Informational Comparison Memo

Charity plays increasingly more important role in the contemporary business environment. Many large companies, such as Target, Hope Depot, Lowe’s and Wal-Mart, pay a lot of attention to charitable activities, which have become a part of their marketing strategy. In this respect, it is important to stress that charity contributes substantially to the development of a positive public image of the four companies and, thus, increase their market value through the increasing popularity of their brand image. The latter also contributes to the development of customers’ loyalty to brands. Consequently, companies can benefit substantially from the implementation of marketing strategies which are oriented on charity. At the same time, each company uses its own strategy and approaches to charity.

Facts/Findings

The size of donations of companies varies consistently. In this regard, the size and share of the market of each company is important.

However, it is worth mentioning the fact that even though Wal-Mart’s donations size is the largest, when it is taken in terms of the percentage of pretax profits of the company spent on charity, its donation size proves to be not the largest one. For instance, Target gives $1 for every$444 spent in its stores, while Wal-Mart gives $1 only for every $1,425 spent. As for the size of donations, Wal-Mart gave $337,9 mln, Target gave $168,9 mln, Home Depot gave $42 mln, Lowe’s gave $27,5 mln in 2007 (Table 1).

Comparison of companies

Wal-Mart

Wal-Mart uses charity as a perfect possibility to promote itself, its products and services. As a result, Wal-Mart’s charity is closely intertwined with its promotion to the extent that it is even possible to speak about Wal-Mart’s charity as a part of its promotional strategy.

Obviously, such strategies have dubious effect. On the one hand, Wal-Mart can attract a large number of people though active promotion of its charity and, therefore, create an image of a company, which is extremely concerned with charity, even though its actual charitable giving is substantially lower compared to Target. Consequently, Wal-Mart can gain the respect and attention of those customers who do not pay much attention to figures.

Target

Basically, companies attempt to promote their contribution to charity to maintain a positive image. In this respect, the amount of donations can play an important role. At any rate, Target is particularly concerned with the amount of donations since it is one of the leading companies in terms of the charitable giving. In other words, the company readily participates in charitable activities and spends large sums of money on charity to emphasize its concerns with charity (Calder, 2002). At this point, Target is consistently different from Wal-Mart since the former spends three times more than the latter. In such a way, the charity spending of Wal-Mart is consistently smaller and that difference can influence substantially the public image of both companies since Target can take an advantageous position since it seems to be more concerned with charity than with its own benefits.

Strategies used by the companies are also different. Even though Target spends more on charity compared to Wal-Mart, it is not as concerned with advertising its charitable activities as Wal-Mart is. In contrast to Wal-Mart, Target is not so much concerned with promotion of its charitable activities. Target attempts to create a genuine image of a company that is really concerned with charity and charity is primary concern of the company, while promotion is secondary. Target is oriented on customers who are really concerned with charity and for whom the size of donations does matter.

Home Depot

The company also attempts to compete with Wal-Mart and Target, but its charity donations are consistently lower compared the aforementioned companies. The difference in profits of companies influence their charity, though Home Depot donations are more balanced compared to Wal-Mart since the company gives more of its profits to charity.

Lowe’s

The company gives the least of all of the four companies. On the one hand, Lowe’s is not as much concerned with charity as other companies do. On the other hand, the company has a smaller market share and lower profits.

Conclusion

Thus, it is obvious that, in spite of substantial differences in strategies applied by Target and Wal-Mart, both of them can be effective. Nevertheless, the strategy of Target seems to be ethically correct since it creates the image of a company, which is truly philanthropic and it does not use charity in its own interests of self-promotion. Home Depot and Lowe’s attempt to compete with Wal-Mart and Target but their profits are consistently lower that limits their charity.

Appendix

Table 1 Donations of Wal-Mart, Target, Home Depot and Lowe’s in 2007