“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” Sam Walton. Sam’s Club is a large company with still a big room for improvement. Not only do they have to deal with the economy, but they also have to fight there headstrong and powerful competitors. Although Sam’s Club doesn’t have a link that goes right out and tells how they do all of their market research we can make a very educated guess on how they do so. Throughout this paper we will discuss and analyze how successful Sam’s Club is at creating and managing their marketing strategies.
Sam’s Club has many measurements and standards that they collect to assess their performance. Since Sam’s Club made Brian Cornell CEO of their company; the chain has tiptoed upmarket. Mr. Cornell believes in the idea that if you are aware of your customer’s pain points and take those away, then you have a customer for life (this is actually what Steve Jobs said). Cornell has utilized global information and has made Sam’s Club carry more private labels which is the trend in Europe. He has also recognized the budget of the average American home and how much they are willing to spend. (Cornel) He has put this into consideration with price and promotion. Sam’s club is about $50 to $60 billion in sales, second to Costco’s $88 billion. While Cornell does not expect to rise above Costco in the near future, he does predict that both chains will do well in the next few years, he believes that there will be at least a 5% annual increase in sales, due to the value and cost savings consumers now desire. (Cornell) Besides this, we have searched a lot to see if Sam’s has a focus group of sorts for Sam’s to get good information about how to assess their performance, what we have found… may have even been better. Sam’s Club has given us the consumer the ability to post about how we feel how good their products are online at “Viewpoints”. (Conover) But Sam’s doesn’t stop here, after moving their headquarters next to Wal-Mart’s in Bentonville, Ark.; they added a fancy test kitchen and would bring in customers to taste food and comment on it. (Zimmerman)But it doesn’t end there! Brian Cornell, himself, and other Sam’s Club executives would visit stores and talk directly with customers. This need to be customer-centered drove Cornell to be more technology invested. (Cornel) Sam’s Club would also take into consideration when analyzing their selves, their comps or the sales at stores open at least a year. (Moskowitz) These are all great ways that Sam’s uses to help themselves better their marketing strategies.
Sam’s would like to imagine themselves as the top dog, and although they are at the top.. they sill fall short to being the King. Sam’s Club faces competition from Costco and other membership warehouses in the brick-and-mortar space, and it must contend with Amazon and other retailers online. (Moskowitz) The basic strategy of Sam’s Club was to elevate its merchandise assortment to highlight newness, which was expected to drive sales growth, which is easier said than done because Sam’s just had their worst quarters in history. (Moskowitz) Sam’s Club desires to fulfill all of their clientele needs and to expand their target customers to more than just smal business owners. But according to many different sources, Costco is believed to have superior products, making them more appealing than Sam’s Club. (Costcovs.Sam’s) But Sam’s Club is the optimum choice when shopping for electronics in comparison of the two. In the end, Sam’s Club is $50-$60 Billion in sales compared to Costco’s $88 Billion. VWhile Sam’s Club does offer great value and lower priced alternatives, Costco’s stil overrule with the quality of their own products. (Cornel) Although Sam’s Club has worked hards to deliver on their promise of eliminating unnecessary costs and maintaining a simple shopping environment and passing on the savings to their members; (Sam’sClub) their operating income has declined 1.4% for the last quarter and a Diagram I found said that their Free Cash Flow had sunk to a low of 1.3 Billion. Although Sam’s Club has had a hit thanks to Costco some people still believe that Sam’s may be the better choice between the two. Cheapism.com Reviewed Sam’s on a very positive note saying “the superstore was clean, well-organized, and well-stocked; membership enrolIment was easy (started at $40) and checkout was super fast.” And they also agreed that from what they had purchased between the two warehouse clubs, Sam’s was around $11 dollars cheaper. (Conover) In fiscal 2013, Sam’s Club generated about $57 billion in sales and $3 billion in membership income. (Forbes) Which is still amazing, although Sam’s is only second best… they are still making up in the billions! Not millions, Billions!!! Even now Sam’s Club has steadily improved their sales, delivering a rare bright spot. (Zimmerman) Since 2007 they have opened up around 23 new stores and have together improved their own sales.
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When looking at Sam’s Clubs revenue one would believe that the company is doing extremely well, which they are. However, compared to their number one competitor, Costco, they are not doing as well. When looking at the average dollar per hour that each company’s employees make studies show that Costco’s employees receive about five and a half dollars more when starting with the company. (Rowe, 2014) If they are paying their employees so much with a lot of benefits how are they still managing to get higher revenue each year? Costco’s customers are shown to spend more thana Sam’s Club member per transaction and they tend to come back more often. A chart showing the differences between Costco and Sam’s Club shows that Costco’s revenue in 2013 was 105.1 billion while Sam’s Club’s revenue was only 57.1 billion. (Shreerams, 2014) Although they are not performing to the standards that their main competitor is creating, they are still maintaining a fairly good profit. Looking at their yearly revenue from 2000-2010 Sam’s has had a steady increase. The increase is not by much but it is still an increase. There are no fluctuations negatively or positively. (Wal-Mart, 2010)
Sam’s Club has used all this information: Market Research, understanding their market shares, discerning between their desired and actual state, and working on their tactics to help fully optimize their market strategies. I believe that they are doing their market strategy successfully. Since they hired the newest CEO and began to change this to help improve the Club, they have successful began to raise their sales and value annually. Although they are rising slowly and their stock prices are still lower than Costco, they still are not yet defeated dreaming of the bigger picture and not the “now”.
