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The War for GuestsTarget Team CaseMGMT-4842Dr. Joy Karriker4/15/2013Team BuccaneerAlex Benson, Norman Hawley, Courtney Klink, Seth WallPaper Overview The war for guests is a constant battle fought between companies. What some companies don’t realize however is that they have all of the weapons they need to compete their competitors effectively but could be using them more precisely. Target (TGT) has recently been creating a multichannel strategy to attract customers to their stores. This seamless strategy that Target has been creating is a wonderful tool for the customer experience. The main issue we believe with Target is their implementation and execution of their strategy. In this paper we will have a short introduction to Target touching on the following:Customer basisValue propositionWeighted Competitive Strength Assessment (before and after strategy implementation)SWOT analysisIdentify Targets Central problemGive our recommended solution Our team believes strongly that Target has a lot of great tools to attract customers and keep them coming back time and again. With the different smartphone applications, Price match, Customer Service standards, and Channels of distribution Target has available they have the opportunity to grow their market share substantially. According to “55% of current marketing spend is on new customer acquisition” and “Only 12% of current marketing spend is on customer retention” CITATION Jam10 \l 1033 (Digby, 2010). The area where most of the wars funding goes straight into the first time customer and 1/5 of that initial investment are all that is directed into keeping the customer. Target has been putting their strategy in place to focus on keeping the customer coming back. We believe that Target’s strategy is great, but we believe that changing their approach to implementation would result in a much higher return on investment. IntroductionTarget launched its first store in 1962 in Roseville, Minneapolis where they have strategically managed and maneuvered themselves into one of the industry leaders in discount retail. Target Corporation (TGT) has become one of the key players in online retail and operates under the brand names Target and SuperTarget. Target’s slogan is simple and to the point, “Expect More, Pay Less” and is further exemplified in their mission statement: “Our mission is to make Target your preferred shopping destination in all channels by delivering outstanding value, continuous innovation and exceptional guest experiences by consistently fulfilling our Expect More. Pay Less.??brand promise” (Target 2013 Mission and Values).Target’s current consumer has a median age of 40, has median household income of $64K, 43% have children, and 57% have completed college. Target’s consumers are young, smart, and savvy enough to know great value when they see it! Through their consistent delivery of value customers and customer satisfaction, Target has enjoyed great success and reported at fiscal year’s end in 2012, a total of 1,778 stores throughout the United States and Canada and enjoyed revenues of 73.3 billion dollars (Target 2013 Corporate Overview).According to Hoovers, Target’s three main competitors are Kmart Corporation, Wal-Mart Stores, Inc., and Costco Wholesale Corporation. In the United States, Target is second in department stores behind none other than Wal-Mart (Hoovers 2013 Target Corporation Competition). Discount department stores sell a wide array of goods such as household products, a variety of clothing lines, personal care products, and groceries (Hoovers 2013?Discount Department Stores Industry Overview). Companies that operate in this industry must be able to manage their supply chain effectively in order to survive and Target has done so by renegotiating contracts with their suppliers to keep their prices competitive because Target is trying to avoid becoming another showroom for competitive online retailers. In order to survive in this industry, companies must change as market conditions change.Value PropositionTarget’s value proposition is straightforward, delivering higher quality products at competitive discount prices to their customers with a stong emphasis on customer experience. After all, their slogan is “Expect More, Pay Less.” When Target gets its customers in the doors they want them to come back, and not simply because of their competitive prices and superior quality. Customer service and satisfaction keeps customers coming back to Target because the atmosphere and great service is above and beyond the competition. Target has trained their employees to cater and tend to all of their consumer needs to the very best of their abilities and consumers take notice. Weighted Competitive Strength AssessmentKey Success FactorsTargetWal-MartCostcoControl Stock on Hand (.15)887Score1.21.21.05Experienced Work Force (.3)735Score2.10.91.5Ability to change with Market Demand Quickly (.4)884Score3.23.21.6Attractive Product Presentation (.05)854Score.40.25.20Wide Variety of Products (.10)798Score.7.9.8Total7.66.455.15The weighted strength assessment between Target and its competitors Wal-Mart and Costco shows the importance of each of their success factors that we think is important to each company. Target overall has the highest score. Target has a very prestigious inventory system that allows them to keep track of every single item in the store, where it’s located and where exactly it is on the shelf and in the back room which gives them a high ranking for control of stock on hand. Wal-Mart has a similar inventory system, but they do not have as much product in storage to put on the sales floor. Wal-Mart constantly has empty spaces on their shelves in different areas of the store, but this is also because of their low price promise to customers, which is not known to as many customers for Target. Costco is more about buying in bulk, so their inventory is on the sales floors. Experienced work force is something that Target could work on for having more team members that are trained in their department such as electronics or house appliances. Even though each team member is crossed trained it would be more beneficial for them to have background or extensive training in specific areas, but overall Target has knowledgeable employees which they have over Wal-Mart. Costco is similar with their different areas but they also offer a wider selection of products such as furniture, outdoor items, high quality cameras and appliances. Wal-Mart has the lowest rank for experienced workers because Wal-Mart is about paying less, and focuses on having a broad selection for customers and saving them money. Target changes their items in store quickly and is easily able to keep up with the changes in trend or seasons. Target has a huge advantage over Wal-Mart and Costco for this. Costco usually keeps the same bulk items in store, they transition for Spring and Fall with different products offered for outdoor items. Costco still has the largest selection of items to choose from and are able to buy in bulk.Target is much more effective as far as having a cleaner, more organized look in each of their retail stores. It is one of the strengths over Wal-Mart and Costco by always being clean, organized and bright when you walk into any Target retail store. Wal-Mart is seen as not as clean as Target but they have an easy lay-out of the store that you can easily navigate through and find the section you are looking for. Costco also is bright and welcoming when you walk in, but is not as easy to navigate and find the particular section you are looking for when you visit.Target has an excellent selection of products to choose from with lower prices than most. There number one competitor being Wal-Mart for prices is a constant battle. But Target has a higher quality product but not as large of a selection as Wal-Mart. Wal-Mart has a large, diverse selection but have the low price guarantee and most items people need in one store. Costco also has a very large selection of items to choose from but still can only buy in bulk which essentially if you have a large family, saves you money because your items last longer. Costco and Wal-Mart have more of a diverse selection than Target but is two different shopping experiences and needs than going to Target. SWOT AnalysisStrengths“Expect More Pay Less” approachExcellent Guest ServiceInnovativeTeam Member developmentWeaknessesPoor MarketingBrand LoyaltyGeographic limitationsBest-cost provider competitionOpportunities More Multichannel marketingFree Shipping to StoresExpanding PFreshSpecialized Training for DepartmentsThreatsWal-Mart (Low Prices)Amazon Free Shipping to doorLack of Customer awareness about incentives Target has Strengths Expect More Pay Less: Target is known for the slogan, “Expect more pay less.” It is their biggest strength because customers are getting high quality products for lower prices. “The cost savings that Target offers to its customers allow it to build a loyal and satisfied customer base” (Marketline, 2013). Excellent Guest Service: One of Target’s main focus is guest service, which is a huge strength over Wal-Mart. Target makes sure that every customer has a happy, pleasant experience which will make them come back again.Innovative: Target is doing an excellent job keeping up or being slightly ahead with new technology and ways to target more technology savvy people. Team Member Development: Another quality Target has is their development of their employees. Target is all about developing each of their team members into better people and giving them all the tools needed to do so. Target is about developing their employees into a team, and then transforming them all into leaders. Each team member is crossed trained in each department, which also is a contributing factor to their excellent customer service and high satisfaction rating.WeaknessesPoor Marketing: Target has not done a good job as far as letting guests know about their excellent savings programs they have to offer. We feel one of their main weaknesses is not announcing their free Target app for Smartphones, not promoting the REDcard more, and their price matching. Hardly anyone knows about Target’s price matching guarantee.Brand Loyalty: Even though Target is known for striving for customer loyalty, we feel it remains their weakness. If a customer knows they can get the same exact item that Target offers for a cheaper price at either Wal-Mart or any other retailer than they will do so. Target needs to make it almost impossible for their guest to want to get that item somewhere else. This also ties into the lack of marketing, because the more people that know about their excellent savings they have to offer, the more loyal the guests will remain.OpportunitiesMore Multichannel Marketing: Target has an amazing tool that most retailers don’t have, which are different types of Multichannel marketing. If Target was to expand more by having more ads pop up through social media which would describe some of their basic savings programs. But if they could just make them easier to learn about and find that would benefit them in every aspect.Free Shipping to Stores: Target has free shipping if you are a REDcard member, but to those guests that do not have it or are unaware, having them order something from the website and have free shipping with next day delivery would bring more people in the store. That would be an excellent opportunity to tell them about the REDcard, its savings it provides and that it would be free shipping to their home instead. But also the benefit of having free shipping to the stores would bring the customers in, and more likely get them to buy more than they planned. Expanding PFresh: “PFresh concept offers some of the fresh food items sold at SuperTarget in its smaller stores and several pre-packaged fresh produce such as bananas, berries, baby carrots and bagged lettuce; an assortment of fresh packaged meat such as ground beef, chicken and pork; and pre-packaged baked goods such as dinner rolls and pies. This format enables Target stores to offer guests high frequency perishables such as fruits and vegetables, a selection of fresh meat and bakery items, and an expanded assortment of dry, dairy and frozen foods.” (Market Line) The more Target is able to bring PFresh to its smaller stores or be able to continue to grow its PFresh in the existing stores will ultimately drive up revenue and customer loyalty because everything will be in one place. Specialized Training for Departments: Even though Target cross trains all their team members, they would have a better opportunity and competitive advantage to have employees go through specialized training for the department of their choice to work in. This would allow Target to better compete with Best Buy and other retailers that have more specific items by having knowledgeable team members about each product in their department.ThreatsWal-Marts Low Prices: With Wal-Mart always having low prices, and their low price guarantee being known to everyone is a huge threat to Target because they will always have to make sure their prices are just as low, but also will have to let the guest know about their prices as well. If Wal-Mart develops its own Multichannel Marketing than that will be a huge threat to Target for people will go to Wal-Mart for the lower prices and bigger savings if they do not care so much about their shopping experience.Amazon Free Home Shipping: Amazon having free 2 day shipping to customer’s home through amazon prime is another huge threat. Also amazon has several of the same items as Target at a cheaper price, if customers don’t mind waiting a day or two to get their order than Target loses another customer for that product. Lack of Customer Awareness: Target has amazing savings for their guests but with many not knowing about all the different ways to save that Target offers is a huge threat. Target needs to advertise more about their savings for their guests through more detailed ads online, commercials, and employees letting their guests know. Central ProblemWhen looking at Target’s current marketing strategy it seems solid. However there are always areas that can be improved upon. The key is to get customers in the door and keep them coming back. We feel that Target has a unique opportunity to take those customers back from competitors like Wal-Mart and Costco. Recently during a store visit, we had the opportunity to ask the Assistant Manager some questions. Throughout this conversation, he was mentioning many benefits that we had never heard of. Things such as the price-match guarantee, REDcard benefits and the most important, the free Target app for smartphones. We all couldn’t believe that they had an app that we haven’t heard of. The app is great for item location and even coupons. In our opinion, it’s great to have these channels of marketing but it doesn’t matter if the customer doesn’t use them. The Target smartphone app will be the focus of both our recommended and final solution.Recommended SolutionsWe recommend that Target should utilize a more guest specific marketing campaign. Target Corporation already has the tools that they need to increase their market share. One thing that was noticed during our research was that a lot of Targets current customers are not informed at all about their current services or applications available to them. Our group itself was unaware of the services and applications along with other friends that we had spoken with as a Litmus test of other people that shop at Target currently. This told us all that we needed to know about how effective Targets current strategy implementation is functioning. Marketing – Due to the target market we believe that Target needs to be advertising through channels that have the highest probability of reaching their guests. Television commercials that would air during the times that their guests would be watching are a great start (i.e. The Today show, between the hours of 9am-1pm; 4pm-8pm). During these times the typical Target guest or future guest would be watching shows on Television and have a high probability to view Target ads. Within the Ads to be shown we strongly recommend that Target pushes information about the services that they offer. Target needs to emphasize their Price Match, Debit/Credit card services (REDcard) and the discounts that come along with the applying. Loyal customers will see the ads and commercials and will be informed about new services available to them as well as reminding them of the ones that they are already aware of. As for new customers, not only will they be introduced to the great customer service that Target offers but will also be introduced to the new smartphone application and other services offered. A possible idea for a campaign is having a customer introduced outside of a store with their mobile device and show in a 90 second ad how simple it is to use the new applications. A great way to introduce customers in the commercial is walking through the store and showing how the Item Locator works, the ability to check to see if the store has a product in-stock, and also the coupon and discounts available on them. This will spike the interest of the guests watching the ad and if they have their mobile devices with them they would have an increased probability of utilizing the service right away. An incentive to downloading the application would also increase the probability of the guest to download immediately (i.e. $5 off coupon on frequently purchased products or $30 or more purchase). The applications that Target has created are great but without properly introducing them to the guests with a mini-tutorial through commercials and ads the consumer will not intuitively use them. An informed consumer will be a loyal customer. Customer Service – One of the areas that Target can definitely work on is their promotion of their services through their customer service. This is absolutely free of cost for Target to utilize their employees to push and remind customers about the rewards available to them for shopping at their local Target. Personally our group has shopped at Target but the majority of us have never been told about the different services that Target had to offer us. We knew that Target had a card to apply for, but we believe that Target should push the Debit card harder. The typical guest of Target would be more apt to apply and use their Debit card option than the Credit card. The guest should be reminded that this would cut down on bills coming to their home. Along with fewer bills, it would also be saving them from dangerous interest rates of other charge options while saving them money and giving them rewards. With this strong but friendly push from customer service it will give Target the upper hand on bringing customers back into their stores.Along with these new protocols, Target needs to make sure that all of their employees are well versed in the new applications they have available. If a customer has any questions that they need to ask to customer service, it is recommended that the Customer service representative actually use their mobile device. As they are helping the customer find their product needed they have the opportunity to tell the customer about the application and how simple it is to use. This will not only reinforce the use of the application but also allows the customer to be informed even more with a live tutorial. Not only will the customer be getting superior customer service but they will also be given new tools to use to help improve their next experience at their local Target. Final SolutionThe Target app is a great tool to target tech-savvy customers but it is being underutilized. We often see that people download an app, use it once and never open it again. Target should reward people for using the app in order for people to keep using it and coming through the doors. We have come up with a two-pronged approach that will not only help Target get more customers, but will also help them collect the ever so vital demographic information that retailers long for. First, by linking a customer’s REDcard to the app, Target can track customer purchases and be more effective in the delivery of its coupons and other promotions. By tracking customer purchases, Target can then crosscheck their frequently purchased items against sales at the customer’s local Target. For example, if a customer purchased all of their medications from the Target pharmacy and had the app, they would probably use it more often to see if there were any discounts. If a coupon or discount was available and Target knew the customer always purchased medicine from them, they could direct that coupon to them instead of coupons for things that they do not purchase from Target. By directing this important coupon to the customer they could also take the chance to introduce a “teaser” coupon. This could be a coupon or a discount on a private label Target-branded item that is similar to a competitor’s product. If the customer then takes the chance on the product and likes it just as much or more than a competitor’s, then they have locked them in on that product. This approach could potentially drive more use of the app and in theory; get people to purchase other products that they may buy from a competitor. With the coupons being on a customer’s mobile device, the ability to activate the coupons for register use will be important. The customer will select what coupons they want to use and by using their REDcard at the register, this will eliminate the need to show them to the cashier.Second, the app can be used as a tool to collect important demographic information on customers. Like Groupon, Target can modify the app to make a message appear in the notifications of the customer for a new promotion. This message can say something to the effect of “Target has a new deal waiting for you!”. Once the customer taps the notification, they will be directed to the app. Once on the app they will be required to answer 3 questions to unlock the deal. Here is the opportunity to collect vital information on their customer base. Example questions would be; Age. Most commonly purchased product (health and beauty, clothing, electronics, sporting goods). Male or Female? Target could come up with thousands of these questions and spread them out amongst their customer base. By doing this you benefit both the retailer and the customer. The customer receives a discount for a fraction of their time and Target benefits from the demographic information obtained. Implementation Customer service protocols can immediately be implemented by the Managers of the stores. This would simply take place at the meetings for the employees and should be reminded every week how important it is for the customers to be reminded and introduced to their services offered. This is a very simple protocol that can be initiated with zero cost to Target. The key to success for Target in this aspect is ensuring that they hire enthusiastic employees. If Target does have a reward program for their employees for recruiting REDcard members it can be in fact a negative reinforcement. The most important factor is ensuring that Target employees truly enjoy helping and offering customers these great services. Targets marketing campaign should be implemented as soon as possible. Accounting for time for creating ads and commercials that will effectively communicate Targets services to the guests, Target should implement these over the next year, if possible. The sooner that these ads can be introduced to the customer the quicker the guests will be informed. How will these steps help Target increase their customer base?A time adjustment in Targets marketing campaign will provoke more of the desired guests to come into stores. The main push in the marketing campaign should be the Applications and services that Target now has available to guests. Once the guests have downloaded and used the applications now available to them they will want to try them out and see how their Target experience has changed. As for new customers, they will be interested in how a shopping experience at Target is different from their normal shopping experience at another store. Upon arriving at the store they will see how easy it is to find what they need in the store and can even check to see if they have it available before they leave their house. With this power given to the customer along with superior customer service and the great offers that the REDcard has it is sure that Target will be creating return customers. The increased customer service push for ensuring that every customer that comes into the store is told about the services that are offered is a key factor in successfully retaining customers. Post Implementation SWOT AnalysisStrengthsExpect More Pay LessExcellent Guest ServiceInnovativeTeam Member developmentMarketing strengthStore loyaltyWeaknessesTarget app maintenanceBest-cost provider competitionGeographic limitationsOpportunities Free Shipping to StoresExpanding PFreshSpecialized Training for departmentsThreatsWal-Mart (Low Prices)Amazon Free Shipping to doorConclusion “Expect More, Pay Less” places a large burden on Target to come across as a best-value retailer, while attracting customers. Competitors such as Wal-Mart, K-Mart and even Costco have made it their priority to undercut everyone on prices. Target needs to not worry about trying to get into a price war with these competitors. It will be important for them to hold true to their idea of more for your money by providing their customers services that keep them coming back. Customers enjoy the layout of the stores, the cleanliness and the service you receive from every red-clad Target employee. However in these times of economic hardship, it is even more important to separate themselves from the best-cost providers. This has been done through their REDcard promotion, price-match guarantee and even their new smartphone app. Since Target aims to serve the more tech-savvy and more affluent customer the addition of our solution will be paramount to their future success. With our society being a technology driven world, the changes we mentioned will benefit them in the ever competitive “War for Guests”.Works CitedDigby, J. (2010, October 26). Return on Behavior. Retrieved April 14, 2013, from 50 Facts About Customer Experience: . (n.d.). In Discount Department Stores Report Summary. Retrieved April 14, 2013, from Hoovers. (n.d.). In Target Corporation Competition. Retrieved April 12, 2013, from information/cs/competition.Target_Corporation.d874c3aa052df19e.html Marketline. (2013, January 18). SWOT Analysis Overview. In Marketline. Retrieved April 14, 2013, from . (2013). In Corporate Overview. Retrieved April 12, 2013, from . (2013). In Mission and Values. Retrieved April 12, 2013, from ................
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