Wal-Mart's new math

Aside from the endlessly repeated word "relationships," the only important thing I remember from marketing class is that, whether you're a consumer products company or a charity, you never, ever want to be perceived as the bargain brand. What you want is to be perceived as offering value, so that customers (read "donors" if you're a nonprofit) feel that the more they spend, the more value they obtain.

Taking this advice too literally could lead one into a dumb mistake like shorting Wal-Mart. If it's a marketing axiom that there's no future in cheap, how did Wal-Mart build such success offering nothing but cheap?

I see two possible answers: 1) Marketing gurus are stupid and wrong; 2) Wal-Mart's brand is actually more complex than its longtime slogan "Always Low Prices" allowed, and you need a marketing guru to explain why. Let's explore option 2.

I would argue that decades after its founding and many years after being universally acknowledged as one of history's most important (for ill or good is merely a matter of opinion) economic entities, Wal-Mart is only now revealing its true branding.

(An aside: the stores, you may have noticed, have migrated from "Wall*Mart" to "Walmart." But the company remains "Wal-Mart Stores Inc.")

Sure the new ads mention low prices, but now in the form of a call to action: "Save money." More importantly, the new slogan continues, "Live better." Thus low prices are repositioned: Once they were an end; now they are a means. We don't go to Wal-Mart for low prices after all -- we go for happiness, security and prosperity. Low prices are the way we get what we really want.

So far, so truistic. But there is a risk to Wal-Mart's strategy, and you'll see it when you recall the grade-school arithmetic concept, the transitive property of equality. Expressed as an equation, Wal-Mart's old branding is:

Low prices = low prices

N equals itself -- end of discussion. The new branding is:

Low prices = a better life

The transitive property reminds us that any number of things that at first seem very different can equal one another. 2+2 is the same as 100-96 which is the same as 4 quaqdrillion/1 quadrillion and so on. So the Wal-Mart shopper may now find herself wondering: What else equals a happy life? What if tariffs made imported goods just expensive enough to cause the re-introduction of manufacturing to America, causing more of us to be employed, causing more of us to live happily? High prices can equal a better life just as easily as low ones can.

(Granted, if Karl Marx were alive today, he would be the only person alive today who seriously thinks Wal-Mart customers may be asking themselves this. What if, is all I'm saying.)

I'm certainly not advising shorting Wal-Mart on grounds they've suddenly decided low prices are a bad idea after all. Monkeys will sooner fly out of my ass. I am saying that if you want a crash course on the psychology of spending -- including the psychology of donating -- listen carefully to Professor Wal-Mart.

What IS in my wallet?

After swearing vertically, horizontally and laterally that I would never apply for a Capital One card in revolt against the Amazonian volume of direct mail they were sending me during the credit boom, I finally got one because they were the only card issuer I could find that didn't charge a foreign transaction fee. This feature alone was enough to win my loyalty, for now that travelers' cheques have vanished from the face of the earth, cards are the only way to safely carry a significant amount of value while traveling (or even when doing any intercontinental cyber-shopping). Though I have recognized the futility of forming attachments to objects since reading Siddhartha 25 years ago, I quickly found myself falling in like with this card and using it whenever I could, even when I had enough cash for the purchase.

Aside from nifty accounting features that a solid back office operation makes possible -- like choosing how frequently to receive your cash-back bonuses -- the cleverest aspect of my new card is the ability to upload my own photo. We happened to have just had a delightful holiday card photo taken, so I uploaded that. Now my card elicits delighted coos from clerks all over Denver (though they still sometimes ask to see ID). When I take it on upcoming trips to Quebec and Argentina, I'm sure clerks there will coo in their native Romance tongues.

The emotional reaction the card has provoked in me and others got me thinking about the co-branding experiment Capital One has launched. That credit cards are brands at all is something of a miracle in its own right, for Visa and MasterCard aren't products at all; they're payment transfer mechanisms. Can you imagine anything less marketable? Yet it's common to speak of having "a Visa card" or "a MasterCard" (or, more correctly I suppose, "a MasterCard card") rather than "a credit card issued by Such and Such Bank whose transactions are facilitated by the MasterCard payment transfer protocol." That's branding.

Then comes CapitalOne going to great effort to put more air between itself and the brand by allowing me to insert my image into the equation. If Volkswagen allowed customers to customize cars with, say, square roofs, would they still be Beetles? When we're told that consistency is the key to brand equity, offering inconsistency as a product feature defies logic.

So is it a Capital One card? A MasterCard card? Or my card? Can one thing really be, by the business relationships and personal desires it evokes, three things? The question is more apt than I at first realized: What IS in my wallet?