COMPANY CaseTarget: From “Expect Mo

COMPANY Case
Target: From “Expect More”to “Pay Less”
When you hear the term discount retail, two names that usually come to mind: Walmart and Target. The two have been compared so much that the press rarely covers one without at least mention-ing the other. The reasons for the comparison are fairly obvious. These corporations are two of the largest discount retailers in the United States. Category for category, they offer very similar merchandise. They tend to build their stores in close proximity to one another, even facing each other across major boulevards.
But even with such strong similarities, ask consumers if there’s a difference between the two, and they won’t even hesitate. Walmart is all about low prices; Target is about style and fashion. The “cheapchic” label applied by consumers and the media over the years perfectly captures the longstanding company positioning: “Expect More. Pay Less.” With its numerous designer product lines, Target has been so successful with its brand positioning that for a number of years it has slowly chipped away at Walmart’s massive market share. Granted, the difference in the scale for the two companies has always been huge. Walmart’s most recent annual revenues of $408 billion are more than six times those of Target. But for many years, Target’s business grew at a much faster pace than Walmart’s. In fact, as Walmart’s samestore sales began to lag in the mid2000s, the world’s largest retailer unabashedly attempted to become more like Target. It spruced up its store environment, added more fashionable clothing and housewares, and stocked organic and gourmet products in its grocery aisles. Walmart even experimented with luxury brands. After 19 years of promoting the slogan, “Always Low Prices. Always.” Walmart replaced it with the very Targetesque tagline, “Save Money. Live Better.” None of those efforts seemed to speed up Walmart’s revenue growth or slow down Target’s. But oh what a difference a year or two can make. As the global recession began to tighten its grip on the world’s retailers in 2008, the dynamics between the two retail giants reversed almost overnight. As unemployment rose and consumers began pinching their pennies, Walmart’s familiar price “rollbacks” resonated with consumers, while Target’s image of slightly better stuff for slightly higher prices did not. Target’s wellcultivated “upscale discount” image was turning away customers who believed that its fashionable products and trendy advertising meant steeper prices. By mid2008, Target had experienced three straight quarters of flat samestore sales growth and a slight dip in store traffic. At the same time, Walmart was defying the economic slowdown, posting quarterly increases in samestore sales of close to 5 percent along with substantial jumps in profits.
SAME SLOGAN, DIFFERENT EMPHASIS
In fall 2008, Target acknowledged the slide and announced its intentions to do something about it. Target CEO Gregg Steinhafel succinctly summarized the company’s new strategy: “The customer is very cash strapped right now. And in some ways, ourgreatest strength has become somewhat of a challenge. So, we’re still trying to define and find the right balance between ‘Expect More. Pay Less.’ The current environment means that the focus is squarely on the ‘Pay Less’ side of it.”
In outlining Target’s new strategy, company executives made it clear that Walmart was the new focus. Target would make certain that its prices were in line with Walmart’s. Future promotions would communicate the “pay less” message to consumers, while also highlighting the fact that Target is every bit the convenient onestop shopping destination as its larger rival.
The new communications program included massive changes to instore signage. Instead of instore images and messages highlighting trendy fashion, store visitors were greeted with large signs boasting price points and value messages. Similarly, weekly newpaper circulars featured strong value headlines, fewer products, and clearly labeled price points. In fact, Target’s ads began looking very much like those of Walmart or even Kmart. Further recognizing the consumer trend toward thriftiness, Target increased the emphasis on its own store brands of food and home goods.
While making the shift toward “Pay Less,” Target was careful to reassure customers that it would not compromise the “Expect More” part of its brand. Target has always been known for having more designer partnerships than any other retailer. From the Michael Graves line of housewares to Isaac Mizrahi’s clothing line, Target boasts more than a dozen product lines created exclusively for Target by famous designers. Kathryn Tesija, Target’s executive vice president of merchandising, assured customers that not only would Target continue those relationships but also add several new designer partnerships in the apparel and beauty categories.
MOUNTING PRESSURE
Although Steinhafel’s “Pay Less” strategy was aggressive, Target’s financials were slow to respond. In fact, things initially got worse with sales at one point dropping by 10 percent from the previous year. Target’s profits suffered even more. It didn’t help matters that Walmart bucked the recessionary retail trend by posting revenue increases. When confronted with this fact, Steinhafel responded that consumers held perceptions that Target’s value proposition was not as strong as that of its biggest rival. He urged investors to be patient, that its value message would take time to resonate with consumers. Given that Walmart had a decadeslong lead in building its cost structure as a formative competitive advantage, Steinhafel couldn’t stress that point enough.
While Target continued to struggle with this turnaround challenge, it received a new threat in the form of one of its largest investors. Activist shareholder William Ackman, whose company had invested $2 billion in Target only to lose 85 percent of it, was holding the retailer’s feet to the fire. Ackman openly chided Target for failing to deal effectively with the economic downturn. He charged that Target’s board of directors lacked needed experience and sought to take control of five of the board’s seats. “Target is not Gucci,” he said in a letter to investors. “It should be a business that does well, even in tough economic times.”
Making the changes that Ackman and others were calling for was exactly what Steinhafel was trying to do. Steinhafel refused to give up on his strategy. Instead, he intensified Target’s “Pay Less” emphasis. In addition to aggressive newspaper advertising, Target unveiled a new set of television spots. Each ad played to a catchy tune with a reassuring voice singing, “This is a brand new day. And it’s getting better every single day.” Ads showed ordinary people consuming commonly purchased retail products but with a unique twist.
In one ad, a couple was shown drinking coffee in what appeared to be a fancy coffee house with the caption, “The new coffee spot.” But the camera pulled back to reveal that the couple was sitting in their own kitchen, with a coffee pot on the stove. The caption confirmed: “Espresso maker, $24.99.” In another segment of the ad headlined “The new salon trip,” a glamorous woman with flowing red hair appeared to be in an upscale salon. The camera angle then shifted to show her in her own modest bathroom, revealing a small bottle sitting on the sink with the caption, “Hair color, $8.49.” Every ad repeated this same theme multiple times, with takes such as “The new car wash,” “The new movie night,” and “The new gym.”
In addition to the new promotional efforts, Target made two significant operational changes. First, it began converting a corner of its department stores into minigrocery stores carrying a narrow selection of 90 percent of the food categories found in fullsize grocery stores, including fresh produce. One shopper’s reaction was just what Target was hoping for. A Wisconsin housewife and mother of two stopped by her local Target to buy deodorant and laundry detergent before heading to the local grocery store. But as she worked her way through the freshfood aisles, she found everything on her list. “I’m done,” she said, as she grabbed a 99cent green pepper. “I just saved myself a trip.”
While the minigrocery test stores showed promising results, groceries also represented a lowmargin expansion. Walmart was seeing most of its gains in higher margin discretionary goods like bedding, traditionally Target’s stronghold. But in a second operational change, Target surprised many analysts by unveiling a new package for its main store brand . . . one without the familiar Target bullseye! That is, the packages discard the bull’seye, replacing it with big, colorful, upwardpointing arrows on a white back-ground, with the new brand name, “up & up.”
Continuing to address the trend of higher store brand sales, Tesija stated, “We believe that it will stand out on the shelf, and it is so distinctive that we’ll get new guests that will want to try it that maybe didn’t even notice the Target brand before.” Up & up prod-ucts are priced about 30 percent lower than comparable name brand products. Target began promoting the store brand in its circulars and planned to expand the total number of products under the label from 730 to 800. While initial results showed an increase in store brand sales for products with the new design, it is unclear just how many of those sales came at the expense of name brand products.
SIGNS OF LIFE
Target’s journey over the past few years demonstrates that changing the direction of a large corporation is like trying to reverse a moving freight train. Things have to slow down before they can go the other way. But after 18 months of aggressive change, it appears that consumers may have finally gotten the message. During the first half of 2010, sales rose by a

Kết quả (Việt) 1:

Trường hợp công tyMục tiêu: từ "Mong đợi hơn" để "Trả ít hơn"Khi bạn nghe thấy thuật ngữ giảm giá bán lẻ, hai tên đó thường đến để tâm trí: Walmart và mục tiêu. Hai đã được so sánh với rất nhiều rằng báo chí ít khi bao gồm một mà không có tối thiểu đề cập đến-ing khác. Lý do cho việc so sánh là khá rõ ràng. Các công ty này là hai trong số các nhà bán lẻ giảm giá lớn nhất tại Hoa Kỳ. Thể loại cho mục, họ cung cấp hàng hóa rất giống nhau. Họ có xu hướng để xây dựng các cửa hàng gần với nhau, thậm chí đối mặt với nhau trên đại lộ chính. But even with such strong similarities, ask consumers if there’s a difference between the two, and they won’t even hesitate. Walmart is all about low prices; Target is about style and fashion. The “cheapchic” label applied by consumers and the media over the years perfectly captures the longstanding company positioning: “Expect More. Pay Less.” With its numerous designer product lines, Target has been so successful with its brand positioning that for a number of years it has slowly chipped away at Walmart’s massive market share. Granted, the difference in the scale for the two companies has always been huge. Walmart’s most recent annual revenues of $408 billion are more than six times those of Target. But for many years, Target’s business grew at a much faster pace than Walmart’s. In fact, as Walmart’s samestore sales began to lag in the mid2000s, the world’s largest retailer unabashedly attempted to become more like Target. It spruced up its store environment, added more fashionable clothing and housewares, and stocked organic and gourmet products in its grocery aisles. Walmart even experimented with luxury brands. After 19 years of promoting the slogan, “Always Low Prices. Always.” Walmart replaced it with the very Targetesque tagline, “Save Money. Live Better.” None of those efforts seemed to speed up Walmart’s revenue growth or slow down Target’s. But oh what a difference a year or two can make. As the global recession began to tighten its grip on the world’s retailers in 2008, the dynamics between the two retail giants reversed almost overnight. As unemployment rose and consumers began pinching their pennies, Walmart’s familiar price “rollbacks” resonated with consumers, while Target’s image of slightly better stuff for slightly higher prices did not. Target’s wellcultivated “upscale discount” image was turning away customers who believed that its fashionable products and trendy advertising meant steeper prices. By mid2008, Target had experienced three straight quarters of flat samestore sales growth and a slight dip in store traffic. At the same time, Walmart was defying the economic slowdown, posting quarterly increases in samestore sales of close to 5 percent along with substantial jumps in profits.SAME SLOGAN, DIFFERENT EMPHASISIn fall 2008, Target acknowledged the slide and announced its intentions to do something about it. Target CEO Gregg Steinhafel succinctly summarized the company’s new strategy: “The customer is very cash strapped right now. And in some ways, ourgreatest strength has become somewhat of a challenge. So, we’re still trying to define and find the right balance between ‘Expect More. Pay Less.’ The current environment means that the focus is squarely on the ‘Pay Less’ side of it.” In outlining Target’s new strategy, company executives made it clear that Walmart was the new focus. Target would make certain that its prices were in line with Walmart’s. Future promotions would communicate the “pay less” message to consumers, while also highlighting the fact that Target is every bit the convenient onestop shopping destination as its larger rival. The new communications program included massive changes to instore signage. Instead of instore images and messages highlighting trendy fashion, store visitors were greeted with large signs boasting price points and value messages. Similarly, weekly newpaper circulars featured strong value headlines, fewer products, and clearly labeled price points. In fact, Target’s ads began looking very much like those of Walmart or even Kmart. Further recognizing the consumer trend toward thriftiness, Target increased the emphasis on its own store brands of food and home goods. While making the shift toward “Pay Less,” Target was careful to reassure customers that it would not compromise the “Expect More” part of its brand. Target has always been known for having more designer partnerships than any other retailer. From the Michael Graves line of housewares to Isaac Mizrahi’s clothing line, Target boasts more than a dozen product lines created exclusively for Target by famous designers. Kathryn Tesija, Target’s executive vice president of merchandising, assured customers that not only would Target continue those relationships but also add several new designer partnerships in the apparel and beauty categories.
MOUNTING PRESSURE
Although Steinhafel’s “Pay Less” strategy was aggressive, Target’s financials were slow to respond. In fact, things initially got worse with sales at one point dropping by 10 percent from the previous year. Target’s profits suffered even more. It didn’t help matters that Walmart bucked the recessionary retail trend by posting revenue increases. When confronted with this fact, Steinhafel responded that consumers held perceptions that Target’s value proposition was not as strong as that of its biggest rival. He urged investors to be patient, that its value message would take time to resonate with consumers. Given that Walmart had a decadeslong lead in building its cost structure as a formative competitive advantage, Steinhafel couldn’t stress that point enough.
While Target continued to struggle with this turnaround challenge, it received a new threat in the form of one of its largest investors. Activist shareholder William Ackman, whose company had invested $2 billion in Target only to lose 85 percent of it, was holding the retailer’s feet to the fire. Ackman openly chided Target for failing to deal effectively with the economic downturn. He charged that Target’s board of directors lacked needed experience and sought to take control of five of the board’s seats. “Target is not Gucci,” he said in a letter to investors. “It should be a business that does well, even in tough economic times.”
Making the changes that Ackman and others were calling for was exactly what Steinhafel was trying to do. Steinhafel refused to give up on his strategy. Instead, he intensified Target’s “Pay Less” emphasis. In addition to aggressive newspaper advertising, Target unveiled a new set of television spots. Each ad played to a catchy tune with a reassuring voice singing, “This is a brand new day. And it’s getting better every single day.” Ads showed ordinary people consuming commonly purchased retail products but with a unique twist.
In one ad, a couple was shown drinking coffee in what appeared to be a fancy coffee house with the caption, “The new coffee spot.” But the camera pulled back to reveal that the couple was sitting in their own kitchen, with a coffee pot on the stove. The caption confirmed: “Espresso maker, $24.99.” In another segment of the ad headlined “The new salon trip,” a glamorous woman with flowing red hair appeared to be in an upscale salon. The camera angle then shifted to show her in her own modest bathroom, revealing a small bottle sitting on the sink with the caption, “Hair color, $8.49.” Every ad repeated this same theme multiple times, with takes such as “The new car wash,” “The new movie night,” and “The new gym.”
In addition to the new promotional efforts, Target made two significant operational changes. First, it began converting a corner of its department stores into minigrocery stores carrying a narrow selection of 90 percent of the food categories found in fullsize grocery stores, including fresh produce. One shopper’s reaction was just what Target was hoping for. A Wisconsin housewife and mother of two stopped by her local Target to buy deodorant and laundry detergent before heading to the local grocery store. But as she worked her way through the freshfood aisles, she found everything on her list. “I’m done,” she said, as she grabbed a 99cent green pepper. “I just saved myself a trip.”
While the minigrocery test stores showed promising results, groceries also represented a lowmargin expansion. Walmart was seeing most of its gains in higher margin discretionary goods like bedding, traditionally Target’s stronghold. But in a second operational change, Target surprised many analysts by unveiling a new package for its main store brand . . . one without the familiar Target bullseye! That is, the packages discard the bull’seye, replacing it with big, colorful, upwardpointing arrows on a white back-ground, with the new brand name, “up & up.”
Continuing to address the trend of higher store brand sales, Tesija stated, “We believe that it will stand out on the shelf, and it is so distinctive that we’ll get new guests that will want to try it that maybe didn’t even notice the Target brand before.” Up & up prod-ucts are priced about 30 percent lower than comparable name brand products. Target began promoting the store brand in its circulars and planned to expand the total number of products under the label from 730 to 800. While initial results showed an increase in store brand sales for products with the new design, it is unclear just how many of those sales came at the expense of name brand products.
SIGNS OF LIFE
Target’s journey over the past few years demonstrates that changing the direction of a large corporation is like trying to reverse a moving freight train. Things have to slow down before they can go the other way. But after 18 months of aggressive change, it appears that consumers may have finally gotten the message. During the first half of 2010, sales rose by a