The Wal-Mart Flap
Tales From The Marketing Wars
The Wal-Mart Flap
Jack Trout 12.19.06, 6:00 AM ET
Nothing has excited and riled up the advertising agency business as much as Wal-Mart's recent firing of Julie Roehm and the agency she just hired.
It was all over the business press, but nothing captured it better than the big headline in Advertising Age magazine that proclaimed: "Unruly Julie and the Scandal That Rocked the Ad World."
For those that missed the flap, Julie's problem was supposedly accepting fancy dinners in New York City, driving around in a fancy car with an agency head, pushing her favorite choice of agency or even having an affair with her assistant. The agency world hasn't had excitement like this since the time that Mary Wells of Wells Rich Greene married the CEO of her biggest client, Braniff International (and had to resign the account). Mary always had a lot of style.
Ms. Roehm was hired to help Wal-Mart change from a down-market, price driven image to one that would attract the likes of those suburbanites shopping at Target and other slightly up-market establishments. Famous for her edgy double entendre marketing at Chrysler, she rode into the Wal-Mart culture like a tank driving through a brick wall. Julie described all her problems to being a "change agent" in an organization that didn't really want to change.
What is missing in all these articles is an analysis of whether or not Wal-Mart can or should change. I've written in the past that once a brand has established itself in the value or price category, it is almost impossible to go up market and attract a group of customers that are already going for fancier brands. Wal-Mart is a mass merchandiser that clearly is all about "always low prices."
That's why people shop there.
And their culture, store layouts and advertising push price for all it's worth. Retailers such as Ames or regional price players such as Caldor's tried to compete on price but are long deceased.
Target played it perfectly. Rather than go head-to-head with Godzilla, they decided to offer mass with class, or department store type merchandise for less. They used unique designs and nicer store layouts to attract those folks that were a bit more up-market and tended to look down on the down-market, Wal-Mart shopper. Remember, when you walk into a Wal-Mart, you are telling the world you are a price shopper. When you walk into Target, you are telling the world you have a little more taste than a price buyer. When you walk into Neiman Marcus you are telling the world that you have a lot of money and a great deal of taste.
Like everything else in this very competitive world, trying to be everything for everybody just doesn't work. You are what you are in the minds of your customers and prospects, and leaving that position tends to generate confusion. Higher prices in a low-price store just suggests to your customers that you might be ripping them off.
The same goes for products. When Toyota went up market with a $50,000 automobile, it gave it a different brand name (Lexus), as did Honda (Acura). They didn’t want their customers to feel they were buying puffed up Toyotas or Hondas.
So, to me, someone at Wal-Mart recognized that change was not such a good thing for Wal-Mart to pursue. (Absolutely.) And with that realization, Julie and her new agency were no longer needed. In fact, if they hung around, all they would do is cause confusion among employees and customers. (Absolutely.)
Of course, this is past. What about the future? The answer to this question is now in the hands of John Fleming, the chief marketing officer. Already, you're reading about suggestions being lobbed by all the so-called experts. Be more targeted. Evolve. Stop making everything a commodity. My take is that if you're about value, talk more about value instead of price. You might even let your customers get a peek at what they do behind the shelves to offer that value. And you certainly can make the shopping experience better with friendlier service. (Think Southwest, which has flight attendants doing stand-up comedy.) What they shouldn't do is get fancy and try to go up market against the likes of Target.
All this points to a simple truth: It's never too early or too late to correct a mistake. No matter what the embarrassment.
With more than 40 years of experience in advertising and marketing, Jack Trout is the acclaimed author of many marketing classics, including Positioning: The Battle for Your Mind, Marketing Warfare, The 22 Immutable Laws of Marketing, Differentiate or Die, Big Brands Big Trouble, A Genie's Wisdom and his latest, Trout on Strategy. He is president of marketing consultancy Trout & Partners and has consulted for such companies as AT&T, IBM, Southwest Airlines, Merck, Procter & Gamble and others. Recognized as one of the world's foremost marketing strategists, Trout is the originator of "positioning" and other important concepts in marketing strategy.
The Wal-Mart Flap
Jack Trout 12.19.06, 6:00 AM ET
Nothing has excited and riled up the advertising agency business as much as Wal-Mart's recent firing of Julie Roehm and the agency she just hired.
It was all over the business press, but nothing captured it better than the big headline in Advertising Age magazine that proclaimed: "Unruly Julie and the Scandal That Rocked the Ad World."
For those that missed the flap, Julie's problem was supposedly accepting fancy dinners in New York City, driving around in a fancy car with an agency head, pushing her favorite choice of agency or even having an affair with her assistant. The agency world hasn't had excitement like this since the time that Mary Wells of Wells Rich Greene married the CEO of her biggest client, Braniff International (and had to resign the account). Mary always had a lot of style.
Ms. Roehm was hired to help Wal-Mart change from a down-market, price driven image to one that would attract the likes of those suburbanites shopping at Target and other slightly up-market establishments. Famous for her edgy double entendre marketing at Chrysler, she rode into the Wal-Mart culture like a tank driving through a brick wall. Julie described all her problems to being a "change agent" in an organization that didn't really want to change.
What is missing in all these articles is an analysis of whether or not Wal-Mart can or should change. I've written in the past that once a brand has established itself in the value or price category, it is almost impossible to go up market and attract a group of customers that are already going for fancier brands. Wal-Mart is a mass merchandiser that clearly is all about "always low prices."
That's why people shop there.
And their culture, store layouts and advertising push price for all it's worth. Retailers such as Ames or regional price players such as Caldor's tried to compete on price but are long deceased.
Target played it perfectly. Rather than go head-to-head with Godzilla, they decided to offer mass with class, or department store type merchandise for less. They used unique designs and nicer store layouts to attract those folks that were a bit more up-market and tended to look down on the down-market, Wal-Mart shopper. Remember, when you walk into a Wal-Mart, you are telling the world you are a price shopper. When you walk into Target, you are telling the world you have a little more taste than a price buyer. When you walk into Neiman Marcus you are telling the world that you have a lot of money and a great deal of taste.
Like everything else in this very competitive world, trying to be everything for everybody just doesn't work. You are what you are in the minds of your customers and prospects, and leaving that position tends to generate confusion. Higher prices in a low-price store just suggests to your customers that you might be ripping them off.
The same goes for products. When Toyota went up market with a $50,000 automobile, it gave it a different brand name (Lexus), as did Honda (Acura). They didn’t want their customers to feel they were buying puffed up Toyotas or Hondas.
So, to me, someone at Wal-Mart recognized that change was not such a good thing for Wal-Mart to pursue. (Absolutely.) And with that realization, Julie and her new agency were no longer needed. In fact, if they hung around, all they would do is cause confusion among employees and customers. (Absolutely.)
Of course, this is past. What about the future? The answer to this question is now in the hands of John Fleming, the chief marketing officer. Already, you're reading about suggestions being lobbed by all the so-called experts. Be more targeted. Evolve. Stop making everything a commodity. My take is that if you're about value, talk more about value instead of price. You might even let your customers get a peek at what they do behind the shelves to offer that value. And you certainly can make the shopping experience better with friendlier service. (Think Southwest, which has flight attendants doing stand-up comedy.) What they shouldn't do is get fancy and try to go up market against the likes of Target.
All this points to a simple truth: It's never too early or too late to correct a mistake. No matter what the embarrassment.
With more than 40 years of experience in advertising and marketing, Jack Trout is the acclaimed author of many marketing classics, including Positioning: The Battle for Your Mind, Marketing Warfare, The 22 Immutable Laws of Marketing, Differentiate or Die, Big Brands Big Trouble, A Genie's Wisdom and his latest, Trout on Strategy. He is president of marketing consultancy Trout & Partners and has consulted for such companies as AT&T, IBM, Southwest Airlines, Merck, Procter & Gamble and others. Recognized as one of the world's foremost marketing strategists, Trout is the originator of "positioning" and other important concepts in marketing strategy.
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