TARGET: from "expect more" to "pay less"

Fundamentals of Marketing and International Marketing

1. INTERNATIONAL BUSINESS MANAGEMENT
FUNDAMENTAL OF MARKETING AND
INTERNATIONAL MARKETING
Prof: Joao Pedro Almendra Xavier Teixeira
Case study 1
TARGET: From “Expect More” To “Pay Less”




By:
Pascoal Matiue,
Saira Khalil

10-17-2015

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Question 1 and 2
One of the most significant concepts in marketing analysis is the environment, where
not only internal actors but also external actors play an important role.
If the actors are close to the company, those who affect its ability to serve customers
– the company, suppliers, marketing intermediaries, customer market, competitors
and the public – then it is said to be micro-environmental actors. And if the actors are
larger societal forces such as the demographic, economic, natural, technological,
political and cultural forces, then it is said to be macro-environmental factors.
We believe both micro-environmental and macro-environmental factors have
affected Target´s overall performance in the past few years.
In microenvironment:
a) The company and its competitors
Prior the global recession, Target was not focusing in marketing concept, it was
rather product concept oriented. It was more concerned about company value and
brand positioning as it was well known to be successful due to its numerous designer
product lines. In comparison to Walmart, its biggest market competitor, Targets also
had cheaper prices but not cheaper than those of Walmart.
When Target noticed that its clientele was “pinching its pennies”, it decided to give
the company a new focus, which was the “Pay Less” part of its slogan in order to
keep the right balance between the two parts.
The company started with some operational changes, this included redesigning the
product itself, store brand promotion and advertising and product expansion. It even
designed a new brand name with much lower prices than other comparable brands.
b) Customers
Both Target and Walmart had the same line of merchandise, thus when the
unemployment rose due to the global recession, the consumers on one hand did not
think twice before shifting to Walmart since its prices were reasonable for them in
this period but on the other hand when Target realised it’s mistake and started
focusing on the “Pay Less” part of its slogan without compromising the quality of its
products, the situation started to get better since the consumers got Target´s
message and they were satisfied with the new prices since these prices were
reasoning with their budget.
c) Public
Target had a falling out among its various stakeholders, with the activist shareholder
William Ackman, whose company lost 85% of the $2 billion invested in Target.
Ackman not only chided target for being ineffectual in dealing with the abrupt
economic downturn but also accused the Target’s board of directors to be
inexperienced and so, went on to ask to control 5 of the board’s seats.

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In macro-environment:
Economic Factor
The way we see it, in macro-environment, global recession is the main economic
factor to affect Target’s performance. Since it caused the rise in unemployment and
reduction in wages, the consumers were reluctant to spend money more than their
budget limits. This proved to be a great drawback for Target’s performance as there
were other competitive brands like Walmart that resonated with the consumers.
Question 3
When it comes to applying a strategy, it always requires a right time most importantly
and effective management. Even though the “Pay Less” strategy was aggressive,
but in those circumstances of economic slowdown, it was right decision to make.
With time this strategy proved to be most effective as it prevented Target from going
bankrupt and helped to stabilize its sales volume.
Question 4
Product standardization strategy, that is Target should´ve reduced its inventory and
increased the product variety in stores. This strategy not only reduces retailer´s
exposure to any single product but also creates an artificial scarcity – the less it is
available the more desirable the product becomes.
Question 5
Recommenda tions
Target´s promotional efforts were quite resourceful and profitable, nevertheless we
would recommend it to rely its advertising activities rather on celebrities or people of
influence than on ordinary people to appear in its ads.