TARGET
Strategic Brand Alliance
ADMINISTRATIVE NOTES
Study in China Opportunity 2013
 Retail Council of Canada Newsletter
 Retail Institutions trip

Cost of trip = $35
 Money MUST be paid by Jan. 30
 Instructions for payment will be verified (direct
billing option being explored)

CASE QUESTIONS

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List the criteria that you think Target should use
in screening potential strategic brand alliances.
Be as specific as possible.
Propose a strategic brand alliance in a category
where Target currently lacks one. Evaluate the
pros and cons of the alliance from the perspective
of both Target and the proposed partner.
Are there any strategic brand alliances that
Target should consider for its entry into Canada?
ABOUT TARGET

Size and Reach (2006 data)
1500 stores in 47 states
 $50 billion revenue (2006)
 Planned growth of 100 stores/yr
 Retail strategy mix (next slides)


The Target Guest
Descriptive demographics
 Trip frequency
 Trip duration

RETAIL STRATEGY MIX - PRODUCT
Category
2006
Consumables
32%
Hardlines (Electronics, Sporting goods,
Toys)
23%
Apparel and Accessories
22%
Furniture and Home Décor
19%
Other
4%
Revenue
Goals:
• high quality
•unique style and design
$59.5 billion
RETAIL STRATEGY MIX
Price
 Location
 Communication
 Operations Management

POP-UP SHOPS
POSITIONING MAP
High Product Quality
T
C
W
Target sees its points of
differentiation as:
•Product quality
•Distinctively designed
products
•Fresh energetic tone
Appealing
Atmosphere
STRATEGIC ALLIANCES – THE PARTNERING PROCESS
“A strategic alliance is a formal and mutually agreed to
commercial collaboration between companies. The partners
pool, exchange or integrate specific business processes for
mutual gain. Yet partners remain separate businesses.”
Strategic
Rationale
• Objective
assessment of
whether or not an
alliance is the best
choice for the
organization
Partner
Selection
• Identification and
ranking of potential
partners based on
rigorous criteria
Negotiation
• Preparation and
conduct of alliance
negotiations on
lasting relationship
fundamentals
Implementation
• Planning,
supporting,
monitoring and
continuous learning
for successful
results
Michael Kelly and Jean-Louis Schaan (2005) Strategic alliances that work: Should you
build a strategic alliance?, Ivey Management Services, Richard Ivey School of Business,
Version: (A) 2009-10-01
ALLIANCES COULD BE WITHIN
Design
•i.e.. - Research
contract; joint
research

Purchasing
•i.e. - Joint
purchases
Production
•i.e. - Engineering
contract;
Subcontracting;
Manufacturing
agreements
Target’s Alliances
(case)

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

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Bose
Calphalon
Smith & Hawken
Archer Farms
California Closets
Tupperware

Marketing
•i.e. - Joint
marketing;
trademark license
Distribution
•i.e. - Distribution
agreements
Other Target Alliances?
(Annual Report)
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Jean Paul Gaultier
Shaun White
Liberty of London
Jason Wu
Missoni
Calypso St. Barth
Sonia Kashuk (make-up)
TARGET’S STRATEGIC GOALS
Increase frequency of shopping trips among
current customers (market penetration)
 Increase number of stores (market development)


How can strategic alliances help Target
accomplish these goals?
Access to expertise
 Reduce risks
 Reduce costs

LIST THE CRITERIA THAT YOU THINK TARGET
SHOULD USE IN SCREENING POTENTIAL STRATEGIC
BRAND ALLIANCES. BE AS SPECIFIC AS POSSIBLE

Strategic importance

Potential partners must help them meet their strategic goals


Consider market penetration and market development goals. Can
alliances help with either?
Partner competencies

What capabilities do partners bring to close the gaps in our
strategy?


i.e. - Product type, Design expertise, Production capacity, Delivery time,
Distribution
What partner needs the strengths we bring?

i.e - Mass distribution in the US, image, awareness generation
opportunities, promotional effectiveness
Customer comparison
Organizational size comparison
Financial strength
 Experience with alliances
 Cultural fit


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70% of alliance failures are due to soft or relationship problems (KPMG,
1998)
PROPOSE A STRATEGIC BRAND ALLIANCE IN A CATEGORY
WHERE TARGET CURRENTLY LACKS ONE. EVALUATE THE
PROS AND CONS OF THE ALLIANCE FROM THE PERSPECTIVE
OF BOTH TARGET AND THE PROPOSED PARTNER.
TARGET CANADA

Are there any strategic brand alliances that
Target should consider for its entry into Canada?
Handout
 Consider the pros and cons of this alliance

PROPOSED STRATEGIC BRAND ALLIANCE
FOR TARGET
Category
 Which
2006
2010*
product category?
Why?
2011*
Consumables
32%
24%
25%
Hardlines
(Electronics,
Sporting goods,
Toys)
23%
20%
19%
Apparel and
Accessories
22%
20%
19%
Furniture and
Home Décor
19%
19%
18%
Other
4%
17% (Food and
Pet Supplies)
19%
$59.5 billion
$67.4 billion
$69 billion
Revenue
*Owned and exclusive brands = 1/3 revenue in 2010 and 2011