Leave it to the company that so many people love to hate to first reinvent corporate social responsibility ("CSR") and now take on marketing.

Walmart has announced that it's creating a new function, called "marketing operations," and slotting its architect of corporate sustainability into the role, and it's taking its private brands marketer and putting her into the sustainability job. These moves say profound things about the marketing world, how Walmart is reinventing it and, by default, how it's leaving other marketers in the dust.

Walmart Blows Up CSR

One of the reigning myths in marketing is that companies need to do "good works" because consumers value them, so most big brand names sacrifice some small, token percentage of their marketing budgets to making mostly symbolic gestures. Often times these campaigns are intended to offset deep seated and real concerns about businesses (so fast food brands sponsor programs on healthy living, and cosmetics firms fund campaigns to encourage their consumers' self-esteem). Other programs are intended to link brand names to topical issues, like environmentalism. There are even campaigns like Pepsi’s "Refresh Project" that give money away for the sake of giving money away, hoping to attach a name to good works generically.

CSR is racket, for sure, and it's evidence of marketing's failure to discover and deliver branding messages that are meaningful, relevant, and offer utility to consumers. There's no hard evidence that spending infinitesimal sums of money on such gestures does anything to help sell products (retroactive arguments to find proof of its value in stock prices isn't causal, but rather interpretive and hopeful). It's just lazy, and more than somewhat dishonest.

Enter Walmart, which is a company that has no interest in hitching its name to the latest pop myth. Walmart exists to maximize its revenue and profits, and it's a terribly efficient machine at doing both. Years ago it saw a business opportunity in sourcing environmentally responsible products; it did the math, not based on calculations of consumer emotions or other vague measures from marketing, but rather the tangible costs of production (manufacturing, shipping, stocking) and consumption (user experience, durability, ease-of-replacement). It determined that there was real value in doing so -- both in terms of of saving money on its cost side while increasing tangible value for consumers -- and kicked-off an internal campaign to remake its business based on this opportunity.

Matt Kistler was the guy who'd been running it until he was tapped for the new marketing operations job.

The Light Bulbs Go Off

Forget branding for a minute: the impact on reality of Walmart's decision is utterly immense. Take fluorescent light bulbs as an example. The company decided it wanted to sell 100 million compact fluorescent bulbs in 2008, which represented a 50% increase in how many would be bought in the US. It held a "light bulb summit" for manufacturers and challenged them to increase production. Everyone had minor heart attacks and then got down to business.

The company surpassed its goal before 2007 was over. Major manufacturers like GE credit Walmart with causing it to build the production capacity that would drive down costs, making the environmentally responsible bulbs price competitive with traditional incandescent bulbs.

You could take every CSR campaign from every other big brand name in the world during the past year and put them together and they still wouldn't match the impact Walmart had with this one product.

Its Supercenters carry over 100,000 product SKUs.

Walmart has proven that true corporate responsibility is synonymous with good business practices, and it chooses to spend its resources doing the right things instead of talking about them. Again, feel free to hate the company, but it is inexorably working toward making itself impossible for consumers to live without.

Putting Kistler into the local marketing slot suggests to me that it's going to take the same substantive, real, and sustainable approach to local marketing that it put against sustainability. Imagine if it could reassess all the product sourcing, good works contributions, marketing promotions, employee policies and services, and everything else it does on the store level...and then integrate all of it with its local consumers and communities? It would put every social media experiment to shame, and reveal its competitors to be distinctly detached from the reality of their markets.

Walmart is changing the way marketing is conceived and delivered. Hats off to them for taking the steps that most of the marketing experts are incapable of conceiving, let alone executing.

From Image to Reality

Concurrently, the company is moving Andrea Roberts into Kistler's old job. Roberts had been in charge of launching its Great Value store brands and then leading its private brands overall. From what I can tell, her tenure was a success, but it was clouded by all of the typical branding nonsense about consumers having "emotional connections" with products like laundry detergent and television sets. For all of Walmart's futuristic vision for tangible marketing, this approach of assessing hazy internal consumer mindsets is pure 1950s and it isn't working for many companies, if any. It's communications without substance, and in period when the economy was crashing and consumers were suspicious and cost-conscious, it's virtually impossible to separate out any impact such branding had on the sales success of Walmart's private labels.

I'd wager it had none. People find low prices desperately emotionally satisfying. End of story.

So perhaps putting Roberts into the sustainability job is giving her a tour of duty in reality? How much more powerful would its private label brands be if they were conceived and delivered with the same eye to tangible, substantive benefits that drove the company's move into fluorescent bulbs? Could this experience make Roberts another internal agent for change across the company?

Again, Walmart is reinventing marketing without talking about marketing or the happy nonsense of CSR...it's working on its business, and marketing seems to be getting further integrated with its operations. This has profound implications, perhaps signaling that the long-term solution to the crisis for brands is to merge marketing as an SME into the operational fabric of business?

Lots of bulbs going off there. Not all of them dim. :)

(Image credit: From http://www.inhabitat.com and a story on Walmart's Sustainability Index)

Original Post: http://www.dimbulb.net/my_weblog/2010/09/walmart-is-reinventing-marketing.html

Leave a Comment