Brand AuditChey NavarroSpring 2016

Company Analysis

Mission

Founded as Goodfellow’s Dry Goods in 1902, Target is now the second largest discount

retailer in the United States.  The first “Target” store was opened in 1962 and became the largest

division of the Dayton-Hudson Corporation. Consequently, the company was renamed the

Target Corporation in 2000. This upscale discount retailer provides high-quality merchandise in

the 1,792 stores nationwide.

Target’s mission is to “make Target your preferred shopping destination in all channels

by delivering outstanding value, continuous innovation and exceptional guest experiences by

consistently fulfilling our Expect More. Pay Less. brand promise,” (Target through, 2016). CMO

Jeff Jones says this mantra reiterates that Target recognizes consumers’ financial pressures, and

strives to preserve its brand promise. The company prides itself on their commitment to fulfill

the needs and fuel potential of their customers.

Not only do Target Corporation uphold a responsibility to their guests, but also to their

community. Target sponsors educational programs, supports families recovering from disasters,

and practices sustainability throughout the business. To support their overall mission, they are

guided by their commitments to great value, the community, diversity and the environment as a

whole, (Target through, 2016).

Corporate Culture

Target’s purpose and beliefs collaborate to foster connections and conversations both

inside and outside their front doors. Like many large and established corporations, Target aims to

uphold a strong corporate culture. The company’s objective in establishing a corporate culture

was to create an environment where everyone, guests and team members alike, feel welcome,

valued, and respected. The company believes that fostering an inclusive culture is a core value

that is integrated into every aspect of the business. By doing so, they enable all team members to

leverage their individual, unique talents to drive innovation and success. The team members are

empowered and encouraged to innovate, and are valued as an essential part of the company’s

success. The goals are clear, challenging, and designed to develop leaders dedicated to helping

all of the team succeed. (Culture, 2016)

According to glassdoor.com, 60% of Target employees would recommend their job to a

friend and 73% approve of the CEO of the company. In the 25,000+ reviews, the company

received an overall 3.3 rating out of 5. The following diagram breaks down the ratings and

trends according to Target employees across the nation. The overall distribution indicates that

the company has maintained a positive outlook with its team members, (Target Reviews, 2016).

Target has been ranked, recognized, and rewarded by many of the most respected and

responsible companies in the world. Among many others, the company has been proudly placed

in the “100 Best Corporate Citizens” list since 2012 (Culture, 2016). These accomplishments

accompanied by the employees’ positive ratings and reviews prove the company to be one with

an outstanding corporate culture.

Ambitions

As previously mentioned, Target strives to be the preferred shopping destination for their

guests. The company has been transformed from a stagnant department store business to one of

the country's most aggressive retail brands and they achieved this through their ambitious drive.

Potential Risk and PR Issues

Although Target’s ambition has led to many achievements, it has also put the company at

risk. Historically a United States corporation, Target launched its business into Canada in 2013.

In less than a year, over 120 were opened and running throughout the country. This overly

ambitious extension resulted in a failure when the company faced an online security breach. This

security breach ensued the theft of various personal information for their millions of Canadian

customers who shopped online and in stores. Target offered $10 million settlement in the

lawsuit. The company received various negative PR which effected not only the company’s

profits, but also their brand image, (Bukaty, 2015).

Financial, Technological, Managerial Resources

Financial

Target Corporation’s financial reports indicated $72,618 million in sales for the 2014

fiscal year with a 1.9% growth from the previous year. Of the 1,790 stores nationwide, 268 are

located in the state of California, 41 in Colorado, and 75 in Minnesota. These three states

produced over $300 million in sales per capita, (Annual Report, 2014).

Technological

In 2013, Target opened Target Technology Innovation Center, an office where data,

technology, and product experts strive to increase the company’s strength in e-retail and mobile

commerce. This center serves as a lab for retail experimentations to test and learn about the latest

retail technologies to keep up with the retail industry. "Our office is one part of the broader

ecosystem of innovation in Target Technology Services (TTS)," says Director David Newman.

"We're here to help get ahead of emerging technologies and to find new things, test them, and

bring our learnings back to the larger team," (Meet, 2013).

Managerial

Target Corporation maintains ongoing relationships with community leaders, government

agencies, and non-governmental organizations that aid in understanding the pressing issues in the

community. These relationships also influence the support of team members and guests. The

company sustains partnerships with educational, environmental, well-being, safety and

preparedness, and diversity and inclusion partners, (Steakholder, 2016).

Sales Trends

Target Corporation has experienced an increase in sales over the past 3 years. 2013

generated revenues of $73.3 billion dollars and as previously stated, $71.3 billion in sales for the

2014 fiscal year. 2015 generated the sales of $72.62 billion dollars, (Target Corp., 2016).

Profitability

Being named the second largest leader in the retail industry, Target has proven to be quite

successful overall, but has experienced some deterioration in their profit margins. The company

experienced a decrease in gross profit margins from 2013 to 2014 and from 2014 to 2015. This is

attributed to the previously mentioned data breach experienced in 2013. A majority of the

financial information came from the company’s 2014 Annual Reports. The following diagram

indicates the sales by product category according to the 2014 Annual Reports (Annual Report,

2014).

Industry

The retail industry is the second largest industry in the United States generating over $4.5

trillion dollars. The following graph from the Statistics Portal displays the annual retail industry

sales in the United States from 2000-2014 in trillions:

If the trajectory is forecasted to continue on the rise in the near future (Annual, 2015).

Social, Cultural, Political Conditions

In June, 2015, the company made the announcement “We’re not born with pride. We take

pride. Pride in celebrating who we were born to be,” (#TakePride, 2015). The announcement

was followed by full support of the LGBT community. This established a relationship with the

LGBT community and became a favored brand among those included. However, this also earned

some backlash from those consumers who were not in support of this community.

Consumer Analysis

Demographics

Target identifies their primary customers as middle class individuals with a median age

of 40, median household income of approximately $64,000, approximately 43% with children at

home, and about 57% that have completed college. An analysis conducted by Ad Age revealed

the demographics of their guests to determine the company’s target market. The analysis

identified gender, age range, marital status, and income as important factors to segment the

market. Roughly 60% of the shoppers were women, 60% were aged 25-54, 54% were married,

and 40% earned an average annual income of $35,000-$75,000 (Target Corporation, 2015). The

figure below displays each factor broken down.

Lifestyles

The quality of Target’s products is key in distinguishing itself from competitors in the

discount retail industry. Although Target is categorized as a discount retailer, their consumers are

not the typical coupon-cutting, bargain shoppers. These consumers are more affluent than those

of Wal-Mart, but are still cost-conscious shoppers. By emphasizing high-quality merchandise

and products and low-cost designer fashion, Target typically appeals to the consumers who are

brand oriented individuals. These consumers are motivated by their desire for high quality and

high style while still being mindful of the prices. They tend to be educated individuals who are

loyal to the Target brand and who are willing to pay a slightly more for the added value in these

products. When making purchases, they expect the satisfaction and trust that Target will uphold

their mission in delivering the higher standard products. These consumers admire quality, trust,

and value in their everyday lives and in their purchases.

As a discount retail store, Target has a lot to offer and their consumers are aware of this.

From home appliances to the latest lower-cost designer fashion, Target’s consumers utilized their

products in their everyday lives. Consumers can look to Target for their clothing, home,

entertainment, beauty, and grocery needs among many others.

A survey conducted at the West Virginia University’s campus revealed that the opinions

of many college consumers reflected that of Target’s target market. Below are various

testimonies that support the previously listed factors.

Target’s variety of product categories contribute to the attraction for their consumers.

“Target appeals to me because it provides affordable products with a variety of options.” Target

has become a convenient retail option for many consumers because of its one-stop characteristic.

“I enjoy shopping there because it is a one-stop shop for me. I can do grocery shopping, clothing

shopping, household items, etc., in one place,” (Class, 2013).

Consumers also perceive Target’s products as having superior quality. “As a married

young professional female who doesn't want to waste all her hard earned money on expensive

products, but also doesn't want to waste on products so cheap that they fall apart within a month,

Target is the perfect middle ground for me,” (Class, 2013).

Consumers view Target as a higher standard brand compared to Walmart, its biggest

competitor. “I also love that I can get stylish clothes or home decorating items that don't cost a

ton of money. I feel confident buying a present at Target without it seeming cheap like a

Walmart gift would feel.” A male consumer wrote, “I don't enjoy the Wally-World consumer,

therefore I must be 'snooty' and thus a good Target consumer. I am willing to pay a little more

(but not a lot more) for the pleasure of shopping at this store.” Consumers find that as a retailer,

Target is more reliable than its competition. “The main reason I shop at Target is that it is far

more reliable than Walmart. Walmart’s items are usually of lower quality – and that’s when

they’re in stock. Rarely have I gone to Target and not been able to find what I need,” (Class,

2013).

Competitive Analysis

Walmart Corporation is one of Target’s largest direct competitors. Although Wal-Mart

promises the lowest prices on their products, their products are often found to have less quality.

Wal-Mart markets to a lower income level than Target, however, the two companies do share a

common market segment.

Target has been called the “Wal-Mart for a higher class,” (Class, 2013) which is

somewhat congruent with the perception of each company’s brand. Both companies offer a

variety of products, but Target emphasizes higher quality. Consumers expect adequate quality

and lower prices from Wal-Mart which falls short of the company’s expectations.

An indirect competitor of Target would be Amazon.com, the online retailer. They are

considered the indirect competitor due to their strict online presence. However, they are still

considered a competitor because Target also sells their products online. Amazon’s goal is to be

the most customer-centric company, where customers can find and discover anything on their

website. Like Target, the company is focused on the satisfaction and care of their customers.

Both competitors, Wal-Mart and Amazon, offer similar products, but with different

platforms. Wal-Mart is in stores and online, and Amazon is strictly online. Even though the

platforms differ, they are still able to serve similar markets.

Brand Analysis

At a net value of $53.5 billion dollars, Target was listed as number 92 on the World’s

Most Valuable Brands list. This is favorable for the brand as it proves the company has the

ability keep their brand promise and give the consumers what they want. Consumer’s expect to

receive high quality in their products and Target delivers exactly that.

The brand’s simplicity and elegance resonates throughout the consumer’s perception, the

brand’s personality, and the brand’s essence .When asked to describe Target as a brand, several

consumers used adjectives such as clean, stylish, and affordable (Class, 2013). Not only were

these the most popular adjectives used to describe the brand, but they also encompass three

different facets of Target’s company; the store’s quality, products, and pricing, respectively. This

supports that Target is keeping their brand promise for the customers to “expect more” and “pay

less.”

With the company’s heavy involvement and support for the LGBT community, the

company has been favored by those involved and the supporters of the community. This

established a relationship with the community and extended the brand’s likeliness.

The Target brand’s sophisticated personality evokes satisfaction and happiness in its

consumers in their product offerings and their community involvement. As previously stated,

Target is partnered with a variety of educational, environmental, well-being, safety and

preparedness, and diversity and inclusion programs.

Appendix

References

#TakePride With Target. (June 2015). Retrieved February 5, 2016, from https://corporate.target.com

2014 Annual Report | Target Corporate. (n.d.). Retrieved February 2, 2016, from https://corporate . target . com/annual-reports/2014

Annual retail industry sales in the United States 2000-2014 | Statistic. (2015.). Retrieved February 2, 2016, from http://www.statista.com

Bukaty, R. (2015, March). Target’s Settlement In Data Breach Lawsuit. Retrieved February, 2016, from http://www.npr.org

Class Survey. (2013). Forum: Week 5 Question > Target. WVU ECampus. Retrieved Feb. 7, 2016, from http://wvu.edu

Culture: Working at Target | Target Corporate. (n.d.). Retrieved February 2, 2016, from https://corporate.target.com/careers/culture

Meet Target's Silicon Valley team. (n.d.). Retrieved February 3, 2016, from https://corporate.target.com

Stakeholder Engagement | Target Corporate. (n.d.). Retrieved February 3, 2016, from https://corporate.target.com/corporate-responsibility/stakeholder-engagement

Target Corp. (n.d.). Retrieved February 3, 2016, from http://www.marketwatch.com/investing/stock/tgt/financials

Target Corporation (US). (n.d.). Retrieved February 3, 2016, from http://www.adbrands.net/us/target_us.htm

Target Reviews. (n.d.). Retrieved February 3, 2016, from https://www.glassdoor.com

Target through the years. (n.d.). Retrieved February 02, 2016, from https://corporate.target.com/about