Marketing 161
An Environmental Scan and Consumer
Behavior Analysis of Target’s Entry into
the Canadian Market
Alicia Kingsland, Kat Bastow, Sanalta Duong
February 17th, 2012
I. Company Description
Target Corporation
According to their company website, the Target Corporation has been around for 50
years, but was originally founded in the 1900’s as a department store named
“Daytons” after the family name that owned the business. In 1962, the company
went from a family owned and operated company to a publicly traded corporation.
The company also evolved from a department store to a discount store, selling
quality goods at a fair price, and giving back to the community any way it could,
whether it be through charities, educational programs and sponsorships. This
business strategy has been the backbone of their philosophy since the Daytons
started the original company in the 1900’s and is still their mission today. The
current slogan of Target is “expect more. Pay less” (Target.com) which reflects their
brand promise which is:
“A natural evolution of Target’s commitment to community giving and offering
guests value, quality and service, all in a fun and inviting store environment.”
II. Environmental Scan
1. Socio-Cultural
Socio-cultural trends that may affect Target’s opportunity are that Canadian
consumers are highly diverse - the population ranges from minorities from
countries of Southeast Asia to Europe. These will be strong influences on
Target because if they do not provide these certain supplies for the ethnic
groups of Canada, they would lose out on a chance to “connect” with their
Canadian market. However, Target Corporation have managed to notice this
and executive vice-president John Griffith stated that Target “didn’t want to
replicate Minnesota stores [in Canada]” but instead, “try to cater to the
[census] of the area” (Shaw) - whether it be cultural values or ideas. Target’s
marketers want and are capable of adapting to their clientele. Furthermore,
as any visitor outside of this country can see, Canadians are a very interactive
and friendly bunch; they also like to be in on the latest news (either local or
from Hollywood) and are approachable to others - and Target’s online
magazine, “A Bullseye View”, happens to be an ”up-to-date” program ranging
in topics from fashion to health, and the Canadian audiences would enjoy
tuning into it. Another point would be that countries from all over the world
see Canada as a humanitarian country by giving to others in need and
provide aid - Target, also, gives back to the community and they have much
pride in doing so. With Target’s reinforced philanthropic image, Canadians
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may find them appealing due to their similar trends.
2. Competitive
While Target will face a wide range of competition, here we will focus on
what we believe will be their two main competitors, The Bay and Walmart.
The Bay: The Bay is a well-established company originally founded in
Canada. They sell a mixture of Canadian and American goods, such as highend perfumes, makeup, clothing, toys and etcetera. The wide, higher-end
variety isn’t a threat to Target because the products sold are on different
ends of the spectrum; however, the variety of goods on the lower end that
The Bay sells are a competitive factor to Target. Target will need to make
efforts in establishing why it is a better place to shop than the Bay for these
products. The Bay also holds a variety of sales and annual holiday charities.
While Target does have its own charities, none are recognized by the
Canadian market, an obstacle that will take time to overcome. Target will
also face nationalistic attachment challenges, since it is recognized as an allAmerican company.
Walmart: Walmart has been around for 40 years, and is a company
comparable to Target in regards to its philosophy and business strategies.
The company slogan is: “save money, live better.”(walmartstores.com), which
is very similar to Target’s slogan of “Expect More. Pay Less.” You can see how
they are a major competitor in the Canadian marketplace, as they fill a
similar need. The products sold at Walmart, less the store-exclusive brands,
are virtually the same as the products sold at Target. The major difference is
that Target tends to carry more name-brand items. Walmart promotes
themselves as a company that is constantly reducing their prices. They have
coined this as their “Rollback” promotion, which is a promise to consumers
that their prices will always be the lowest.
While both will offer competition, Target has a tendency to offer the best of
both worlds. It has the low-price points offered by Walmart, but also the
humanitarian spin offered by the Bay. If it can play both of these well, it will
be unique in that it can offer that humanitarian good-feeling at a lower price
point.
3. Technology
The largest way that technology will impact Target will be in the way that it
uses it for marketing, and in its point of sale systems. Target will have to
make sure that is point of sale systems are up to date, and prepared to deal
with a higher number of debit card transactions than they previously have
seen in the US. This is because debit card transactions are far more common
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in Canada. (Dyer, 2012) Target will also want to take advantage of
technology in terms of social-media marketing in order to reach the younger,
more tech-savy, university students and young adults that make up its target
demographic.
4. Economic
If you were to look at simply the gross income of Canadians compared to
Americans, you could conclude that Canadians must have a higher
discretionary income, because their gross income is much higher. However,
this is not so, because our taxes in Canada are much higher, given that our
government has traces of socialism to it. This means that the discretionary
income of Canadians is in fact much lower. This both helps and hinders
Target. On the one hand, a discount store is exactly what Canadians need,
since the cost of living is so high. However, if Target is unable to keep its
prices consistently low, it will find itself losing business to competitors such
as Walmart. Also, the unemployment rate in Canada is much lower that it is
in the states, which could lead to employee shortages and higher salaries, a
factor that will increase their overhead and hinder their ability to keep their
prices sufficiently low.
5. Regulations
This section very nearly requires its own book to fully explain all the
regulatory factors that are going to make life in Canada difficult for Target.
We’ll only cover the main two one though: Packaging and Labeling
regulations. In Canada, all packaging must be bi-lingual, in both French and
English. This means that Target will have to actually use different vendors
just to be able to sell the same products that they already sell in the United
States. The problem worsens for their Quebec locations; The labeling
regulations are so complicated in Quebec that we won’t elaborate, but suffice
it to say that this difficulty has stopped many other US immigrant companies
for expanding into Quebec, such as Bed Bath & Beyond. (Dyer, 2012)
6. Demographic
As of 2006, Statistics Canada have recorded a total population of 31,612,897
people that reside throughout of the country. About 13.7% of the total
population are 65-and-over, 17.7% of them are under-15 and the rest are
from the ages of 15-64 (Census of Canada). Target’s approach as a discount
retailer to its market is to attract a younger crowd - and they have done so
successfully by “boasting a low median age of 46 - which is the youngest of
their competitors” (AirTran Inflight Magazine). Canada being one of the most
diverse countries, has a wide selection of cultures and ethnicity coast to coast
- meaning Target must have products to cater to them. From the estimated
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31.6 million total population in 2006, about 29.7% paint the ethnocultural
picture of Canada; meaning that Target’s products should consist of ethnic
things (like rice, etc) and they plan to do so. Overall, Target’s emphasis is on a
more “upscale type of discount experience” (AirTrain Inflight Magazine) and
with that, it is successful in bringing about their lower age range of
customers. Also, if they are considerate about Canada’s diversity they’ll get
positive feedback from Canadians when they enter into the market.
III. Consumer Behavior
A. Marketing Mix
The marketing mix consists of the four P's of Marketing: Product, Price, Place
and Promotion. In our case, we are looking at both the service provided by
Target as a discount store, and the physical goods that they sell. The price for
their goods should be appropriate for their target market - low to middle
income families who value quality, but find price very important. Target also
operates as a discount store, and so prices for goods should be kept low to
correlate with this. Place will play a large role in the success of Target, and
they have already planned for this, putting stores in locations that were
previously occupied by Zellers. Because Target and Zellers have similar kinds
of customers, this means that it is likely that those people who previously
shopped at Zellers will now shop at Target. Finally, we look at promotion, the
method companies use to communicate knowledge of their goods and
services to potential consumers. Target will want to use both television
advertisements and social-media marketing to reach their target market. By
doing this, they can make sure that their slogan, "Expect More. Pay Less," is
well-know among Canadians.
B. Psychological Influences
Values, attitudes and beliefs: Target’s market segment values a good
product at a great price. They also perceive corporate responsibility as a
positive attribute and value a company that gives back to the community.
Target holds this attitude of thriftiness and community in its highest regards,
and this will positively influence potential buyers.
Lifestyle: Since Target’s market segments consist of university students,
families and the middle-class consumer, being able to save money is very
important, and being able to go to one location for all their needs is essential.
These segments like to keep up with the latest trends as much as they can,
without damaging their bank accounts, and Target offers a wide variety of
products that are not only well-priced, but are stylish and modern.
Perception: The American perception on Target is sound. Their mission
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statement, slogan and philosophy are concrete. The only thing that Target
must do is work on how Canadians perceive them, which currently is that
Target is all-American and only sells American goods. They must make
efforts to demonstrate they are a ‘Canadian-friendly’ store. A way Target
could do this is to sell a line of Canadian products in their Canadian stores,
and include them in their advertising and promotional ideas.
C. Socio-Cultural Influences
Socio-cultural influences such as family influences, reference groups and
cultural influences can also affect the way that consumers make their
purchasing decisions. The text defines reference groups as “People to whom
an individual looks as a basis for self-appraisal or as a source of personal
standards.” (page 54, chapter 3 of ‘The Core’). The use of a Canadian celebrity
in an ad geared towards the target market would assist in further appealing
to the Canadian population, in order to gain their trust. The families in
Canadian society tend to have a strong relationship with one another - thus,
the family influence on consumer behavior is very strong. 70% of Canadians
already recognize Target’s brand (Target Canada and City Target), and many
of them already shop at Target during trips to the US. This means that Target
has the potential to gain many new customers based on family reference.
Another difficulty for Target in Canada is that we have a very diverse culture,
whic means more market segmentation and a wider range of marketing
choices. In the US, the culture is more of a melting pot, and makes mass
marketing easier. In Canada, there are many sub-cultures to appeal too,
instead of simply one all-consuming culture.
D. Situational
Target’s slogan is “Expect more. Pay less.” - this speaks for itself in the
purchase task. Due to the economy, people want to be getting more for a
lesser amount. Target claims to be able to provide this, from having the basic
necessity products to more “high-end” and trendy products. The company
wants to expand its selection to meet a good majority of the Canadian
market. They have “many exclusive deals with various hip, up-and-coming
designers” (AirTran Inflight Magazine) (like Mossimo Supply Co., Zac Posen,
Alice Temperley, etc.) to make consumers well aware of the brands they
carry. The influence of singers like Gwen Stefani, who promotes her clothing
line through Target, and Selena Gomez, who makes headlines because she
enjoys shopping at Target, generates lots of interest from teens and middleaged women, encouraging them to come shop at Target. People want to feel
like they are able to afford things celebrities like and when they can, it
generally makes them feel good about themselves and want to buy those
products. To tie it all up, Target also sets up the ultimate discount retail
experience by “[reinforcing] through the store’s interiors” (AirTran Inflight
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Magazine) making the customer’s shopping experience more gratifying spacious aisles, attractive displays of merchandise and better lighting.
Compared to other discount retailers, this sets up a great play for Target
costumers to stroll through the stores with comfort and ease, which then
may lead to a larger purchase as they thoroughly look at products rather
than simply dashing in-and-out.
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IV. Bibliography
1. "Target Corporation - Features." GO: AirTran Inflight Magazine. Web. 12 Feb.
2012. <http://www.airtranmagazine.com/features/2006/03/target-corporation>.
2. "2006 Census: Age and Sex Release." Census of Canada. Web. 13 Feb. 2012.
<http://www12.statcan.gc.ca/census-recensement/2006/rt-td/as-eng.cfm>.
3. "Target Corporation - 2011-present: Target Canada and City Target." Wikipedia,
the Free Encyclopedia. Web. 14 Feb. 2012.
<http://en.wikipedia.org/wiki/Target_Corporation>.
4. Kerin, Roger A., Steven William. Hartley, William Rudelius, Christina Clements,
and Harvey Skolnick. Marketing: The Core. 2nd ed. Boston, MA: McGraw-Hill/Irwin,
2004. Print.
5. Shaw, Hollie. "Target Aims for Canadian Appeal." Financialpost.com. National
Post, 21 Oct. 2011. Web. 13 Feb. 2012.< http://www.financialpost.com/todayspaper/Target+aims+Canadian+appeal/5585301/story.html>
6. Dyer, Greg (2012, Feb 11). Senior VP, Bed Bath & Beyond. (A. Kingsland,
Interviewer) North Vancouver, BC. Interview.
7. “Target: Company”. Target Corporation. Web. 13 Feb 2012.
<http://sites.target.com/site/en/company/page.jsp?contentId=WCMP04-030795>
8. “About Walmart”. Walmart.ca. Web. 13 Feb 2012.
<http://sites.target.com/site/en/company/page.jsp?contentId=WCMP04-030795>
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