Marketing 161
Environmental Scan and Consumer Behaviour
Analysis:
Target Corporation
Kelsey Mazzone, Kael Klein & Darleen Saxer
BADM 161
Ms. Joanne Charley
February 10, 2012
Part A
II. Company Description
Target’s mission is to be the preferred shopping destination for their guests by delivering
outstanding value, continuous innovation and an exceptional guest experience by consistently
fulfilling their “Expect More. Pay Less.” brand promise. In 1881, New York’s George D. Dayton
decided to explore the growing Midwest markets. The company was founded in 1902 in as the
Dayton Dry Goods Company. In 1938, following his death, George’s son and grandsons took
over the leadership and began to expand the Dayton Company. After a significant growth,
Dayton’s transformed itself from a regional department-store company into a nationwide
retailer with a headquarters in Minneapolis, Minnesota. In 1969, they renamed the company
Dayton-Hudson. In 2000, the retail stores were renamed Target Corporation. Target grew and
became the largest division of Dayton Hudson Corporation. Target stores carry clothing, shoes,
jewelry, health and beauty products, electronics, compact discs, DVDs, bedding, kitchen
supplies, sporting goods, toys, pet supplies, automotive supplies, hardware supplies, fresh food,
meat and produce. Many stores also have Target Optical, Target Clinic, and a portrait studio. As
of November 2011, Target had over 1,767 current retail locations in America generating 67.39
billion dollars in revenue and employed approximately 355,000 people. On January 13, 2011,
Target announced its expansion into Canada through its purchase of leaseholds from the
Canadian chain Zellers, which is owned by the Hudson’s Bay Company. In 2013, Target will open
and operate 100 to 150 stores in Canada (Target).
III. Environmental Scan
1) Demographic Forces
Target attracts many different types of customers as they have a large variety of products
available in their stores. Their median customers are 41 years of age, 76% of whom are females
and more than 45% have children. Their key customer base has an average income of
approximately $63,000 USD. Around 80% of their customers have attended college with 48%
completing college. 97% of American consumers are able to recognize Target’s Bullseye logo
(Wikipedia).
2) Socio-cultural Forces
Canadians are socially conscious, value diverse, strong communities and affordable, goodquality products (The Core). Consumers also value their time and are on the go with less time to
go shopping. Target encompasses all of these values and trends. It, too, values community and
since 1946 have committed 5% of its income to support local communities (Target). Target is on
track to reach a total of $1 billion in education-related giving by the end of 2015 (Target). It
recycles shopping carts and donates over-stocked groceries which makes a positive impact with
each stores’ community. Target plans to hire 150-200 employees per store in Canada (The Star),
which will play a huge role in lowering the unemployment rate in different regions. The
branding of “Expect More. Pay Less.” is reflected in its good-quality products at low prices.
Target is committed to providing outstanding value with an exceptional experience for
shoppers. The company carries an enormous range of products which consumers can
appreciate as they can shop for clothing, food, furniture, auto-parts, etc. all at one place. With
both Canada and Target sharing many of the same values and beliefs, the socio-cultural forces
should positively influence Target’s entry into the Canadian market.
3) Competitive Forces
Target’s main competitors in Canada will be Walmart and Winners. Walmart carries a variety of
goods, similar to Target: clothing, food, auto-parts, beauty products, electronics, and many
products for homes. Walmart has photo-centres and pharmacies, as well. In the USA market,
Walmart caters to lower-income level consumers than Target. The average Walmart customer’s
income is below the national average and the average customer income at Target is above the
national average (Wikinvest). Target is considered to carry higher-end goods than Walmart, yet
remain competitive with Walmart’s pricing. Target is currently the second largest retailer in the
US by sales – Walmart is the largest (Wikinvest). Both have a large amount of retail locations
and use similar promotional strategies (TV advertisements, flyers, website, coupons). They will
remain extremely competitive in Canada.
Winners carries affordable, high-end, trendy name-brand products and focuses mainly on
clothing and beauty products. Winners Homesense is a branch of Winners that carries
furniture, cookware, and home products. They have extremely competitive pricing, comparable
to Target, as they carry clothing from high-end name-brand designers such as Hugo Boss and
price the clothing to be affordable for the average consumer. There are more than 200 Winners
locations across Canada, many of them in malls (Winners). Winners’ promotional strategies are
not nearly as strong as Target’s as they mainly use flyers and sales to attract consumers. Their
website is not easy to navigate and there is no online shopping capabilities.
4)
Technological Forces
Today’s fast-paced world has caused a need for convenience for shoppers. Consumers greatly
value technology and the internet provides convenience for people to research and purchase
products from wherever they are, whenever they want. Target has an extremely interactive
website for the USA. It is easy to browse and search for specific types of products. You are able
to see if an item is in stock at specific stores and you are also able to ship products to your
home. Target also has created at “REDcard” to compliment their consumers’ needs. They have
a Target debit card, Target credit card, and a Target Visa credit card, which gives the consumer
additional savings and benefits to other payment options. Customers automatically get 5% off
when using their REDcard in stores and on Target.com and have their purchases shipped for
free with no minimum purchase. If Target is able to roll their website over to supply to Canada,
they will likely gain a positive response. Currently, their Canadian website is set up as a
placeholder with no browsing available. This likely will not change until the first Target location
opens in 2013.
5)
Economic Forces
As target looks to breach the Canadian market, the country’s consumer purchasing power is a
factor that can forecast potential sales. While there are no Target locations to refer to in
Canada yet, the United States trends can be applied due to our similar consumer markets. One
statistic that can be drawn upon is the country’s GDP, as it is based on purchasing power per
capita. United States currently has a GDP per capita outlook for 2015 of $56,092.27, which is
similar to the projected Canadian purchasing power of $45,760.95 (TradingEconomics). This
gives Target the confidence that a population has it within their means to make purchases.
Recently, due to the economic unrest throughout Europe, our economic recovery in Canada is
being dragged down causing consumers to be less likely to make large purchases. This is
potentially a good thing for Target as more of the consumers’ income could be put towards
smaller purchases, like those offered at Target.
6)
Regulatory Forces
There are many restrictions on marketing practices by varying levels of government and
industry associations in Canada. Target will be affected by The Competition Bureau, The
Canadian Radio-Television and Telecommunications Commission, and Advertising Standards
Canada. The Competition Bureau is responsible for administration and enforcement of things
such as the “Consumer Packaging and Labeling Act” (The Core). Target supplies their exclusive
private label called Market Pantry as well as Ancher Farms, which is another exclusive line of
premium grocery products (Target). When Target starts their expansion into Canada by 2013,
they will need to make sure that all of its stores comply with Canada’s advertising guidelines.
Target They should familiarize themselves in depth with the Canadian laws and regulations that
many not be in affect in the USA, such as television ads must be within guidelines and must
follower Advertising Standards Canada who addresses issues such as comparative advertising,
decency and advertising to children. The United States’ advertising laws are not as restrictive
and allow companies to directly slander their competitors, which is against regulations in
Canada. Target will face many challenges with regulatory forces which may negatively affect
their entry into the Canadian market.
Part B
III. Consumer Behavior
A) Marketing Mix
The marketing mix consists of four elements: product, price, place, and promotion. A product is
a good, service, or idea. The products for Target are a large variety of quality goods. The prices
should be reflective of their target market – 41-year-old, higher-income females with families
who have attended college or university. The prices Target uses reflect discount prices on highend products, which suit their target market. Promotion is how a company communicates its
product to inform possible consumers. Target should use television advertisements, newspaper
ads and flyers, coupons, and internet ads to reach its target market.
B) Psychological Influences
When looking at the Psychological influences on a consumer, motivation, lifestyle, values,
beliefs, and attitudes are an excellent way of interpreting the buyer’s process. In regards to
motivation, Target looks at the needs and wants of an environment and tries to supply what is
desired. By arousing the specific needs of the consumer at a reachable price, they capture the
consumer’s attention. The lifestyle of a consumer is extremely important for a company trying
to inject itself into a new market as it will house the fundamental needs for certain goods and
services in a given area. Target can take into consideration the populations consumer diversity
and choose to focus on the segments of lifestyle that best fit their product line. By targeting to
specific psychographic market segments, they can increase the chance of the consumer
enjoying their products (The Core). By addressing the consumer through these segments, their
values, beliefs, and attitudes can be identified as well. Target, being the humanitarian, giving
company that it is, will undoubtedly spark interest in a Canadian market where family, friends,
and society are extremely important to the population (The Core). That sense of value,
fulfillment, and social responsibility is a big selling point in the minds of the Canadian consumer
(The Core)
C) Situational Influences
Purchase task, physical surroundings, and social surroundings are three divisions of the
situational influences on a consumer, and all play a vital role in their purchase decision process.
Purchase task is essentially the reason the customer is engaging in the possible purchase in the
first place (The Core). For Target, closing the sale is going to come down to their combination of
value and the right selection according to their chosen target market. If the consumers needs
feel met they will be more likely to make the purchase. The physical surroundings also
contribute to this shopping experience and range from the stores décor to the music being
played, to the overall crowding of its space (The Core). One way that Target tries to make the
customer feel more welcome and comfortable is by offering extra wide aisles (Target). This
gives the consumer space and an uncluttered space to focus on shopping in. Another situational
factor on consumers is their social surroundings. The social surroundings consist of the other
people present during the consumers experience at Target. Like the physical surroundings, this
creates a shopping experience for the customer. Targets diverse selection of products will
undoubtedly create a diverse consumer crowd but the combination of friendly helpful staff, and
a slightly up scale look, should attract a crowd that makes a comfortable place to be. These
situational factors on the consumer all contribute to their shopping experience and Target
offers a place where these needs are met.
D) Social Cultural Influences
Personal influences, family and culture have an impact on the consumers purchase decisions.
Often, consumers will take the personal word of a family member or friend, also known as
word-of-mouth advertising, very seriously (The Core). Consumers are easily influenced by
family members and friends, so if Target can generate a positive opinion with its buyers, this
spread of advertising can be fast and very beneficial. In terms of Canada’s culture, it is
important that Target emphasizes the aspect of community involvement and the support they
offer to the community, as we hold these things with high value (The Core).