Target Corporation

1
Target Corporation

• By Leigh Blackmon, Justin Napier, Sara Ratliff,
  and Brian Roundtree

2
Executive Summary

• The Firm
• Upscale discount chain that offers trendy
  merchandise at affordable prices
• The Industry
• Dominant Firms Wal-Mart, Costco, K-Mart
• Keys to Success- Marketing, Promotion, Brand
  Loyalty, Differentiation

3
Mission Statement

• At Target, our mission is to create a loyal
  customer base by selling a trendy, yet affordable
  range of merchandise. We are also interested in
  being socially responsible and do not define the
  success of our company simply by the bottom line.
  We are committed to the social, economic, and
  environmental welfare of all communities.
  Finally, it is our mission to encompass quality,
  style, and trend into all aspects of our
  corporation to ensure customer satisfaction.

4
External Environment

• Economic
• Customers amount of disposable income
• Customers propensity to spend
• Social
• Age of customers
• Beliefs of customers
• Technological
• Technological forecasting
• Giving customers the ability to shop from the
  comfort of their own home

5
Ranking of Porters Five Forces
Present- 1) Substitutes 2) Rivalry 3) Powerful
Buyers 4) Powerful Suppliers 5) Threat of Entry
1 Most Important, 5 Least Important
6
Suppliers
Buyers

• No similar companies
• Ex. 1-Including purchase volume
• Ex. 2-Including differentiation of inputs

• Wal-Mart, K-Mart, and Costco
• Need more product differentiation
• Increase buyer volume
• Establish brand identity
• Providing quality and performance in each store

7
Threat of Entry

• Difficult to establish large companies
• Hard to imitate brand identity
• Large capital requirements

8
Rivalry
Substitutes

• None- Due to quality and fashion
• Results in customer loyalty
• Results in brand identity

• Wal-Mart
• K-Mart
• Costco
• Differentiation is key factor Fashion
• Push Targets brand identity

9
Company Profile

• Primary Activities
• Customer Service
• Marketing and Sales
• Advertising, promotions, market research,
  planning
• Operations
• Production and Quality Assurance

10
Company Profile

• Secondary Activities
• Human Resources
• Recruitment, hiring, training, and development
• Technology
• Conduct research
• New trends and interests

11
Company Profile

• Strengths
• Loyal customer base
• Readily available products
• Constantly produces new ideas and exclusive
  products

12
Company Profile

• Weaknesses
• Higher prices than Wal-Mart
• Population response to the economy
• Not a global retailer
• Other companies, such as Wal-Mart, are gaining a
  competitive advantage
• Not all stores are SuperTargets
• Customers want a one-stop store

13
Financial Analysis - Revenue

• Target
• 2001 32.5 billion 2005 51.2 billion
• Costco
• 2001 34.1 billion 2005 51.8 billion
• Wal-Mart
• 2001 180.7 billion 2005 285.2 billion

14
Revenue
15
Financial Analysis Net Income

• Target
• 2001 1.1 billion 2005 2.4 billion
• Costco
• 2001 0.6 billion 2005 1.06 billion
• Wal-Mart
• 2001 6.2 billion 2005 10.2 billion

16
Net Income
17
Profitability
18
Asset Turnover
19
Firms Position / Core Issue

• Core Issue
• Competition with Wal-Mart
• Target has one-fifth the sales of Wal-Mart
• Firms Position
• Based on more than just pricing
• Strive to encompass style, quality, and trend

20
Long Term Objectives

• Increasing Market Share
• Achievable and Measurable
• Scenarios
• Best Case Wal-Mart going out of business and
  Target having a significant share of market
• Worst Case Target going out of business
• Most Likely Wal-Mart maintains market share and
  Targets profit margin, sales, and net income
  will continually increase

21
Corporate Level Strategy

• Growth
• International Expansion
• Create more competitive advantage
• Increase market share

22
Business Level Strategy

• Strategic Business Unit
• Target Food Centers, Target Pharmacy, Target
  Retail Merchandise
• Generic Strategies
• Differentiation
• Focus
• Grand Strategies
• Innovation
• Product Development

23
Strategic Choice

• Differentiation
• Higher quality, more trendy clothing, better
  style
• Drive-through Pharmacies
• Expansion into SuperTargets

24
Any Questions?