My First

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1. History of Target Corporation:
* Dayton Company opened first Target store in 1962, in Roseville, Minnesota. * Target name had been intentionally chosen to differentiate the new discount retailers from the Dayton’s more upscale stores. * First Super Target store was opened in Omaha, Nebraska in 1995. * Target.com website was launched in 1999.

* By 2000, parent company Dayton Hudson, officially changed its name to Target Corporation. 2. There were several retailers like Sears, JCPenny etc. serving many of products similar to Target’s Product line but all of them were having different strategy and customer base. So, it was very difficult to identify true competitors. But many investment analysts focused Wal-Mart and Costco as important competitors for Target. 3. Wal-Mart offered same store format and several merchandising assortment while Costco overlapped in customer base with Target. 4. In order to attract shoppers, retailers were focusing on Segmentation of customer population using different strategies. 5. Wal-Mart was using “Everyday low price” Pricing strategy whereas Costco was offering discounted pricing in exchange of membership fee (its following Membership fee format). 6. Target was following strategy of appealing style-conscious consumers while pricing competitively with Wal-Mart on items common to both stores. 7. Target referred to its customers as guests and consistently strived to support the slogan “Expect more, Pat less”. 8. Intensity of competition among the retailers was so high causing very tight profit margins that retailers had started selling their own brand that could be marketed to more affluent customers in search of a unique shopping experience. 9. Sales Growth for Retail companies stemmed from two main sources: a) Creation of new stores b) Organic growth (process of business expansion due to increasing overall customer base or new sales) through existing stores. 10. Target had been highly successful at promoting its brand awareness with large advertising campaigns resulted in Target’s bull’s eye logo being ranked among the most recognized corporate logos in US. Its advertising expenses were about 2% of sales and 26.6% of operating profit for fiscal 2005. 11. Target also started offering credit cards to qualified customers that accounted for 14.9% of Target’s operating earnings. 12. Capital Expenditure Committee (CEC) was a team of top executives that met monthly to review all CPRs in excess of $100,000. A typical CEC meeting involved the review of 10 to 15 CPRs. All CPRs with questionable economics were normally rejected at lower levels of review. In rare instance when a project with negative NPV reached the CEC, the committee was asked to consider the project in the light of its strategic importance to the company. 13. CEC meetings lasted for several hours to scrutinize each project carefully as suggested capital investment could have significant impact on long-term and short-term profitability of company. 14. CEC might choose to reject a remodeling proposal even with positive NPV if investment amount requested was much higher than normal. 15. Projects typically required 12 to 24 months of development prior of being forwarded to CEC for consideration. * In case of new store proposal (which represented majority of CPRs), a real state manager assigned to that geographic region was responsible for the proposal from inception to completion and also for reviewing/presenting the proposal details. * Pre-CPR work required a certain amount of expenditure that was not recoverable if the project were ultimately rejected by CEC. More than these expenditures, however, were the “emotional sunk cost” for the real state managers who believed strongly in the merits of their proposals and felt significant disappointed if any project was not approved. 16. CEC considered several factors to determine whether to accept or reject a...
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