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11/17/09 Strategic marketing 1

 INTRODUCTION  Analyze the strengths

 Wal-Mart and weaknesses of
 Wegmans Sam’s Club from
 Costco perspective of Costco
 Analyze the strengths and
weaknesses of Wal-Mart ,
 Costco strategies
from perspective of its  RECOMMENDATION
 Wegmans strategies

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 The largest grocery retailer in the United States, with
an estimated 20% of the retail grocery and
consumables business. It also owns and operates the
North American company, Sam's Club
 Founded in Rogers, Arkansas by Sam Walton in 1962
 The world’s largest public corporation by revenue the
2008 Fortune Global 500)
 Slogan :Low price, always
 Save money, live better

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 Wegmans Food Markets is a 79 store US regional
supermarket chain with stores in the New York,
Pennsylvania and Maryland
 Appeared on Fortune’s annual "100 Best Companies to
Work For" list since its inception in 1998
 In 2008 and 2007 Fortune ranked Wegmans the third
best company to work for in the United States
 Ranked among the top 10 for six consecutive years,
Food Network recognized it with its award for Best
Grocery Store in 2007

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 Costco Wholesale Corporation is the largest
membership warehouse club chain in the world
based on sales volume
 The fourth biggest general retailer in the United
 Headquarters : Washington, United States(with
its flagship warehouse in nearby Seattle)
 Founded in Kirkland, Washington, in 1983
 Costco is NO.29 on the Fortune 500.The ACSI
(The American Customer Satisfaction Index)
named Costco number one in the retail industry
with a score of 81 in 2006.

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1)The brand image of Wal-Mart is more powerful than
Wegmans 2)Wal-Mart’s main strategy is cost leadership
approach whereby it can sell its product cheaper
3)The company uses information technology to support
its international logistics system
4)The company’s policy of respect towards employees
and customers makes the company so popular.
5)Wal-Mart’s market power is so high that the company
can control its suppliers. Example, it can have influence
on design directions by saying that it may be too costly
for customers.
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1)Sam’s Club, which is owned by Wal-Mart has presence in more
locations than Costco. Number of stores being 532 compared to
Costco being 312.
2)Since Sam’s Club is under Wal-Mart it enjoys a powerful brand
3)It can work in coordination with Wal-Mart to gain certain
competitive advantages like using information technology to make
logistics effective and achieve more buying power.
4)Wal-Mart’s cost leadership approach can be a threat when it
starts selling similar products like that of Costco.

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1)Costco is the leader in respect to Sam’s Club. The company
has higher total sales volume in respect to Sam’s Club.
2)An average Costco store generates nearly double the revenue
of a Sam’s Club.
3)Approach taken is different-more emphasis on upscale brands
and products like expensive jewellery, Starbucks Coffee etc,
4)It attracts a different kind of customer who are looking for
upscale brands.
5)The American Customer Satisfaction Index rated Costco
number 1 in the retail industry with a score of 81 in 2006
suggesting customers are more satisfied with Costco than any
other company.

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1)Wegmans was founded in 1916 compared to Wal-Mart which
was founded in 1962. So the company has been in business for
a long time.
2)Despite being so huge and strong, Wal-Mart has not affected
Wegmans much as sales of Wegmans are continuously
rising and generating healthy profits.
3)The policies and style followed by Sam Walton has to some
extent diminished after his death which Wegman can take
advantage of. Sam’s flair of association with customers and
employees missing now.
4)Too much control over suppliers and manufacturers might not
work in the future for Wal-Mart.

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 We make the commitment: "Every Day You
Get Our Best”
 Wegmans usually has 300 specialty cheeses
on hand.
 Larger than most supermarkets:
(We need room for all that stuff!) Stores run
80,000 to 130,000 square feet in size. Aisles
are unusually spacious.
 Wegmans offers more customer convenience
services and “stores within a store” than
possibly any other supermarket chain.

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 A membership warehouse club, dedicated to bringing
our members the best possible prices on quality brand-
name merchandise. With hundreds of locations
 On merchandise: We guarantee your satisfaction on

every product we sell with a full refund.

 On membership: We will refund your membership fee

in full at any time if you are dissatisfied.

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 Wal-Mart, have wrested control of the supply chain from
manufacturers through a revolution in information
technology and logistics.
 Wal-Mart’s International segment consists of its wholly
owned subsidiaries operating in Argentina, Brazil, Canada,
Puerto Rico and the United Kingdom, its majority owned
subsidiaries operating in Central America, Japan and
Mexico, its joint ventures in India and China and the
Company’s minority-owned subsidiaries in China.

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 Strengths  Sam’s Club also is in the
 The one of the nation’s largest and unique situation of being
the most profitable retailers
 Warehouse club shopping is still a
able to leverage its
relatively new phenomenon relationship with Wal-
compared to more established Mart and, what are
formats such as department stores
and discount stores
arguably the best
information and logistics
systems in the retail
 Operator of 525 domestic
warehouse club is at a
pivotal point in its
20years history

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 Weaknesses
“We were not leveraging our market basket
information to determine what customers we
are going to upset by deleting those items.
Now we have a set wholesale item list where
we measure the basket, as opposed to the
item productivity for business items," Turner
said. "For treasure hunt items, item
productivity is still very important, but for
business items basket productivity is the
driver.“ (

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 Being number one means that you are
the target of competition, locally and
 Being global retailer means you are
expose to political problems in the
countries that you are operate in
 The cost of producing many consumer
products tends to have fallen because of
lower manufacturing costs

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 Using plain spaces to  Costco offers upscale
sell products in bulk brands like Callaway
at deep discounts has golf clubs, Starbucks
won over many coffee, and expensive
customers jewelry, and thus it
attracts a different
kind of shopper

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