Marketing 161
An Environmental Scan and Consumer Behavioural Analysis of Target Co
James Killoran
Nicholas Farina
Matthew Hunt
Company Description:
George Dayton was a man with a vision. Already owning a six story building
downtown Minneapolis and having a large retailer using his building, Dayton
purchased the majority interest in Goodfellows department store. Not long after
renamed The Dayton Company. Dayton had a strong belief in his personal principles
and used them to shape his new store. “His store soon becomes known for
dependable merchandise, fair business practices and a generous spirit.” (Target,
2012).
In May of 1961, The Dayton Company planned to create a new discount chain store.
The Dayton Company states that their new stores will “Combine the best on the
fashion world with the best of the discount world, a quality store with quality
merchandise at discount prices, and a discount supermarket... 75 departments in
all” Through many staff debates and with more then two hundred possible names
the discount chain store took on the name Target with the reasoning “As a
marksman’s goal is to hit the center bulls-eye, the new store would do much the
same in terms of retail, goods, services, commitment to the community, price value
and overall experience” (Target, 2012)
With the continuous growth over the past sixty years the Dayton Company goes
public on September 6, 1967, which opens new doors that allowed the expansion of
target to national audiences. Continuing to grow the Dayton Company merged with
J.L. Hudson Company out of Detroit and was established as one of the 15 largest
non-food retailers in the United States.
Through the later half of the 20th century target continued to grow in popularity and
expansion throughout the USA with almost 1770 stores in 49 states. Target donates
almost 3 million dollars a week to community events and charity’s. Target wanted
to reflect the unique retail experience of commitment to the community, giving and
offering guest value, quality and great customer service in a fun and inviting
shopping experience by creating a brand promise and slogan “Expect More, Pay
less”.
Environmental Scan:
1.Demographics
Target’s target audience would focus mainly on families who like one stop shopping.
With more and more suburban areas being built throughout the United States to
accommodate families in increasing population areas. Target is now focusing on
building in these areas apposed to the urban downtown environment. Through
research groups, target has gained the understanding that most of the population
that lives in the high paced urban environments don’t have the time on a usual basis
to do a one-stop shop that Targets target audience is.
Also with Target acquiring the Zeller’s chain in Canada and having the potential to
move up to Canada and becoming a multinational Corporation. With the move up to
Canada Target will have to change some of its marketing strategies and products
due to the demographic change of American’s to Canadians. Things such as sizes
would change because the average size of a Canadian is smaller then the average
American.
2. Social
With today’s big trend of going green, most companies are trying to reduce their
emissions and their carbon footprint. Target has joined the trend and has worked on
making a smaller environmental impact. Target has integrated environmental
sustainability into everything from how the build the stores to the products on the
shelves. Target has implemented recycling stations in all of their stores to offer
guest a convenient way to recycle everything from aluminum to old cell phones and
ink cartridges.
3. Competitive Factors
The main direct competitor of Target would be Wal-Mart. Both companies focus on
giving the customer the best bang for their buck and providing a one stop shopping
experience. Although both carry the same categories of merchandise, Target in
known to have a higher grade of merchandise than Wal-mart. The prices per store
fluctuate every week meaning one store could be cheaper one week while more
expensive the next.
An oligopoly is when few firms or companies run an entire industry. Target and
Wal-mart fall into this type of competition. Both excelling in the one stop shopping
experience the only difference to the consumer would be the specific items or brand
loyalty to a certain one.
4. Technology
Although technology isn’t the biggest factor in the external scan, it still plays a
crucial role. Stores that attract people for one stop shopping strive for efficiency.
Technological advancements in checkouts and store security tend to be the main
advancements. Targets security and theft prevention is above par due to their high
numbers of security cameras. Advancements such as self-checkout add to the choice
a customer has and can facilitate a faster exit to the store.
5. Regulations
For a commercial retail market, Target would likely want to be mindful of the
following three regulatory forces. The Competition Bureau’s role is to promote and
maintain fair competition so that Canadian’s benefit from lower prices, product
choice and quality services. As a large corporation Target will need to be aware of
the prohibitive practices associated. Advertising Standards Canada is a nongovernmental organization that is self-regulated. As such, the government does not
impose its ideas and industry sets the standard to follow. Finally, the Better
Business Bureau is a voluntary alliance committed to being fair and honest in their
dealings. It is always important to ensure you are in good standing with the BBB to
maintain a strong public image.
6. Economic Forces
Economic Forces always play a significant role in the economic ability of a consumer
to purchase a product. Microeconomic forces are the catalyst for what can be spent
by any one individual or the associated household. There is a direct relationship
between disposable income and our good friend the taxman that can have a serious
impact on spending. If taxes rise at a faster rate than income, Target may want to
consider which items to focus on within their product line due to the consumer’s
bottom line. Depending on the state of economy, consumer’s discretionary income
will always vary. If Target is paying attention to the economic factors for it’s
potential customers, they will be in good position to capitalize in any economy.
Consumer Behaviour
A. Marketing Mix
Product, price, promotion, and place are the four elements of the marketing mix.
The product being analyzed is Target. The product consists of multiple trends, such
as: tight and/or loose fitting, or athletic wear. The price will vary depending on the
target market for each product and the products. The different styles and brands
and variety of products will effect the price significantly because of the quality it
was produced. The price is essential in marketing mix because it can determine how
successful a product is. The product’s target market may fluctuate on the
consumer’s view of the products. They may or may not like the style. The last
element of the marketing mix is promotion. The retailing store should use television,
magazine, and newspaper advertisements, and a well-known athlete to reach their
target market.
B. Psychological Influences
A psychological influence consists of components that influence the consumers
to make a purchase decision. Three components of psychological influences are
personality, motivation, and lifestyle. Lifestyle is a way of living that is identified by
how people spend their time and resources, what they consider important in their
environment, and what they think of themselves and the world around them. A
person’s way of life will influence the product they would purchase to try and fit
their daily life as much as possible. The different styles will come into consideration
for the consumer. Another factor is personal values. Personality refers to a person’s
consistent behaviours or responses to recurring situations. A person’s self-concept
affects the consumer purchase because of the way the consumer views them, and
the way they want the world to view them. Motivation is the energizing force that
stimulates behaviour to satisfy a need. Understanding your target market and being
able to clearly identify and appeal to their specific motivational needs thru the need
hierarchy is an established framework to success. Drawing from the five need
classes of physiological, safety, social, personal and self-actualization you can define
and craft the appropriate message.
C. Social Cultural
Socio-cultural influences, which evolve from a consumer’s formal and informal
relationships with other people, also have an impact on consumer behaviour. Three
factors of socio-cultural influences are family and personal influences and global
cultural diversity. Opinion leadership and word of mouth are two aspects of
personal influence that are important to marketing. Opinion leaders are individuals
who have social influence over others. Opinion leaders can cause an individual to act
and dress accordingly to their surroundings. Word of mouth is people influencing
each other during conversations. It is a powerful way of influencing a consumer
because it typically involves someone trustworthy, like a family member or close
friend.
D. Situational
There are five situational influences that can affect the purchase decision process.
Starting with the purchase task, consumers will arrive at a Target with specific
items in mind. Being visible and a reputable store among competitors is the key to
making sure consumers walk thru your door. From there, social surroundings of the
store may influence additional items to end up in your cart. We can all remember
asking mom or dad for that cool looking toy or box of coco puffs the kid next to you
has! We are then hit with the physical surroundings, this is an area where Target
has a captive audience and can set the floor plan, music and décor to provoke
further spending. Have you ever wondered why it is so difficult to find an exit while
shopping in department stores? Combine the lack of escape with a good soundtrack
and some new toys within arm’s reach and you might find you bring home a few
extras from your original list.