The LGBT Guest Case Study: Situation Analysis This case presents a scenario with a hypothetical challenge. Approach it as if you were aTarget team member. Diversity means more than just ethnic background or race. The US population is more vibrantand varied in composition than ever before, with the makeup of rapidly growing, changing, and, most […]
This case presents a scenario with a hypothetical challenge. Approach it as if you were a
Target team member.
Diversity means more than just ethnic background or race. The US population is more vibrant
and varied in composition than ever before, with the makeup of rapidly growing, changing, and, most importantly, blurring. According to The Intelligence Group, “This historic shift is reshaping
the nation's long-held notions of multicultural. Millennials, in particular, are more tolerant of other
races, ethnicities, religions, sexual orientations & gender identities than older
generations.”
Media, brands, and businesses targeting and marketing directly to the LGBT Community are
helping legitimize the community in the broader culture, removing stereotypes and beginning to
reflect a new inclusive modern consumer mindset. Target’s Guest Insights team has found that
“Given the choice, consumers today prefer to give their business to companies that share their
inclusive values. They are supporting businesses that share their values and turning away from
those that don’t.”
It is easy to spot one of these modern consumers at Target: they are making more shopping
trips per year and spending more per trip with retailers who support inclusivity, including talking to
the LGBT community. Target’s LGBT guest over-indexes spend in style categories like apparel
& home. As a buyer or financial analyst within the Target style business, how would you develop
a strategy that stands for style and acknowledges Target’s support for the LGBT community?
Minneapolis-based Target Corporation (NYSE: TGT) is a publicly-owned Fortune 40 company
serving guests across the US and at Target.com. Target had $72.6 billion
in annual sales in 2014.
The first Target store opened in 1962 in the Minneapolis suburb of Roseville, focusing on
convenient shopping at competitive discount prices. Target is currently the second largest
general merchandise retailer in America, with Target.com consistently ranked as one of the
most-visited retail websites. The company continues to deliver on its brand promise of “Expect
More. Pay Less.” Since 1946, Target has given 5 percent of its profit to communities, and living today equals more than $4 million a week. Corporate Responsibility magazine has
named Target on its “100 Best Corporate Citizens List.”
Today Target has nearly 1800 stores and 38 Distribution Centers in the United States, all of
which are supported by nearly 350,000 team members worldwide.
For Target, the guest is at the center of everything. The company is continually developing new
ways to serve the guest anytime, anywhere – including rolling out store pick-up, launching a
Cartwheel digital savings app, opening flexible format stores and offering Target Subscription
services.
Target Style categories deliver on Target’s brand promise by making design accessible to the
masses. Decades of designer collaborations have spanned limited-time collections to multiseason partnerships, most recently including Lilly Pulitzer Oh Joy! by Joy Chu & Nate Berkus.
Target also has a robust in-house design team creating an on-trend assortment year-round
through owned brands such as Merona & Threshold. While many guests shop at Target for
frequency categories such as grocery, Target Style balances solutions with inspiration and a
strong perspective on trends.
Target has long-standing partnerships with LGBT Community groups like Family Equality
Council (FEC), Gay, Lesbian & Straight Education Network (GLSEN) & Human Rights
Campaign (HRC). In June 2012, Target launched its first-ever PRIDE apparel collection on
Target.com, with all proceeds going to the Family Equality Council. In the Fall of 2012, Target began
carrying same-sex greeting cards in all its stores. In June 2015, Target’s Pride collection
expanded to more than 100 stores with Pride apparel & home collection designed for the entire
family.
It’s not just about Mom anymore; it’s about the Demanding Enthusiast. Target’s core
guests are digitally connected families who enjoy shopping and demand great
value. Typical guests have kids in the household and lots of demands on their time and are
likely to live in urban areas. These guests actively shop in-store and online and are early
adaptors of new technology, shopping with one hand on their cart and one hand on their
smartphone. They enjoy shopping and want to tell their friends, remaining engaged with social
media while shopping and sharing their feedback and experiences online. They are often
influenced by others and share their findings to influence others. Guests love Target for its
newness, product assortment, and value.
In addition, the millennial generation is an important segment of Target Corporation. According to 2014
Yahoo Advertising article, this generation, currently entering the family life stage, comprises
27% of the US population is more diverse than any previous generation and, on average, will
check their smartphones 43 times daily. Regarding shopping, 71% browse online but do
their actual shopping offline, and 52% prefer to browse on mobile devices. Millennials do their
homework before selecting a store and know what they want when they arrive. They expect that brands are channel agnostic: 60% say the consumer experience should be
consistent across online, store, and mobile.
Finally, while browsing and making decisions is a large portion of the guest experience,
today’s consumers demand great value and convenience. They have a wide range of
retail choices willing to hunt and take advantage of the best price and are comfortable
making spontaneous purchases. Retailers have answered this trend by partnering with mobile
payment applications and shortening the number of steps required from browsing to checkout,
both digitally and physically. In terms of obtaining the purchased product, free shipping and in-store pick-up are becoming increasingly important for online transactions and the length of
time until the product is received.
According to Nielsen, “There are almost 10M LGBT adults in the US with 6M kids who have
LGBT parents.” Community Marketing, Inc. states that “94% of LGBT guests will go out of
their way to purchase products and services marketed directly to them.” Also according to
Nielsen, “These guests over-index spend in style categories like apparel & home. They are
digitally savvy and smart with whom they spend their money.”
Other market players have taken varied approaches to creating an inclusive experience that
supports consumer trends while staying true to their brands. They are announcing new initiatives,
especially during June Pride Month, to capture the attention and dollars of LGBT consumers.
With continued emphasis on style and differentiation, the Style division should consider the
following a competitive set of retailers while developing a strategy: Amazon, Macy’s, Gap/Old
Navy, Nike, and Google.
How should the Target Corporation Style deliver on the “Expect More. Pay Less.” brand promise for the LGBT Community?
To sustain growth, Target must continue to surprise and delight millennial guests. How
should Target Corporation Style strategy come to life over the next two years to be more relevant to the
LGBT Community? Starting with the framework of the four P’s, provide ideas for how you would
approach this challenge as a buyer on a category within the style.
Product/ Assortment: How should Target manage thoughtful expansion with products
that support the LGBT Community and elevate the brand? What kind of financial
investment might this require? What kind of partnerships could this entail?
Price: How can the Target Corporation profitably deliver on “Pay Less” while also creating meaning with
the assortment?
Promotions: How and where should Target deliver seasonably relevant promotions?
What are the right seasonal moments in the LGBT Community? What are the financial
consequences of these promotions? [Suggestion: Look at what other companies are
doing in June & October for the LGBT Community]
Place/ Supply Chain: How might Target Corporation leverage store locations and broad distribution
centers to ensure product availability and to get it to the guest quickly? How might we
leverage engaged store team members? What are the financial impacts of these
decisions?
Additional considerations in this challenge include:
If you would like to select a specific category within the style, the area is comprised of the following:
Resources.
Interested in learning about what it’s like to work at Target Corporation? Visit here to view current openings.
The Target Corporation (Target) is a mass-market retail business dealing with general merchandise and large-scale food discount stores. Target is a US-based company and is considered to be one of the largest discount retailers in the region. In that sense, it is reputed for offering differentiated merchandises to its consumers at discount prices, ranging from everyday essentials to luxury products. At the same time, their efficient supply chain, loyalty offerings, advanced technology, devotion towards innovation, and suite of fulfillment options has facilitated the company in offering their clients with the preferred shopping experience. Target Corporation sells products through digital channels and its stores, and this has enabled the business to further facilitate the customer experience. To remain competitive, Target needs to adopt strategies for creating an inclusive experience that support the trends of consumers while staying true to its brand. In this way, Target will remain competitive by taking new initiatives that would capture the dollars and attention of LGBT consumers.
SWOT Analysis (Current Situation)
The LGBT Guest Case Current Case
Digital services (App). The Target Corporation has developed a first-rate app, “Cartwheel,” for its digitally savvy clients. It allows the users to manage a credit card, order online, checkout, check prices, access offers/coupons, and find items by aisle location.
Superior customer shopping. Compared to companies, such as Walmart, Target provides a better experience to consumers through well-marked and lit aisles, an improved floor plan, clean store environment, and better shopping carts.
Brand positioning. The Target Corporation offers fashionable and trendy merchandise of high-quality and it does so at discounted rates for their clients.
Wide range of merchandise. The business is a one-stop shop for all items, such as home décor, designer clothes, sporting goods, pharmacy, electronics, pharmacy, and accessory.
Weaknesses
Little presence in the global market. The company has not been successful in expanding to the global market. For instance, the effort to expand to Canada failed and the company had to close all of its stores in the region.
Customer data security. The Target Corporation had, in 2014, faced one of its worse incidents concerning the breach of data. Consequently, the company has faced many class-action lawsuits and affected the reputation of the business negatively.
High prices. Compared to its biggest competitors, including Walmart, Target appears to charge more on its products.
Expand private label brands. The Target Corporation has the opportunity to create its portfolio of private label brands, which as a retailer, will help the company different itself and carry higher margins as a result.
REDcard reward loyalty program. The company further has an opportunity to enlarge its REDcard loyalty program, enabling it to gain an understanding concerning the preferences and changing habits of customers.
Small-format stores. The organization has been setting up small-format stores that are situated in college campuses and dense urban areas. The Target Corporation has the opportunity to expand on these stores because they are approximately one-third of their standard average size stores.
Low barrier to entry. Despite being capital intensive, the retail business is easily replicable.
Failure to differentiate. The brand loyalty of the Target Corporation may be influenced negatively as a result of the shift of many shoppers towards price sensitive and emotionless online shopping.
Local competition. The industry where the firm operates is of low margin and highly competitive. Main players, including Home Depot and Walmart have different stores situated close to local population. The approach, in turn, impacts the market share of Target Corporation.
The Target Corporation should manage thoughtful expansion with products that support the LGBT community and elevate the brand by ensuring that the customer-service, design, after-sale service, quality, features, and packaging consider the group in question. The management needs to understand the features and benefits that these products will offer to the LGBT group. Apart from that, the company needs to study the unique selling proposition of the product that appeals to this group. More so, in managing thoughtful expansion, Target should consider how the product is differentiated versus the competitors, how it is branded, how customers will experience it, and the features that it should have to meet the needs of the LGBT. Arguably, this might require the company to investment in research and development (R&D). In this way, the company will be able to generate new knowledge to enhance, design, and develop the proposed products. Achieving this end will require partnership with LGBT organizations that will help Target to gain an understanding of the needs of this group.
Target needs to make some pricing decisions once they have established a concrete understanding of the product offering to the LGBT. The company can profitably deliver on “Pay Less” while also creating meaning with the assortment by determining how the price compares with the competitors as well as the value of the product to Target Corporation group. In this way, the pricing decision will be significantly influenced or broadly determined by the 4Cs. The first one is cost to the company, and it entails the consideration of the combination of variable and fixed costs involved with the proposed product for the organization. The second one is competitors’ prices; in this case, Target needs to consider the substitutes and competing products as it determines the price elasticity of the consumer. In that sense, Target has to determine the market reference point or price point for the new product category while choosing the final price. The third one is customer value, and it involves the value that the LGBT community will identify that the product delivers. The last one is the strategic, marketing, and financial objectives that Target has decided to attain from this class of products.
After determining the product and pricing, the Target Corporation has to undertake the activities that will make the new merchandise preferred amongst and known to the users (LGBT) and trade. The company should deliver seasonably relevant promotions through ways that the LGBT consumers will be undoubtedly learn that Target is inclusive to the group. The company can achieve this by sponsoring LGBT charity organizations or events, through news stories and articles, and advertising specifically in LGBT media. Moreover, affluent clients belonging to this group are mire involved online compared to the general population. As such, Target should pay more attention to and consider using online and social media to reach them.
The right seasonal moments in the LGBT community that the Target Corporation needs to consider are June and October. In that sense, October is LGBT history month where the company can target the group through LGBT-friendly ads. June is pride month and Target; it is a time of commemorating Stonewall riots of 1969, which is extensively observed as a turning point in the LGBT movement. During this period, Target can put on pride parades to celebrate LGBT identity. The financial consequence of these promotions is that the Target will be able to maximize on return on investment by ensuring that each touch point is sustained by a well-positioned brand.
It is fundamental for the Target Corporation to assess what the ideal locations are transform potential LGBT customers into clients. At present, even in circumstances where the main transaction does not take place on the internet, the initial place that Target can engage and convert potential clients is online. Apart from that, the company has to use a sales force to leverage the store locations and broad distribution centers to ensure the availability of the products and that they get to the clients quickly.
Indecision is a negative concept that will slow down the progress of the proposed endeavor. When a lone individual is liable for decision-making, they often feel worried and concerned about the consequences of making the wrong choices. The Target Corporation should develop a decision-making unit (DMU), which consists of a group of individuals who obligated to make decisions in the promotions, pricing, and assortment contexts. The reason for this is that within companies, including Target, the marketing and buying approach requires input from different components of the firm, such as the senior management, finance, information technology management, purchasing, and accounting. The DMU will ensure decisions are made as quickly as possible without missing the input of stakeholders or cutting corners.
Scalable frameworks for decision-making would assist the team to maintain momentum. Properly adopting and defining the decision-making framework will ensure each individual is aware of what their role is in the process of decision-making. The personalities will be more confident with the process by adopting a scalable framework that consists of clearly designated roles. One approach that the Target Corporation can consider to achieve this end is the Driver, Approver, Contributors, and Informed (DACI) decision framework. The “driver” is the person who will gather the stakeholders and get all the information to make the ultimate decision. The “approver” is responsible for making the final call. The “contributors” do not make any decision but they provide the relevant information. Lastly, the “informed” are those who are enlightened on what has been decided.
The best way to improve the sentiments of its brand while attracting the best possible talent is for the Target Corporation to ensure LGBT are visible as consumers in their marketing. One approach that the company can use to inform and excite the group under analysis is the “gay window advertising.” In this strategy, the company will use special markers, signals, and cues that enable their ads to be particular detected by gay consumers, but go more or less undetected by the general customers. Another way that Target Corporation could reach the LGBT is through sponsoring gay charities and events as well as through targeted marketing initiatives utilizing gay media platforms. The reason for this is that providing financial support to gay/lesbian causes, using gay/lesbian images in both gay and mainstream media, and treating gain/lesbian employees fairly are all seen as fundamental dynamics to achieving support from the LGBT community.
Within either home or apparel, the product category that the Target Corporation should prioritize for building a relevant assortment are those on the home classification. The reason for this is that compared to the average U.S household, the buying power of the household of same-sex partners is substantial. Arguably, this gives Target the opportunity to satisfy the requirement of the group under analysis. Furthermore, the household with same-sex partners shop at almost the same rate as the average household in the following three main traditional channels: drug, mass merchandiser, and grocery. Nevertheless, the household with same sex partners index higher in specialty retail channels, such as health food retailer, pet stores, electronic stores, and online retailers. Apart from that, they are also more likely to spend more on personal grooming and alcohol. To this end, compared to the average U.S home, the households with same-sex partners are indexed-higher in shopping for household product categories. The point then is that the LGBT community spends more home products than the average US household. It is, therefore, in this product category that Target Corporation has the biggest opportunity to win this demographic.
The greatest threat of the proposed strategy is external competition. There is the potential for many organizations to compete for LGBT as consumers. The rivalry consists of established firms as well as startups that may expand into the targeted market. The risk that the Target Corporation should consider is the potential for price war. It will involve Target competing with other firms in lowering charge rate on the merchandise in a strategic objective to capture greater market share and undercut one another. Nevertheless, Target can prevent a price war through strategic management of the price that depends on non-aggressive pricing, which entails a robust communication with the competitors and thorough understanding other main players. Target Corporation should also consider that the competition may have the potential to develop superior intellectual property, including patents and trade secretes that enable them to outperform the company.
Second SWOT Analysis
The LGBT Guest Case Second SWOT
Superior service and product quality. Focusing on the LGBT will ensure that the Target Corporation increases its share in the market as current clients are extremely loyal to it. The reason for this is that Millennial considers the LGBT to be something entirely normal; therefore, they deserve equal acceptance and rights.
Managing business environment and regulation. By focusing on LGBT through social enterprise and human resource management, the Target Corporationwill be able to build strong associations with political network and lobby groups.
Diverse product portfolio. By considering the LGBT as potential consumers, the brand and product portfolio of the Target Corporation will ensure that the company builds diverse profit mix and revenue source.
Customer's Feedback Review
Published On: 01-01-1970
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