name brands than the semi-generic. (That is, Hellman's sells for $4.19 a quart, Kraft for $3.88, middle store brand is $3.49 and the rock-bottom store brand for $1.89.)

There was an attempt a couple of years ago to introduce a premium (gold-label) store brand but it does not appear to have stuck around. Do you think that was intentional, botched, or merely a victim of a souring economy? I'm somewhat inclined to believe that it wasn't intended to make money but merely to lift the cachet of the store and the acceptability of the middle store brand.

[thyme4change]

I suspect it was a victim of the economy. They had that thing in the works for up to 3 years before it hit the shelves, and so that might have put it in the time when everyone has a doubling and tripling equity, and they were buying luxury items like crazy - $200 jeans, $400 purses, $300 sunglasses. Getting a "premium" placed product was the way to go. The probably continued with it even after the crash thinking it would slide in between the name brands and the store brand.

I can see that in your store the middle store brand is a private label to gain market share at very high margins, where as the rock-bottom is to give shoppers the cheap version, if they choose. Those two products are placed completely differently and probably appeal to two different crowds. They are probably both big money makers for the store, and therefore it is viable to keep them both on the shelves.

[Deleted]

Apr 21, 2011 11:50:28 GMT -5 hoops902 said:

Any customer could tell you that you're making a mistake by paring down your selection...but those customers don't see the numbers either.

I've always been intrigued by the ultra-chic clothing stores that are practically bare walls with just a few things on each shelf. It must work, though.

With grocery stores, DH and I like variety. We don't shop at Wal-Mart but do find ourselves bypassing nearby stores for our weekly grocery shopping and going a little farther out for more selection. In some cases we're trying to find a brand of something without high fructose corn syrup; sometimes it's unusual spices or other ingredients, and sometimes it's just the right size, whether it's Large Economy for something we use a lot, or very small for something perishable that we use slowly.

[NoNamePerson]

Apr 21, 2011 12:17:45 GMT -5 swamp said:

Apr 21, 2011 12:12:04 GMT -5 haapai said:

It's also possible that they were targeting the space-hoggers. Both Era and Hellman's are two of the brands that come in the largest number of varieties and sizes. It's a transparent attempt to hold onto the shelf space. The spin-off varieties and sizes don't sell well, but their presence makes the core product very easy to find.

Is there even a brand of mayo other than Hellman's?

Noooooooooo!!!

[Opti]

Apr 21, 2011 12:00:07 GMT -5 Savoir Faire-Demogague in NJ said:

I think they just thought the economic tradeoff made sense

Typically, these sorts of actions take place because marching orders were received from the top to reduce inventory costs by X% or be out of a job.

Anyone who has worked at a real job for any length of time has worked on projects that are the fallout of "marching orders".

Been there.... worked on it.

Odds are SF's right on this. They were trying to accomplish one objective and it hurt sales more than expected.

I prefer Kraft Mayo.

I also am one of those people who shops many stores because I like what I like and often that product is only carried in one or two stores. I recently discovered my closest Walmart has a much smaller food selection then one I pass sometimes twice a month. The better stocked store is also lower in price on several of the items I buy.

[Deleted]

I did not read all the posts in this thread , but since I deal with this on a regular in my professional life I will add that a lot of things happens behind close doors. As someone else posted, it is not marketing but operations. Here are a few things that goes into carrying a merchandise or not:

Inventory turn: How quick can you sell the item? Retail business is all about sells and an item seating on your shelf is not making you money. Yes a few customers might like it, but if you are only selling 1 case every 20-30 days (sometimes more), is it worth it to the Retailer to carry it just to make 2-3 customers happy? Also, that is space you are using that you could put something that will actually sell or increase the rows of an item that is already selling.

Profit Margin: Some of you mentioned it as in they rather carry their own brand since they would make more money off it, which is true. But it would be smarter to have their brand there and also the other brands so I doubt that was one of the major reasons. Also frozen dinners, alcohol, etc then to be major profit margin items in the industry and most stores don't carry it in their brands.

Shrink: items that are code dated. Are you selling it quick enough that you are not left with a lot of shrink. this is mostly for perishable items (meat, dairy, produce) but you do have items in the regular grocery items that are code dated (Cereal, cookies, etc).

[Deleted]

They fired Al Gore's BFF, Leslie Dach. He tried to remake Walmart into a progressive haven but the unwashed masses revolted.

[AgeOfEnlightenmentSCP]

Apr 21, 2011 12:17:45 GMT -5 swamp said:

Apr 21, 2011 12:12:04 GMT -5 haapai said:

It's also possible that they were targeting the space-hoggers. Both Era and Hellman's are two of the brands that come in the largest number of varieties and sizes. It's a transparent attempt to hold onto the shelf space. The spin-off varieties and sizes don't sell well, but their presence makes the core product very easy to find.

Is there even a brand of mayo other than Hellman's?

I know, right? I guess Kraft?

[tskeeter]

My understanding is that WalMart reduced the variety of products they offered in order to control costs and reduce prices. That seems like the right move as the economy tightened and consumers without jobs, and even those with jobs, became more price sensitive. Now, as the economy has shown signs of improvement, and people are going back to work, consumers are demanding a wider selection, even if it is at a higher cost. WalMart is responding by returning many products to their shelves. Seems to me like they didn't have a massive marketing or operations debacle. Seems to me like they have been doing a pretty good job of responding to changing consumer desires.

Think about it in this context. How long do you think it would take your Mom & Pop grocery or variety store to add 8,500 products to their inventory in stores across the entire country. I think it is a testament to how robust WalMart's distribution and operations systems are that they can do something like that in a matter of several weeks.

According to the Food Marketing Institute, the typical supermarket carries nearly 49,000 different products. Add all of the variety, auto, clothes, and other dry goods that a WalMart stocks and I'd bet you're talking well in excess of 100,000 different products in every store. That makes the 8,500 items that the media is making a big deal over a relatively insignificant portion of a WalMart stores total product selection.

To me, it appears that the media is working very hard to make a mountain out of the proverbial mole hill and attempting to portray WalMart as incompetent when, in fact, the exact opposite may be a more accurate representation of the situation. The media certainly doesn't want to write about how WalMart is closely aligned with changing consumer needs or wants, and how effectively WalMart operates. It's a much better story if you can spin it to claim WalMart is bad, stupid, unethical, etc. After all, WalMart is a big business, and big business is always the bad guy, right? Certainly Sam Walton couldn't have gotten really rich by giving people what they want, when they want it, where they want it, at a price they wanted to pay. Sam and his WalMart buddies must have held consumers down, stuffed their mouths with expensive socks, and stole their wallets in order to get rich.

[Deleted]

Apr 22, 2011 18:39:00 GMT -5 tskeeter said:

Certainly Sam Walton couldn't have gotten really rich by giving people what they want, when they want it, where they want it, at a price they wanted to pay. Sam and his WalMart buddies must have held consumers down, stuffed their mouths with expensive socks, and stole their wallets in order to get rich.

Sam Walton got rich by squeezing his suppliers, treating his employees like slave labor, buying from companies that produce lead-laden crap in sweatshops in China, and selling it all to people who care about nothing but price.