TARGET

Like other discount retailers, Target sells a wide variety of products, including clothing, jewelry,

sporting goods, household supplies, toys, electronics, and health and beauty products. However,

since its founding in 1962, Target has focused on differentiating itself from the competition. This

became evident in the mid-1980s when Kmart dominated the mass retail industry and Walmart

was growing rapidly. Kmart and Walmart’s marketing messages communicated their low price

promise, but their merchandise was perceived as cheap and low-quality. Target sensed a gap in

the market for “cheap chic” retail and set out to distinguish itself from the other big-box retailers.

Target planned to build an up-market cachet for its brand without losing its relevance for price-

conscious consumers. It positioned itself as a high-fashion brand with trendy styles and quality

merchandise at affordable low prices. To fulfill this brand promise, Target’s teams of

merchandisers travel the world looking for the next hot items. Next, Target brings these trends to

the shelves faster than its competitors.

Many styles are sold exclusively at Target through partnerships with world-renowned designers,

such as Mossimo Giannulli, Jean Paul Gaultier, and Liz Lange in clothes; Anya Hindmarch in

handbags; Sigerson Morrison in shoes; Michael Graves in home goods; and Pixi by Petra Strand

in beauty. They are either staples in Target stores or part of the Go International line, a special

design collection available for only a few months. In 2006, Target introduced U.S. consumers to

the concept of “fast fashion,” already popular in Europe, to help keep the product selection fresh,

which in turn led to more frequent shopper visits.

Target’s designer line collections are just one unique part of its entire integrated marketing

communications mix. The company uses a variety of tactics to communicate its “cheap chic”

positioning, beginning with its slogan, “Expect More, Pay Less.” In its stores, Target uses

strategically placed low shelves, halogen and track lighting, cleaner fixtures, and wider aisles to

avoid visual clutter. Signage features contemporary imagery but is printed on less expensive

materials. Target even catches the eye of consumers in the air by painting its signature red bull’s

eye on the roof of stores located near busy airports.

Target uses a wide range of traditional advertising such as television ads, direct mailers, print

ads, radio, and circulars. Its messages feature hip young customers, a variety of strong name-

brand products, and a lighthearted tone—all which have helped make Target’s bull’s eye logo

well recognized. Target also aligns itself with a variety of events, sports, athletes, and museums

through corporate sponsorships. From Target Field, the home of the Minnesota Twins in

Minneapolis, to Target NASCAR and Indy racing teams and contemporary athletes like Olympic

snowboarder Shaun White, sponsorships help Target pinpoint specific consumers, interests,

attitudes, and demographics. Target also advertises on and sponsors major awards shows such as

the Oscars, Emmys, Grammys, and the Golden Globes.

Target has a strong online presence and uses Target.com as a critical component in its retail and

communications strategy. Target.com is able to gain insight into consumers’ shopping

preferences, which ultimately allows for more targeted direct marketing efforts. The site also

features in-store items alongside Web-only items in hopes of driving traffic into the stores. On social Web sites such as Twitter and Facebook, Target builds loyalty and encourages young

consumers to share their experiences, discounts, and great finds with each other.

Target reinforces its positive brand image by contributing significantly to surrounding

communities. The company donates 5 percent of its annual income, or more than $3 million a

week, to programs that focus on education, the arts, social service, and volunteerism. Target

donated more than 16 million pounds of food in 2008 to Feed America, the nation’s food bank

network. Target also sponsors discounted or free days at art museums around the country,

including the Museum of Modern Art in New York and the Museum of Contemporary Art in

Chicago.

As a result of its integrated marketing plan, Target has attracted many shoppers who would not

otherwise shop at a discount retailer. Its customers are younger, more affluent, and more

educated than its competitors attract. The median age of Target shoppers is 41 and the median

household income is $63,000. Three-quarters of Target consumers are female and 45 percent

have children at home. In addition, 97 percent of U.S. consumers recognize the Target bull’s eye

logo.

While Target’s marketing communication mix has effectively communicated its “cheap chic”

message over the years, this strategy hurt sales during the recession in 2008–2009. During that

time, consumers significantly cut their spending and shopped mostly for necessities at low-cost

Walmart instead of for discretionary items, which make up about three-fifths of sales at Target.

As a result, Target tweaked its marketing message and merchandise profile. The company added

perishables to its inventory—a necessity in slow economic times—and cut back on discretionary

items such as clothing and home accessories. Target’s marketing message remains focused on

offering consumers high style and unique brand names but emphasizes value more, using phrases

such as “fresh for less” and “new way to save.”

Today, Target is the second-largest discount retailer in the United States, with $65.4 billion in

sales in 2009, and ranks number 28 on the Fortune 500 list. Its successful integrated marketing

mix has worked so well that consumers often jokingly pronounce the company’s name as if it

were an upscale boutique, “Tar-ZHAY.”