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Target: The War for Guests

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Lisa Marsh

on 17 April 2014

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Transcript of Target: The War for Guests

Target customers like to shop where they are going to get:
Affordable prices
Ease and convenience
Great guest services
How do they like to shop?
Median age of 46
The youngest among major retailers
Median household income of shoppers
80 to 90 percent of shoppers are female
43 percent of Target shoppers have completed college
More than half of Target shoppers are employed in professional or other managerial positions
Who shops at Target?
Trends shifting towards the internet
“Online retail sales will grow from $225.5 billion in 2012 to $434.2 billion in 2017”

Where is the majority of their shopping now?
Source: eMarketer, April 2013
Promote Target REDcards In local schools
Spread awareness to parents, grandparents, guardians
Encourage schools to display REDcard donations
Work with local schools to set donation goals
Win-win for Target, guests and schools
The most recent Target donation to this school (August 2013): 262.01
Total of all Target donations to this school through August 2013: 2407.83
Amount accumulated toward the next Target donation:* 193.04
Number of REDcard holders who have designated this school :21
Since 1997, Target has donated over $387 million to K–12 schools.
For cardholders enrolled in the program, Target donates 1% of all REDcard purchases made at Target and Target.com to the eligible K-12 school of your choice.
What is Target's value proposition?
"Since 1962,
Target has committed 5% of its income to support communities.
Today, that totals more than $3 million in giving every week. We're excited to announce a new chapter of that commitment: our pledge of
$500 million
by the end of 2015 to support education and help kids learn to read. This will be the largest gift in our history, bringing our legacy of giving to education to
$1 billion

A significant portion of this giving will fund programs and partnerships that help more U.S. children reach one of the most critical milestones on the path to graduation: reading proficiently by the end of the third grade."
Melissa Back
Blake Bessette
Lisa Marsh
Basilio Velez
Peyton Walsh

The War For Guests
Owned Brands
Archer Farms Market Pantry Spritz
Archer Farms Simply Balanced Merona Sutton & Dodge
Boots & Barkley Play Wonder Threshold
Circo Prospirit up & up
Embark Room Essentials Wine Cube
Gilligan & O’Malley Smith & Hawken Xhilaration
Exclusive Brands
Assets by Sarah Blakely Genuine Kids by OshKosh Nate Berkus for Target
Auro by Goldtoe Giada De Laurentiis for Target Nick & Nora
C9 by Champion Harajuku Mini for Target Paul Frank for Target
Chefmate Just One You made by Carter’s Shaun White
Cherokee Kitchen Essentials from Calphalon Simply Shabby Chic
Converse One Star Liz Lange for Target Sonia Kashuk
dENiZEN by Levi’s Mossimo Thomas O’Brien Vintage Modern

Where is Target beating the competition?
What do Target's guests want that it does not carry?
Anything illegal 

Internet connection 
Flight tickets 
Wedding dresses 
Where are they beating Target?
Tobacco products
What gaps in Target's product assortment exist?
What are some products that are not sold?
The economy can direct us in almost all aspects of business, such as:
How big should the stores be?
What are the shipping costs?
How much are consumers willing to spend?
Why is the economy important to look at?
Some major economic factors that affect Target are...
Interest rates
Payroll tax increase
Rising fuel costs
Changing costs of raw materials
Major indicator of an economy's aggregate condition
Denotes how much consumers are currently spending versus saving
Consider how the average household income of someone who shops at Target is $55,000 annually...
How much will be spent at Target?
Determined by looking at GDP
A large increase in the cost of goods
Controls how much consumers will spend
Slows down impulse buying, as only necessary goods being purchased

Payroll Tax Increase
In 2010, the payroll tax was cut from 6.2 percent to 4.2 percent, this expired at the end of 2012 and from 2013 forward, there will also be a 0.9 percent additional tax on high income earners ($200,000+ for individuals and $250,000+ for families)
Used to fund Affordable Care Act
Lower consumer discretionary income

Rising Fuel Costs
Direct effect on the cost of goods sold (COGS)
Prices on consumer goods rise
Logistics need to be looked at to find more efficient shipping methods
Energy Information Administration expects fuel prices to come down slightly in 2015
Average cost for a gallon of diesel fuel in 2014 is $3.82
Expected to fall to $3.73 in 2015

These also play a large effect on the cost of goods sold
Metals, wood, minerals and many other raw materials are used in the production of consumer goods
As prices for these materials rise, we see a hike in the cost of production
Higher purchasing costs for retailers are then passed on to the customer
Methods of production that minimize the use of costly raw materials should be investigated

Raw Material Costs
Who is Target's competition?
J.C. Penney
Large scale of operations
International presence
Highly competent information systems
Expansive list of products
Cost leadership strategy
Labor-related lawsuits
High employee turnover
Little differentiation
Negative publicity
What are the strengths/weaknesses of the competitors?
Superior quality products and services
Strategic acquisitions
Efficient distribution chain and logistics
Excellent IT skills and server capacity
Cost leadership strategy
Only has online presence
Selling at zero margins
Negative publicity
Cost leadership strategy
providing the widest range of products and benefiting from the low costs
What must Target do differently to compete?
One weakness of Wal-Mart's is increasing resistance from local communities and negative publicity
Interferes with local retailers, who are often forced to close when a superstore opens nearby
Amazon also can suffer from negative publicity
Tax avoidance in US and UK
Poor warehouse conditions, price discrimination, anti-competitive actions
How is it different from Target's competition?
How should this be communicated to Target guests?
What channels
should Target use?
What channels
should Target use?

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