Weaknesses to Overcome
- Target is not a global retailer, which means that they do not have a presence in countries worldwide. Therefore, they should look into traveling overseas, since their competitors like Wal-Mart are working internationally and boosting their revenues.
- Pharmacy customers for Target account for 7% of their total sales and revenues but their turnover rate for Pharmacist is very high, since they work 12-hour a day shifts. This in turn affects their sales and customer satisfaction.
Opportunities to Exploit
- Target has a reputation for new product development and creativity. Target can build upon this reputation to penetrate new market in innovativeness and originality.
- Like all its competitors, Target Corporation uses coupons to attract customers. Until recently coupons could only be used in store, but now the coupons can be used in store and online. With their company website and technological advancement such as the Internet, Target can move to the computer literate market segment thus leading to higher sales.
- To take on competition plans, such as Wal-Mart, and focus on international markets.
- New locations give Target an opportunity to be diverse in the market. More and more Target stores are attaching to trendy malls in different market segments.
Threats to Overcome:
- Most Target stores are located within 10 mile radius of their major competition.
- In some markets, Target’s prices are higher than their competitor’s.
- Target stores that are not Superstores and do not possess a grocery department is a threat since their major competitor such as Wal-Mart are now implementing the majority of their stores into Super centers.
Marketing Strategy
Market Segment
The strategy is very clear; the company implements new products, grocery, and well known brands by using differentiation. This differentiation strategy allows Target to establish originality, away from the traditional discount retail stores. Quality products along with trend setting styles keep the big department store feel without having cheap products. The marketing strategy is to be identified as an upscale discount store with trend conscious products. John Geisse, who was a senior vice president and the originator of the discount store concept stated, “We will offer high-quality merchandise at low margins, because we are cutting expenses. We would much rather do this than trumpet dramatic price cuts on cheap merchandise.” Regular discount stores, such as Wal-Mart focus on price and low cost through products. Target has broken away from the general assumptions of discount stores. With Wal-Mart focusing on price and other retail stores struggling, the company has been unchallenged as a premium discount store. The company has developed a drive to be creative and innovative in their marketing strategy. The differentiation aspect of Target is to outperform on specific dimensions. The cleanliness of the store, shopping environment and overall experience the customer receives is part of the strategy (Lisanti, 2001). The focus is always on the consumer. Every merchandising decision is based on the commitment the company has to its target market.
The company considers their customers as guests and wants their employees to treat them as such. The store attracts affluent customers with in-house brands and national products (Lebhar-Friedman, 2001). The target market is well educated with 48% of the consumers having a college degree and up to 80% that have attended college. The demographics of the target shopper has an average age of 41, and 76% of those customers are women. Most come from low to middle class income levels with an average of $63,000 per year. The customer base is family oriented with 45% having children currently living at home.
The company segments the market by offering a wide range of products that are beneficiary to the consumer. The company is constantly evolving through changing tastes and trends of consumers. The creativity and vision is shown through the extraordinary merchandising and promotion. Every-day commodities are expressed through stylish images in magazine ads. Commercials on television are both whimsical and extreme (Arlen, 2001). The strategy behind such colorful promotion is to create a high brand position based on consumer perceptions. Target has high brand awareness, 97% of American consumers recognize the bullseye logo. The consumer awareness gives Target a competitive advantage against the competitors. Target wants to develop an emotional relationship with the consumers. Marketing strategies attempt to create a relationship between the consumer and the brand.
Customer Insight
By studying advertisements we were able to decide the customer insight for Target. Consumers believe that being trendy and diverse gives them a high social status and an upbeat positive self image. Target has taken the idea of following the latest trends and fashions and incorporated new sleek designs into daily ware and household goods (Arlen, 2001). The huge selection the company offers is diverse and gives consumers a sense or originality. Having a positive image is shown through the stores attitude and upbeat theme. The store associates are fast and friendly and are willing to assist the guests in any way possible. The dramatic décor in the store is designed to announce brand position. Aesthetics such as vivid colors and modern art entice consumers that Target is a premiere brand. Quality products at a reasonable price define social status without shopping at a regular discount store. Fun and cheerful commercials tell customers that Target can fulfill their self image. By evaluating customer insight Target has been able to understand and unlock consumer motivations.
Key Brand Benefit
Consumer Driven Strategy
To determine the brand health of Target we interviewed 30 individuals using the task brief questionnaire. The industry category for Target is discount priced retail and supercenter stores. We profiled consumers at Target versus Wal-Mart by using the 4 As measurement scale. We recorded the attitudes and behaviors in a table located in Appendix A. As the table shows there is a difference in percentages between the two companies. The majority of Target customers are classified as adopters with 36 percent of the total sample base. The second highest category is acceptors with 23 percent followed by available. Surprisingly adorers and rejectors had the same percentage of consumers. Only 7 percent of the total sample base is considered an adorer. Wal-Mart on the other hand, has a higher customer base of acceptors, adopters, and adorers. Wal-Mart has 16 percent more adorers and rejectors is 3 percent less than Target.
The result of the survey conducted shows the need for Target to set specific consumer goals. Table B in the appendix shows the result of the consumer driven strategy. Each of the consumer categories were divided up into percentages. Based on the number of consumption and the percent of consumers in each category, Target has great potential to develop a change in attitudes and behaviors. As of right now, adorers only represent 6 percent of the entire category after the number of consumption. Adopters have a much larger percentage of the majority with 71 percent. By changing the number of consumption per category and the attitude towards the brand, Target has an opportunity to increase brand commitment. The consumer goal for Target is to convert 10 percent of adopters to adorers by moving the consumer along the journey. By increasing the volume of adorers the total percentage of consumption will grow to 17 percent. The advantage to having more adorers is customer loyalty through repeat purchasing. Positive word-of-mouth will be spread to other consumer categories and perceptions will transform.
Brand Essence Wheel
Along with the consumer driven strategy we also surveyed the individuals about the facts and feelings that determine the brand image to the consumer using the brand essence wheel. Responses were subject to the rational thinking and emotional beliefs about the image of Target. We received a number of words used to describe the brand from the survey. Both positive and negative words were expressed along with some neutral feelings. Some of the terms used to describe the product include: quality, busy, creative, diverse, atmosphere, and cheap. The diverse use of language shows the different attitudes consumers have toward the product. When it comes to what the product does for the consumer the thoughts are slightly similar. The selection of Target consists of quality merchandise with style and reasonable prices. The store atmosphere coincides with the unique advertised themes. Target creates value to new ideas that attracts middle class consumers.
Responses were distinctive when asked, how the brand makes me look. Individuals have an emotional viewpoint on how others perceive them. Target shoppers give the impression of being organized, comfortable and trendy. Upbeat and friendly attitudes are associated with the open selection the company has. The mindset of want it-need it is satisfied with the sense of having money. The final question referenced to feelings is consumer’s ability to recognize how the brand makes them feel through personal characteristics. Target makes a person feel smart, in-style, and equal to others. Equality is shown through social status and the luxurious taste the product gives them. Consumers relate high fashion models in the commercials to their own individuality.
The inner part of the wheel is broken up into three sections. The first section is facts and symbols that connect the brand to people’s minds. Symbols are recognized by sight, repetition, and memory. The results of the survey had an assortment of language with the target symbol being the main theme. Expect more pay less slogan is widely known along with the catchy advertisements. Colors such as red and white, and the circled shape target are represented in every promotional endeavor. Consumers also associate the dog and cheerful music with the company. The second part is the personality of the brand. Target is both unique and self-aware of the impact it has on society. The brand is a people pleasure and is open and carefree with respect to others. Targets light-hearted personality creates a positive attitude and cheerful mentality. The brand characterizes humble, clean cut, yet has an edge with fashion and new trends.
The final element for the brand essence wheel is the core. The core for Target is represented by value, customer and trend. The company is dependable with quality products and service which create value. The costs associated with the brand are reasonable and fair. Customers assess a value to the merchandise, and how much they would be willing to pay for it. Targets main focus is on the customer. Target’s vice chairman Jerry Storch stated, “It’s all based on a clearly-defined customer, one which remains in the company’s strategic sights even as it embarks on a new era of growth with its Super Target format (Lebhar-Friedman, 2001).” Expressions such as cheerful, friendly and satisfaction are the result of the impact the brand has on the consumer. The layout of the store is designed specifically for consumers to maneuver throughout the different departments. Bold colors and sleek designs attract customers to the brand. The final core value is the trend. Trend is one of the core values because of how much focus is emphasized on creativity and fashion. Encouraging new ideas and following trend lines is a part of the strategy at Target. The consumer associates trend with the brand because of the ever changing products and ideas that are implemented into the stores.
Key Brand Benefit
As discussed in the brand essence wheel, Target creates value, trend, and customer satisfaction with their products. The core is consistent to what the consumers already think. This attitude is credible; the thirty people we interviewed verified it. The truth of the individuals opinions were expressed while constructing the wheel. The consumer’s goal is to increase the number of adorers. The brand is using the insight of trend and assorted products to drive growth. Insight is also used to develop an understanding of the consumer through designing and implementing strategies. By using these elements of consumer understanding, consumer goal, and the essence of the brand we can determine the key brand benefit. Target adds excitement to products. Excitement is compelling, credible, creates growth and is distinctive. The key brand benefit for Target focuses on an emotional benefit. Emotional benefits are both consistent and strong. Consumers expect Target to create activities that are exciting because of the brand position. The feeling of excitement Target portrays has already taken a part of the consumers mind. The one consumer motivation of excitement becomes the insight. Consumers want to have fun; the brand is fulfilling that need. Regular products are enticing customers through unique displays. Merchandise is animated with enthusiasm to motivate the senses
Brand Position Statement
By capturing all of the components in brand building we can establish the brand position statement. Appendix C has a summary of the elements we used in comprising all of the information found. The competitive set at target is discount retail and supercenter store. The key trend in the market is competing against price. Target focuses on the product and customer to be able to compete against companies such as Wal-Mart. The target consumer is family oriented with the female doing most of the shopping. Attitudes focus on fashion and following the trend line. Motivation comes from the emotional aspect Target gives their guests. By adding the consumer goal, customer insight, and key brand benefit we can develop the brand position. The brand position statement is, Target is better than any other company at bringing excitement to products for original women, because of the attractive image the brand has created.
Marketing Mix
Product
The 4P’s are used by Target in many ways. The Target Company is very well known throughout the retail industry for their good use of the 4P’s. The first of the 4P’s is product. Great product design is the essence of the Target brand. Target partners with world-class designers to offer amazing products at affordable prices. The designers for their product are top-notch. Thus making their products top notch and the place to get these products is at your local Target store. Forging partnerships with established designers, such as Liz Lange and Victoria Hagan, and emerging designers who create limited-time-only fashion and accessories, Target offers guests an increasing selection of high-quality, classy and affordable products.
To be able to differentiate their design from all of their competitors Target partnered with emerging designers to create exclusive product lines such as global home décor and runway fashion trends. These products create a niche in a big retail industry that otherwise would not be there. The products that merge from these programs are only offered for a limited time, generating excitement for the customers.
At target, design is about more than just good looks. It’s about creating solutions that surprise and delight their guests. Looks are great and very important to target but that is not all. They are dedicated to bring good designed products to their customers. At Target they do not just look at the way a product is designed, but if the product satisfies a need, how it simplifies a customer’s life, and the way it makes a customer feel. There are many products that Target sells that represents the way they focus on form and function of a product. A great example of this is a how they feature an easy-to-read bottle and color-coded ID rings. These rings are placed on prescription bottles to minimize the chance of taking the wrong dose or confusing medications between family members. This product innovation improves medication packaging and design, and makes prescription and health information easier to use.
Target is also dedicated to make their products environmentally friendly. This is done in many ways that many other retailers do in the industry. The one thing that they do that is different than any other retailer is design their products to use minimal packaging material. Target uses this product innovation to add value to their customers.
Place
The second P is place. Target operates more than 1,600 stores in 47 states, including more than 200 Super Target stores that include an upscale grocery shopping experience. In addition to the photo processing centers, pharmacies and restaurants found in almost every Target, Super Target stores include an in-store bakery, deli, meat and produce sections. Target is in almost every region of the United States. Making them one of the biggest discount retail stores in the world. The first Target store opened in Roseville, Minnesota, in 1962. Its trendy merchandise at affordable prices launched a new era in discount retailing. This first Target store was easy to shop, attractive and always clean. It served as the prototype for every Target store opened since then, and it changed how consumers think about discount shopping.
Target is in many areas of the country. They are able to make shopping very easy once you get into the store. Target gets you into their store by locating in a place that is in high visibility to much of the area’s population. Their goal is to be on the main street of a town or next to a highly traveled interstate. This insures they get the opportunity to reach as many potential customers as possible. Target has tried to make their location be a destination shopping location. This is done by putting their huge stores in a location that is out of the normal stream of traffic. They make their own retail outlet location. This has been done with success in some areas and others it has taken time to create the ideal profitable destination shopping outlet. Target has made the conclusion that if at all possible they try to be in the main stream of traffic.
Price
Price is what many people will look at to determine many things that influence their purchases. The price of a product gives the perception that the product is high quality. This is something that Target is very well aware of. They place their product at the lowest possible price. They will try to overcome the perception that a low priced product is low quality by offering brands that have good brand equity, great return policies, and very good promotions. The goal of Target is to offer the lowest possible price but not the lowest price in the industry. By not being the lowest price they give their customers the assurance that they are getting a better quality product than their competition. This insures that their brand position is higher than their competition that offers a lower price.
Promotion
What is promotion? Is promotion just having a sale, or offering a coupon? The answer is no. Promotion can be a sale of a product but that is not all. Promotion is the tool that creates attitudes toward a brand. It is the forerunner to a brand. When asking what is the first thing that comes to people’s minds when thinking about Target is: figures, ideas, slogans all of which have been part of promotions. The three most popular promotions that came to people’s minds when they thought of Target is the big red target symbol, the Target dog, and the slogan “Expect more pay less.”
Target looks to promotion to place their brand above all others. The slogan that people remember very well “Expect more pay less” is their brand promise. Target puts this on all of their ads to install their promise to all who are in contact with their promotions. Throughout their variety of promotions there are common themes. These themes include happiness, trendy design, upbeat, “Expect more pay less”, and the color red. These themes help us position their product where they want us want us to position it.
Target spends millions of dollars a year to promote their brand. They also use countless avenues to reach the target market. These avenues are tailored to each specific market they are trying to connect with. Over the years Target has found a direct correlation with sales and the amount of money and effort spent on promotion. They say if they need to be on the leading edge of the retail industry they need to be on the leading edge of promotion.
Connection Strategies
Target uses marketing communication activities to contribute to their brand equity in many ways. Target understands that their communication activities between the brand and the consumer are an opportunity. These communications can either clarify or confuse the customer about the brand. To make sure that Target clarifies the brand and not confuse the brand they use specific tools to do so. One of the tools is creating awareness for the brand. They do this by advertising in different media outlets. Much of the advertising budget is in the television and news paper segment. This is the best communication channel to create awareness for the brand.
Through these advertisements Target’s goal is to link the right associations to the brand image in the consumer’s memory. Target reaches this goal by linking all of their advertisements to their brand image. In all of the promotional campaigns there is always an underlining theme that represents the brand image. The underlining theme based in all of their promotions is repeated in all communicating channels that they use. Consumers are more likely to remember a brand if the image is repeated throughout marketing activities. Strong healthy brands are embedded in individuals evoke set.
Target communicates positive brand judgments or feelings to their customers or potential customers by many different communication channels. These channels let customers view the good things that others customers have experienced. Some of the ways that Target does is to have blogs on their web-site. This blog seems to only emphases the good things about what Target store. When a customer purchases things online they fill out a customer survey. These surveys are then put into information bins for all the public to read. This does not mean that there are any bad things said about Target. By far the majority of all the comments are positive about the company, the shopping experience, and the products. This means that Target goes to great lengths to provide their customers with the expectations they are looking for. Whenever customers have frustrations they can express them via comment boxes or letters to the CEO right on the Target home web-site.
Target is always trying to improve their connection with their customers. This is done throughout their company. Their efforts to build a stronger brand connection can be seen in every connection avenue they use. When asked thirty people what were the first three words that came to their mind when they thought about Target, 90% of them said at least one of the three words: 1) red 2) dog 3)the Target bulls-eye. Many of the thirty would mention all of the three. These three things seem to not be of significance to the average consumer, but they may be the most important tools that target has to connect with their customer base. These symbols are things that anyone can relate to whether it is in the first introduction of the Target brand or to make it easier to remember the brand to purchase more.
These three communication tools are maybe the most recognizable but this not all that Target does to communicate with their customers. At each stage of the buying process target has different tools to help the customer with the purchase. These tools range from the location of the buying avenue to the packaging that they do. Each of these tools plays a role in making it easier to purchase products from Target.
Another communication platform that Target does is to entice people to purchase products by offering sales promotions. These sales promotions are dispersed in many avenues. The first thing that the customers see when they go to Target’s web-site is some type of purchase incentive. Target will use this venue to communicate with their customers when they need to increase sales. Coupons are offered throughout their home web page and on ad campaigns like the local news paper for the region they live in.
Recommendations and Conclusion
Appendix
A. The 4 As profile
The 4 As profile of Target consumers in the US, vs Wal-Mart
Sample size 30
B. Consumer Driven Strategy
Consumer Driven Strategy
Sample size 30
C. Brand Position Summary
Brand Positioning Summary
Target Corporation
D. Target Financials
December 5, 2008 Sales
Sales 65.26 Billion
Income 2.63 Billion
Net Profit Margin 4.03%
E. 1Year Stock Price Graph
References
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Why Is Target So Cool? - Target's marketing strategy - Brief Article Accessed December 5, 2008
DSN Retailing Today, April 2, 2001 by Jeffrey Arlen Accessed October 15, 2008
Accessed October 15, 2008
Wal-mart Vs. Target…Battle Of the Super Stores…By Ayanna G., published Nov 09, 2006
Accessed October 15, 2008
(http://moneycentral.msn.com/companyreport?Symbol=US%3aTGT)
