Case Study: Target
Target is one of the largest discount retailers in the United States and it competes with Walmart. For several years Target’s successful brand positioning assisted in slicing some of Walmart’s marketshare and for many years its’ business grew at a faster pace than Walmart. However, in 2008 due to economic conditions, global recession and higher unemployment, consumers became more frugal and Target experienced three straight quarters of flat same-store sales growth and a slight decrease in store traffic. During this same period Walmart experienced an increase in profits. In an attempt to stimulate Target’s sales growth, CEO Gregg Steinhafel executed a new marketing strategy in response to the turbulent economic dynamics. The new strategy attempted to take Target’s marketing slogan, Expect More, Pay Less, and emphasize the “pay less” versus the “expect more”. By 2010 Target finally saw a five percent increase in sales and profits rose significantly by fifty-four percent. However, I question whether the increase was totally a result of the marketing strategy given the economy had improved. What microenvironmental factors have affected Target’s performance over the past few years? • Company’s financial reports flat sales growth in 2008. • Global recession causes more frugal customers who are drawn to Walmart due to its’ strong brand awareness as a discount retailer. • Although not stated, I presume suppliers were also struggling and as such possibly raised Target’s prices. • CEO decides to change marketing strategy with focusing on just a portion of their marketing slogan—pay less. • Disgruntled Shareholder William Ackman, one of Target’s biggest investors, was unhappy with Target’s performance and sought to take control of five board director seats stating the directors lacked experience. He claimed, “It should be a business that does well even in tough economic times.” (Kotler pg. 95) What macroenvironmental factors...
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