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.