Target's Vertical Marketing Strategy

One of Target’s strengths is that it’s one of the largest retail outlets. Target is a one stop shop for its consumers. Target

Target Corporation (NYSE:TGT) is the leading large-format general merchandise and discount retailer in the U.S., challenging Wal-Mart in electronics, toys and apparel while also seeking to differentiate with higher-end fashions and products for an upscale audience. As of the close of their latest fiscal year (FY2011), Target operated approximately 1,760 stores encompassing 233,000 square feet in 49 states and the District of Columbia. The company is divided into the retail and credit card divisions and moves the majority of its products through a highly integrated network of 37 different distribution centers, which include four food distribution centers. Target is one of the most well-entrenched large format retailers in the U.S., has the ability to manage their pricing strategies at a level of accuracy and precision that is comparable to Wal-Mart (Henderson, 2001). Unlike Wal-Mart, Target concentrates on a value-based message that concentrates on quality and price differentiation to sustain their gross margins while Wal-Mart concentrates on supply chain efficiency and a continual reduction of supplier and transaction costs (Krishnamurthi, 2001).

Target is one of the largest retailers in the United States. Target wants to be able to give guests better quality products for a cheaper price. They also want to be the one stop shop. Target relies on their team members to keep the guests happy so they always come back again and again. Target Corp. is the nation 's #2 discount chain (behindWal-Mart). The fashion-forward discounter operates about 1,765 Target and SuperTarget stores in 49 states, as well as an online business at Target.com. Target and its larger grocery-carrying incarnation, SuperTarget, have carved out a niche by

Headquartered in Minneapolis Minnesota, Target Corporation is one of the largest chains of retail stores in United States and Canada (Stone, 1995). Founded in 1902, the chain now has more than 360,000 employees worldwide. The company operates nearly 1925 stores out of which 1795 stores are in the US and 130 stores are in Canada (NASDAQ, 2014). The business prides itself in a diverse portfolio of merchandise that their outlets houses, ranging from dry groceries to electronics, furniture, apparel and much more. Its distribution networks make use of third party vendors, direct shipping as well as distribution centers. It also operates a successful e-store target.com which offers customers a virtual one-stop shop for their needs.

Target sells its products from the high end of the market to the low end depending on the type of product in question. In regards to Electronics items where the caption rate is small, they price their items at the high end to ensure they meet their margins. However, in regards to Target’s name brand items, they price those at the low end, keeping the company as a discounted retailer. Target also sells designer items that range from mid to high range of the market. In 2013 Targets CEO Gregg Steinhafel adopted the philosophy “a penny saved is a penny earned”. He further mentioned that they company would be a penny higher in price than their competitors Wal-Mart (Davis, M 2013). Steinhafel stated that “We want to be a penny

Target’s business-level strategy is one that does not strictly focus entirely on one plan to gain a competitive advantage over competition. It encompasses various strategic and meticulous planning and decision making that is implemented in order to position the company at the top of the retail industry. With competition from the likes of Wal-Mart, Sam’s Club, and Costco, Target uses several clever and “out-of-the-box” ideas to attract consumer attention and ultimately increase market share within the industry. Most of the company’s ideas centered more on the differentiation of products and services provided to customers than lowering prices. For quite some time, the company’s plan was to not compete head-to-head with Wal-Mart in terms of lowering prices but instead to provide their customers, who they identify as “guests”, with a special experience every time they visited a Target location. One idea that was implemented was to market and sell upscale, trendy clothing and unique merchandise at discounted prices.1 This strategy, known as the “cheap-chic” strategy, focused on providing good quality clothing from various well known designers and fancy products from high-profile manufacturers for prices lower than their competition. This plan was vital because it began essentially began the concept of customers referring to Target as “Tar-zhay” which according to Patrick Barwise and Sean Meehan, who are university professors, as a “connote its trendy sensibility”. Target

What has Target done well over the years in terms of its integrated marketing communications strategy? What should it do going forward?

Target Corporation is a retail chain specializing in household goods, clothing, food, and accessories at discounted prices. The retail chain’s history started back in 1902 as Goodfellows and in 1910 as The Dayton Company. Initially, the chain specialized in “furnishings, fabrics and decorations for business and other public institutions” (“Target Corporation,” 2016, p. 5). Eventually, Target went public in 1967 and on to acquire Mervyn’s in the 1970s where they became the seventh largest retailer in the United States. Target operates in the United States, where it is headquartered in Minneapolis, Minnesota and as of January 31, 2015 Target employs over 300,000 people. “The company recorded revenues of $72,618 million in the financial year ended January 2015, the operating profit of the company was $4,535 million, [and] the net profit was $2,449 million” (“Target

One of Targets biggest competitors is Wal-Mart and surprisingly they have a different type of organizational structure. “…our new structure will align three very successful operating divisions – Logistics, Real Estate and Store Operations under a unified leadership team. We will organize into three distinctive geographic business units (GBUs) – Walmart West, Walmart South and Walmart North”("Wal-Mart", 2014). Unlike Target, Wal-Marts stores and distribution centers are broken into three sectors not four. This is very surprising because Wal-Mart has over 4,000 stores in the United States and Target has only 1,797. Even though the mission of these two stores is extremely similar, providing a wide arrangement of quality products at reasonable prices, they are managed very differently.

After 90 years of growth, target has over three hundred stores across Australia with stores conveniently located in both metropolitan and regional areas (Wesfarmers, 2016). Target offers its customers a diverse range of products including Branded clothing, cosmetics, toys, homewares, electrical, fitness and consumer electronics. Few premium brands, mostly mid-range seasonal fashion lines (Target Australia, 2017). Target’s core marketing strategy is targeting fashion conscious shoppers by collaborating with designers like Jean Paul Gaultier and Stella McCartney (Catie Low, 2016) with a focus on quality and customer in-store shopping experience, and entering high volume brands, exiting unprofitable sales and toy sales.

In order to run and maintain an effective business, it’s critical to efficiently utilize internal assets to both maximize production and achieve customer satisfaction while working to limit potential weaknesses that could essentially impact the firm’s ability to profit. Due to the rapid growth of consumer acceptance, a key strength within Target has been the sale of more than 30 exclusive private-label brands such as the highly successful kids’ lines Cat & Jack and Pillowfort that work to challenge the value of traditional name brand products while providing the customer with additional shopping opportunities resulting in $26 billion in sales during 2017 (PYMNTS, 2018). Target has implemented an efficient store layout in order to maximize on

Target one hand follows a similar low price strategy as we do, but on the other hand has a different product mix, different capabilities and very different value proposition. They especially focus on store layout and emphasize design. Also they have many private brands and exclusive offers.

. Prices with no real concern about product quality. Target on the other hand markets and sells unique products of good quality and to customer who don’t mind to pay a little extra for manufacturing. In order for Target to remain profitable and relevant in this industry, the company must be strategic with their resources and marketing efforts.

Wal-Mart has an undifferentiated approach that stresses its low costs. This universal message is delivered through all of its communications. This makes it easy for the audience to know what to expect. Small companies more often emphasize local involvement and a personalized experience. Message consistency also enables better word of mouth development, as all customers see the same things.

At times as an initiative to attract a cluster of customers who share similar interest in a product that a company or person is selling merchandizers create strategies to set up target markets. In order to effectively capture the interest of the target market thorough research is performed to recognize customers that purchase these products and strategize ways to capture their interest. In order to reach these customers market segmentation, market targeting, and market positioning are all exercised as a target marketing strategy. Market segmentation aims at building customer connection this expands the understanding of the uniqueness of target customer, their conduct and also helps suppliers to customize their target marketing strategies to specific customers or groups (Liu, Li, Peng, Lv & Zhang, 2015).