Target Corporation
Case Study Summary
The Target Corporation, a Fortune 500 company, is named to be the largest discount store retailer in the United States. Facing stiff competition from the second largest discount store retailer Wall-Mart. Over the many years that the Target Corporation has been in business, many strategies and policies were employed in an organizational capacity. With its headquarters in Minneapolis, Minnesota, the company boasts of over 1,700 brick and mortar stores in the United States only (Corrigan et al., 2014). This does not seem to strike as a big surprise considering the company has been in operation for more than a century since it was founded in the year 1902. Currently, Target is a competitive force to reckon with in the United States retail market. This would be attributed to the strategies that have been implemented in the company for the many years it has been in existence. Strategies that ensure customer needs and wants are satisfied with the line of the strategic business goals (Jennings, 2014).
The Target Corporation has installed much of its workforce in finding out what the consumer wants. It is by gaining this important information that the company has grown to become what is known as a customer centric company (Corrigan et al., 2014). Indeed, the company places the needs and wants of their consumers at the very center of their business operations. This paper will incorporate study findings and articles on the prowess of the retail giant that is Target Corporation. The paper will focus more on specific strategies employed throughout the chain of operations of the business from human resources, to marketing, and lastly, corporate social responsibility. The paper also strives to investigate currently implemented strategies that will give an insight into the future of the company amid the growing competition in the retail market. Furthermore, strategies will be recommended for implementation after a keen analysis of the current and future market trends relevant to retail business in North America, with a specific focus on the USA.
Marketing is an important aspect that drives the profits of the Target Corporation. Target Corporation has taken marketing to the next level: The use of technology and consumer data places the company in the capacity of making consumer related decisions that focus on consumer satisfaction (Corrigan et al., 2014). Marketing in the Target Corporation majorly involves that analysis of consumer data. The data are collected is analyzed to provide insight into decision-making processes that guide the organization’s main operations. The majority of the information is collected from data companies and from customer interaction with the online retail store, that is, target.com.
Analysis of data from the customers informs target on what the customer is looking for. This will, in turn, inform the company on what to provide for the customer specifications. The data contain useful information including age, occupation, average home income and individual income, purchasing power, spending ability, location, preference, and gender among other personal data (Corrigan et al., 2014). Target Corporation then moves on to using this data to fit the customer to a product portfolio of their choosing. The data is collected when consumers visit the online retail store target.com or websites similar to that. This data is then analyzed with a specific focus on the purchasing trends of individual customers (Corrigan et al., 2014). The results of the analysis, then guide on what the company should market to the customer to be product specific based on past purchases or a profile of the customer. With such information, the company is able to make their marketing strategies more focused on individual customers rather than a segment of a given consumer base thus being more specific.
Specific marketing drives revenues up and makes the company more reliable to the customer. The significance of data mining and big data analysis has empowered the marketing strategies of different retail companies, especially Target Corporation. Data mining and analysis are considered one of the most significant strategies being employed by Target Corporation to guide their marketing strategies. Still, there are many concerns about the privacy of customers concerning how companies use data collected from the internet (Corrigan et al., 2014). This growing concern has kept customers on edge about issues concerning how much companies know about them, which was brought about by predictive analytics, which predicts what product or portfolio thereof is the customer attracted towards. Customers have therefore been such a skeptic on marketing that seems so specific.
For instance, target.com is able to provide product coupons to customers in a very specific way. As in the case of pregnant women, target.com was offering them coupons for baby products that they are bound to buy during the pregnancy period. However, the capability of companies knowing that you are pregnant even without telling them made the pregnant women a little bit spooked. This would, in turn, make them move to purchasing their product at another retailer outlet (Corrigan et al., 2014). To avoid this, target.com has made such customers feel at ease by ensuring that specific products are marketed with a host of other products that the customer does not need. This would make the specific marketing exercise seem a little bit random that targeted at a specific product based on the women’s status.
By randomizing such marketing exercises, the target has been able to create a trustful relationship between them and their customers. This move has, in turn, made more customers visit target.com or their brick and mortar outlets due to their specific nature in the successful marketing of their products (Corrigan et al., 2014). When customers grow more aware of the company’s abilities to get hands on very personal information, they start to grow suspecting and cautious of any interaction with the company’s website or brick and mortar outlets. This would eventually translate to the drop in sales through the online platform and eventually move on to the physical stores. Thus, target.com made it their work to make customers feel comfortable that personal information will not be directly used against them in the company’s need to make profits.
Marketing is not the only strategic area that target corporation has focused on. There is also the issue of staffing. Target has been notoriously linked with freelance and out of house designers. The way target recruit talent is far much different from what is done by other companies in the retail sector, which is attributed to the fact that target not until recently did not have any in-house design team (Corrigan et al., 2014). The company had for the most part of their years in operation relied on the use of outside talent to make their products top quality design products (Corrigan et al., 2014), which is possible since every designer has an urge to boast of their interaction with target concerning the design process. Most of these talented design individuals tend to have a sense of appreciation of how target involves them in making creative products for customers. The designer will be excited when his or her product idea or design content features on products sold through target online and physical retail platforms.
However, of recent, target has acquired an in-house design team, citing the need to cut their product portfolio to a small catalog of designs that are relevant to the consumer market. The rationale behind this move is that an in-house team would only be able to create more creative designs for specific products whose preference of the consumer is high (Lovejoy et al., 2013). In this sense, designs would only be for the most relevant products, thus cutting down expenses on designing for a vast majority of products whose market value had no significant effect on the general sales the company makes annually.
Consequently, Target has become a model company when talking about corporate social responsibility. The company has made a significant effort in helping the society, particularly in the area of education (Corrigan et al., 2014). The vast majority of CSR conducted by Target was to help children read efficiently by the third grade. This milestone has been achieved through various ways in which students are encouraged to read at an early age. The main focus of the CSR activities is to create an environment in which good reading habits will thrive among American children, which is one of the main issues being tackled with CSR activities of Target Corporation. For instance, the company has been involved in the renovation of school libraries all over the United States. By renovation the school libraries, the environment is made conducive to learning. Furthermore, the renovation efforts are compounded with the addition of extra reading materials and learning and reading tools for the students and teachers (Corrigan et al., 2014). The reading and learning tools are instrumental in creating a well-established reading environment for the students.
However, the company notes that all the CSR efforts towards education are made more significant with the cooperation of various shareholders in the education (“A conversation with Laysha Ward”, 2012). They include all the caring parents, teachers, non-profit organizations, students, and the government along with other companies. The CSR effort to enable the average grade, three children, to be able to read for the purposes of learning has proved to be a good cause for the society. These efforts are made more meaningful through various research that affirm that most students are not able to read efficiently for the purposes of learning by grade three (“A conversation with Laysha Ward”, 2012). Grade three is a significant stage of learning whereby the child transits from learning to read to the level of reading to learn.
The ability to read for learning purposes is believed to guide the child to get a high school diploma: A feat, which a significant percentage of the students in America, do not achieve this education mark. Apart from the individual significance of the CSR activities to the individual students. The move is also made towards achieving a better workforce in America. More people graduating with high school diploma means that the workforce of the United States will significantly competitive, which is due to the graduation of competent professionals who were students who moved on to attend Universities and Colleges. The CSR efforts are, therefore, not significant to the society only, but also to most of the involved parties (Gonzalez-Perez & Leonard, 2013). Ability to read for the purposes of learning is eventually expected to create a more competitive and productive country that is competitive locally and globally (“A conversation with Laysha Ward”, 2012).
Target’s Future with Focus on Current Strategies
Target has a list of very significant strategies in place. The current position the company holds in the retail market is one to be admired. However, the current strategies should be changed from time-to-time to ensure that Target is not overtaken as the industry leader. The strategies need to change with a change in the business environment. There are many aspects of retail business that are being affected every day by a variety of factors. For instance changing technology needs agile companies who will not be afraid to embrace new technology for the betterment of their business operations. This would ensure that the organization retains their leadership position amid all the competition in the retail market.
Nonetheless, if the current strategies are maintained, the competitive atmosphere will not be largely restructured. Research shows that it takes a considerable amount of time for the society to change its relation to given entities (Paladino, 2013). For instance, customers currently loyal to Target will not change significantly in the next five years if the current strategies to stay in place for the same period. Therefore, the chronology of events leading up to the currently implemented strategies took a while to get adopted in the market and become significant tools to the company’s success. Hence, it would take the same amount of time for the significance of the current strategies to erode.
Recommended Strategies
Still, companies have been more profitable by being adamant in the face of the changing business environment; particularly companies whose strategies are guided by the consumer trends. However, the current lot of customers are unpredictable when it comes to changing their purchase or rather market trends. Hence, the target would be better by changing various strategies that are aligned with short-term goals or situation of the business environment. Consequently, the target should hold steadfast in their strategies relating to CSR activities. These are strategies that have a long term impact on the society (Paladino, 2013). These strategies are also time-consuming since they are implemented over an extended period. Therefore, Target Corporation should maintain long term strategies while appropriately changing short term strategies.
Competitive Strategies Being Employed by Main Competitor
Wal-Mart is considered as the leading competitor of Target Corporation. It is therefore by default the main competitor of Target. Target has employed a strategy of producing creative products at a relatively high price. However, Wal-Mart has taken the opposite path of providing customers with low-cost products. Wal-Mart is, therefore, implementing a cost leadership strategy (Basker, 2011). In its cost leadership strategy, Wal-Mart seeks to provide affordable products to its customers. The products from Wal-Mart are made less costly through an initiative by the company to reduce costs in their business operations, which makes their products less costly while increasing their revenue significantly. Their generic strategy is, therefore, the opposite of what is being implemented by Target.
Consequently, Wal-Mart is able to apply more intensive strategies owing to the fundamental framework of their main strategy of cost leadership. One of the intensive strategies being employed by Wal-Mart is market penetration (Basker, 2011). In a world where customers are looking for ways to get the same value, but for a lower price, low cost products become popular. Wal-Mart proceeds to penetrate the market through their costly products that are well appreciated by a large percentage of the retail market. The company is, therefore, using avenues to lower cost of products, for example promotions, special packages, and discounts. However, in the face of all these strategies, making the business environment very competitive (Kalyanam & Tsay, 2013). There has been a debate about whether Wal-Mart products are inferior to Target products due to their lowered cost (Basker, 2011).
Conclusion
Indeed, the target is a leading retail discount company. The effect of the company is not only felt in the business world, but also socially through their inclusive educational programs that strive to create a better future for the children. These strategies stand to create a better perception of the company in the eyes of their customers by being involved in some of the most significant aspects of the modern society. It is undoubted that target has a great vision for America on the business and social angle. A better society means better business opportunities and a better economic environment which is great for business operations.
References
A conversation with Laysha Ward, president of Community Relations and Target Foundation. (March 07, 2012). National Civic Review, 100(4), 59-61.
Basker, E. M. E. K. (October 01, 2011). Does Wal-Mart sell inferior goods? Economic Inquiry, 49(4), 973-981.
Corrigan, H. B., Craciun, G., & Powell, A. M. (September 06, 2014). How Does Target Know so Much about Its Customers? Utilizing Customer Analytics to Make Marketing Decisions. Marketing Education Review, 24(2), 159-165.
Gonzalez-Perez, M. A., & Leonard, L. (2013). International business, sustainability and corporate social responsibility. Bingley, England: Emerald.
Jennings, M. (2012). Business ethics: Case studies and selected readings. Australia: South-Western, Cengage Learning
Kalyanam, K., & Tsay, A. A. (January 01, 2013). Free Riding and Conflict in Hybrid Shopping Environments: Implications for Retailers, Manufacturers, and Regulators. Antitrust Bulletin, 58(1), 19-68.
Lovejoy, K., Handy, S., California., University Transportation Centers Program (U.S.), University of California (System)., & University of California, Davis. (2014). The impacts of big box retail on downtown: A case study of Target in Davis, California. Berkeley, Calif: University of California Transportation Center.
Paladino, B. (2013). Corporate performance management best practices: A case study approach to accelerating CPM results. Hoboken, N.J: Wiley.
