Target: Swot
Essay Preview: Target: Swot
Report this essay
Target Corporation
Introduction : Target is a superstore designed to sell a more stylish product at affordable price. Their stores include all different types of products ranging from clothes to furniture, to electronics and household products. They are an upcoming store with excellent growth potential in a wide competitive market. Target is well positioned to learn from Wal-Marts mistakes as well as some of their other competitors.
SWOT SUMMARY
I. Strengths – Target is well positioned to experience sustainable growth through its solid customer base, exclusive product lines, positive marketing, and its growing credit card business.
II. Weaknesses – Target is a company that could improve in several different areas including their strategic operations, strategies about pricing, advertising to their customers, dealing with their two other divisions, and future investments.
III. Opportunities –
IV. Threats – Target is company that have threats from different sources. They have competition from different products and companies, a gap in production, and threats that are involved with who invests in this company.
Strengths
Sustainable Growth Potential
In 2004, there were 1,172 Target and 136 Super Target giving a combined total of 1,306 stores. Total square footage has increased 8.2% from 2003 and the company has a strong network of 25 warehouses in place supplying their stores. In times past, stock outs occurred at stores hurting sales and steps have been taken over the last few years to build up the infrastructure supplying the stores. Target is growing at a sustainable rate and plans on operating about 2000 stores by the end of the decade. Target should not experience cannibalization like Wal-Mart is experiencing for some time since there are not nearly as many Targets as there are Wal-Marts. Target also target large suburbs and cities that have people that do not want to shop at Wal-Marts for ethical and socio economic reasons. The areas in which Targets are located are because they contain the demographics that they are targeting. Target is being selective and locating in areas with the best growth potential to increase revenue.
Target has been focused on consistently bringing down costs by getting rid of redundancies and using direct shipping rather then dealing with third parties to increase profitability. Sales and revenue have been consistently strong increasing year after year. Sales in 2004 were strong with sales reaching almost $46.9 billion, up 11.6% from 2003 revenue of about $42 billion.
In 2004, the decision was made to sell Mervyns and Marshall Fields, which has had lagging sales, for $4.9 billion in pre-tax profit that way the company can focus on Target operations. The board has also authorized buying back $3 billion in stock over the next 2 to 3 years, which shows good governance and it should cause the stock price to increase. Targets ever increasing size allows it to enjoy economies of scale and benefit from cost reductions due to its size. Its strong brands differentiate it from its competitors such as Wal-Mart and others. Its strong brands will help foster brand loyalty and future sales.
Solid Customer Base
Target has differentiated itself from Wal-Mart and others by creating a strong brand image which appeals to the middle class, college students, and others aspiring to be perceived as middle to upper class when they can not afford to be. This has allowed them to create a strong customer base. People do not feel ashamed to shop in a target. Most people do not feel proud about saying they bought something at Wal-Mart, especially clothing. No one wants to say they buy there clothes at Wal-Mart because they are not stylish and you become perceived as poor. Wal-Mart all but comes out and tells you that you are poor, where as Target provides style at a bargain. Target has created designer lines and carries better clothing at affordable prices. Target also does not have the bad image as Wal-Mart and Target takes steps to avoid that by being socially responsible. Target stores are also not cannibalizing themselves as Wal-Marts are doing with one around every corner. Customers are willing to drive an hour or more to go shopping at a Target if there is not one near by.
Target and Wal-Mart go after the same customer, but Target is perceived to be more stylish, hip, and funky. Target customers do not necessarily have more money to spend on goods, but they are willing to spend a few extra dollars to get something that is stylish. Target shoppers want to look more affluent and Targets goods, such as their clothing and furniture, allow them to do just that. Target is creating brand loyalty. Target lures the aspiring affluent customer in and provides them with a more reserved atmosphere. Target does not continually have signage pointing out that the prices are low; Target customers know the prices are low, and they do their shopping. Target does not make their customer feel as if they are poor, but instead allows one to shop for a bargain. Target provides the customer with a value that they appreciate.
Exclusive Product Lines
Target has taken many steps toward keeping itself perceived as a higher end discount store. One way it which it has done this is by successfully promoting brands exclusive to it without its name. It has kept its product lines strong and is continually expanding on them. The Issac Mizrahi Home Collection and FieldCrest have been successful lines exclusive to Target that keeps customers coming back. Target has also moved towards selling more consumer goods through its super stores which create more traffic and more sales. The company now has over a thousand pharmacies and is focusing on is promoting health and wellness products, which the more affluent crowd is concerned about. Target is also moving towards selling more higher end electronics like Sony, which fit its image. They have also created more partnerships with companies such as Boots Cosmetics, Apple Ipod, and Simply Shabby Chic to allure more customers.
Positive Marketing
Target has also been using successful campaigns such as “Expect More. Pay Less,” and many more programs to promote their products. Target has also held events like in New York City where they drove around with air conditioners for sale. They have promoted helping communities through programs like with Target House. All these programs are designed to promote Targets image and get customers to be repeat customers. Target.com