Retail

One of the foremost advantages of Wal-Mart is due to its management’s keen understanding of substitutes. In a market that has quick changing needs, Wal-Mart has constantly been threatened by the collective substitutes such as grocers, drug stores and other retail stores. The presence of these other substitutes creates a small yet viable threat to the business of Wal-Mart; a threat that Wal-Mart is all too familiar with due to the fact that it too was a small substitute that has taken advantage of its pricing, location and diversification to turn into an economic force.

Using the “Buy it Low, Stack it High and Sell it Cheap” idea, Wal-Mart has not only been able to offer lowest prices but it this lower price has allowed it to maintain more SKUs than any other competitor thus providing low prices and several items to choose from. This is one key concept that has remained in the consciousness of most major businesses today. While there are certain sectors that try to seek quality, the diversity that Wal-Mart offers has allowed Sam Walton to find a niche with over 90% of the purchasing public. Wal-Mart used discount pricing to establish its stores as the alternative to other retail stores.

It was able to offer similar products sold at other stores at lower prices by maintaining a low-cost structure by keeping its operating cost low, maximizing store space, rationalizing areas of expenditure, aligning supply with demand, and other practices. Wal-Mart’s mutual partnership with suppliers, product manufacturers, and logistics firms also supported its low-cost structure. (Bradley & Ghemawat, 2002) By maintaining low prices, Wal-Mart was able to fend off strong substitutes to its store and store products and kept customers coming back.

The second key to Wal-Mart’s success was the way that it targeted the usually ignored small towns as the location for its stores (Bradley & Ghemawat, 2002). By establishing stores in small communities, the company’s discount prices captured the entire community as a market. Wal-Mart gets the first mover advantage and fends of the entry of substitute stores in the small towns. In addition, Wal-Mart stores are also clustered to allow warehousing in key locations and logistics arrangements to save on cost.

This mobility and access to new markets for expansion kept Wal-Mart well ahead of the competition. By cornering select markets, it prevents new competition from entering and thus maintaining its advantage in the market. After substitutes such as K-Mart followed the low price format, Wal-Mart maintained its discount pricing while developing differentiation strategies such as offering its own brands and establishing various store formats to provide accurate product and service needs to a particular market or area (Bradley & Ghemawat, 2002).

Wal-Mart continues to develop differentiating factors as a means of suppressing the threat of substitutes by making itself difficult to substitute. Every single commodity manufacturer who is interested in surviving must be able to gain the good graces of Wal-Mart. The impact of Wal-Mart is such that it “has life-or-death decision over [almost] all the consumer goods industries that exist in the United States (Gereffi 2006). ”

Reference

Bradley, S. P., & Ghemawat, P. (2002). Wal-Mart Stores, Inc. HBS #9-794-024. Boston, MA: Harvard Business School. Gereffi, Stephen (2006). Consumer Benefits from Increased Competition in Shopping Outlets: Measuring the Effect of Wal-Mart. Economic Research Service, U. S. Department of Agriculture. Hicks,M. (2005) “The Impact of Wal-Mart on Local Fiscal Health: Evidence from a Panel of Ohio Counties. ” Econ WPA Economics Working Papers. (Urban/Regional Archive No. 0511016)

The store was a mess — the very picture of how not to sell food. The aesthetic was drab. The vibe, absent. In one area, pickles, marshmallows and wrapping paper were stocked side by side; Trish Sharon liked to call it the pregnancy aisle. But she and her husband, Bo, kept harping on the bananas: They somehow seemed the saddest of all specimens, just slapped down on a table with rough patches of AstroTurf. It was the cardinal sin of not honoring one’s ingredients, of treating fruit as a simple fuel source.

Bo is always quick with a joke, and he lay down across the banana table, posing like a slab of apple-stuffed meat. His wife laughed. “It was like, ‘Who in their right mind would shop here?’” Trish says.

It was their job to answer that question.

This was 2002. The Sharons were in their early 20s and facing their future in every possible way. The young couple were engaged to be married and had been handed the keys to the family business — the North Boulder Market, this mess of a place in Boulder, Colo., which Trish’s uncle and father had run for a decade. Now Trish and Bo were tasked with making it a more viable business. There were, to be sure, many ways that could go wrong.

Today, 14 years later, shoppers across the country have never heard of North Boulder Market. But many know its new name, which the Sharons gave it: Lucky’s Market. The supermarket chain has become a beloved institution throughout the South and the Midwest, where it has 17 locations across 11 states, another seven slated to open this year and plans for many more to come.

The place is modeled after a farmers’ market, with a wide-open entranceway, neatly stacked produce that spills onto the sidewalks in the warm summer months and a folksy maze of barrels, crates and bins. Employees wear name tags that include conversation-starting personal information, and are trained to talk serious food — suggesting how to properly season and sear a Piedmontese steak, say, or handing over generously sized samples of Lucky’s scratch-made fare, such as cauliflower salad, chicken sausage or dill caper salmon cakes. A “Sip and Stroll” program encourages thirsty customers to walk the aisles while downing $2 craft beer drafts (where local law allows, of course). Each store can develop its own personality, from the local brands it stocks to the in-house entertainment: The Iowa City location, for example, has a shuffleboard table and vintage Pac-Man machines, and others offer adult coloring books, free movie screenings and piping-hot-pizza specials. Customers have been known to turn their grocery run into a date night.

“Lucky’s is an interesting company with a concept that checks almost every box from what people want in a food store today,” says Jon Springer, a retail editor at the trade publication Supermarket News. “It plays to the foodie trend of fresh, lively and somewhat indulgent selections; it emphasizes fresh foods at value pricing; and it’s small and easy to shop in, not loaded with aisle after aisle of branded packaged goods in multiple sizes like a traditional supermarket.”

Those traditional supermarkets are taking notice. Kroger’s, the 2,700-store giant, made what it calls a “meaningful investment” in Lucky’s earlier this year, which will help the upstart chain expand even faster. In Florida, where Lucky’s has three stores, the Broward-Palm Beach New Times published a piece called “Ten Reasons Lucky’s Market Is Better Than Publix.” (Reason number nine: “Lucky’s makes its own bacon that makes Boar’s Head look like Oscar Meyer”). And Whole Foods is surely on edge: It’s currently launching a new store called 365 to appeal to younger, cost-conscious shoppers, but Lucky’s has already beat them to the market.

Back in 2002, though, the Sharons’ ambitions were far smaller. They just knew their little market was ugly and wanted to make it inviting — fast. The walls were an insipid shade of white, made worse by severe lighting. Money and time were tight, so instead of wasting either by securing proper work permits, the couple bought cans of paint and then raced the clock after hours.

“Oh, it was awful,” says Nick Gulizia, who was then a college student working in produce and helped out with the paint job. “One wall was purple, one was yellow and one was teal green. But it kind of made Lucky’s a unique shop, one that was fun to go to, rather than getting beaten down on by fluorescent lights.”

That guiding principle — make it fun, and embrace the personal touch — would carry Lucky’s a long way.

“I’ve got all kinds of dirt on him,” Trish jokes, as we sit down for chilaquiles and a baby-kale Caesar salad at Lucky’s Cafe, a casual restaurant she opened with Bo in 2003. It’s located in the same modest complex that held the North Boulder Market and is the kind of place the Sharons might have worked in decades ago. They’re trained chefs, and became friends while attending the cooking program at the Art Institute of Los Angeles. One day during that time, Bo called Trish to say he’d just lit the side of his house on fire while cooking a meal. Poorly lit charcoal was to blame, apparently. To which he added, “Wanna come over?”

“The whole side of the house was charred,” she says. “I should have known then to run.” But Bo impressed her with dinner: roasted quail slicked with a sour cherry sauce, paired with fresh tagliatelle and cracked pepper. All of it was cooked better than the house. “We haven’t spent more than a few days apart since,” Bo says.

Bo and Trish make a perfect pair: They’re both funny and disarmingly casual, and their banter seamlessly switches between business and personal. They were engaged within a year of meeting — and although both sets of parents worried about how quickly things had moved, nobody doubted their bond. “From day one in culinary school to today, we’re partners,” Bo says. “First and foremost, I trust Trish’s opinion more than any others’, and she does the same in return. We have different strengths and weaknesses, so being able to identify those and allow the other person to take the reins in certain situations is key.”

Originally, they planned to start their lives together with cooking jobs in Las Vegas. But then Trish’s family offered to sell them the market, and it was too enticing to pass up: In business, they reasoned, they could indulge their love of food, share it with many others and potentially grow something in a way that’s far harder to do from the kitchen. But once they took over, the couple began to understand the North Boulder Market’s struggles. Boulder was stuffed with well-heeled chains: Wild Oats, Vitamin Cottage and Alfalfa’s are all headquartered in the city, and Whole Foods has three locations, including a 77,000-square-foot monster that’s mobbed daily. “We were the small guy up against giants — the definition of David versus Goliath,” Bo says. “We couldn’t buy as cheap as our competitors due to our scale. Many big vendors wouldn’t return our calls.”

But Bo in particular felt ready for the challenge. He’d been preparing for it all his life — and, in fact, you may have even seen some of his early training videos. In the second-to-last season of Happy Days in 1983, he was Richie Cunningham Jr., and he spent the next 15 years as a child actor in everything from Moesha to The Puppet Masters. “The career of a working actor is essentially 95 percent rejection/failure,” he says. “You audition over and over for different roles and land only some of them. You need to dust yourself off and get back on your feet daily. Being an entrepreneur has many of the same parallels. Success is always possible tomorrow.”

The couple knew they had to minimize risk. In a place like Boulder, failure could compound fast. So they decided to grow incrementally, always based on their cash flow and never their credit. They bought
most of their retail equipment secondhand — trekking out to the back alleys of train depots and who-knows-where to get ovens, display cases and even shelves.

Eventually, the Sharons hit upon the insight that would differentiate them from the crowd: They cannot be one kind of store. Many of the Boulder-based chains grew directly out of the organic food movement and had strict philosophies on what they carry and what their customers expect. But that could turn off a customer who, say, wants organic peanut butter but also wishes they could find some damn Heinz ketchup. The North Boulder Market would solve this by cramming several disparate shopping experiences under one roof — a farmers’ market, a natural food store and a corner bodega.

This meant combining some of the best elements of their competitors — so the Sharons called up the major chains across town and asked their execs for advice. How did they handle pesticide-treated produce and processed food? How about farm-fresh fare and local vendors? With persistence, they got answers. “Who were we back then?” says Bo. “A dopey little grocery store, so the threat was pretty minor. And it was never our intent to be malicious. It was just to learn.”

Within a year, they’d renamed their store Lucky’s Market. For the next five years — “five long years,” Bo stresses — they fine-tuned the business model. They gave themselves a tagline, “Organic for the 99 Percent,” and a mission to offer high-end fare at affordable costs. They discovered it was possible if they dealt with most vendors directly, rather than through distributors, and sold perishables at such a low margin that they’d fly off the shelves, therefore lessening the amount of waste other stores dealt with.

Ten years after they bought the market, Lucky’s finally felt stable. In 2013, they opened their second location, in Longmont, Colo. The third came two months later, in Columbus, Ohio. Four more came in 2014, and seven in 2015. And they’re just getting started.

“I’ll never forget my initial meeting with Bo,” Justin Gold says. The two of them were standing  in Lucky’s receiving warehouse, talking about Gold’s new line of nut butter, called Justin’s. This was 2005, and Gold’s brand was new back then. He was constantly touring around trying to get it onto shelves, and usually he had to go through an elaborate pitch and a mess of paperwork. Bo wasn’t interested in any of that. “There wasn’t a formal review process; simply a handshake and the opportunity to prove myself,” Gold says. “Bo and Trish are themselves entrepreneurs, and their willingness to try new items has helped launch a lot of brands, including my own.” (And to great effect: In May, Hormel bought Justin’s for $286 million.)

There are many stories like this — of handshake deals and operating on gut. But Bo says that misses the underlying strategy. “I don’t find us to be chill; we just are who we are,” he says. We’re talking in Lucky’s corporate office, a place that doesn’t exactly serve as a counterargument against “chill.” Almost everyone here, Trish and Bo included, looks like they walked out of a REI catalog; fleece jackets are practically a uniform. The receptionist’s desk is a reclaimed checkout stand. There’s a Ping-Pong table in the corner, though not out of some conscious effort to emulate Silicon Valley–style offices; it’s just a gift Bo’s mom bought for him and Trish (and their two kids, ages 11 and 5), but it didn’t fit in their house.

We just are who we are. That’s not an especially prescriptive policy, but its core is unmistakable. Lucky’s has a cohesive vision — something customers feel connected to — because its identity is not filtered through marketing studies and focus groups. Longtime Lucky’s employees have a theory of where this comes from: The Sharons were recent graduates when they took over the market, and their goofy enthusiasm and desires became crystallized as corporate culture. What kid, fresh out of college, doesn’t want to drink beer while shopping for salsa and snacks? Even the labels on Lucky’s private-label goods are extensions of that vision: Bo writes much of the copy himself, and gives them witty names like Ground Control to Major Mustard and It’s Just Oregano, Officer.

And so, the Sharons didn’t need to think much about stocking Justin Gold’s nut butter, or many of the other thousands of small-batch products they’ve stocked over the years. “Justin in particular had an incredible passion for food and his product when he started out,” Bo says. “I think fellow entrepreneurs find inspiration in each other, which I have always found in Justin. He was going to make his nut butter empire a realization no matter what.”

This from-the-gut attitude attracts loyal customers, but it has another benefit as well: It lures talent away from larger competitors. Lucky’s staff is full of people who put in years at larger grocery chains. Marketing VP Ben Friedland, for example, was previously Whole Foods’ marketing director for the Rocky Mountain region. Trish and Bo won him over with hummus and carrots at a business meeting on their back porch. Boulder store director/general manager Tim Overlie has been in the natural foods business since 1978, serving many years in management roles at Alfalfa’s and Wild Oats. He plans on retiring at Lucky’s. Other industry vets include Lucky’s CFO (Andy Pillari, formerly of Quiznos and Smashburger), COO (Scott North of Sprouts Farmers Market), president (Steve Black of Sprouts) and chief merchandising officer (Peter Gialantzis of Whole Foods).

They all remember their first moment of Lucky’s culture shock, when they discovered just how differently this place operates. For Lucky’s department manager Brittany Strachan, that came during her first cashier training session, five years ago. A customer returned kale with some bug bites in it — hey, it’s organic! — and because Lucky’s has a policy of limiting food waste, Strachan’s boss asked her if she wanted to take the kale home. “I was like, ‘Is she trying to trick me into getting fired on my first day?’” Strachan says. So she turned down the kale; her boss took it home instead. “The atmosphere here is miles different from anywhere else,” says Strachan. “I worked at Pearl Street, one of the biggest Whole Foods in the country, a crazy machine with so many moving parts. Then I came here and everyone was having fun and joking around.”

The sharons’ path was long and unassured, but their timing couldn’t be more fortuitous. Just as Lucky’s is evolving from a regional to a national brand, the marketplace is as ripe as their fruit. “Up until this point, ‘better for you’ items were limited to Whole Foods and other upscale retailers,” says Michael Paglia, director at the market insights and consulting firm Kantar Retail. “Within the past year or so, there’s been a shift, led by retailers like Kroger, Lucky’s and Trader Joe’s’ parent company, Aldi. We’re starting to see the natural/organic trend hit a critical mass; it’s starting to go mainstream.”

And so, Lucky’s is now heavily focused on growth. New locations are being built, finalized or opened in South Boulder, Colo.; Traverse City, Mich.; and Florida, where five new Lucky’s will spring up across the state. The locations speak to Lucky’s strategy of, once again, doing things differently than other grocery stores. Whole Foods and its ilk have largely pursued more affluent regions, where shoppers are primed to value organic food and pay its high price. But Lucky’s 24 locations are elsewhere, in places where the brand can be viewed as a trailblazer.

“Our goal is not to take over the coasts,” says Bo. “If we’re able to someday spread that way, it’d be totally awesome, but I feel like there’s so many people who need what we have more somewhere else. The fact that we were able to survive and flourish in Boulder was kind of like, ‘If we can do that here, why can’t we do it anywhere?’ Blue-collar people deserve fantastic food just as much as the wealthy do.”

And with that comes a different kind of Lucky’s customer: the competition.

“We opened up this crazy store in Columbia, Mo.,” recalls Nick Gulizia, the then college kid who in 2002 helped repaint the North Boulder Market. “And all of a sudden you see these Hy-Vee executives walking in with their ties on, checking it out. It’s been an eye-opener for conventionals that are archaic in some ways. They realize, ‘Uh-oh, Lucky’s isn’t just a small mom-and-pop place. They’re actually putting a dent in our sales, and we need to react to that.’”

Gulizia has been working with the Sharons since that paint job. Now he’s one of Lucky’s top product managers. The way he figures, why go anywhere else?

Jon King and Jim Stott founded, which is an almost $100 million business. But 25 years ago, the business (and life) partners began their company with a series of happy accidents.

How’d you guys get started?
Jon King: For the holidays one year, Jim and I wanted to make homemade jams and sauces. I was working part-time at a greenhouse and brought our leftovers in. A woman suggested that I sell it at the local farmers’ market. I had huge student debt, so a few extra hundred dollars on a Saturday? Totally game.

Related: 

What was your approach to the market?
We never had a — we just made what we wanted! If we were making strawberry jam and it didn’t set, we’d call it strawberry syrup.

That’s similar to how you created one of your most popular products, Roasted Garlic Onion Jam, right?
We were making garlic relish for hot dogs and burgers, and it called for a certain amount of sugar, to sweeten it a bit. I added the sugar, but Jim didn’t know, so he added the sugar, too. The batch just set — it was completely solid. But I was like, “We are not throwing this out; we made 120 jars!” So I called it to jam and told everyone it was for bagels and cream cheese. And people loved it! So we just kept telling them it was a brand-new product for crackers and cheese.

What was your biggest lesson at the farmers’ markets?
This woman came up to us — she later became our — and asked if we were selling. And I said, “I don’t even know what that means!” She bought everything in our van that day and sold it at this old family farm in New Hampshire. I drove over to see the display she had made, and she had doubled the price of everything. And I just thought, Aha! This is the difference between retail and wholesale! So the next week at the market, we upped our prices from $3 to $6. Our customers screamed at us, but they kept buying.

Related: 

So how did you go from the market to retail?
Crate & Barrel was our first large national account. They called and ordered 2,000 jars of marmalade jam. We were still doing everything by hand, so we told them it would take three months, and they said they’d wait! We made the jam, and I sat their one-night writing labels. I was like a machine — I could watch Entertainment Tonight and drink wine and just write as fast as I could. And I wrote, “Orange Cranberry Marmalade” on all of them. I misspelled marmalade! When they called to tell me, I did some quick thinking and said, “We’re from Maine; that’s how we say it here!” They loved it. Thank God.

Wal-Mart’s four years at the top fortune 500 list has confirmed that the retailing giant is all powerful and unstoppable. Its great success over the last decade and half isn’t a smooth sailing and does bring its own critics regarding the company’s business practices. Management reluctance to let employees for union, Biased against women for certain jobs and hiring of illegal immigrants to clean up the stores are just few of the high profiles cases has severely tarnished the image of the company.

In all the above incidents Wal-Mart has faltered on both the founding principles of Caux Business principles namely Kyosei and Human Dignity. Kyosei in Japanese means living and working together for common goal and Human Dignity refers to treating of each person as an end not a mean to achieve ends. The harshest critics has called Wal-Mart a destroyer of American dream, according to them today most of the Wal-Mart employees are working as low wage data entry operators with a miniscule chances of moving into the middle management.

Secondly their biggest concern is that the reluctance of management to let the workers form union, presently Wal-Mart is paying near to nothing in terms of health benefits to its employees and all efforts to stop the union indicates that it will squeeze more from its employees and suppliers to deliver low prices. Wal-Mart has also faltered on Human Dignity count by its mistreatment of illegal immigrants, who are used to clean up the stores in the night and paid next to nothing.

Wal-Mart can lighten up some of the blemish by charting out a transparent and just employee policy. It has already done a great good to average Americans by increasing their purchasing power; it can do the same with its employees. The company on the top of the ladder of fortune 500 can pay extra pennies out of its pocket to provide a good healthcare cover. It should have clear employees’ policy that is not biased against women, preventing them from moving up in hierarchy.

Above all It has to balance its ‘low cost’ policy, too much of it and the company may end up squeezing too much from its supplier who did the same from its own employees and natural resources. Knowledge@Wharton (2004, April 21). Wal-Mart’s Mega-Growth Continues, But Is its Image Getting a Bit Tarnished?. Retrieved August 09, 2006, from http://knowledge. wharton. upenn. edu/article. cfm? articleid=965 Knowledge@Wharton (2006, June 14). Wal-Mart: Is There a Downside to Going Upscale?. Retrieved August 09, 2006, from http://knowledge. wharton. upenn. edu/article. cfm? articleid=1499

Dr. Pepper/Seven Up, Inc. is the company which produces the brand Squirt. “Squirt is a caffeine-free, low sodium carbonated soft drink brand with a distinctive blend of grapefruit juices that gives it a tangy, fresh citrus taste. Squirt is the best selling carbonated grapefruit soft drink brand in the U. S. ” (Kerin and Peterson, 2010) Kate Cox, the brand manager responsible for Squirt believes that market targeting and product positioning are key elements in Squirt’s advertising and promotional plan development.

This case study will provide a summary and analysis of Dr. Pepper/Seven Up, Inc. ’s options and the examination into the company’s strengths, weaknesses, threats, and opportunities. Problem Identification One of the key problems which need to be addressed is the decreased market share by Dr. Pepper/Seven Up, Inc. Some reasons for this are several issues related to the advertising and distribution of Squirt. Dr. Pepper/Seven Up, Inc’s current program is not reaching the largest target audience available. Squirt is not focusing on valuable characteristics such as ethnicity, demographics, and target audiences.

America’s consumption of soft drinks is on the rise per person and therefore with effective advertising to the correct target audience, increased market share is achievable. Another problem is that Squirt’s distribution is currently not represented in all the top 10 cities throughout the United States with Hipics and studies have shown that Hipics prefer the fruit flavored carbonated soft drinks. Dr. Pepper/Seven Up, Inc. , has asked Kate Cox to draft the annual advertising and promotion plan for Squirt in the U. S. and then present this to senior management for review and approval prior to implementation.

Case Analysis Dr. Pepper/Seven Up, Inc. is the largest division of Cadbury Schweppes PLC who is the world’s third largest soft drink company. This company’s head quarter office is located in England with the distinction of being the world’s first soft drink manufacturer and the largest non-cola soft drink producer and marketer. Dr. Pepper/Seven Up is the largest non-cola soft drink enterprise in North America and is ranked third in sales with 14. 7% market share. Squirt’s current advertising uses a variety of media including spot television and radio, freestanding inserts in newspapers, and cable television.

Squirt also used retail, consumer, and trade promotions. Squirt focuses more on retail, trade and consumer promotions and cooperative advertising than media advertising expenditures similar to the competitors. However, by missing the target audiences, Squirt’s marketing efforts are not as beneficial in gaining market share as some of the other companies. Some of Squirt’s strengths are the fact that Squirt is represented in about 83% of the U. S. and has the highest consumer brand awareness in the U. S. Unfortunately, the advertising that is currently being done is viewed as juvenile instead of young and hip changing with the times.

A strong marketing and development team which adapts the positioning and packaging to meet local consumer preferences and target the correct market can help to maintain and improve upon these strengths. In the past this has not always been accomplished which is a big weakness for Squirt. Another weakness for Squirt is the limited product line that is being offered. By having a small product line, inadequate marketing and advertising can have a negative effect on the company. Squirt currently is not represented in all of the top 10 cities throughout the U. S. where the target audience is represented.

The target audience should be young adults ages 20 to 49, also keeping in mind that ethnicity has been shown recently to have a large desire for this type of a product. Hipic and African Americans have also been known to follow brand names more closely than other ethnic groups. This is very important research that should be used and developed into the advertising strategy in order to reach the correct audiences who will consume and purchase the product. By correctly representing Squirt in the top 10 cities throughout the U. S. with the highest Hipic ethnic groups per capita, this could improve market share almost instantaneously.

Externally Squirt follows the top two competitors with a much lower percentage of sales in the U. S. By having such a smaller percentage in sales with a new product a competitor could easily overtake the third position in the United States if Squirt is not careful in executing a successful marketing strategy. In contrast, Squirt has many external opportunities which are not currently being sought through the market strategy. One opportunity is to gain market share and percentage of sales in the U. S. by focusing on the correct target audience and their wants and needs as previously discussed.

America’s consumption of soft drinks per person is on the rise. Also citrus flavored soft drinks have not been introduced to all of the areas of the country which leaves the opportunity to gain market share. Studies show that consumers want more fruit flavored beverages which are exactly what Squirt products are. This is an opportune time to lay the ground work for a national campaign which will target increased ethnic groups and capture a larger market share. Identifying the Root Problem Components There are two root problem components currently for Squirt. First Squirt is not being offered in all areas of the U. S.

A focus should be placed on the top largest consumption areas to be sure distribution is being done in those locations, but also a focus must be on the nation as a whole to be sure that from coast to coast there are no large areas being missed in sales and distributions. Secondly all the advertising cannot be universal. A general theme and slogan should be developed, however, from there the advertising must focus on the target audience’s age, ethnicity, and region which they live in.

An example of this is if the commercials were constantly shown in a tropical location, this would not be relatable to someone who lives in the central U. S. which does not have beaches and the tropical backgrounds. The advertisements should focus on appropriate age and trends for this age and ethnic group. Evaluation of Alternatives Squirt has three choices in regards to market targeting and positioning. They can continue market targeting and positioning with the strategy that they currently have or the can use a refinement in Squirt’s target marketing and positioning as recommended by Foote, Cone, and Belding consultants (FCB) or they can adopt a completely new market targeting and positioning strategy.

With the current strategy which is being used, Squirt is not focusing on ethnicity and therefore is losing potential market share in the heavier populated ethnic areas. According to the case study, “Ethnic markets are a huge growth opportunity”. The current strategy is also in need of changes as the audience views the advertisement as juvenile. Finally, the current strategy is not reaching all areas of the U. S. One example of this is Squirt does not have a bottler in the New York City metropolitan area.

FCB recommendation of refining the current strategy would consist of developing a strategic platform to help grow volume and maintain Squirt’s leadership as the number one grapefruit carbonated soft drink. (Kerin and Peterson, 2010) The new position Squirt would use to build a creative advertising execution would be “For young multicultural adults who thrive on the excitement and spontaneity of living up to the max, Squirt citrus soda fuels your thirst for living life loud, with an exhilarating taste that’s powerfully thirst-quenching! (Kerin and Peterson, 2010) By using this platform, market share would be gained almost immediately once these ethnic groups began using the product and the product was available in their region of the U. S. This new campaign would also update the image of the advertising to abolish the view of Squirt as being juvenile. By concentrating on these particular audiences more distribution would occur.

A downside to this would be that since the focus is so strongly on the ethnicity, Squirt could lose some of the current customers that were previously focused upon and do not seem to be a part of the target audience as much anymore. Finally, Squirt could develop an entirely new marketing strategy. By doing this, research would be done again in order to develop the best possible means of who the target audience is, where concentration should be focused, and how to execute the strategy in the best, most efficient way possible. Recommendation

Currently since Squirt is the third largest soft drink company and they have 83% representation throughout the U. S. , the marketing strategy must have some pretty good techniques implemented. The concern is the missed ethnic audiences. It is recommended that the current strategy be kept, however, the FCB recommendations be meshed into the strategy as well to help improve the loss of audience and adopt a new improved, and up to date image. By keeping the best points to each strategy, the advertising and marketing will be better than ever and will achieve the goals which are desired.

The new strategy therefore will be maintaining the current target audience age and concentrating more on the African American and Hipic groups in the areas of higher concentration of these races in order to gain additional market share. By creating the new advertising to aim at the youth in an up to date trendy way, Squirt as a brand will not be viewed as “juvenile” any longer. The decision to adapt the current strategy and meld it with the suggestions from FCB was made due to the potential benefits outweighing any risks that there are.

Wal – Mart stores were established in the Western Germany City many years ago, constituting of retail stores. They almost lost hope in the German business they provided very competitive prices in the market and they had quality food stuff which they were supplying in the market but because the prices of the groceries were very cheap in the German discount chains. The most of the clients never managed to shop at the Wal – Mat grocery stores because it was located at the outskirts of the town which was out of reach for most customers especially those did not have cars. Also they faced others challenges like huge expenditures due to the site location something that did not please most of the customers.

It took Wal – Mart more that ten years to establish in the market and failed to become a good shopping destination for most Germans, the same thing they experienced in America. They also struggled in other countries like South Korea and Japan after they biggest trouble they faced was cheapness of groceries in the market and obsessive records control and a major collection of goods that did not meet their own budget and customers with differing ways of life. Particularly Wal – Mart had a very bad experience in Germany because of the loss they suffered, costing them millions of dollars thus blocking them from developing further in the country.

It was a crucial lesson they learnt in German, as even afterwards the company’s spokes person commented saying due to their little experience they had to go through so many problems and afterwards they harvested fruits of success and honor. Today Wal – Mart has made huge profits, with over 70% of its income coming from out investments.

Wal – Mart today is attempting to join together acquisitions with more understanding which is a more challenging issue for their different companies all over the world and how they can civilize their non American workers. Today due to increased demands on their products in German the sales representatives no longer need to struggle when doing their job, a thing that is very uncommon with most Germans.

For Wal – Mart to fully establish in the German took them too long, a factor that came afterwards to their own favor and favored them to penetrate other regions like China. Today Wal – Mart has continued investing in the international markets and thus attaining a great success.  Through their good strategies of investments, they have continued purchasing other companies outside the country and partnering with other companies a factor that has helped them increase their shops and creating employment something that has greatly favored them and acquiring great things. Although they still face many challenges including their competitors who have continued progressing in this business.

For the last few years has expanded their investments in terms of assets and is rapidly growing with recording an over 30% of growth in terms of sales, as compared with hard times especially when at times they have go through huge losses. This is a noticeable growth for any company facing all this kind of challenges.

Maintaining the good pace was important for Wal – Mart n the market, especially because of rising fuel prices that weakened the purchasing power for Germans thus reducing their profits and growth as their was a continued competition in other countries like India. Wal – Mart continued increasing their profits and sales but faced so many challenges like it could not relate well with German labor union due to failure to comprehend with the fact that in German most of the companies had good relations with the union as their top management team did not want to have anything to do with the union as they thought they were self centered. The two opposing sides later agreed and united, they continued working together and these gave them a concrete chance to build their business and organize their workers in all stores. They later found a better site which they bought and settled the company, this helped the company relocate away from its bad locations to a place where they reached their clients with easiness and secured an ideal environment for business.

Due to increased challenges the company was facing, Wal – Mart had to close one of their major branches, something that most of their employees were not happy with and most of them decided to stop working instead of shifting. This is something that further challenged the Wal – Mart especially in the markets where there was fully developed and investors who continued offering great discounts. Customers continued complaining every time they shopped at Wal – Mart stores saying things were always cheaper in other places they bought before. The company had also entered into different markets as a non food retailer and also planned to open major branches that will also be selling food stuffs but the analysts predicted that they would be facing major challenge in more established companies.

Wal – Mart had also other flourishing markets and in these areas the company was operating the most vibrant retail stores. Due to the knowledge they obtained in German, they were able to manage better their other branches and they had to employ the staff members who had worked before in Germany as they were more experienced and adapted. They tried introducing new product but they were still challenged as most shoppers preferred buying at cheaper markets and some of these newer products were not familiar with their customers.

Other they faced challenges were like most of their customers could not fit their American style which they were attempting to introduce in the foreign markets. As I conclude Wal – Mart had tried to change their style but this was too late. Wal – Mart had nothing against the inter marriage in the company as most workers had done, the companies top management team assured the public that they were positive with love matters as long as they could not affect the business. Wal – Mart launched in Germany in the year 1997, and up to this day they supply only 2% of German food sales and thus they have not fully dominated in the market. The competition has continued growing stiffer and as their main rivals has continued upgrading their stores and because of this reason they also have to spend millions of dollars on renovations. But in the year 2004 they recorded noticeable profits and they continue pushing forward despite the numerous challenges they face. The Wal – Mart is far away from attaining its goals, in terms of profits and assets. The greatest needs they need to acquire today expand more in terms of profits and yield more from their customers. Partnering with other big companies of Germany which will help them multiply more easily and build more bigger stores thus reaching the shoppers all over the country with easiness.

References

Landler, M. and Barbaro, M. (August 2, 2006.) Wal-Mart finds that its formula doesn’t fit every culture. New York Times. (Electronic version). Retrieved from Lexis Nexis Academic Universe: Retrieved on 11th Dec 2008, also available at http://www.nytimes.com/2006/08/02/business/worldbusiness/02walmart.html?scp=1;sq=Landler%20Barbaro%20wal-mart;st=cse

Wal-Mart: Struggling In Germany. BusinessWeek. (Electronic edition): retrieved on 11th Dec 2008, available at http://www.businessweek.com/magazine/content/05_15/b3928086_mz054.htm

 Wal-Mart lesson: Smiling service won’t win Germans. The Christian Science Monitor** (Electronic version): Retrieved on 11th Dec 2008, available at
http://www.csmonitor.com/2002/1017/p07s01-woeu.html

An extended warranty may be purchased at the time you buy your electronic device or appliance; it may also be possible to purchase one much further along in your ownership experience. If you’re the type who likes to be prepared for all eventualities, an extended warranty may be just what you’re looking for. Bearing in mind the ever-increasing cost of electronics repairs, these contracts can make a lot of sense. The purpose of this paper is to delve into consumers’ viewpoints on extended warranties.

The topic will be further analyzed by studying the extended warranties offered by Future Shop and RadioShack. Then, a few consumer interviews will be presented detailing their previous experiences with extended warranties from the two stores. Lastly, the paper will conclude with a brief discussion on the validity of extended warranties. Definition of an Extended Warranty An extended warranty is a contract purchased to protect the consumer goods against the unexpected costs of breakdown, for a specific period of time. The time can range from period of 2 to 4 years.

This normally begins after manufacturers guarantee. These are usually bought directly from the retailer and sometimes offer coverage for theft and accidental damage. Background Information on Future Shop Established in 1982, Future Shop’s first store was located in Vancouver, British Columbia and showcased 4,000 square feet of the latest consumer electronic products. During in the late 1980s, Future Shop followed an aggressive growth strategy, quickly expanding operations in provinces of Alberta, Manitoba and Ontario.

In some 20 years, Future Shop has grown from a “one store Operation” located in Burnaby, British Columbia, to Canada’s largest, fastest growing national retailer and e-tailer of consumer electronics with more than 100 stores from coast to coast and still growing. Background Information on RadioShack Radio shack on the other hand was established in 1919 in Fort Worth, Texas. Two brothers, Theodore and Milton Deutschmann, opened the first retail store in the heart of downtown Boston.

RadioShack has formed strategic alliances with some of the best known and most trusted brands in the consumer electronics and computer industries – including Compaq, RCA, Sprint, and Verizon Wireless. They have positioned themselves for consistent and sustained growth. In just over five years, RadioShack has essentially “reinvented” itself into an innovative company that is, with each passing year, moving further from a traditional retailer to a leading-edge growth company.

Benefits of Purchasing Extended Warranties

1. Offer peace of mind
2. Allow repairs to be made when one needs them.
3. Most include a replacement good if there are no available parts for repair in shop.
4. Protect against the rising cost of repairs.
5. Added resale value- most is transferable.

• Allows repairs to be made in accordance with level of coverage
• Ensures consumer goods are always in best possible mechanical condition.

Major Drawback of Purchasing Extended Warranties

The average cost of the warranty policy is often much higher than average cost of repair. Improved product designs mean that appliances do not break down the way they used to.

In general, appliances are more reliable and most people won’t need to use their extended warranties at all. For instance, it is sensible to pay $8 for an extended warranty on a kettle when the replacement price is $30. “An extended warranty can cost from as little as 10% to more than 30% of a product’s retail price. Some industry observers claim that because of the razor-thin margins on electronic goods, certain chains make more money hawking warranties and service contracts than they do selling actual merchandise. ” (Menzies, 2001)