Target’s new broadcast campaign reflects real moms. This more direct and genuine approach to broadcast marketing shows moms telling personal stories about Target’s great store experience and prices. There’s no place like Target at Christmas to save. Advertisements feature children during the season, and some use humor to connect with the budget-limited shopper. One example is a school Christmas pageant, showing parents quietly inserting money-saving Christmas tips into their children’s speeches.
Target uses differentiated (segmented) marketing strategy attracting all kinds of shoppers – affluent, middle, and low-income consumers. Target designs its stores to be more attractive than its competitor Wal-Mart and other large department stores by having wider aisles, contemporary signage, backdrops, and a more attractive presentation of merchandise. Target’s use of super size graphics, portraying common household items embellish the walls of Target’s housewares department. Target also offers inexpensive yet chic and trendy apparel and accessories attracting younger and affluent crowds. Target emulates retailers outside the discount space, such as Pottery Barn, Restoration Hardware and The Gap(Prior 2002).
An early strategic choice to build a brand around the Target name fostered the company’s steady growth. Gerald Storch, Target’s former vice chairman, noted this strategy in one of his interview by saying: “The company had faced three strategic choices to tackle the increased competition in the retail market: to specialize, to become the low-cost producer, or to differentiate [itself]. The first choice would have thwarted future growth, and Wal-Mart was already a low-cost producer, so Target chose the third option and decided to reposition itself as a mass merchandiser of affordable chic goods.”
Marketing Mix Product Strategies
The merchandise mix is diverse though consistently stylish at Target, with low-rent products from high-rent designers displayed on shelves and racks under one roof. Target has consistently challenged other competitors’ strategies and has always come up with new ways of providing its merchandise in the seasonal “must-have” columns. This technique has not only been successful but also made discount shopping experience even better. Target owns and oversees its private label products, including the grocery brands Archer Farms, Market Pantry, and Sutton & Dodge.
In using this powerful tool, good brand management makes it possible for Target to maintain positive customer relationships, by way of strong brand recognition and its value proposition that is incomparable to that of other discount retail competitors’. Its value proposition, the promise it makes to its customers, is embodied by the slogan, “Expect More. Pay Less.” There is more to it than mere promises; Target maintains its brand loyalty by managing each customer’s experience and by providing higher quality goods at discount prices.In addition, the Target brand changed its name and visually corresponding trademark to “Up & Up,” in the effort to communicate the high quality of its private brand’s products, despite its lower costs when compared to most leading brands.
Pricing Strategies Target has adopted “status quo” pricing strategy, influenced by nearby retail competitors, its trade market area. It is not based on demographics, income of an area, or location. Every Target store has “The One Spot” section, usually located near the entrance, which contains a range of products that only cost a dollar. The items in this section also change frequently, providing consumers with a sense of bargain.
Promotional Strategies Promotional campaigns play a vital part to the success of Target. Advertisements and inserts in newspapers allow the company to reach large segments of consumers. Free shipping is offered periodically at Target.com. During the holidays, Target offers special extended holiday hours as well as special promotional pricing for new products or products with high demand.
In September 2006, Target launched organic foods and beverages, sold under the Archer Farms label, into their stores. The purpose of the move into organics was to attract younger, female shoppers. “Target was voted # 1 on the top 10 retailers based on consumers’ favorite TV holiday advertisements with 24.2 percent compared to Wal-Mart with 21.1 percent.” (Hall 2008). The Bullseye Dog, together with the promotional slogan, “See. Spot. Save,” is found on discount in-store signage and weekly circulars.
Distributional Strategies As of August 2009, Target Corporation has been operating 27 distribution centers across the United States. With the exception of vendor supplied items, such as greeting cards and soda, these distribution centers ship items directly to Target stores. It also has four facilities, operating in the ports of Rialto, California; Savannah, Georgia; Lacey, Washington; and Suffolk, Virginia, which receive shipments from overseas manufacturers and suppliers. The imported merchandise is then directly sent to regional distribution centers.
In August 2004, Target announced to its suppliers that it was going to perform a trial on the effects of radio frequency identification (RFID) on the efficiency of supply chain management in the Dallas/Fort worth Metroplex; as of 2009, RFID has been phased out of this geographic segment. Target developed an e-commerce strategy that involved managing its own online distribution at the start of the century. Online retailing gained a larger profile in early 2000 with the formation of a separate e-commerce unit called Target Direct. New store brand web sites were also launched later that year. Its Annual Report of 2008 also discloses that merchandise sold through Target.com is distributed through Target’s own distribution network, through third parties, or shipped directly from vendors.