Credible Claims and Big Savings

Credibility always counts in marketing, but even more these days when consumers are questioning the trustworthiness of their banks, the safety of their food, and the value of the products they are purchasing as funds have tightened up. Interestingly, polls now show that the same people concerned about safety issues in the food system are also exhibiting greater trust in small or local banks. Retail marketing campaigns that aim to capture the frugal consumer are extremely vulnerable to skepticism in the age of internet activism, advice, and response. Setting aside their big blunder with free chicken, Oprah, and coupons, KFC got into some hot water with consumers when a recent ad challenged a family to create a meal from the grocery store for as little as it cost for one of their seven piece dinners (roughly $10). Tons of bloggers and ordinary folks took the challenge and, armed with Joy of Cooking, common sense, and price spreadsheets, "brought the colonel down."

Now, Wal-Mart is faced with a similar challenge. Their new ads are slicker, minus the smarmy happy face, but full of satisfied families getting just what they need (or don't) for low low prices. Recently, Media Post reported that the National Advertising Division (NAD) of the Better Business Bureau is after WalMart because of its claim that it can save customers $700 a year. Wal-Mart contends that its math is good and small disclaimers at the bottom of the ad make it clear that variations are possible. However, the claim is misleading:

While acknowledging that all price-matching programs have terms and limitations that may not reasonably be expected to be disclosed in a TV spot, the NAD recommended that Wal-Mart "make its disclosures substantially more clear and conspicuous in its printed and broadcast advertising and on its in-store signage." It also recommended that it ditch the "$700 annual savings" claim entirely. "The use of the phrase "on average" does not temper the overriding message that the viewer -- wherever located -- can expect to obtain these savings," the watchdog group says in its release.

According to Retailing Today, the NAD also complains that Walmart's cost comparison study (done by Global Insight) looks at a national average rather than considering the competitive landscape of grocers throughout the nation. Indeed, Global Insight's study was designed to look at the impact of WalMart's low prices on the overall economy, but it does make the claim that customers can expect such savings no matter what geographic area they live in.

More importantly, the press generated by the BBB's complaint and WalMart's defiant attitude are more likely to be what consumers hear about rather than the methodology behind Global Insight's research. Being a behemoth, it's not likely that WalMart will take a huge hit from this gaffe, but it doesn't help their larger credibility. We've reached a point, as a culture, where defensiveness is not a successful long term strategy for gaining loyalty.