Targets Marketing Strategy - Essay Example

The study of marketing is a very broad subject that aims to improve the company’s financial performance not only through selling and advertisements, but also in finding ways to develop and establish a good relationship with its target customers. For this reason, it is wrong to believe that the study of marketing is focused only on selling and advertising. Target is one of the most successful retailing companies in the United States. As part of analyzing the company’s business strategy, this report will analyze the article written by Duhigg entitled “How Companies Learn Your Secrets” followed by showing how it illustrates its use of technology when conducting a market research, market segmentation, product strategy, branding, market distribution, and services. As part of the study conclusion, my personal opinion with regards to Target’s marketing strategy will be provided in details. The Use of Technology in Market Research and Marketing Strategies In relation to the use of technology, Kotler (a 102) defined marketing information system (MIS) as “a continuing and interacting structure of people, equipment and procedures to gather, sort, analyze, evaluate, and distribute pertinent, timely and accurate information for use by marketing decision makers to improve their marketing planning, implementation and control”. It means that MIS is all about gathering useful customer data that can be useful on the part of the managers when making important marketing decisions, planning, organizing, coordinating, and controlling significant marketing activities (Source 1). In the case of Target, the use of MIS has a significant impact over the development of its marketing research and market segmentation strategy. Since Target’s prospective customers are the pregnant women, the customer information gathered by the company’s MIS enabled the manager learn more about its target consumers’ product preferences, specific wants, and purchasing habits and behavior. By tracking down the buyers’ history of purchasing habit, the company was able to forecast specific products that are suitable for the specific needs of its valued customers. In general, keeping the company’s target consumers satisfied with the products they purchase from a retailing company is one of the main factors behind the success of Target. To ensure that the company’s prospective buyers will remain loyal with the brand, Target decided to market its consumers’ products using market segmentation and the marketing mix (4Ps) (Kotler and Armstrong 52). Basically, market segmentation analyzes the company’s target customers’ demographic, psychographic, and demographic segmentation (source 2). Since Target is focusing on pregnant women, demographic segmentation is limited to women of reproductive age who are most likely to be pregnant regardless of the size of family, family life cycle, income, occupation, educational attainment, religion, race, generation, nationality, and social class (Kotler b 263 – 266; Rogers 19). Under the psychographics segmentation, Target needs to analyze its target buyers’ lifestyle, personality and values (Kotler b 266 – 267; source 2). As a retailer, it is important for Target to be discreet when analyzing and tracking down its customers’ purchasing habit. Since there is a risk of upsetting pregnant women upon receiving coupons for baby and pregnancy products straight from Target, the company decided to mix baby products and pregnancy products coupons together with other non-related items (source 5). With regards to geographic segmentation, Target divided its target market based on geographic units such as the nations, states, regions, countries, cities, local government areas, or community area (Kotler b 263; Rogers 24; source 2). In case one of its loyal customers is on a business trip, Target’s computer will be able track down the customer’s location so that the company will avoid sending out irrelevant coupons through mail (Duhigg; source 6). In preparation for their long-term financial stability, most pregnant women tend to become more conscious and sensitive to market prices of consumers goods. In order to invite more pregnant women to purchase consumers’ products from Target, the company took advantage of its MIS gathered data in order to send out coupons not only on baby and pregnancy products (Duhigg). By sending out coupons to expecting mothers, the company is using price as a way to convince its target customers to purchase consumer items from Target. This particular marketing strategy enables Target to position its brand as the only retailing company that its target customers need (Duhigg; source 3). For example, when Andrew Pole worked as a statistician for Target back in 2002, he was instructed to find a way to determine who among its existing customer is pregnant. To do so, Pole decided to build a “pregnancy-prediction model” that will help the company accurately identify thousands of female shoppers who are mostly likely pregnant (Duhigg). In most cases, sending pregnant women some coupons on pregnancy and baby products can trigger negative affection on some women. To avoid creating a sense of feeling that the company was spying on their customers’ purchasing habits, Target decided to incorporate coupons on baby and some pregnancy-related products together with other general consumer items. The purchasing behavior of Target’s target consumers is highly dependent on how the company could effectively satisfy the specific needs and wants of its customers. Aside from the fact that having strong brand equity positively affects consumers’ buying behavior (Yoo, Donthy, and Lee; Pitta and Katsanis; Barwise; Source 3), developing an effective marketing communication strategy is equally important on the part of the company. By doing so, Target can easily develop a positive relationship with its target consumers. Ann Graybiel is an M.I.T. neuroscientist who explored the habits of rats using a T-shaped maze and a chocolate. According to Graybiel, “habits never really disappear” (Duhigg). Once Target is able to persuade its target customers to purchase consumer items from the company, it is much easier for them to unconsciously persuade its target customers to keep on returning back to Target. In the long-run, becoming overly comfortable with purchasing consumer goods from Target becomes a habit. This would eventually increase the brand loyalty of its existing customers (source 4). Dick and Basu (102) explained that customer loyalty is “the strength between relative attitude and repeat patronage”. Since loyal customers would eventually develop a subconscious emotional and psychological attachment with Target (Jenkinson 116), the company’s sales revenue suddenly increased from $44 billion up to $67 billion within a short span of eight (8) years right after Pole implemented the use of his “pregnancy-prediction model” (Duhigg). Conclusion One factor that enabled Target to be successful in retailing business is due to its ability to make its customers satisfied not only with price but also the availability of consumer products based on their specific needs. Aside from providing the customers with “a 100% available products” at a much reasonable price, Szwarc explained that a successful retailer is the one that can develop and implement marketing strategies that will meet the specific demand of its customers (Szwarc). Aside from using the customer database wisely, I personally think that Target’s decision to target the pregnant women is a good decision. Since most women are the ones who are responsible in purchasing household consumer items, targeting this group of consumers and making them loyal to Target means a regular sales and revenue on the part of the retailing company. Pregnant women tend to become more conscious about their spending. This makes most of them a price-sensitive consumer. For this reason, sending out coupons on baby diapers and other related products is effective in terms of unconsciously inviting them to visit at least one of the Target’s retailing store outlets. Furthermore, carefully analyzing its target consumers’ market segmentation enables the company to save a lot of unnecessary marketing and promotion expenses. This explains why Target was able to significantly increase its sales revenue within a short span of 8 years. Works Cited Barwise, Patrick T. "Brand Equity: Snark or Boojum?" International Journal of Research in Marketing 10 (1993): 93-104. Print. Dick, Alan S., and Kunal Basu. "Customer loyalty, towards an integrated conceptual framework." Journal of the Academy of Marketing Science 22.2 (1994): 99‐113. Print. Duhigg, Charles. "The New York Times." 16 February 2012. How Companies Learn Your Secrets. 13 May 2012 . Jenkinson, A. "Retailing and shopping on the internet." International Journal of Retail & Distribution Management 24.3 (1995): 26‐37. Print. Kotler, Philip, and Gary Armstrong. Marketing: An Introduction. Upper Saddle River, New Jersey: Prentice Hall, 1997. Print. Kotler, Philip. Marketing Management: Analysis Planning and Control. Prentice-Hall, 1988a. Print. Kottler, Philip. Marketing Management - International Edition - The Millennium Edition. Upper Saddle River, New Jersey: Prentice Hall International Inc., 2000b. Print. Pitta, Dennis A., and Lea Prevel Katsanis. "Understanding Brand Equity for Successful Brand Extension." Journal of Consumer Marketing 12.4 (1995): 51 - 64. Print. Rogers, Emma. Learner’s Resource: Certificate IV in Business (Marketing) Profile the Market. Melbourne: Australian Training Products Ltd., 2005. Print. Szwarc, Paul. Researching Customer Satisfaction & Loyalty: How to Find Out What People Really Think (Market Research in Practice). London: Kogan Page, 2005. Print. Yoo, Boonghee, Naveen Donthu, and Sungho Lee. "An examination of Selected Marketing Mix Elements and Brand Equity." Journal of the Academy of Marketing Science 28.2 (2000): 195-211. Print. Read More