Post on 15-Oct-2014
transcript
A Dent In Wal-Mart’s Public Image- PR
StrategyPresented By:-
Bhawna Sikka
Nishant Pratap
Arun Yadav
Pooja Jain
Sneha Gera
Sarang Miskin
Nakul Parnami
Presented To:- Prof. Mani Thomas & Class
About Wal-Mart The history of Wal-Mart can be traced back to
the 1940s Sam Walton began his career in retailing at J.C.
Penney 1943: Walton met the Butler Brothers who
owned the retail chain Ben Franklin Stores Ozark Mountain town of 2,900 residents would
become the headquarters for the world's largest retailer
1962: Walton invested 95% of the capital to open the first Wal-Mart store
Introduction To The Case• 2004: Wal-Mart Stores with sales of $256 billion
accounted for 2% of the GDP• Strategy: Everyday low prices and widespread
presence• Emerged as the largest retail store in the world• As it grew in size, it began to draw the attention
of the media and the labor unions• Its non-unionized labor and anticompetitive
practices faced resistance
Contd…• Wal-Mart had been avoiding interaction with the
media and was labeled media-shy • Led to more criticisms against its public relations
policies• Labor lawsuits that alleged low wages, gender
discrimination and illegal immigrant labor further damaged the company’s image
• Consumer advocates publicly claimed that Wal-Mart was bad and cancer on the economy
Contd… Anti-globalization activists blamed the company
for having exploited labor In sweatshops in Bangladesh, China and other
Asian countries to offer low prices to the customers
Campaign Launched• 2005: Launched a major public relations
campaign in 100 newspapers like New York Times, USA Today and Wall Street Journal
• To assure:
1) It was a fair employer
2) It provided most of the health benefits to its employees
• Television advertisements featured Wal-Mart employees especially the women talking about Wal-Mart as a great working place
Contd… For the first time in 43 years, the company had
formally faced media Lee Scott, CEO, Wal-Mart Inc. signed the print
advertisement: “Wal-Mart is working for everyone”
Analysts felt that such a campaign was insufficient to revamp the image, damaged over years
Contd…• This reactive public relations and company’s
defensive stand would further harm the company by attracting more attention
• Other claimed that:
1) By buying media slots in major newspapers, the company was trying to gain favor from media
2) Also, the company was misleading the public with its false claims
For too long, others have had free rein to say things about our company that just aren’t true. We have decided its time to draw our own line in the sand.
-Lee Scott, Chief Executive Officer, Wal-Mart Inc.
I think they are going to have a tough time suddenly overcoming the perceptions of some people. It is going to be a tough sell on their part.
-Larry Bevington, Chairman, Save our Community
Lowest Prices For All- Always World Economies Liberalized, Wal-Mart jumped
to Outsourcing. Continuously focused on its philosophy of
bringing the lowest prices to the customer. It put pressure on its suppliers in US and
Overseas to cut down prices. Wal-Mart became more powerful in its retail
landscape. Wal-Mart demanded the prices of its products to
drop every year which put pressure on its suppliers.
Continued… Merchandise sold in an year was twice more
than all it competitors. Communication strategy revolved around the
lower price strategy that the company believed as its cornerstone.
“Smiley Yellow Face”- promoted its superior image as a discount store that offered quality products at lowest prices.
As Wal-Mart expanded from small towns to large cities, critics questioned its anticompetitive practices.
Continued…. Relied more on central circulars and national
newspapers over local newspapers. In 1994, Fortune magazine named Wal-Mart as
“Most Admired” Company in America. It also faced lawsuits. Critics sent ripples through the public leading to
a large scale opposition against Wal-Mart Local Media were a big criticism to Wal-Mart’s
expansion as it feared increase in failure rate of local stores.
No Comment, Shouts Wal-Mart! Wal-Marts Public Relation took a new turn by the
1990s In December 1992, , in an interview with
NBC,CEO David Glass was questioned about the non-American labor and the low wages of the workers and child labor in sweatshops in Bangladesh
For the charges, Glass affirmed that it was equally depend on American factories for its merchandize and that the Buy American campaign
Not satisfied with Glass reply- NBC in another episode showed Made in USA
labels being hung over the merchandise bought from overseas in most of the Wal-Mart stores
Glass defended that it was mistake at store level and for the child labor he said, we don’t buy from any vendor that uses child labor
Few weeks later, company arranged for another media interaction with channel- Glass remarked that he was not prepared with
facts in previous interview This time, he said, he had evidence to prove that
there is no child labor at the factories in Bangladesh
When reporter insisted showing the videos taken at plants, Glass claimed the videotapes had been doctored and abruptly walked out of the interview.
In another interview with 60 minutes in 1994- When Wal-Mart was charged of impairing growth
of small stores in the country, the company did not react and avoided any interaction with media.
In 1995, during a press meeting at Canada, the company officials seemed so unsure and dubious
However, the growth continued. By 2002, it had 4800 stores and more than $8
billion in revenues.
No Comments, Shouts Wal-Mart..! Wal – Marts was against unionizing labor. Employees were not allowed to interact with
UFCW workers. California and New York oppose Wal-Mart. Discrimination against women. UFCW claimed Wal-Mart workers were paid
30% less than industry norms.
No Comments, Shouts Wal-Mart..! Law suit filed by 1.6 million women workers. Share value drop by 84 cents on NYSE on a
single day. Protests from National Organization for Women. Websites posting criticism about the company.
PR Path: The Defensive Way!
Steps taken to improve its image in the society …
To face communication crisis a PR Team was put in place
Under CEO, Lee Scott PR Campaign in over 100 newspapers were launched
It included the major 1ce like New York Times, Wall Street Journal & others..
Jay Allen, senior VP stated that :-
“Campaign was not response to any recent affairs but was addressed towards long term solution for the image drained over the years”
The CEO confirmed that the campaign wanted to get rid of the MYTHS among the customers, union workers & the public about the company
The CEO also issued an Open Letter in the ads stating that the company provides good jobs with excellent advancement opportunities
PR Team was sent to major metro areas to attend media calls
Employees themselves took initiative to send mails to editors refuting the criticisms
In the Print Advertisements the company held some special interest groups & critics responsible for spreading misinformation
Wal-Mart’s benefits manager sent a letter to New York Times stating that the company provides health benefits to their employees
The district manager wrote a similar letter to The Salt Lake Tribune
The CEO became the 1st person to address the National Retailer Federation Trade Group
In which he openly condemned the medias wide coverage on its imports from china & employees labor policies
The executives declared that IF the policies would have been so bad then the chain would not have grown to the size it did
It changed its low prices proposition which had been guiding its advertising strategy
The commercials the released were not meant to sell any product but focused on creating overall goodwill about the company
“Meanwhile, as the company was working towards restoring good employers image, Federal raids in the store in the country bought to light 200 workers with illegal immigration licenses”
However it reported that the Federal Government had betrayed them…as it stated that “it had already agreed with Federal Government to corporate with the immigration officers in exchange of which it was to be left untouched”
An internal lawyer was appointed to regularly investigate the hiring practices of the company
The company also began to actively corporate to smoothen the investigation process
A professor specializing in Labor Issues stated that “I think we have reached a critical mass of bad publicity for Wal-Mart. Settlements, as expensive as they are, stop the bleeding.”
The company accelerated its image makeover efforts by :- Launching testimonial advertisements 1st time increasing its political donations to
$1 million Other advertisements shoed hoe Wal-Mart
contributed to other local communities In an alliance with NPR (National Public Radio) ,
Wal-Mart announced in radio about it being a good employer
It further began to offer scholarship for journalist studies in about 10 universities nationwide
Some observers claimed that the company was seeing corporate benefits
A Behemoth called Wal-Mart.. Revenue- US$ 421.849 billion. Nearly 2 % contribution to the GDP. Wal-Mart employs 2.1 million associates
worldwide in more than 6,700 stores in the US and more than 1,500 throughout the rest of the world.
Serves more than 138 million customers per week.
“Wal-Mart’s very success may be working against it. Big empires are hard to manage, the public tends
to mistrust institutions that get too mighty.“
– David Berkowitz (Brand Consultant)
Wal-Mart- Accused of doing PR the wrong way. What went wrong ?
Media stone-walling. ‘No Comment’ strategy. Company’s hesitant attitude.
Remedial Measures undertaken : Paid search Ads from Yahoo and others. Launched walmartfacts.com
walmartfacts.com Press Releases. Community Fact Sheet Corporate & Financial Fact Sheet Health & Wellness Fact Sheet Opportunity Fact Sheet Sustainability Fact Sheet How many jobs we provide Average wages Supplier jobs we support How we give back in your community
The Bigger The Worse (Contd.) Negative publicity – bloated in size – affect the growth
prospects of a company as large as Wal-Mart.
UFCW skeptical about the facts revealed – believed that the company was trying to solve the problem temporarily – in reality was misleading the media and the public.
The Democratic Socialists of America challenged Wal-Mart to prove the facts – opportunity to debate its critics.
One PR campaign would not negate the long list of PR blunders of the earlier years.
The Bigger The Worse (Contd.) Not going to make Wal-Mart look like a great place for
low wage workers – downsides too well known.
Must be followed by changes at the factory level – comparing it with the pro smoking ads of the 1930s and 1940s – smoke-and-mirrors diversion tactic.
Image of the company hanging on the prevailing lawsuits regarding gender discrimination and the immigrant labor.
No lawsuits If the labor policies were flawless.
The Bigger The Worse (Contd.) Humility and acknowledging mistakes – willing to
make good.
Spend money on wages and solving problems instead of unrealistic and glossy advertisements.
Wal-Mart’s Financial ResultsYear Revenue($Mi
l.)Net Income Net Profit
MarginEmployees
Jan 04 256,329.0 9,054.0 3.5% 1,500,000
Jan 03 244,524.0 8,039.0 3.3% 1,400,000
Jan 02 217,799.0 6,671.0 3.1% 1,383,000
Jan 01 191,329.0 6,295.0 3.3% 1,244,000
Jan 00 165,013.0 5,377.0 3.3% 1,140,000
Jan 99 137,634.0 4,430.0 3.2% 910,000
Jan 98 117,958.0 3,526.0 3.0% 825,000
Jan 97 104,859.0 3,056.0 2.9% 728,000
Jan 96 93,627.0 2,740.0 2.9% 675,000
Jan 95 82,494.0 2,681.0 3.2% 622,000
Stock ValueYear Stock Price ($) P/E Per Share ($)
FYHigh
FYLow
FYClose
High Low Earns Div. Book Value
Jan 04 60.75 46.01 53.85 29 22 2.07 .36 10.12
Jan 03 63.94 41.50 47.80 35 23 1.81 .30 8.95
Jan 02 59.98 41.50 59.98 40 28 1.49 .28 7.88
Jan 01 64.94 41.44 56.80 46 30 1.40 .24 7.01
Jan 00 70.25 38.88 54.75 56 31 1.21 .20 5.80
Jan 99 43.22 20.09 43.00 44 20 .99 .16 4.75
Jan 98 20.97 11.50 19.91 27 15 .78 .14 4.13
Jan 97 14.13 10.06 11.88 21 15 .67 .11 3.75
Jan 96 13.81 9.55 10.19 23 16 .60 .10 3.22
Jan 95 14.63 10.31 11.44 25 17 .59 .09 2.77
Conclusion
Wal-Mart has been growing at an impressive rate. But, there is no smoke without fire. Present hard facts and figures to the media. Adopt media friendly strategy with backup. Solve problems from within.