A business strategy is defined as the means by which a business or an organization sets out to achieve its goals or objectives. Simply, it can be defined as a long-term business plan. Target stores have used different strategies overtime. Nancy Koehn, a Harvard Business School professor said in her review that Target Stores what the store did was to eke out its position in the retail business landscape, a strategy much different from Wal-Mart’s. Chris Merritt, a principal at Kurt Solomon Associates while commenting on branding, said that branding was one of the things Target Stores did a good job of. They used this this strategy to make a name for them.
Background of the company
Just to touch on the background of the company, Target Store was opened by Dayton Company in 1962 in Roseville. Dayton Company was a company started by a man by the by the name George Dayton whose first store was called Good fellows. Due to the business niche that this astute business man had, the stores became the major suppliers of goods and grew at a very high rate. By the end of 1962, his four stores had made about eleven million dollars ($ 11 million). The companies continued to grow. Mergers took place. For instance, in 1969, Dayton merged with J.L. Hudson to form the Dayton Hudson Corporation. Profitability of the companies continued to increase. Management of Target changed and in 1973, the new management decided to slow down non expansion. By the year 2002, the company had become one and was now called Target Corporation. Looking at the summery of their finances from 2002 to 2004, it is clear that this company has grown to major levels. In 2002, the revenue of the company was $37,410 million. In 2004, it had shot up to $46,839 million. The earnings before interest and taxes in 2002 were $2,861 million. By the year 2004, the earnings before interest and taxes had gone up to $3,601million. The net earnings were $1,407 million. In 2004, they had shot up to $1,885 million. The net earnings per share in 2002 were $1.54. By 2004, they had shot to $2.07. The company has continued to improve its financial status over the period. The question in many lips of course is how? What was Target Corporation’s strategy? Did they use one strategy or one?
Differentiation strategies
Merchandising
Since Target saw the need to constantly be abreast with what the customer’s needs and wants which consisted on them anticipating both the demands and trends, they had to find a merchandising strategy was would meet its objective. Target’s executive vice president of merchandising, Mr. Warren Feldberg coined the phrase ‘looking at the world as our shopping basket and finding ways to bring that basket to the average customer’. This phrase greatly influenced the merchandising strategy of the company. Consequently, Target displayed products which were in line with its customer’s lifestyles, created a unique image and made enhancements to its merchandise displays. It offered national brands and private labels with innovative and creative layouts. Labels like ‘Favorites’, ‘Honors’, ‘Sostanza’ and ‘Greatland’ were used as a merchandising strategy to induce many customers with different tastes to shop in the store.
They had different prices, were of different qualities and targeted different clientele. The main merchandising strategy most retail outlets use to create an upscale image is the shop-within-a-shop concept. Nevertheless, Target had a different approach. It decided to bring in very many labels and brands which would be associated with department stores. As a result, they created ‘focus areas ‘for them. The ‘focus areas’, or simply, ‘stripe points’, as Target named them, would highlight the merchandise, but still line with interiors and aesthetics of the whole store. Even the vendors were happy with the merchandising strategies that Target put in place.
Advertising and Promotions
This strategy started as early as 1975 when the company began publishing a circular in the Sunday edition of the leading newspapers. The circular was very attractive, with colorful and bright information with their latest offerings. This was rather very different from the coupons which most discount stores used. This is mainly because it was like a style section of a newspaper. The circular gave great focus to the fashion and trends and the must-haves, rather than the prices. Therefore, Target Corporation was able to project an image of sophistication and style to its customers and other consumers. In addition, Target had aisles that were clean and displayed artful images which were very attractive to look upon. This company presented a merchandising style that was not like any other. Its competitors focused on pricing in their advertising. In contrast, Target gave the impression that there were great finds at great prices. The company created a trendy and stylish image for the everyday household items. These were items as mundane as an iron box, a lawn mower and even clothes.
Consequence its differentiation strategies
As a result, Target Corporation won gold, silver and bronze in various categories for marketing and advertising by the Retail Advertising and Marketing Association (RAMA). In 2004, one of their print advertisements became a design exhibition in National Design Triennial: Inside Design Now which happened at the Smithsonian Cooper-Hewitt. In 1999, to enhance their online presence, Target signed an advertising agreement with Target and Collegestudent.com. This also facilitated the company’s entry in the college market. In conclusion, Target has used its own unique method to stamp its foot in the American retail market. The differentiation strategy the company has used has worked magic for them. Their unique way of merchandising, marketing and advertising strategies have greatly influenced the company’s growth and profitability.
