Target Stores'Differentiation Strategies

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Case Details:

Case Code : BSTR164
Case Length : 15 Pages
Period : 1962 - 2005
Organization : Target Stores
Pub Date : 2005
Teaching Note : Available
Countries : USA
Industry : Retailing

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Differentiation Strategies

From the very beginning, Dayton's strategy was to position Target as an upscale discount chain at which the prices would be just above the lowest prices. To achieve this upscale image, it offered trendy and stylish goods in an environment that was bright and attractive, unlike other discount stores of the time.

To be able to offer the most up to date styles and trends to the customers Target focused on merchandising. Recognizing that just having the goods in the stores was not enough, Target also worked on conveying this image to the customer through its store layouts and displays, and through marketing and promotions.

It consistently used its famous Bullseye logo and tag line, ‘Expect more. Pay less.'in its marketing and promotions. According to an article in Advertising Age in 2003, its logo was recognized by 96% of Americans. Unlike other discounters, Target itself had become a brand because of its successful merchandising strategies, marketing, and advertising.

Merchandising

Target's positioning as an upscale discount chain was reflected in its merchandising strategy as well. Target managers felt that they needed to be constantly in tune with what the customers wanted and anticipate trends and demands. Warren Feldberg, Target's executive vice president of merchandising, tried “looking at the world as our shopping basket and finding ways to bring that basket to the average customer”.

Target developed an image and displayed products that matched its customers'lifestyles and created enhanced merchandise displays. It offered a mix of private labels and national brands in creative and innovative layouts and displays. In the early 1990s, Target had several private labels with merchandise at all price points.

'Favorites' was its opening price point label offering basics and its ‘Honors'label was priced just above that. The label 'Sostanza' was a better quality, more European look for the younger customer, and was all predominantly ladies' ready-to-wear lines. Target also had 'Pro Spirit', which was an active wear label. Its ‘Greatland'label was positioned as an outdoor wear label.

"There's no question we want to continue to take advantage of our own brands. We built some very successful brands that are well identified by our own customers. We also know that we, in the company strategy, believe in brands, so we will obviously balance those two approaches as we go forward" , said Feldberg regarding Target's view of private labels versus national brands...

Exhibits

Exhibit I: Financial Summary of Target Corporation


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