For 23 years, the ability to advertise nationally on network television has given Walmart not only greater media cost-effectiveness, but also a television presence that no local or regional competitor could match. But now, Advertising Age reported April 8, they’re shifting advertising dollars from network to spot buys.
In an attempt to create a television version of online advertising’s ability to tailor messages to real-time local conditions, the retail giant plans to run commercials comparing prices against specific competitors in 60 different markets.
Lots and lots of commercials
It’s going to cost them more, because buying time in 60 markets costs more than reaching the same markets through a national buy. It will also cost more because all that tailoring will call for producing far more local commercials – 1,500 this year, according to Walmart’s plan, compared to about 615 that ran last year.
The sheer logistics are so mind-boggling that Walmart’s advertising agency of record, the Martin Agency in Richmond, will be handling only part of the workload. The overflow will go partly in house and partly to other, as yet unnamed, ad agencies.
Just how do they compare?
Each local spot will compare a real consumer’s real cash-register receipt for a real shopping list against the cost of the same items at another specific local or regional competitor in the market. Advertising Benchmark Index consumer panel testing showed that this approach worked 30 percent better than the norm for commercials tested.
A January-February Consumer Edge Research market survey of pricing on 70 grocery items found that Walmart pricing is 19 percent lower than Safeway’s, 2 to 3 percent lower than Kroger, Target and Family Dollar, 2 percent higher than Target with RedCard discounts and 4 percent higher than Dollar General.
That notwithstanding, though, Kroger beat Walmart on beverages, and Safeway matched Walmart on dairy pricing. And a Kantar Retail survey showed that Walmart’s overall edible grocery pricing was 14 percent lower than Target’s nationally (probably 9 percent less with Target’s 5 percent RedCard discount).
Doubts and opposition
Walmart has been working to move upmarket from its core base of low-end consumers, and Consumer Edge analyst Stacy Rabinowitz fears that the new, competitive strategy could fail with the chain’s cost-conscious core customners. “Her company’s monthly tracking survey of more than 2,000 U.S. consumers found Walmart’s most price-sensitive customers, who also tend to be lower income, are most likely to shop around at dollar stores and a variety of other retailers as they cherry-pick the best deals at each,” Ad Age explained.
Even though Walmart’s strategy may not work, competitors have tried to take legal action against it. Complaints to state attorneys general haven’t even gotten so far as prompting any formal investigations.
As the old adage goes, “If you can’t outperform them, outlaw them.”
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