WAL-MART DRAMATICALLY EXPANDS MARKETING DEPARTMENT

Plans to Boost Advertising Staff by 30%

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BENTONVILLE, Ark. (AdAge.com) -- Back in 2000, Paul Higham, the head marketer at Wal-Mart, asked a top executive of Coca-Cola Co. the size of the beverage giant’s marketing division. The reply was thousands. When asked about Wal-Mart’s, Mr. Higham hedged, added in marketers at Sam’s club and international operations and replied: “That would be 121.”
Once a minor part of the Wal-Mart headquarters operations, the marketing department is undergoing a massive expansion.

In fact, as recently as two years ago, marketing head Bob Connolly had a senior team he could count on one hand -- and the remainder made as little as $35,000 a year.

Today Wal-Mart’s CMO, John Fleming, oversees a staff of 200 and a budget nearing the $1 billion mark, and, in unprecedented hiring spree, he plans to grow the marketing team as much as 30% this year, adding up to 60 people. In doing so, he’s looking to build from scratch three new departments -- brand management, a category marketing group and an insight and customer strategy group.

The changes come as Mr. Fleming faces far greater challenges than his predecessors, especially from his former employer Target, which is six times smaller yet has a marketing division reportedly numbering more than 900.

The Wal-Mart way has always been to keep headcount down at headquarters. Former CEO David Glass, after all, was known to scrutinize the construction of new parking lots around headquarters, positing the logic that more spots would inevitably lead to more hires.

But with frustrated shareholders green with envy over Target’s ever-rising stock price, marketing under CEO Lee Scott, is seen as Wal-Mart’s salvation.

“We had developed a business system that was arguably focused on one thing -- reducing costs and price for customers,” said Stephen Quinn, senior VP-marketing, who will oversee the build-up of the three new departments.

Mr. Quinn, a former Frito-Lay executive, dismissed the notion the team is stocked full of former colleagues, referred to around Bentonville as the “Frito-Five.”

“These folks have multiple experiences -- it just so happens I got to know them at PepsiCo,” Mr. Quinn said. “Too much has been made of that.”

One of the five is Robert Atencio, VP-insight and customer strategy, who is conducting a thorough analysis of Wal-Mart’s entire marketing mix to “free up on what is not as productive,” Mr. Quinn said.

Luring top-brass marketers is Fred Ley, who joined Wal-Mart as head of staffing in March 2005, after working for executive search firm Spencer Stuart. And conducting the searches is uber-recruiter Greg Welch at Spencer Stuart.

Not all Wal-Mart watchers think the changes are necessary.

The stream of changes and staff additions has left some former Wal-Mart marketing executives concerned. One former insider lamented: “Why do you need all these people? You are going to start doing what everyone else does and pretty soon you are just going to be a worse Target, not a better Wal-Mart.”

Mr. Quinn said he never would have come if it meant keeping the status quo. “What attracted me to this? The same thing that attracted Robert [Atencio] and [former Chrysler Group executive] Julie Roehm and the others that we recruited: This company is committed to becoming a lot better at marketing to the customer.”

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