Target Research Report

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Table of ContentsTable of ContentsTable of ContentsTable of Contents IntroductionIntroductionIntroductionIntroduction 1 Industry OverviewIndustry OverviewIndustry OverviewIndustry Overview

History 1 Industry Size 2 Stage in Product Life Cycle 3 Seasonality 3 Growth Potential/Forecasts 3 Economic Environment 4 Legal and Regulatory Issues 4 Social/Cultural Consideration 5

Client Profile & Competitor AnalysisClient Profile & Competitor AnalysisClient Profile & Competitor AnalysisClient Profile & Competitor Analysis Client History 5 Sales 6 Advertising Expenditures/Media Allocation 6 Positioning/Creative Strategy 7 Public Relations 8 New Developments 9

Competitor AnalysisCompetitor AnalysisCompetitor AnalysisCompetitor Analysis Wal-Mart 9 Kmart 11 Big Lots 14 Dollar General 14 Costco ______________14

Consumer AnalysisConsumer AnalysisConsumer AnalysisConsumer Analysis Demographics/Pyschographics/Geographics _________________________________________15

Quantitative ResearchQuantitative ResearchQuantitative ResearchQuantitative Research Objectives, Methods and Participants 16 Survey Results 17

Qualitative ResearchQualitative ResearchQualitative ResearchQualitative Research Objectives and Technique 20 Analysis 21

Marketing Marketing Marketing Marketing RecommendationsRecommendationsRecommendationsRecommendations 22

IntroductionIntroductionIntroductionIntroduction Corporate social responsibility (CSR) has become an increasingly important component for most retail corporations. It is defined ‘‘as action(s) that appear to further some social good, beyond the interests of the firm” (McWilliams & Siegel, 2001, p. 117). In the past, being a good corporate citizen was seen as going above and beyond the normal business operations, but today, companies are realizing the importance of making positive contributions to society. In fact, integrating social, environmental and economic causes into operations has almost become an expectation. In order to explore the CSR efforts made by Target Corporation and its competitors, the situation analysis looks into the industry, client, competitors and consumers. The Industry Overview provides data about the size, advertising expenditures, growth potential, growth forecasts, social/cultural considerations and regulatory/legal issues of the discount retail industry. Following this section is the Client Profile which highlights the key information for Target Corporation including company history, sales revenue for the past nine years and the company’s marketing mix. Each competitor analysis provides the corresponding information and serves as a comparison to Target. Finally, the Consumer Analysis focuses on the target market and provides demographic, psychographic and geographic data for Target. Recently a study was conducted by Alloy College Explorer focusing on the topic of college students spending habits. The study revealed the “Top Socially Responsible” brands across the major industries. Yoplait was the first choice for food/beverage, Toyota was number one for the automotive industry and Target

earned the number one spot for the retail industry. As a result of the study, Target learned that retailers’ CSR policies have an impact on where students choose to spend their money. These three main areas of the Target Corporation situation analysis provide insight on how to best convey Target’s CSR policies to college students. A survey was designed to measure the behaviors of college students ages 18 and older. This research measured the target markets’ retail

shopping frequency, attitudes, beliefs, awareness of CSR and gender differences. The results

allowed Target to make an informed decision on future marketing and promotional efforts for

CSR initiatives and college students. The survey results exhibited that the most notable insight was the consumer’s awareness of and attitude about CSR. Secondary research analyzed Target Corporation and consumer sentiment toward the mass market/retail stores; primary research helped Target Corporation further understand the consumer’s attitudes, motivations, feelings and buying behavior and was collected in the form of 12 personal interviews. From the interviews, we were able to get an in-depth look at consumers’ feelings on Target’s role in the mass market/retail industry. We questioned participants about their awareness of CSR and their attitudes toward certain retail stores and Target in particular. Eleven out of 12 people named Target as their top choice due to its convenience, variety, cleanliness and helpful employees. We also found that eight out of 12 participants were not familiar with the term CSR. In order to reach those who were unaware of Target’s CSR initiatives, five recommendations have been proposed for our client to effectively promote its socially responsible actions. These recommendations include giving advice on what media outlets to use, suggesting how to outperform the competition, encouraging them to engage in college campus promotions and noting the importance of product labeling. The final research report is a conclusive study geared toward helping the client learn how to inform college students about their Corporate Social Responsibility practices.

Industry OverviewIndustry OverviewIndustry OverviewIndustry Overview HistoryHistoryHistoryHistory America has loved the retail industry since it’s beginnings in the 1800s. In 1852 P. Palmer and Company, which eventually became Marshall Field’s, opened as a retail dry goods store. The store also focused on fashion and prided itself on fashion conscious displays. Previously, retail store prices were based on haggling, but P. Palmer and Company started fixed pricing and put a price tag on everything. According to Marshall Field’s Company history, the “biggest role in securing loyal customers was Palmer's "no questions asked" return and exchange policy—unheard of at the time”(1). In 1858 the first Macy’s store opened its doors. Macy’s operated on a strict cash only policy and according to Macy’s companies history, Macy’s “introduced their odd-price policy, now used virtually everywhere in U.S. retailing. Charging $4.98 instead of $5.00, the store motivated consumers to buy in quantity in order to accumulate substantial savings” (2). In 1879 the first “Great 5C Store,” later

renamed Woolworth’s, opened and still exists in specialty stores such as Footlocker. Woolworth’s succeeded by having low prices and putting the customer first. Previously in most retail stores, prices were determined depending on the customer and it was considered rude to enter a store without buying anything. Woolworth’s encouraged the customer to look around the store and prices were held

constant (3). In 1881, P. Palmer and Company’s name was changed to Marshall Field’s and Company. Marshall Field’s coined the phrase “Give the lady what she wants” in 1895, which became the company’s motto (1). Sear’s, Roebuck and Company began in 1888 and was successful in producing mail-order catalogs (4). J.C. Penney’s opened its first store in 1902.

Customers liked J.C. Penney’s because they offered excellent quality at a cheaper price than brand names (5). In 1902 Goodfellow Dry Goods store was founded which was the beginning of what ultimately became the Target Corporation. The Dayton Company, formerly Goodfellows, was run as a family enterprise and prided itself on strong values. Customers admired the conservative style and the Dayton Company flourished (6). In 1918 Kresge Red Front stores, what eventually became Kmart, went public (7). In 1925 Sear’s opened its first retail store along with having mail-order catalogs; Sears invented the unconditional money-back guarantee (4). In 1962, the era of the discount retailing stores began with the opening of Target, Wal-Mart, and Kmart (6,8,7).

1858 1879 1888 1902 1925 1962

First J.C. Penney’s store

opens its doors First Macy’s

store opens

First “Great 5C Store”

opens

Sear’s, Roebuck and Company starts producing their famous

mail-order catalog

Goodfellows Dry Goods opens

Macy’s introduces “odd

price policy”

First Target store opens in Roseville,

Minnesota

Table 1 Top U.S. Discount Retailers

Sear’s, Roebuck and Company opens first

retail store

Walton brothers open first Wal-

Mart store

Source: S & P

Source: S&P

Industry SizeIndustry SizeIndustry SizeIndustry Size

Graph 1 illustrates the trend in sales revenue for the discount retail industry from 2004 to 2008. The industry is generating increasingly more revenue over the years, but revenue growth is declining. In 2004, it grossed $265 million dollars, and sales for 2008 are projected to be $322 million. Sales increased by almost nine percent in 2004 from the previous year, but sales for 2008 are expected to be only 2.9 percent higher than in 2007. The discount retail industry, with a combined revenue of about $130 billion each year, makes up a major component of the overall retail industry (10). By 2008, the industry will be comprised of more than 3,500 establishments which is a 2.7 percent increase from 2007. The industry is a major contributor to the overall economy. The companies are expected to employ 1.14 million people in the United States by 2008, and will contribute $48.22 billion, accounting for 0.52 percent of the total GDP (9).

2650

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Revenue in Millions in

Dollars

Discount Retail Store Industry

The industry is dominated by the major companies in the business; the top eight companies contribute 99.6 percent of total

revenue (9). Table 1 shows the top companies in this highly competitive industry. These competitors offer a wide range of goods at a discounted price to a similar market, so success depends on frequent price promotions and effective marketing. Wal-Mart Stores Inc. keeps its title as the world’s largest retailer by luring consumers with its “Always Low Prices” promise. It is able to offer some of the lowest prices in the business because of its relationships with manufacturers who sell goods at a low cost to Wal-Mart because of its success in the industry. Another retail giant is Target Corporation who emphasizes its “Expect More. Pay Less.” brand promise. Target differentiates itself by focusing more on product design and store atmosphere than most discount stores. Kmart also advertises low prices and was the fist in the industry to offer exclusive brands but has yet to reach the magnitude of Wal-Mart and Target.

DisDisDisDiscount Retail Industry Advertising count Retail Industry Advertising count Retail Industry Advertising count Retail Industry Advertising ExpenditureExpenditureExpenditureExpenditure Advertising and frequent price promotions in the discount retail industry are crucial for keeping up with the competition. Graph 2 shows the trend in advertising expenditures for the industry as a whole from 2003 to 2007 with the exception of the year, 2004 (12). Data for this year were unavailable. Over the years, money spent on advertising has generally increased by about $1 million. However, in 2007, spending for the industry decreased for the first time.

Stage in Product Life Cycle Stage in Product Life Cycle Stage in Product Life Cycle Stage in Product Life Cycle

The retail industry is in the mature stage of the Product Life Cycle (13). This stage is characterized by a decrease in growth of sales, which leads to a decrease in total revenue. Graph 3 shows the relationship between a given year and revenue (13). If the retail industry was still in the growth stage of the product life cycle, one would see substantial percentage growth from year to year in terms of sales and revenue. Graph 4 shows the

revenue growth rate trends. There has been a

2004 2005 2006 2007

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Retail Industry Advertising Expenditures

Years

Advertising Spending (in millions of dollars)

Source: IBIS World

2004 2005 2006 2007 2008

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Retail Industry Revenues

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Revenue (in millions $)

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Source: IBIS World

Graph 1

Graph 3

Graph 2

Source: Ad Age Data Center

Graph 4

decrease in revenue growth rates each year from 2004 to 2007, with only a slight increase for 2008 (13).Reasons for the decrease in growth percentages could be because people are trying to spend less money since the U.S. economy is currently unstable. As gas prices continue to climb, it is likely that people may cut retail spending and use their money elsewhere. Also, the industry is not expanding like it used to. There are fewer new stores opening each year, leading to the assumption that the industry is struggling with existing stores. The fact that the retail industry is contributing less than ever to the overall U.S. economy provides further evidence that the industry is reaching maturity (13).

SeasonalitySeasonalitySeasonalitySeasonality

Data from the U.S. Census indicates that the highest sales numbers for general merchandise stores consistently occur in November and December (14). This information reflects the seasonality of the discount retail industry. Holiday shopping contributes to sales increases during this time of year. There is also a slight sales spike in May which could be the result of school letting out and people having more time to frivolously shop in preparation for summertime (14).

Growth Potential/ ForecastsGrowth Potential/ ForecastsGrowth Potential/ ForecastsGrowth Potential/ Forecasts Despite the current decline in the discount retail industry’s growth potential, prosperity is predicted to increase within the next three years. Presently, discount retail stores are underperforming in its sector of revenue by 2.6 percent annually over the past five years (15). This change in consumer behavior is the result of the economic conditions. Instead of shopping in stores with higher prices, consumers are now purchasing items at stores with lower prices such as warehouse clubs and superstores. With a direct link to the future state of the economy, the growth potential of the discount retail industry is expected to rise by 0.5 percent by the end of 2008, 1.4 percent in 2009 and 1.9 percent in 2010. Economic conditions are forecasted to improve with a Gross Domestic Profit (GDP) growth of 2.64 percent by 2009. Also, the consumption growth has a favorable outlook with a perspective increase of 2.5 percent by 2009 and 2.6 percent by 2010 (16). There is likely to be a favorable shift of consumer behavior back to the department store

industry with a more stable economy, stronger labor market and a promising consumption growth. While the outlook on growth potential in the discount retail industry is expected to improve, these predicted statistics are still lower than the growths of competing sectors such as general merchandise stores, warehouse clubs and superstores. As a result, many department stores are expected to merge or exit the industry. Via better merchandise selection and enterprise expansions, discount retail stores have potential to reach target consumers and outperform the other sectors in the industry.

Economic ConditionsEconomic ConditionsEconomic ConditionsEconomic Conditions The correlation between the prosperity of the discount retail industry and the state of the U.S. economy, the current economic state of recession has had a major impact on this industry’s yield. The real GDP, a measure of the total flow of goods, property and labor services in the U.S., grew in August 2008. Due to the increase in exports, the real GDP grew 2.8 percent in the second quarter of 2008 compared to the 0.9 percent increase in the first quarter (17). However, consumer spending is still weak, which dragged the GDP growth down. The Consumer Price Index (CPI) is the government’s gauge of inflation as it indicates the consumer’s spending power, confidence and financial health. From August 2007 to August 2008, the CPI rose 5.4 percent with the current index at 219.086. This rise in inflation accounts for the 4.2 percent rise in consumer prices (18). Consumer confidence is measured by the Consumer Confidence Index (CCI), which is based on a 5,000 U.S. household

2004 2005 2006 2007 2008

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80

90

Revenue Growth Rates

Years

% Growth

Source: IBIS World

representative sample. While the CCI rose from 51.9 percent in July 2008 to 56.9 percent in August 2008, the current CCI level is considerably low. The Expectations Index in August 2008 is also low at 52.8 percent but substantially increased from July 2008’s Expectations Index of 42.7 percent (19). This low consumer sentiment directly affects the prosperity of the industry. Consumers are constraining their weekly expenditures thus causing a decline in merchandise demand. Low Disposable Personal Income (DPI) also affects consumers’ ability to contribute to the industry. In August 2008, DPI decreased 93.3 billion dollars, a 0.9 percent decline compared to July 2008’s decrease of 0.8 percent (20). Also affecting the economic state of the U.S. is the rising unemployment rate, which climbed from 5.7 percent to 6.1 percent in August 2008. This rise indicates a weakening state of the economy (21). Lynn Franco, Director of The Conference Board Consumer Research Center, sums up the current state of the economy by stating, “Consumer confidence readings suggest that the economy remains stuck in neutral, but may be showing signs of improvement by early next year. The Expectations Index, which posted a significant gain this month, suggests better times may be ahead. However, overall readings are still quite low by historical standards and it is still too early to tell if the worst is behind us” (19).

Legal/ Regulatory IssuesLegal/ Regulatory IssuesLegal/ Regulatory IssuesLegal/ Regulatory Issues The discount retail industry must comply with several regulatory agencies because it sells a variety of products. Foremost is the Federal Trade Commission which protects consumers and prevents unfair practices of competition in

the marketplace (22). Discount retail stores are subject to regulations of the Food and Drug Administration (FDA). The FDA regulates the labeling and safety of cosmetics, food and drugs (23). Target also has internal regulations. Target Corp. was one of the pilot members of the Customs-Trade Partnership Against Terrorism (C-TPAT). The focus of C-TPAT is to insure the safety and security of cargo shipments from around the world (24). Target has been confronted with a few legal issues in recent years. A trademark infringement suit was filed against Target Corp. on April 24, 2008 by skin care and beauty products producer, GoClear LLC (26). GoClear claims that Target’s Clear Rx pharmacy system is too similar to their trademark products of “ClearX” and “The Clear Prescription” (26). GoClear is currently seeking an injunction which would prevent Target from using the trademarks in the future (26). In August 2008, Target Corp. agreed to pay $6 million in damages to plaintiffs, as part of a class-action settlement with the National Federation of the Blind (27). The plaintiffs claimed target.com was inaccessible to blind users. Target must implement internal guidelines by Feb. 2009 to make its site more accessible to blind users (27).

Societal/Cultural ConsiderationsSocietal/Cultural ConsiderationsSocietal/Cultural ConsiderationsSocietal/Cultural Considerations

With 13.6 million college students in the U.S. alone and $237 billion in spending potential (29), it may seem that persuading this age group to spend cash would not be a difficult task. Getting consumers to splurge proves to be a challenge with the nation’s current economic slump.

Consumers are now evaluating mass market retailers more in regard to community outreach involvement, environmentally friendly attitudes, and other sustainability efforts. Alloy Media and Marketing’s eighth annual College Explorer Study revealed that college students are becoming increasingly aware of the economic, social and environmental efforts made by retail companies. This corporate social responsibility in the retail industry includes giving back donations from profits, using environmentally friendly procedures, and supporting community organizations. Stores that convey an image of conscientiousness among societal issues, such as preserving natural resources, the slowing economy, child education, and poverty, are viewed as more accountable, and therefore better deserving of the consumer’s dollar. According to the study, college students between the ages of 18-30 view Target as the most socially responsible retailer. “It has done a good job of positioning the brand as 'caring for all things' and supporting a variety of causes,” according to the executive Vice President of strategic marketing at Alloy. Target strives to reduce its carbon footprint by reducing wastes and incorporating several eco-friendly strategies such as reusing hangers and making gift cards out of recycled wastes (30). Target also provides a clean, well-designed store with fast and accommodating service, and believes that its guests can have a superior shopping experience and save money at the same time (28). These aspects attract young adult consumers to spend their money and shop at Target. As well as putting in efforts to become more culturally aware, retailers are “pushing the envelope on fashion in apparel and in home to give customers a more compelling

reason to spend money during the economic slump”(30). This exertion is put forth to encourage students to shop outside the less profitable commodity section, and into the more pricy areas such as home furnishing and décor. Mass marketers, such as Target, are working to achieve this new height in fashion while still working with suppliers to avoid price increases (29).

Client ProfileClient ProfileClient ProfileClient Profile

History of TargetHistory of TargetHistory of TargetHistory of Target Marshall Field and Company was founded in 1881 and was eventually bought by the Dayton Hudson Corporation which became the Target Corporation. Marshall Field and Company was a dry goods store that became a large, well respected department store with huge retail success. It pioneered “Bargain basement” wholesaling and full service restaurants (1).

In 1902, George Dayton founded Goodfellow Dry Goods which became part of the Target Corporation. The name changed to Dayton Dry Goods Company in 1903 and then to Dayton Company in 1911. The company ran

as a family business and transformed into a multimillion-dollar company by the 1920’s.

Dayton donated millions to charities in his lifetime, thereby establishing

Target’s philanthropic values that set it apart from other retailers (6). In 1946, the Dayton Company began giving 5 percent of profits to the community, a tradition that Target Corporation continues today. Target contributes $3 million to charities each week (31). The Dayton Company successfully built the first fully enclosed shopping mall called Southdale in 1956. In 1962, the company entered discount retail and opened the first Target store in Roseville, Minnesota (6). In 1968, the Target bullseye logo was designed which is now recognized by 96 percent of the American population (31). By 1969, Dayton Corporation and J.C. Hudson Corporation, a department store chain, merged and the Dayton Hudson Corporation formed. Six years later, Target became Dayton Hudson Corporation’s

leading revenue producer. By 1978, Dayton Hudson Corporation bought Mervyn’s and became America’s 7th largest retailer. In 1987, Target began using electronic scanning and computer software which simultaneously processes information to the distribution center for quick product replacement. In 1990, Dayton Hudson Corporation bought Marshall Fields and opened the first Target Greatland, a larger Target store with a unique customer focus (31). The Target credit card, now known as the REDcard, was introduced in 1995. It was the first store credit card in the discount retail industry (6). In 1999, Target introduced Target.com, and Dayton Hudson Corporation was renamed Target Corporation by 2000. The Robert J. Ulrich Center, named after the Chairman and CEO of Target Corporation, opened in Bangalore, India (31).

SalesSalesSalesSales As you can see in Graph 5, Target sales have increased every year but at a decreasing rate. Target is doing very well. Target is a mature company so sales should continue growing but not as rapidly as it did in the early 2000s (32).

1881 1902 1903 1911 1946 1956 1962 1969 1990 1999 2000 2004

Began tradition of giving back 5% to the community

Goodfellows Dry Goods name changed to Dayton Dry Goods

Marshall Field’s founded

Goodfellow Dry Goods

store opens

Dayton Company built the first fully enclosed

shopping mall

Dayton Dry Goods changed to Dayton Company

First Target

store opens Dayton Hudson Corporation buys Marshall Field’s

Dayton Company changed to

Dayton Hudson

Corporation

Target.com

introduced

Dayton Hudson Corporation changed to Target

Corporation

Target Corporation sells Mervyn’s and

Marshall Field’s

0

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Expenditues

(in

thousands)

2000 2002 2004 2006

Year

Target's total U.S. Advertising Expenditures

Advertising ExpendituresAdvertising ExpendituresAdvertising ExpendituresAdvertising Expenditures Target has consistently been ranked in the top 100 leading national advertisers according to Advertising Age. Magazine, newspaper, network TV, syndicated TV, cable TV and internet advertising expenditures continue to increase each year.

Key Points

• 2000 o Ranked 35th according to LNA o Majority spent on newspaper

and network television (TV) (33).

• 2001 o Ranked 30th according to LNA o Continued focus on newspaper

and network TV o Increased expenditures on

magazine, spot TV, spot radio, outdoor and internet advertising (33).

• 2002 o Ranked 28th according to LNA o Increased their cable TV

advertising expenditures o Started advertising to business

publications and local magazines (34).

• 2003 o Ranked 29th according to LNA o Continued focus on newspaper,

network TV, magazine, spot TV, and cable TV as the majority of its spending

o Increased internet advertising o Started advertising on Spanish-

language television for the first time (34).

• 2004 o Ranked 38th according to LNA o Decreased newspaper

advertising, spot TV, and national spot radio advertising expenditures

o Began advertising in Spanish-language magazines and newspapers

o Increased network TV, syndicated TV and internet (35).

• 2005 o Ranked 34th according to LNA o Emphasis on magazines,

newspaper, internet, network TV and cable/Spanish-language television

o Increased local radio and national spot radio advertisements (35).

• 2006

o Ranked 28th according to LNA o Continued increase in magazine,

newspaper, network TV, syndicated TV, cable TV and internet advertising expenditures (36).

The total advertising expenditures for Target from 2000-2006 can be seen in Graph 6.In 2006 Target spent a total of $1,156,892,000 in U.S. advertising.

Target used many media outlets, but the majority of the advertisements were on television. Target spent $330,887,000 on television advertisements in 2006. In Graph 7, Target’s media mix for 2006 is expressed in percentages with television as the clear majority (36).

Source: LNA 2007

Target Sales 2002-2007

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Sales (in millions)

Source: 2007 Target Annual Report

Graph 5

Graph 6

Graph 7

Target Media Mix 2006

26%

13%49%

3%

9% Newspaper

Magazines

Television

Radio

Internet

Source: LNA 2002, 2004, 2006

Positioning Positioning Positioning Positioning Target wants consumers to see it as a company committed to low prices and great service. Target also places importance on its stores’ atmospheres by ensuring that each is clean and easy to navigate. Target promotes great product design and, most importantly, wholly commits itself to the communities it serves. Target Corporation has given five percent of profits back to communities since 1946. Today, that equals $3 million per week (31). In addition, Target Corporation has taken steps to help the environment by implementing initiatives to reduce waste, recycle, provide organic products, reuse goods, use energy efficiently and create eco-friendly products (37). Target also has programs like the Target House which provides long-term housing to families whose children are receiving treatment at St. Jude Children’s Hospital, and team members volunteer their time at the Target House throughout the year. In addition Target has the “Take Charge of Education” program and since its launch has donated over $200 million to schools throughout the nation. Target has several other programs that benefit the communities (38).

Creative StrategyCreative StrategyCreative StrategyCreative Strategy Target has a very unique advertising strategy. Target Corporation’s target audience is on average a younger and better-educated group of people than the target market of other discount retailers such as Wal-Mart and Kmart. Target always put its logo, the bullseye, somewhere in its advertisements because 96 % of the American population recognizes the bullseye as Target’s signature logo (39). In 2004, Target

Corporation bought 23,000 square feet of advertising space on the Times Square Tower. Target also has had some unusual advertising strategies such as “pop-up stores” in high profile places like Rockefeller Plaza in New York City. The stores are small and temporary, but draw attention to the Target brand. Another unusual strategy that Target Corporation has used was placing “Found Dog” signs on telephone poles with the dog being Bullseye, Target’s mascot (40). These ads target successfully grab the attention of consumers. Target’s successful current advertising campaign has been ads focused on clever graphics, vibrant colors, gorgeous models, all with a retro pop culture look. Many of the print ads feature very large graphics of everyday household items in vivid color. Another trend is print ads strictly done in red and white with the bullseye logo scattered throughout the advertisement. Television ads are often whimsical with great photography/graphics and upbeat, trendy music (41). Target’s advertisements use visually appealing, trendy elements to appeal to its target market and convince consumers that shopping at Target is a pleasant experience.

Public RelationsPublic RelationsPublic RelationsPublic Relations Target cares about the community and has given 5% of its profits back to the communities in which they do business since 1946. Target gives back $3 million every week to the community. (31). Target team members volunteer hundreds of hours to non- profit organizations every year. Scholastic Programs • “Ready. Set Read.” Stresses the importance

of reading and partners with publishers so

that it can give in-store book recommendations.

• “United Through Reading” A deployed parent is videotaped reading their child a book and then the tape is sent to the child to foster a bond between child and the deployed parent.

• “Reach out and Reach” provides books to children on each doctor’s visit until the age of five.

• Target provides grants to schools, libraries and non-profit organizations.

• “Take Charge of Education” has donated over $200 million to schools across America since its launch in 2007.

• Target cardholders can pick a designated school and then 1% of Target Visa or Target Card purchases are donated to that school.

• “Kids in Need Teacher Resource Centers” donates school supplies for children in great need.

• Target supports the United Negro College Fund and the Hispanic Scholarship Fund by giving scholarships (38).

Community Projects

• Target offers free and reduced price admission days and touring programs at over 30 theatre and art museums nationwide.

• Target sponsors organizations that prevent family violence, support local authority, and cope with disasters. Organizations include the National Domestic Violence Hotline, Prevent Child Abuse America, American Red Cross and Safe City.

• Target was the first ever sponsor of National Volunteer Week. Target paired up with the Points of Light Foundation and created a campaign to thank volunteers but also to encourage others to volunteer.

• Target House serves as long-term housing to families whose children are receiving treatment at St. Jude Children’s Hospital. Target House has 96 apartments and team members volunteer their time at the Target House throughout the year.

• Target team members have donated over $12 million dollars to United Way since its opening.

• The Target Foundation supports the Minneapolis/St. Paul area by partnering with organizations to provide food/clothing/shelter to at-risk families and individuals (38).

Diversity

• Target has donated money and volunteer hours to veteran and military organizations. Target also has many military veterans as team members and provides them with special benefits.

• Target is committed to diversity as seen with a new Hispanic food selection and celebration of Hispanic History Month. Target also places great emphasis on health, safety, and leadership in the workplace (38).

Economics

• Target also practices the best corporate governance and maintains a strong capital structure (42).

Environmental

• Target Corporation has been taking steps to help the environment including initiatives to reduce waste, recycle, provide organic products, reuse goods, use energy efficiently, and to create eco-friendly products.

• Target Corporation uses water saving technologies such as low-flow toilets in their

stores and ultra low-flow hand-wash faucets and customized irrigation.

• Target has Low Impact Development in several stores to filter the run-off of water from storm drains.

• Target utilizes recycling programs such as reusing garment hangers an average of four times, recycling shrink wrap, and refurbishing shopping carts when they are damaged instead of replacing them.

• Target promotes the recycling and reuse of unsold product.

• Target Corporation donates overstock grocery items to Second Harvest Foodbank and donates overstock pet food and supplies to local animal shelters.

• Target maximizes energy efficiency by using T8 florescent lamps and electronic ballasts, motion sensor lighting in stockrooms and using LED signage instead of neon.

• Target is using windpower, solar lighting and solar energy to power some stores.

• Target offers a reusable shopping bag. Target Corporation’s gift cards are unique because the resins are made from corn-based material and are 100% biodegradable.

• Target is also redeveloping environmentally impaired sites to build stores upon.

• Target also boasts several “Green Roofs” stores which have a thin layer of soil on the roof where plants can grow which improves habitats for birds (37).

New DevelopmentsNew DevelopmentsNew DevelopmentsNew Developments

On September 13, 2008 Target Corporation announced it is making a $1 million promise to provide cash and products for relief efforts of Hurricane Ike and Gustav victims (43). On September 1, 2008 Target donated $300,000 in products to Hurricane Gustav relief, 40,000 relief packages and 40,000 in emergency food packages (43). On September 3, 2008 Target Corporation announced a new line of stationary and home décor by designer John Derian that will launch in September. The line is affordable and trendy (44). On September 15, 2008 Target announced its collaboration with the Minnesota Twins baseball team. Target and the Minnesota Twins have teamed up for a 25 year partnership including the naming rights of the new Target field set to open in 2010. Along with Target Field, a public plaza and pedestrian bridge will be built to connect downtown Minneapolis to Target Field (45).

Competitor AnalysisCompetitor AnalysisCompetitor AnalysisCompetitor Analysis

Rationale for Wal-Mart

Wal-Mart offers similar products and services as Target. Both stores sell clothing, health and beauty products, toys, home and office supplies and has a pharmacy department. Wal-Mart is a main competitor to Target because Wal-Mart positions itself as the retail discount store with the lowest prices.

History of Wal-Mart

Sam Walton began his career working for J.C. Penney Company. A few years later, he opened a Ben Franklin variety store. By the late 1950’s, nine Ben Franklin franchises were owned by Walton and his brother (8). After analyzing mass-merchandising techniques, Walton went to the Ben Franklin management and suggested that the company “slash prices significantly and operate at a high volume” (8). When the management was not receptive to his proposal, Walton set out on his own and opened his first discount store, Wal-Mart, in Rogers, Arkansas in 1962. During the next five years Walton continued to open discount stores in Arkansas. Wal-Mart offered large discounts on name-brand goods. Walton made offering low prices profitable because of the sheer volume of goods Wal-Mart sold (47). A turning point in Wal-Mart history came in 1970 when the company went public on the stock market. With the increased finances, the company took off, building stores throughout the southeast (47). The first Sam’s Club opened in Midwest City, Oklahoma. It began as a wholesale club with the aim of helping business owners “save on everyday items they needed to run their operations” (47). Over the years, it progressed to include families and an assorted merchandise mix. In 1990, Wal-Mart became the nation’s number one retailer. In 1991, Wal-Mart entered the international market and introduced “Sam’s American Choice” brand products (47). Another milestone was reached in 1995 as Wal-Mart expansion reached all 50 states. In 2008, Wal-Mart operates a total of 7,390 stores and Sam’s Club locations throughout the world, more than 4,100 which are located in the U.S (47). Wal-

Mart employs more than two million associates who serve more than 200 million customers per year (47).

Sales

Graph 8 displays the net sales for Wal-Mart from 1999-2008. Net sales is the amount of sales after the subtraction of all returns, allowances and discounts. For the last decade, there has been a steady increase in net sales for Wal-Mart. Net sales have increased by an average of 11.9% a year (48). In 2008 Wal-Mart reported $374.5 billion in net sales (49). This was an increase of 8.6% from the previous year.

Advertising Expenditures

Over the last decade Wal-Mart has consistently been ranked in the top 100 leading national advertisers according to Advertising Age. Each year it has moved up in the rankings. Television is the medium of choice for Wal-Mart advertising, but in recent years it has increased magazine and internet expenditures. In 2006, Wal-Mart spent a total of $1,072,600,000 on advertising in the United States.

Key Notes

• 2000 o 63rd according to LNA o Majority spent on network and

spot TV.

• 2001 o Ranked 54th according to LNA o Majority spent on network and

spot TV o Decreased newspaper spending

by almost 50% (46)

• 2002 o Ranked 52nd according to LNA o Majority spent on network and

spot TV

• 2003 o Ranked 49th according to LNA o Majority spent on network and

spot TV o Increased internet advertising o Started advertising on Spanish-

language television for the first time (46)

• 2004 o Ranked 42nd according to LNA o Increase in magazines,

newspapers and internet (46)

• 2005 o Ranked 36th according to LNA o Majority spent on network and

spot TV o Increased local radio, national

radio and newspapers (46)

• 2006 o Ranked 34th according to LNA o Large increase in magazine

expenditures (46) o Decrease in network and spot

TV spending

0

100

200

300

400

Dollars

(in Billions)

1999 2001 2003 2005 2007

Year

Wal-Mart Net SalesGraph 8

Source: Wal-Mart 2003 and 2008 Annual Reports

Positioning

From the opening of its first store, Wal-Mart has focused on offering its customers the lowest possible prices. Sam Walton believed he could sell a greater quantity of goods, if he offered drastically lower prices than his competitors. Wal-Mart positions itself as a brand that offers quality products at a low price. Sam Walton states that the goal of Wal-Mart is to “save people money so they can live better”(47). The company also looks at savings beyond the prices customers see in the stores. Wal-Mart is currently working with its suppliers to introduce more energy efficient products that can save customers even more money in the long run (47). For Wal-Mart helping its customers save money “is a means to helping our customers live better” (47). The money customers save at Wal-Mart translates into more money to spend on other important things in life. Also, Wal-Mart positions itself as a “one-stop shop” (47). Customers can find groceries, electronics, home furniture, medicine, toys,

school supplies, clothes and much more in one store. Walton also placed an emphasis on localizing each store. He wanted to make sure local shoppers found exactly what they were looking for at their local stores.

Creative Strategy

In 2007, Wal-Mart modified their 19 year advertising slogan of “Always Low Prices.” While low prices are still at the core of Wal-Mart positioning, it has been expanded to “Save Money. Live Better” (50). With this tagline, the company hopes to “convey the message that it is not only concerned with providing the lowest price, but also with showing customers how the savings they receive translate into their lives” (50). The new tagline is about how the money one saves at affects customers’ lives. With the savings one could put back money towards a house, or car, or maybe have enough to spend on an extra gift for a loved one. Wal-Mart targets customers of all income levels with this new ad campaign (50). As Wal-Mart’s advertising vice president explained, “We know our customers, and no matter how much money they make, either lower or higher income, they all come to Wal-Mart to save money” (50). The new advertising campaign focuses on everyday Wal-Mart customers instead of using celebrities like some earlier Wal-Mart commercials (70). The emphasis here is on the customer and how shopping at Wal-Mart impacts their life. Along with the new tagline and advertising campaign, Wal-Mart has also added a series of key brands to its product assortment in the past year. Notable additions include brands like Dell, Samsung, Sony and Toshiba (50). These brands

represent a higher-end product. Wal-Mart also has fashion lines designed by Mary Kate and Ashley Olson, Jesse James and Norma Kamali.

Public Relations

Wal-Mart places an emphasis on giving back to the communities in which it operates. Last year, Wal-Mart contributed and raised over $400 billion (52). This money benefited more than 100,000 charitable and community-based organizations. Though Wal-Mart operates on a global scale, the company philosophy is to “give back locally” (53). Examples of programs include partnerships with the Children’s Miracle Network and Second Harvest Food Bank. Wal-Mart has also made a commitment to helping the victims of recent hurricanes, including a $2.5 million commitment to help with the relief efforts of Hurricanes Ike and Gustav (53). Wal-Mart recently introduced a State Giving Program. Through this program the Wal-Mart Foundation awards state and regional grants to “support unmet needs” (52). The foundation created State Giving Advisory Councils to determine the needs within each state, review all state grant applications and make funding recommendations. The councils are made up of Wal-Mart Stores, Inc. associates. This allows the Wal-Mart employees of each state to have input on how the needs of their community are met. Wal-Mart places an emphasis on education. On October 14, 2008 the Wal-Mart foundation announced that it would support first-generation college students by awarding a $4.2 million grant to the Institute for Higher Education (53). This grant will

Wal-Mart Advertising Media Mix 2006

Magazine

19%

Newspaper

5%

TV

60%

Internet

11%

Radio

5%

Outdoor

0%

Magazine

Newspaper

TV

Radio

Outdoor

Internet

Graph 9

Source: LNA 2007

help increase first-generation student success at minority-serving institutions (53). Wal-Mart implemented new measures to ensure sustainability in the past year. In February, “a packaging scorecard initiative” was introduced (51). This initiative monitors suppliers’ “progress toward incorporating sustainable packaging” (51). Wal-Mart hopes to reduce supplier packaging materials by five percent in six years. In addition to packaging sustainability, Wal-Mart also opened its first “high-efficiency” store in January 2007. This new store uses 20% less energy than a typical supercenter by utilizing new technology in the heating, cooling and refrigeration industries to conserve energy (69).

New Developments

New company developments include launching a digital, in-store TV network called “the Wal-Mart Smart Network.” Powered by Internet Protocol Television, the system will allow advertising to be “monitored and controlled down to a single screen” (54). The screens will be implemented in 300 stores before the upcoming holiday season and will be in all stores by 2012 (54).

Rationale for

Kmart

Kmart is a primary competitor for Target because it offers very

similar products and services to customers. Both stores offer men, omen, and children's clothing, home and office supplies, beauty and health products, pharmacy services, and much more.

History

Sebastian Spering Kresge was the mastermind behind the fundamental concept of Kmart, a retailer that would provide goods at an affordable price for consumers. It all started with Kresge's humble five-and-dime stores, the first of which he opened in 1899 in Detroit, Michigan. The idea was simply to keep prices low so customers would prefer to shop at his stores over the competition. Kresge's philosophy worked because five-and-dime stores grew from their modest beginnings into a giant retailer known as Kmart, which is comprised of more than 1,500 stores today (55). The first Kmart was opened in Garden City, Michigan in 1962. The history of the company overall has been bright, as shown by the increasing number of stores and reaching milestones such as achieving $1 billion in sales only four years after the first Kmart was established; however, there have been many bumps along the road to success for Kmart. In 2002, Kmart declared bankruptcy and announced that it would close almost 300 stores. A little more than a year later in 2003, Kmart re-stabilized and reclaimed its territory on the competitive retail scene once again. In 2004, Kmart Holding Corporation and Sears merged into Sears Holdings Corporation, which provided stability for the newly reborn company. This merger formed the third largest retailer in the country. Recently, however, Kmart has seen a rapid decrease in sales on an annual basis (55).

Sales

Kmart sales initially increased after its introduction into the retail industry, primarily

because it was the first discount store of its type. Today, major discount retail competitors such as Wal-mart and Target have created a diverse retail industry in which consumers have more options, so Kmart's sales have greatly declined. The current economic situation in the United States does not help Kmart's decreasing sales predicament either. The graph below shows the decrease in total sales from 1999-2006. Based on the trend shown by the sales data, Kmart's sales should continue to decline in the future as a result of several factors: not fully recovering from declaring bankruptcy, the introduction of fierce retail competition, and the maturing status of the industry in general (60, 61).

Advertising Expenditures

When S.S. Kresge's stores gained recognition and customers, Kresge wisely invested in advertising. The initial advertising medium of choice was newspaper, but soon radio and television ads were utilized to reach a larger audience. Today, Kmart still relies heavily on print advertising to

Year

Source: http://www.searsholdings.com

1999 2000 2001 2002 2003 2004 2005 2006 2007

0

5000

10000

15000

20000

25000

30000

35000

40000

Kmart's Total Sales from 1999-2007

year

Total Sales (in millions)

Graph 10

Competitive Matrix Table 2

promote its stores and is actually the retailer that uses print ads most (55). In 2003, Kmart spent a total of $413,100,100 on advertising, which was a 34% decrease from 2002 when it spent $628,600,000. One reason for the decrease could be because the store declared bankruptcy in 2002 and tried to advertise as much as possible to increase exposure and bail itself out of the financial crisis. By 2003, Kmart was even weaker prior to the merge with Sears in 2004 and wasn't able to afford as much advertising as it continued to struggle financially. In 2003, $6,283,000 was spent on magazine advertisements, while $12,256,000 was allocated for radio spots, $71,050,000 went to television ads, and an impressive $88,549,000 was spent on newspaper ads (58).

Graph 10

2003 Kmart Advertising

Expenditures/Media

MixMagazine

4%

Newspaper

53%

Outdoor

0%

Television

43%

Internet

0%Business

Publication

0%Magazine

Newspaper

Outdoor

Television

Internet

Business Publications

Positioning and Creative Strategy Kmart positions itself as a store that offers a variety of products at low prices; however, one source claimed that the reason that Kmart has continued to show decline over the last few years is precisely because it does not have a clear marketing or positioning strategy (59); however, Kmart has tried renovating stores to be more accommodating, bright, and accessible for customers and changing the name to “Big Kmart” to reflect these changes (55). In 2003, Kmart Corporation changed its slogan to “Kmart. Right Here. Right Now” to further

encourage customers to shop at Kmart for all of their needs (56). Kmart’s creative strategy includes a refurbished website which is more easily navigable (56). Partnerships with various name brands allow for Website and store product offerings such as Joe Boxer apparel, Disney children's clothing and the Martha Stewart Everyday product line (56).

Company Slogan Number of Stores

in U.S. Advertising Strategy

Corporate Social Responsibility

Expect More. Pay Less.

1,500

Make Target appear trendy and fun, with creative and innovative ad techniques

Gives back 5% of profits annually,

environmental initiatives and social programs

Save Money. Live Better. 4,100

Show consumers that saving

money at Wal-Mart translates into more money for the important things in life

Focus on localized efforts in the communities it operates

Right Here. Right Now.

1,500

Focus on low prices and improving customer shopping experience.

Made donations to tsunami relief effort in 2005. Source: LNA 2004

Public Relations

Despite its own troubles, Kmart's efforts to maintain its Corporate Social Responsibility values to help the community are commendable. Most notably, in January 2005 Kmart collected donations to aid tsunami victims and contributed more than $400,000 to the American Red Cross relief fund (56).

New Developments

Fifteen months after filing for Chapter 11 in Bankruptcy Court, the Kmart reorganization process was complete. Since its reappearance in the discount retail market, the store has implemented several strategies to keep from going under again. Kmart is now focusing its energy primarily on the most lucrative stores, reducing its debt and becoming more efficient overall. In addition, Kmart is restoring its original customer satisfaction proposition and continuing its low price initiatives (55).

Comparative AnalysisComparative AnalysisComparative AnalysisComparative Analysis When comparing Target, Wal-Mart and Kmart, it is noteworthy to mention that each store opened its doors for the first time in 1962. All the companies realized the need for discount mass merchandisers in the retail industry, and since have evolved into today’s retail giants. Target has positioned itself on the higher end of these companies. This positioning is one of its strengths. By targeting a segment of the consumers in this industry, Target has developed a loyal customer base. Another strength of Target is its emphasis on CSR. In an age where consumers are aware of environmental and social issues, it is important for companies to have a strong component of CSR. Wal-Mart has strengths in sheer numbers. With more stores in the U.S. than Target and Kmart combined, Wal-Mart is clearly the powerhouse of the group. When it comes to producing profit, Wal-Mart is the leader, but Target’s emphasis on CSR and positioning itself as higher end produces customer loyalty that will continue to ensure success.

Secondary/Indirect Secondary/Indirect Secondary/Indirect Secondary/Indirect

CompetitorCompetitorCompetitorCompetitor

Big Lots Big Lots, Inc. was founded in Columbus, Ohio in 1967. The store sells assorted products ranging from holiday décor, consumables, furniture, house wares and toys/gifts. Big Lots is now the largest closeout retailer in the U.S. with annual revenues exceeding $4 billion with 1,400 stores in 47 states (62a). Big Lots indirectly competes with Target because of its broad range of low priced retail products. In contrast, Big Lots is a closeout retailer and “sells a range of branded products that have been over-produced or discontinued by manufacturers. Products are sold at prices well below 20% to 70% of discounter’s prices” (62). Target’s brand attempts to capture a more fashion oriented and “fresh” appeal, rather than sell closeout items at a significantly lower price as Big Lots does.

Costco Costco Wholesales Corporations is one of the largest retailers in the U.S. It began in 1983 and now earns approximately $68.5 billion annually. It has 538 warehouse in 40 states and eight countries and employs 137,000 employees worldwide (63). Costco mainly targets individuals and small or medium- sized business that need to purchase goods at a cheap cost. Most of its goods are packaged in bulk. The warehouses also offer top quality, exclusive brands such as Kirkland Signature products.

Unlike Target, Costco Wholesales operates as a wholesale or retail outlet. To shop in the warehouses, customers can choose from three different membership levels for a monthly fee. However, Costco Wholesales is a secondary competitor of Target because of its similar, wide range of available merchandise. Categories include health products, beauty products, groceries, office supplies, furniture, apparel, jewelry, electronics, toys, sporting goods, books and more. Costco Wholesales poses as an alternative choice for purchasing everyday consumer goods. Costco Wholesales Corporations is one of the largest retailers in the U.S. It began in 1983 and now earns approximately $68.5 billion annually.It has 538 warehouse in 40 states and eight countries and employs 137,000 employees worldwide (63). Costco mainly targets individuals and small or medium- sized business that need to purchase goods at a cheap cost. Most of its goods are packaged in bulk. The warehouses also offer top quality, exclusive brands such as Kirkland Signature products. Unlike Target, Costco Wholesales operates as a wholesale or retail outlet. To shop in the warehouses, customers can choose from three different membership levels for a monthly fee. However, Costco Wholesales is a secondary competitor of Target because of its similar, wide range of available merchandise. Categories

include health products, beauty products, groceries, office supplies, furniture, apparel, jewelry, electronics, toys, sporting goods, books and more. Costco Wholesales poses as an alternative choice for purchasing everyday consumer goods.

Dollar General Dollar General Corporation began in 1968, and is now the largest small-box discount retailer in the nation. It earns $9.5 billion annually and has over 8,000 stores in 35 states. It employs over 70,000 employees nationwide (64). Dollar General’s motto, “Save time. Save money. Everyday!”, explains its marketing proposition. The stores offer popular brand name products at a highly discounted price. Dollar General is a secondary competitor for Target since it offers a wide range of household

goods at a discounted price. However, it mainly targets consumers in a lower income category than Target and does not offer as wide of a range of products. Still, it is an alternative choice for consumers to go to buy cheap household goods.

Consumer AnalysisConsumer AnalysisConsumer AnalysisConsumer Analysis and Insiand Insiand Insiand Insightghtghtght

Source: U.S. Census

Demographics Psychographics Geographics AGE

*42.33% of Target guests fall in the 25-44 year old age range

RACE

*79.85% of guests were white *Despite only making up 5.2% of the population of Target guests, Asians and Pacific Islanders are identified as the group that is most likely to shop at Target.

Target shoppers are more likely to: *Read provided information on product labels *Buy recycled paper products *Visit a variety of stores while shopping *Use coupons in stores that they wouldn’t normally shop in *Shop at a store based on its environment *College age females and males who shopped at Target in the last three months were also sampled. *Each gender has specific behavioral traits that are unique to their sex.

Census regions: West

*Consumers from the Western U.S. are most likely to shop at Target. *Almost half of consumers in the Western U.S. have shopped at Target in the last three months.

Census regions: Midwest

*The data from the Midwest comes in a close second to the Western U.S. as the most popular region for Target shoppers in the last three months.

Census regions: South

*Approximately 34% of Target shoppers live in the South.

*Census regions: Northeast Consumers in this region are least likely to shop at Target by a large margin. Only 16% of Target shoppers are from the Northeast

Target Market ProfileTarget Market ProfileTarget Market ProfileTarget Market Profile: Table : Table : Table : Table 3333

After profiling Target and its primary competitors, it is important to analyze Target’s consumers in order to execute an effective marketing plan. Analyzing demographic, geographic and psychographic data is crucial for determining primary Target shoppers. This analysis, along with the detailed client profile, will help marketers to better understand consumer lifestyles and shopping behaviors. With customers on tight budgets, retailers are putting forth even more effort to draw in shoppers despite the current economic crisis (70). It is becoming a trend for consumers to shop at mass market/retail stores rather than specialty shops to get more for their money. Most Target shoppers are younger, better educated and enjoy higher financial security (39). Women spend an average of eight years shopping, which greatly explains the gender characteristics in Tables 3 and 4 (67). As shown in Graph 12, the total U.S. population is 302,398,485 while the total population of the 25-44 year old target audience is 167,363,752 people (66). According to these statistics, the target audience makes up 55% of the total population. This influential age group has substantial buying power as the data implies. The Simmons runs on demographics and psychographics both have a base of adults, while the run on college students has a base of full-time college students. In the demographics Simmons run, the 25-34 and 35-44 year old age ranges have index numbers of 114 and 115, respectively. These index numbers of over 100 indicate that the two groups are more likely to shop at Target than other groups. Based on this data, Target should focus on the 25-44 year old age range when defining its audience. Men displayed behaviors that were overall less likely to behave similarly to the overall adult population. The male population’s index number was much lower on each trait. The only trait where men displayed a high likelihood was in “While shopping, I get what I want and leave,” where they had an index of 114.

Table 4 shows full-time college age females and males who shopped at Target in the last three months were also sampled. Each gender has specific behavioral traits that are unique to their sex. Women are more likely to:

Table 4

Female College Target Shoppers Behavior Index

Number

Enjoy any kind of shopping 141

Spend a lot of money on toiletries and cosmetics

135

Shop frequently 135

Spend long periods of time browsing the store while shopping

131

Shop for bargains 120

Keep up with changes in fashion 120

Visit a variety of stores while shopping 118

Only shop at favorite stores because they like the price

116

Use friends opinions and influences while shopping

115

Shop at different stores to find the best price on expensive items

113

Shop at a store based on its environment 113

Source: Simmons Data

0

50000000

100000000

150000000

200000000

250000000

300000000

350000000

People

Total US Population vs. Total

Population 25-44 Years Old

Source: Simmons Marketing Research Bureau

Graph 12

Total Pop. 25-44 Pop.

Population Categories

Quantitative Research We conducted primary research in an effort to

further understand the targeted age group from the consumer analysis and insight. In an attempt to understand consumer feelings, attitudes, motivations and buying behavior, we conducted 12 personal interviews with diverse college students.

Research Objectives

• To measure the target market’s retail shopping frequency

• To assess the target market's attitudes/beliefs about differentiating characteristics of brands within the industry

• To assess the target market’s awareness about the industry’s current CSR initiatives and policies

• To assess the target market’s perceptions about the industry’s current CSR initiatives and policies

• To assess the target market's attitudes/beliefs about Target

• To measure the target market's perception of Target’s CSR initiatives and policies

• To identify strategies to inform and promote Target’s CSR initiatives within the target audience

• To identify if there are gender differences for the above measures

Method

Sample Profile and Data Collection

• Sample profile: Adults, 18 years and older, who are currently full time or part time U.S. college students

• Sample Size: n=200

• Data Collection Method: Each group member used a web-based data collection method by distributing the survey link through facebook.com.

• Seed Participants: The seed participants were individuals who received the link to complete the survey and were asked distribute it to others.

Proposed Survey Design

We conducted a web-based survey. Each team member individually sent the survey link to the “seed” participants via facebook.com. Each participant was asked to complete the survey on the provided link. To eliminate the chance for non-response bias, we disregarded surveys that were incomplete. In addition, we were not present while the respondent completed the survey to reduce interviewer bias since the interviewer’s age, sex, style of dress, tone of voice, facial expressions or other non-verbal characteristics could have influenced responses. The survey was conducted using SurveyMonkey.com, a tool that creates customized surveys for data collection. This lessened the possibility of selective perception from the interviewer and any administrative or interviewer errors. We followed the general guidelines for survey questions and made sure that the questions were not double-barreled or leading. We ensured that each question was short and easy to understand. The definition of Corporate Social Responsibility was provided so that the respondent would comprehend each question. Also, the questions pertained strictly to the research objectives. In the questions measuring shopping frequency, we made sure the time frame was short enough for the respondent to remember. We had 40 variables in our survey.

Group Member Name of “Seed” Contact

Hillary Adams Brian, Sarah, Andrea, Brooke, Leigh, Tara, Emily, Blair, Daniel, Mark, Wendy, Virginia, Clay, Jack, Jay, Avery, Allie, Whitney, Julie, Molly

Ginny Brown David, Rachel, Diana, Nathalie, Lauren, Emily, Cameron, Molly, Haley, J.J., Caroline, Chris, Justin, Connor, Whitney, Erin, Rebecca, Rea, Mo, Daphne

Logan Clark Bradley, Allie, Ryan, Saheel, Jack, Chloe, Nick, Randy, Sam, Sarah, Mary Claire, Elizabeth, Susanne, Mary Beth, Christie, Bailey, Sara Grace, Chelsi, Jenny, Lauren

Hayley Martin Amanda, Meredith, Alaina, Shainna, Kathryn, Jamil, Kendall, Kelley, Erica, Shelby, Barrett, John Major, Becca, Amanda, Kandace, Rachel, Catherine, Candace, Glenn, Meredith

Sarah Wagner Clarie, Ashely, Chris, Jasmine, Blair, Carley, Brooke, Elizabeth, Jack, Ryan, Wayne, Bobbie, Callie, Katelynn, Katie, Katie, Channing, Chase, Brett, Sarah

Rebecca Whitefield

Abra, Matt, Andrew, Brian, Christina, Crystal, Tara, Kyle, Terence, Addy, Brian, Lauren, Alex, Jamil, Asia, Courtney, Patrick, Emily, Jennifer, Katie

Table 5

Achieving the Research Objectives:

Research Objective Survey Question

Numbers

To measure the target market’s retail shopping frequency

1, 2,

To assess the target market’s attitudes/beliefs about differentiating characteristics of brands within the industry

3, 4, 8, 24

To assess the target market’s awareness about the industry’s current CSR initiatives and policies

5, 16, 17

To assess the target market’s perceptions about the industry’s current CSR initiatives and policies

6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 18, 19, 21, 23

To assess the target market’s attitudes/beliefs about Target

25, 28, 30, 31, 33

To measure the target market’s perception of Target’s CSR initiatives and policies

26, 27, 32

To identify strategies to inform and promote Target’s CSR initiatives within the target audience

29, 34, 35, 36

To identify if there are gender differences for the above measures

58

Efforts to Reduce Survey Design Bias:

We followed the general guidelines for survey questions and made sure that the questions were not double-barreled or leading. Each question was short and easy to understand. The definition of Corporate Social Responsibility was provided so that the respondent would comprehend each question. Also, the questions strictly pertained to the research objectives. In questions measuring shopping frequency, we made sure the time frame was short enough for the respondent to remember. Within our survey design, we abstained from using emotionally-charged words or biased language.

Survey Results The survey results indicated that college students believe that CSR policies are important to business and consumers.

Mass

Market/

Retail Store

Frequency Percentage

Target 111 55.5%

Wal-Mart 80 40%

Sam’s Club 5 2.5%

Costco 1 .5%

Dollar General 1 .5%

Dollar Tree 1 .5%

Kohl’s 1 .5%

Table 7 shows that Target is the most visited mass market/ retail store for the consumers in our sample. Over half of the sample chose Target as their preferred mass market/ retail store. Two hundred college students were surveyed about the most influencing factor in their decision of which mass market/retail store at which to shop.

The frequencies in Table 8 shows that college students consider low prices to be more valuable than any other factors in influencing their shopping behaviors. In order to analyze the quantitative data and determine which responses indicated a significant difference, it is important to compare the average responses of male and female. Several survey questions were provided in a Likert scale format. Participants were asked to provide opinions on a scale from 1 (strongly disagree) to 5 (strongly agree). Likert scales were chosen to provide the extent of participants opinions. One question in particular demonstrated a significant difference between men and women

Influencing

Factor

Frequency Percentage

Low Prices 70 35%

Quality of Products 46 23%

Location/Convenience 42 21%

Store Atmosphere 29 14.5%

Store Reputation 7 3.5%

Store Popularity Among Peers

3 1.5%

Involvement in Community/Outreach

2 1%

Customer Service 1 .5% Table 7

Most Visited Mass Market/ Retail Stores

n=200

Table 8

Factors Influencing Shopping Behavior

n=200

Table 6

when the averages were compared. Men agreed more strongly with the statement believe that CSR policies are important to business” (t = 1.626, sig.=.083). On a scale of 1(strongly disagree) to 5(strongly agree) the average response value for men was 3.88 and 3.63 for women. This question was the only one that conveyed a substantial difference between genders. The significance level reported in the tables is a reflection of how substantial the differences between the group variables (i.e. recycler vs. non-recycler) are. Table 9 reflects significant differences in survey results between recyclers and non-recyclers. The statements shown were scaled in a Likert format to provide interval data about respondents’ attitudes of each in the survey. Recyclers’ responses indicated that they identified more with CSR awareness and appreciation than non- recyclers. The results are presented in order of significance. The significance is indicated by the significance level section in the table. The closer the value is to 0, the more the differences in responses are not due to chance meaning that there is a definable reason for the difference. Table 10 shows the differences among college students’ awareness of the term CSR. From Table 10 one can infer that slightly more than 50 percent of the college students who were already aware of CSR had learned about CSR initiatives in a business course. We performed a T-test to compare the average responses about awareness of CSR of college students. Those aware of CSR (mean=3.28) agreed more with the statement “I have learned about CSR in a college course before” (t=1.626, sig=.000).

Measure Recycler Non-Recycler Sig. Level

(2-tailed) I believe CSR policies

are important to business.

3.95 3.43 .000

I look forward to hearing more about CSR policies in the

future.

3.55 2.96 .000

I buy products that use recycled paper.

3.31 2.96 .000

Now that I am informed of CSR, I

plan to investigate how my favorite mass market/ retailer incorporates these

policies in its day -to -day activities.

3.10 2.63 .001

College students should be aware of the implications of CSR.

3.95 3.59 .001

CSR participation should be expressed in retailers’ promotional and advertising efforts.

3.98 3.68 .003

I believe in banning products that pollute.

3.36 2.94 .003

If I were better informed about the CSR policies of mass market/ retail stores, I would make different

decisions.

3.44 3.02 .004

I believe Target is a good corporate citizen.

3.93 3.62 .020

I usually read information on a product’s label.

3.31 2.96 .026

I believe that CSR policies are important

to consumers. 3.54 3.26 .037

In choosing between two similarly priced products, I would choose the more

socially responsible decision.

3.66 3.38

.058

Measure Aware of CSR Unaware of CSR Sig. Level (2-

tailed) I have learned about CSR in a college course before.

3.28 1.93 .000

College students should be aware of the implications of

CSR.

3.89 3.69 .085

Table 10

Significant Differences Between Levels of CSR Awareness

n=200

Table 9

Significant Differences Between Recyclers and Non-Recyclers

n=200

Table 11 shows the extent to which the recent economic downturn has affected the shopping attitudes and behaviors of college students in our sample. Table 11 demonstrates a relationship between shoppers who have changed their shopping behaviors due to the economic downturn and high level of CSR awareness.

The following tables report the statistical analyses of the relationship between two variables using Chi-Square analysis. Table 12 shows the differences between gender and awareness of the term CSR. Significantly more women (62.9%) than men (37.1%) were aware of this term (Chi-Square=4.43, 1 d.f., Sig = .035).

The statistical differences between full-time and part-time college students and awareness of the term CSR are reported in Table 13. This tells the client that significantly more full-time college students (84.7%) than part-time (14.6%) were aware of this term (Chi-Square=.019, 5 d.f., Sig.=.889). This might be because they have taken more college courses, thus are more likely to have heard of CSR in class. Again, this could be because the majority of the sample was full-time college students. The probability of 0.889 indicates a significant difference between these variables.

Measure Changed

Shopping

Behavior

Unchanged

Shopping

Behavior

Sig. Level (2-

tailed)

If I were better informed about CSR policies of mass

market/ retail stores, I would make

different shopping decisions.

3.5 2.92 .000

I believe that CSR policies are important to business.

3.93 3.43 .001

Now that I am informed of CSR, I plan to investigate how my favorite

mass market/ retailer incorporates these

policies in its day-to-day activities.

3.06 2.65 .006

I look forward to hearing more about CSR policies in the

future.

3.44 3.06 .007

I believe that CSR policies are important to consumers.

3.55 3.24 .021

I believe CSR initiatives and

policies can make a substantial impact on

society.

3.82 4.01 .069

Men Women Chi-Square

Value

Probability

Are you aware of the term

“corporate social responsibility?”

37.1% 62.9% 4.429 .035

Full- Time Part-

Times

Chi-Square

Value

Probability

Are you aware of the term

“corporate social responsibility’?

84.7% 14.6% .019 .889

Table 11

Significant Differences Between Attitude of Economic Downturn

and Shopping Behavior

n=200

Table 12

Significant Differences Between Men and Women

n=200

Table 13

Significant Differences Between Impact of

Economic Downturn on Shopping Behavior n=200

Qualitative Research: Qualitative Research: Qualitative Research: Qualitative Research:

Insight into the Insight into the Insight into the Insight into the

ConsumerConsumerConsumerConsumer

A web-based survey was conducted to

measure the quantitative data of 200 college

students. The statistics revealed information

about the sample’s awareness and appreciation

of CSR policies of the mass market/ retail

industry. We used personal interviews to further

explore the results conveyed through the survey.

This qualitative research provided a better

understanding of the views of our target

audience, and enabled us to convey these

consumer insights to Target Corporation. The

opportunity to interview the consumer on an

individual basis illicited specific explanations

for the quantitative data. This will help the

company make effective decisions regarding the

marketing and promotion of CSR initiatives to

college students.

Objectives for the personal interviews

include:

• To discover consumer awareness of CSR

initiatives in the mass market/ retail industry

• To understand the impact CSR initiatives

have on consumer shopping behavior

• To learn the best outlets to utilize for the

promotion of CSR initiatives to college

students

• To understand what factors influence

consumer shopping behaviors

• To assess any significant differences

between gender and the media outlets

chosen for information

• To determine whether or not gender

influences shopping behavior

• To evaluate the level of consumer

appreciation of CSR initiatives

• To determine the relationship between eco-

friendly attitude and actual behavior

Personal Interview Technique

The qualitative technique we administered was

personal interviews. This technique was

selected to allow for private, structured face-to-

face conversations that illicit extensive, detailed

probing of attitudes, behaviors, motivations and

needs. The information generated is more

extensive and diverse due to the individual

nature of the interviews. The personal

interviews alleviated altered responses due to

group pressures that could arise in a focus group.

The logistical details of the interviews provided

the most effective and efficient information

collection. We selected 12 college students at

the University of Tennessee and conducted a 30-

60 minute face-to-face interview in private

environments. Each interviewer asked

structured, discussion-inducing questions.

While recruiting participants, we strived for a

diverse sample. Each group member conducted

two personal interviews and recorded responses

on a voice recording instrument. All personal

interviews were completed by Nov. 23, 2008.

See Appendix 2 for the Qualitative Protocol.

Reducing Bias

Steps were taken to reduce bias in the personal

interviews. While interviewing, each person

was conscious to not inadvertently communicate

attitudes towards the subject matter. To provide

a less non-random sample, each member

recruited two participants who were interviewed

by another group member. This reduced

personal interviewer bias. To avoid problems in

data interpretation, all group members were be

present during data analysis.

Analyzing the Results

To analyze the data, as a group we listened to

the interviews and each group member took

notes. We then compared notes and identified

similarities. Through the personal interviews,

we developed an extensive understanding of

consumer beliefs and attitudes towards mass

market retailers and CSR.

Analysis of Qualitative Analysis of Qualitative Analysis of Qualitative Analysis of Qualitative DataDataDataData

In an attempt to understand the targeted consumers’ attitudes and behaviors towards Target, we conducted 12 personal interviews

to question consumers about their feelings on Target’s competition in the mass market/retail industry, their awareness of CSR and on Target specifically. In Table 14, the characteristics of the individuals interviewed are shown. All 12 respondents were full-time college students.

Three distinct themes emerged in our analysis of the qualitative data: mass/market retail overview, awareness of CSR and shopping at Target. Mass/Market Retail OverviewMass/Market Retail OverviewMass/Market Retail OverviewMass/Market Retail Overview

Across the board, Target was portrayed in a positive light. When asked which mass market/retail store was the respondents’ favorite, 11 out of 12 people named Target as their top choice due to its convenience, variety, cleanliness and helpful employees. This response also corresponds with the participants’ description of their ideal mass market/retail store. Characteristics included convenience, good quality, a helpful and available staff, cleanliness and easily navigable stores. We used the projection technique for gathering qualitative data when we showed the

respondents the logos of Target, Wal-Mart, Kmart, Sam’s Club, Costco, Dollar General, Dollar Tree and Kohl’s and asked for the first words that came to mind upon seeing the images. We then asked them to describe the type of consumers that shop at each store. The general response for Target was once again positive overall with participants highlighting the importance of high quality goods, a clean store and accommodating personnel. Target shoppers were described as members of a higher socioeconomic class, “trendy” and “modern”. Some of the reactions towards Wal-Mart include that it is overly crowded, too big and lacks a good atmosphere. One respondent even described the store as being an “evil corporate entity.” Most respondents described Wal-mart’s customers as members of lower income families. Kmart had an overall negative image with participants saying it does not have a good shopping environment, which makes it a “last resort” for their shopping needs. Like Wal-mart, most people asserted that regular Kmart shoppers come from a low income class. Sam’s Club and Costco had almost identical qualities according to the respondents. Both stores were described as ideal for buying in bulk for businesses and very large families. Dollar General and Dollar Tree had somewhat similar responses. Dollar General was depicted as “unsafe” and “dirt cheap” while Dollar Tree was seen as safer than Dollar General due to its internal mall locations. However, both stores’ shoppers were portrayed as being from a low socioeconomic class. Finally, the reactions to Kohl’s logo included savings on off-brand clothing, and its customers were categorized as middleclass savers.

Awareness of CSRAwareness of CSRAwareness of CSRAwareness of CSR It is important to gather respondents’ overall opinions of each of these mass market/retail stores so that Target can understand where it ranks relative to its competition. Knowing that Target is preferred over most mass market/retail stores allows the store to narrow its marketing goals to focus directly on the promotion of CSR initiatives rather than on more general store information. After gathering the background information on all the various retail stores and assessing Target’s place in the industry, we asked participants about their awareness of CSR. As shown in Table 15, eight out of 12 participants did not know what the term CSR meant.

Those who did know about the term mostly recognized the concept from business classes. After defining CSR for those who were unaware, we asked if CSR initiatives have any effect on their buying decisions. An overwhelming 12 out of 12 people answered “no”, but some explained that if they knew more about CSR initiatives, they would want to support the business.

Participant Age Number of

Participants

18 0

19 1

20 5

21 4

22 2

Awareness of CSR Participant Response

Aware 4

Unaware 8

Participant Profile

Table 14

Participant Awareness

Table 15

“If two stores are the same across the board, I would choose the store that gives back to the

community over the other.” -20 year old college student

We asked the participants for their input on what the best media outlets would be to promote CSR initiatives for college adults. The array of answers included campus newspapers, facebook.com, television and actual product labels. While CSR does not affect their buying decisions, nine out of 12 participants confirmed that they do recycle and take extra steps to conserve the environment as part of their daily routine. In addition to recycling, these steps include walking to class, turning off lights and water faucets, carpooling, unplugging appliances and keeping thermostats at a low temperature. However, when asked if their shopping behaviors reflected these eco-friendly practices, every participant answered “no”, many indicating that they pay more attention to prices. Shopping atShopping atShopping atShopping at TargetTargetTargetTarget Since all interview participants claimed they shop at a Target store on a monthly basis, we were able to focus on their shopping habits at Target and the effects Target’s CSR initiatives have on these specific customers. All 12 respondents confirmed that their families shop at Target, and the participants generally spend from $30 to $70 per visit. However, all of them claimed that Target is not the only mass market/retail store at which they shop, and eight out of 12 people responded that they do not shop at Target for all their basic needs. When asked what enticed them to shop at Target in the first place, convenience and parental influence were the top answers. Participants explained that what differentiates Target from other mass market/retail stores is better quality products, appealing store design and trendier customers that shop there.

Marketing Marketing Marketing Marketing RecommendationsRecommendationsRecommendationsRecommendations

The main purpose of this research report is to discover how to better communicate Corporate Social Responsibility to college age consumers, which will directly influence their shopping behaviors. College age consumers are a vital demographic due to an immense spending ability and future influence on Target’s revenues. After conducting industry, client, competitor and consumer research, we propose several recommendations for the effective communication of Target’s CSR policies. Recommendation: Utilize television, facebook.com, the internet and college campus

newspapers as the media to best reach college

students. Our research showed that the above media are most appropriate to increase the CSR awareness of college age consumers. Recommendation: Use television commercials to compare CSR initiatives of Target with

primary competitors. The use of a comparative strategy would keep Target abreast of the activities of other mass market/retail stores and provide them a competitive edge in the industry.

Recommendation: Sponsor recycling drives and other environmentally friendly initiatives on

college campuses. This would expose college students to the programs and environmentally

proactive efforts Target participates in. Making students aware of Target’s CSR activities will increase consumers’ positive outlook of Target in the retail industry and potentially affect their buying habits. Recommendation: Place CSR advertisements on strategic items such as giftcards made of

recyclable materials and on refurbished

shopping carts will bring attention to simple

actions Target is making to help the

environment. While shopping, consumers will subtly be exposed to ways Target reduces its environmental footprint. Recommendation: Advertise on product labels to reach a diverse consumer audience. These mobile advertisements will expose consumers to advertisements in their own homes. These efforts will create substantially more awareness in college students of Target’s CSR policies.

“Target is my favorite mass market retail store because it has everything I need

and all with good quality.” -19 year old college student

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