Walmart Prepares Facebook Push in Drive for Marketing Efficiency

Walmart is applying methods to marketing that have propelled its operations and will become ever more effective in getting its low-cost message to consumers, the company informed financial analysts last week

As reported earlier in this blog, Walmart (WMT) is cutting costs on fixed expenses and applying the savings to creating price separation between itself and its competition. But it also is actively and progressively enhancing its ability to inform consumers about the shopping advantages â€" especially price â€" it offers.

At an analyst meeting last week at its Bentonville, Ark., headquarters, Walmart executive vice president and chief marketing officer Stephen Quinn, said the company had become better at shaping it message but that's only one improvement Walmart has made to its marketing program. Critical to getting its message out more effectively is it's ability to adapt cost-cutting principles and return on investment strategies similar to those employed in inventory and store growth initiatives to marketing.

Quinn said:

A lot of this improvement came through better media planning, through better partnerships, through better precision and focus through our marketing mix modeling. So, we're getting a huge amount of impact based on taking a lot of best practices that we've had for years on procuring our merchandise, and applying those over into media--We intend to keep our message in front of customers so that they really know what we stand for, and it is working.

Quinn asserted that an examination of the evidence demonstrates changing consumer attitudes towards Walmart. The changes provide the company a significant advantage in the future, he said, at least the future that the company envisions.

In Walmart's tomorrow, convincing customers that they should be shopping the store will be a lot easier. Picking up on one of Walmart CEO Mike Duke's favorite themes, that of a new normal where consumers have become significantly more sensitive to the cost of just about everything they purchase, Quinn noted that Walmart studies characterized 56 percent of its customers as price sensitive just a few years ago but that 69 percent fit the criteria today. Considering Walmart's initiatives and the prospects for economic recovery, he insisted that even in improving circumstances, the company will be able to retain customers it has gained in the recession, "And one of the biggest reasons why, is that in a country where the majority of people are price sensitive, our price perception scores with customers have never been higher."

One way it will promote its price advantages is through its web site, where it can actively tout the savings it offers and may force its usually less efficient competitors to respond, a situation that doesn't do good things to their profit prospects. The process is particularly evident in the holidays. Recently, Walmart's online initiative dropping prices on major book releases forced a response from Target, which matched Walmart's stance by cutting the cost of potential bestsellers from almost $30 to around $9. Even with initiatives that are available in store, such as its 100 toys for $10 promotion, Walmart's website becomes a potent tool to keep consumers aware of the savings it makes available in an era when checking prices online has become routine for many consumers.

Deborah Weinswig, a Citigroup analyst , pointed out in a research note that Walmart is using its site "as an important strategic tool to increase price transparency versus competitors, drive new customers to its store, and increase share of wallet. We believe customers who shop online and in-store with Walmart spend up to twice as much as customers who only shop in-store."

Quinn said Walmart intends to be "very big in the world of digital, this year." The company is on the verge of breaking a "very big, significant initiative on Facebook," Quinn said, adding:

We are working with people like Yahoo on content and making sure our products are adjacent to the appropriate content, and with big companies like Google in search. And so I can promise you that as the world digitizes, we're going to be advantaged in that world as well as the media changes.