Strategic Management: Target Marketing Essay Example

to price increases that cancel out any savings from tariff elimination on hockey equipment and baby clothes. Quebec's status as predominantly French-speaking with separatist parties attempting secession reforms poses a potential threat to Target's success in Canada. Despite this, Target plans to open 24 locations in Quebec but may face restrictions or bans if Quebec separates.

Sales remain relatively high in Canada's mature discount department store industry, although it is less competitive compared to the US market. There are various competitors from both Canada and America present.Economists are forecasting a 2.7% growth in the retail industry for 2013. Sales are expected to start off low and then increase towards the end of the year. However, experts and government officials are advising caution when it comes to making credit purchases due to a potential economic slowdown after the holiday seasons.

The majority of the population is around 41 years old, with slightly over half being female. According to the Canada Census Bureau, out of approximately 9.4 million census families consisting of at least two members, around 3.7 million have children. These statistics align with Target's target customer profile: a woman in her forties who has at least one child.

Most of Canada's population is concentrated in several Census Metropolitan Areas that are located within 100 miles of the US border. To prevent centralization, it is important for Target to avoid placing its actions too close to the border as Canadians may choose to cross over for more affordable US prices due to impending tariff increases on imported goods.

While this may not significantly impact Target as a whole, it could greatly affect the success of Target Canada and its initiatives.

This is because tariffs and reduced economies of scale in Canada result from its highly concentrated population.

As a result, Target's cost structure and pricing structure in Canada will differ from that of its American stores. Many American retailers entering the Canadian market have faced similar challenges and struggled as a result.Target will face challenges in competing with competitors' Every Day Low Price (EDLP) strategies in Canada. Canadian consumers prefer discounted prices and lower costs over using coupons. Target needs to focus on the increasing number of Canadian consumers who shop online. By cutting costs, Target can offer lower prices and pass on savings to customers, but this may affect sales at physical stores. Until Target establishes a stronger presence in Canada and gains customer loyalty, it may need to limit cross-border shopping. While competition among discount department stores is not as fierce in Canada as in the United States, it still significantly influences consumer choices. Walmart, Sears, Canadian Tire, and Lobar are major players in Target's expansion into Canada. Currently, Walmart leads the industry by offering the lowest prices and is further reducing them to prepare for Target's entry. Sears plans to renovate their existing locations and offer lower prices since 70% of their merchandise overlaps with that of Target's. Canadian Tire primarily focuses on automotive retail but also offers household items; however, their sales in houseware, apparel, and seasonal merchandise may decrease due to Target's arrival.Lobar supermarket has introduced the Joe Fresh clothing line to challenge Target in the discount chic clothing sector. The competitive landscape in Canada differs from that of the United States, as Walmart is focused on offering the lowest prices

and preparing for Target's arrival by further reducing prices. However, this may not significantly impact Target since Walmart lacks the same perception of quality. On the other hand, Sears is primarily focused on rebuilding its image in the US market rather than in Canada through renovations and price cuts. Canadian Tire is implementing a new store format to enhance customer experience specifically in the automotive sector, unlike Target who does not prioritize automotive care due to Canadian Tire's loyal customer base. Additionally, Lobar, a supermarket chain, is entering into the clothing industry with Joe Fresh. Currently, differentiation strategy prevails in the industry which we recommend that Target also adopts. One potential way for Target to connect with Canadians is through hockey. The strategic group map compares Target's position with other major competitors in Canada's discount department store industry and reveals that it plans to open fewer stores compared to others.Canadian Tire has nearly 500 locations in Canada, but it still needs to establish loyalty among Canadian consumers to effectively compete. Sears serves as an example of a company that had high expectations when entering an unfamiliar market but failed to capture enough market share. Sears is reducing its efforts in Canada and focusing on its struggling American stores. Target faces competition from Walmart in the US and Canadian Tire in Canada but must offer competitive pricing, quality, and a wide selection of brands to convince customers to choose them over Canadian Tire.

Target's customers are unique with a median age of 46, making them the youngest among major retailers. Approximately 43% of Target's customers have a college degree, and their median household income is $55,000. Over

half of them hold professional or managerial positions, indicating that Target has a better brand image among department store shoppers compared to competitors. Additionally, 80-90% of Target's customers are women, with 38% having children. This demographic information is valuable for strategic recommendations for the company.

Price sensitivity is also important as customers understand the difference between price and value due to the competitive nature of the discount department store industry. Target is known for providing a wide range of options at competitive prices, which is important to its customers.Target has an initiative called Target Redcap that enables customers to donate one percent of their purchases, whether made in-store or online, to charitable organizations. It would be impactful to include Canadian Youth Hockey Leagues in this program, as there are currently over 500,000 children participating in youth hockey across Canada who may face financial barriers. Target is committed to community outreach and donates five percent of its weekly revenue, amounting to a total of $3 million dollars. Despite expanding into Canada, the Target brand was already familiar to 92% of Canadians. Many Canadians were willing to travel across the border to shop at Target stores in the United States due to competitive pricing and its position as the second-ranked discount department store after Walmart. By the end of this year, Target will have a total of 124 stores in Canada alongside its existing 1,778 stores in the United States. In 2012 alone, Target generated revenue totaling $73.3 billion with a workforce comprising approximately 361,000 employees. Known for its emphasis on design, creativity, and customer service within their high-quality establishments, Target offers a wide variety of products including

household items, entertainment goods, apparel and accessories, food and pet supplies as well as home furnishings and decor elements. What truly distinguishes Target is their commitment towards giving back by donating five percent of their weekly revenue each week which equates roughly $3 million dollars annuallyTarget offers volunteer opportunities to employees because they believe in the importance of giving back. They recognize that donating time, talent, and resources is just as valuable as generating income. This not only shows appreciation for those who have contributed to their success but also serves as a marketing strategy as Target understands the value their customers place on community outreach.

In addition to monetary contributions, Target is committed to promoting sustainable living by responsibly using resources, reducing waste, and minimizing their carbon footprint. In Canada, they are striving to obtain Leadership in Energy and Environmental Design (LED) certification for each of their 124 stores.

To effectively promote new product lines and promotional campaigns, Target Canada utilizes social media platforms such as Facebook, Twitter, and Youth. For example, they may share an image featuring a person holding a Cutbacks coffee cup while pushing a Target shopping cart with one hand. This encourages customers to "Practice the one-handed cart push" and indicates that Target stores in Canada will introduce Cutbacks coffee shops.

Furthermore, Target has created a specific Youth account tailored specifically for the Canadian demographic. Prior to expanding into Canada, Target utilized commercials as a means of generating interest in their brand.Target Corporation demonstrated their fondness for Canada and enthusiasm about becoming part of the community by collaborating closely with them, resulting in a successful strategy. They aimed to attract loyal shoppers who

value their country by offering Canadian products. The approval from Ottawa to open stores was granted after Target made a commitment to sell Canadian books and cultural items, showcasing their dedication to Canadian culture.

To evaluate untapped opportunities, Target Corporation conducted an internal and external analysis using the SWOT analysis and Porter's Five Forces framework. As a company, Target possesses strengths such as strong customer loyalty and brand recognition. Their easily recognizable logo and colors make them stand out, both through employee attire and distinct colors featured in their commercials' modern appearance. The meaning of their logo is immediately clear to consumers when they see it.

Furthermore, Target strategically places its stores in various cities for easy accessibility for customers. This approach allows them to provide a convenient one-stop shopping experience with a wide range of products. The consistency of merchandise and store layout across all locations further enhances convenience, making it easier for customers to find what they need.

In addition, Target already has a strong position in Canada as they attract Canadian shoppers who cross the border to shop at their stores.However, there are challenges that Target faces in expanding its business. These challenges include a high turnover rate among employees due to low wages and the hiring of many part-time staff. The higher turnover rate is often caused by predominantly hiring part-time employees. Additionally, compared to Walmart, Target's prices may be seen as a weakness, which could lead to some loss of sales during tough economic times. Furthermore, Target's specialized segments like grocery, pharmacy, and cosmetics lack the same level of brand awareness as their main products due to inadequate advertising efforts.

While strengths and weaknesses

are internal factors for Target, opportunities and threats are external factors. Expanding their private label offerings across all departments could be beneficial by reaching a larger customer base. Introducing grocery sections into all their stores would allow them to effectively compete as a one-stop shop while targeting new trends and markets they currently do not pursue. Moreover, Target's "Green Programs" initiative in Canada is a profitable segment that they have yet to explore. Previously limited to the United States, Target now has significant opportunities for international expansion.

However, entering the Canadian market poses challenges such as higher costs that may result in price increases to compensate for differences in labor, taxes, and operating costs.American Target stores could become more appealing and attract consumers from across the border. However, they face intense competition from Walmart, the nation's largest retailer. Any efforts made by Walmart to differentiate themselves in the market pose a threat to Target's success. Another potential threat comes from low customer income during economic downturns, leading customers to spend less overall and switch to lower priced retailers like Walmart.

To assess industry attractiveness and examine the external environment, Porter's Five Forces is used as a tool. The analysis reveals that Competitive Rivalry is high due to numerous competitors offering similar products and services. Discount department store companies like Target face fierce competition not only from other discount stores but also specialty stores and super centers. In response to this competition, Target has shifted its focus towards emphasizing value rather than solely focusing on price. They achieve this through positive customer service and offering a quality range of goods.

The threat of new entrants is low due to

high capital requirements and limited suitable locations for new stores. Location plays a crucial role in store placement decisions because there is a scarcity of convenient and easily accessible locations.

The threat of substitute products is high due to the wide variety available from specialty stores like Kohl's, Best Buy, and Pallets.Walmart and Costco are major competitors for Target in the superstore category, but Target offers a diverse selection of products to give customers more options. This diversity prevents any single supplier from having too much control over prices. With multiple suppliers competing for business and Target's large purchase volumes, suppliers are motivated to offer favorable prices.
Target caters to consumers across all income levels by providing both luxury items and essential necessities. This allows individuals to spend according to their disposable income and preferences. During economic downturns, customers tend to choose cheaper store brands, while during prosperous times they may splurge on expensive name brands.
Despite buyers' limited bargaining power due to the relatively small size of their individual purchases compared to overall company sales, Target strategically markets its products to attract a diverse range of consumers.
To gain insights into the Canadian audience, a survey was conducted among current Canadian residents. The survey covered demographics, geography, shopping habits, familiarity with Target, and opinions on hockey. Sixty consumers responded to the survey, with 90% being male.The respondents' ages varied from 17 to 44 years old, with the highest number of participants falling into the age ranges of 18-24 and 25-34. A few respondents mentioned using a combination of Canadian and American brands such as Lululemon, Hudson's Bay, Tim Hortons (Canadian), Nike, Starbucks, and Coca-Cola (American). They expressed curiosity

about having more American brands in Canada, particularly Target, due to its distinct shopping experience compared to other Canadian stores. In general, the respondents demonstrated a good understanding of and interest in both Canadian and American brands.