Target Corporation, American retailing company
Target Corporation, American retailing company
1.0 Executive Summary
This is a compressive report of Target Corporation, American retailing company. The report outlines the strategy and direction of the company, as well as its main objectives. It also describes product identification, international expansion, financial structure, and situation analysis. Therefore, the main aim of this report preparation is to enable Target Corporation to understand its settings and to select the best approach that would be appropriate for its marketing strategy. Thus, the firm will obtain a potential to improve its net income and the number of clients. Target Corporation is based on the provision of everyday essentials and differentiated merchandise at discount prices. The paper discovers that this type of company should be the leading American retailer. Target Corporation owns several brands, such as Simply Balanced and Gilligan & OMalley, among others. Although there has been a lofty success in companys business, there is still a need to establish more international markets. Target Corporation will employ penetration pricing strategy so as to succeed in highly competitive market. The company is hoping that due to employment of penetrating pricing strategy it will be able to compete favorably and overtake Walmart, the largest American retailing corporation.
2.0 Situation Analysis
Target Corporation, headquartered in Minneapolis, was established on February 11, 1902. The company operates large-scale general merchandise and food discount stores in the United States. It has more than 1500 stores in forty-seven states and 26 regional distribution centers in nineteen states. There are five main subsidiaries of Target Corporation. There are online sales, groceries, catalog sales, credit cards, and discount department stores (Plunkett, 2008). The company owns several brands, such as Gilligan & OMalley, Market Pantry, Room Essentials, Merona, and CHEFS among others. Over 365, 000 employees work for Target Corporation. Despite such prolific situation, it has a long-term plan of emergence as the leading American discount retailer. Therefore, it requires a well-conceived and properly implemented eMarketing plan that will be essential to attain outstanding productivity and profitability. After its realization, Target Corporation will be able to compete favorably and even surpass Walmart, which is the leading American retailing corporation.
SWOT analysis is a tool that should be employed by Target Corporation to help it gauge its business strengths, weaknesses, opportunities, and threats. Therefore, SWOT analysis can help this company gain insight into the past and think of an appropriate solution to the existing or potential problems. SWOT analysis for Target Corporation is presented as follows.
Target Corporation has three key strengths. The first one is the ability to generate lofty revenues due to the strong financial position. In addition, most its employees are highly qualified professionals since the company is financially stable and can easily pay them high salaries. The second strength is that this discount retailer has acquired brand visibility by sponsoring sporting events and American major events. Finally, Target Corporation has several awards and recognition that have resulted in an increase in sales volume.
The retailing company had several legal cases in the past. For instance, National Federation of the Blind (NFB) sued the company alleging that most of the blind people were not capable of accessing information on Target Corporations website. In addition, these blind people were not able to purchase any product from the retailers website on their own. Therefore, these past legal cases have adversely affected brand image, crippling companys growth, as stated by Saxena (2009). Another weakness is that the retailer has not managed to penetrate international markets even though it has a strong product culture.
Target Corporation has two main opportunities. The first one is the ability to acquire smaller retail chains. Another opportunity that prevails in this company is the potential to expand its market internationally through emerging economies. Therefore, this can serve as a good avenue for the company to exploit international markets in order to increase sales volume.
There are two main threats Target Corporation can encounter. One of them is intense competition from other large retailing corporations. Moreover, the retailer faces competition from different international retailing companies. The major competitors of Target Corporation are Walmart and Macys. Therefore, this competition pressure may have adverse effects on the companys market share that may result in fall in revenues in the future. Another threat is constant increase in the cost of raw materials. It can result in high cost of production, which will force the company to increase the prices of its products. Therefore, it may lose market demand for some of its products when their prices are higher than those of its competitors.
2.2 Competitive Analysis
There are several competitors of this American retailing company. These are large retailing corporations that have extended their markets internationally. Macys and Walmart are the main examples of Target Corporation competitors (Stickney, Weil, Schipper & Francis, 2009). Therefore, it has introduced merchandising with more product names to differentiate itself from its competitors. In addition, Target Corporation has put more emphasis on customer services by referring to them as its guests. The company has developed some inspirational quotes to entice and motivate prospective customers to purchase their goods. For instance, it has one inspirational quote that says, Expect more. Pay less., as pointed out by Stickney, Weil, Schipper, and Francis (2009).
3.0 Product Identification
Target Corporation is the second largest discount retailer in the United States, which offers a wide range of services, common for such companies. It owns several brands, including Archer Farms, Sutton & Dodge, Simple Balance, Gilligan & OMalley, Market pantry, Boot & Barkley, Threshold, Merona, CHEFS, up & up, Room Essentials, Circo, Wine Cube, Smith & Hawken, Embark, Spritz, and Xhilaration. The company has given its products these names in order to differentiate itself from other retailers and to compete favorably.
The company operates retail chains under two main concepts, namely Target discount stores and Target superstores. Target discount stores provide a variety of household products, electronics, sports equipment, clothing, toys and entertainment products with various discount offers. Similarly, Target superstores offer a variety of electronics, clothing, toys, as well as household, sports and entertainment products, as highlighted by Stickney, Weil, Schipper, and Francis (2009). Moreover, Target superstores provide dairy and frozen products, dry grocery and perishable food, coffee bars, bakeries, banking areas, pharmacies, and photo services (Plunkett, 2008). In addition, the company provides debit cards and credit cards with an offer of five percent discount on goods purchased.
Although Target Corporation has a number of loyal customers, the company has resolved to employ various methods of advertisement to increase further sales volume. Some of the advertising methods that the company is looking forward to implement is its products and services promotion on social media, radio, TV, and its website. Another major intention of the company is to develop more systems of stocks and discounts for both regular and new clients (Pinson, 2008). Target Corporation is also planning to engage in various activities related to advertising, such as exhibitions, conferences, and festivals. However, the most effective method that it is going to put more emphasis on is web sponsorship of related information. It can appear as the best method of companys name and product promotion to the international prospective customers (Burrow, 2008).
5.0 eMarketing Strategies
eMarketing strategies are vital in todays business environment since there is intense competition for the market (Okazaki, 2011). Therefore, online marketing strategies are essential for Stockport advertising agency to realize relatively high sales volume.
5.1 eMarketing Objectives
Target Corporation has four marketing goals for the next five years. The first marketing goal is to expand its international markets in order to increase sales volume. The next goal is to build a loyal customer base and find new clients regularly. The third goal is to create a reputation of a reliable corporation that has reasonable prices, but provides high-quality products. Finally, the company aims to enhance its share in retail industry.
5.2 Pricing Strategies
Target Corporation aims to apply various pricing strategies to ensure that there is a fair price for esteemed customers and optimum return for the company. There are four main pricing strategies that the company may use. These are skimming strategy, penetration pricing strategy, differential pricing strategy, and geographical pricing strategy, as identified by Burruw (2008). However, application of these pricing strategies depends on several factors, such as customer characteristics, companys goals and objectives, as well as intensification of inter-firm rivalry and phase of the product life. Therefore, Target Corporation has resolved to use penetrating pricing strategy since there is intense competition in American retail industry. Moreover, penetrating pricing strategy will also serve as an entry strategy to more international markets.
6.0 Technical Issues
Technical issues involve communication and identification of existing websites and services Target Corporation will be using to realize its objectives. One of the technical issues that can be raised is the determination of cost-effective privately hosted blogs and the usage of blogs hosted by others. Blogs hosted by others are cheaper and less controlled. In addition, CEO of Target Corporation has never posted any blogs on companys website. Therefore, it will use blogs hosted by others to promote companys name and products.
6.1 Internet Law
The Internet Law & Policy Forum (ILPF) is non-commercial business organization that was founded in 1995 to address complex issues that are affecting businesses and nations with the increasing use of the Internet. The ILPF offers international perspective and non-aligned forum in order to develop accurate solutions to these complex challenges affecting the Internet in terms of policy, law, business, and technology. In order to realize its goal, ILPF has published several articles and books on electronic authentication, content blocking and jurisdiction as a method of awareness promotion (Weintraub, 2011). Its members are diligently attending meetings to discuss best solutions in order to globally advance Internet opportunities. Therefore, I recommend that Target Corporation should apply for membership of ILPF so as to be able to understand fully complex legal policy, as well as business and technology issues affecting the Internet. Moreover, members of ILPF have access to valuable tools during advocacy programs in terms of profound analysis, statements and consensus principles.
The key concept I can borrow from Facebook representative is the promotion of the Target Corporations page. Facebook ad targeting makes buyers and sellers visit the companys website www.targetcorporation.co.ke. According to Weintraub, the purpose of the advertising campaign is to entice people to Like the ad, thereby becoming fans of Target Corporation (2011).
7.0 International Expansion
In March 2013, Target Corporation established 127 stores in Canada. The number of the stores grew rapidly to 133 in 2015. According to Pride, Hughes and Kapoor, there are two main methods that have been employed by Target Corporation to expand its market internationally (2012). The first method involves increasing companys sales and products in existing markets. It is one of the easiest and risk-free methods of international expansion. However, this method may require special tactics, such as the use of differential pricing strategies and new marketing techniques. Another method is the introduction of various brand names with the aim to make the retailers products unique, which definitely attracts international customers. Therefore, Target Corporation will fully realize international market expansion by constant differentiation of its products and by establishment of more stores in other countries. It will enable its prospective customers in other countries access the retailers goods and services.
8.0 Financial Structure
Target Corporation has been consistently growing since its formation in 1902. For instance, in 2004, it had assets worth $4.9 billion, as highlighted by Plunkett (2008).
8.1 Financial Objectives
Target Corporation has the following financial goals. The first goal is to make vast profits from international markets. This objective is fundamental because it identifies the effectiveness of the companys work and influences determination of the other goals. The next goal is to increase incomes by enhancing the number of stores from 1, 934.
8.2 Break-Even Point
Break-even point is a very important tool in setting amount of units that the company should sell in order to break even. Break-even point is defined as a zero point at which there is no gain or loss, as highlighted by Albrecht, James, Earl, and Swain (2007). In other words, it refers to a point in the business at which total costs for the number of units sold are equal to the total revenue generated, that is:
Break-event Point = Sale Revenue – Variable Cost – Fixed Cost = 0.
The break-even point will be very useful for Target Corporation to gauge risk involved in international market expansion. It will also help to decide which advertising and marketing strategies are better to employ. Currently, Target Corporation has been realizing lofty profits almost every month. For instance, it managed to earn sales revenue of $52,647 million at the end of 2006, as highlighted by Stickney, Weil, Schipper, and Francis (2009). Therefore, the company realized a net profit of $2, 408 as shown below:
Sales revenuefixed costvariable cost = net profit, $52,647- $48,787- $5,312 = $2,408 million.
Target Corporation is the second largest American retailing company. It owns several brands, such as Gilligan & OMalley, Market Pantry, Room Essentials, Merona, and CHEFS. These brand names are intended to differentiate companys products from those of its competitors. There are various business activities undertaken by Target Corporation. These business activities include sales online, in groceries, catalog stores, discount department stores, as well as through credit cards. The company has been realizing lofty profit almost every year; however, there is a need to establish more international markets to further promote its products. Therefore, intensive advertising and market research are mandatory for realization of the companys goals. Moreover, Target Corporation has resolved to use penetrating pricing strategy to effectively enter more international markets.