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DBZ Consulting Group
Kevin Cai Julius Chen Brian Lee Daniel Yang
Target Case
Background Strategy ImplementationIntroduction
Target Corporation
Mission
Our mission is to make Target your preferred
shopping destination in all channels by
delivering outstanding value, continuous
innovation and exceptional guest experiences
by consistently fulfilling our Expect More. Pay
Less.® brand promise
Key Numbers
• First opened 1962 in Roseville, Minnesota
• 365,000+ current employees at Target
• 1,763+ locations currently open nationwide
Background Strategy ImplementationIntroduction
Agenda
How can we better utilize technology to innovate our food strategy so our
guests think of Target first when it comes to food?
• of current situationAssessment
• pronged, multi faceted solution to key
issueThree
• value added of solution to Target
CorporationProjected
Background Strategy ImplementationIntroduction
P-FRESH was introduced to Target in 2009 and has been
standardized into almost every single store
2009 Present
With introduction to
PFresh, Target became
an all-inclusive, one
stop shop
Total # of Stores (~1800)
Converted
Expected
Remaining
Background Strategy ImplementationIntroduction
2009
With introduction to
PFresh, Target became
an all-inclusive, one
stop shop
“Recently, we’ve worked on increasing
grocery awareness with Target guests by
employing shopper marketing tactics to
drive grocery conversion—which is when a
general merchandise customer begins to add
grocery items to purchases”
- Target Lisa MacMillan, customer vice
president
PFresh’s goal is to entice their customers to
shop the store more frequently , & and to
not directly confront its competitors
PFresh is not a substitute for a full grocery
store visit, but it is certainly a great fill-in
Background Strategy ImplementationIntroduction
(Food & pet supplies)
Total # of Stores (~1800)
Converted
Expected
Remaining
13%
60%
27%
“Ultimately, PFresh allows Target to enter
guests’ shopping routines more
frequently because they offer food and
perishables, just like a traditional grocery
outlet or their primary mass competitors
without having to invest in building stores
with a larger Super Target footprint.”
- Steven D. Althaus, Target Director of
Customer Product Sales
Background Strategy ImplementationIntroduction
Current Strengths, Weaknesses, Opportunities & Threats
to the PFRESH brand at Target
Strengths
•High quality goods at
affordable price
•“Expect more, pay less”
Weaknesses
•Lack of market presence
•PFresh not as recognized
compared to competitors
(Walmart)
Opportunities
•New market segments
allow room for growth
and change
Threats
•Competing in a saturated
market
•General misconception of
Target’s “high prices”
Target’s financial standing and brand recognition allowed them to
expand with PFresh in order to form a strategic approach to increase
market presence in produce.
Background Strategy ImplementationIntroduction
Our case focuses on implementation of technology to
increase the brand recognition of PFresh & expand its
demographic audience
Value Achieved
Key Questions
Solutions
Objective
• Marketing of PFresh, making sure when people think of
groceries, they think of Target
• Create value added with money-savings, “Expect
more, pay less”
• How can we better utilize technology to innovate our
food strategy so our guests think of Target first when it
comes to food?
• How can we increase market presence of Target as a one
stop shop?
• Add-on to Target App
• Goal: expand target demographic markets
• Increase PFresh brand recognition
• Achieving more convenient shopping experience
for guests
Background Strategy ImplementationIntroduction
Our case focuses on implementation of technology to
increase the brand recognition of PFresh & expand its
demographic audience
Value Achieved
Key Questions
Solutions
Objective
• Marketing of PFresh, making sure when people think of
groceries, they think of Target
• Create value added with money-savings, “Expect
more, pay less”
• How can we better utilize technology to innovate our
food strategy so our guests think of Target first when it
comes to food?
• How can we increase market presence of Target as a one
stop shop?
• Add-on to Target App
• Goal: expand target demographic markets
• Increase PFresh brand recognition
• Achieving more convenient shopping experience
for guests
Background Strategy ImplementationIntroduction
Our case focuses on implementation of technology to
increase the brand recognition of PFresh & expand its
demographic audience
Value Achieved
Key Questions
Solutions
Objective
• Marketing of PFresh, making sure when people think of
groceries, they think of Target
• Create value added with money-savings, “Expect
more, pay less”
• How can we better utilize technology to innovate our
food strategy so our guests think of Target first when it
comes to food?
• How can we increase market presence of Target as a one
stop shop?
• Add-on to Target App
• Goal: expand target demographic markets
• Increase PFresh brand recognition
• Achieving more convenient shopping experience
for guests
Background Strategy ImplementationIntroduction
Our case focuses on implementation of technology to
increase the brand recognition of PFresh & expand its
demographic audience
Value Achieved
Key Questions
Solutions
Objective
• Marketing of PFresh, making sure when people think of
groceries, they think of Target
• Create value added with money-savings, “Expect
more, pay less”
• How can we better utilize technology to innovate our
food strategy so our guests think of Target first when it
comes to food?
• How can we increase market presence of Target as a one
stop shop?
• Add-on to Target App
• Goal: expand target demographic markets
• Increase PFresh brand recognition
• Achieving more convenient shopping experience
for guests
Background Strategy ImplementationIntroduction
How technology has changed the shopping experience?
Background Strategy ImplementationIntroduction
How technology has changed the shopping experience?
Key Take Away
Target should anticipate this increasing adoption rate of technology and have an
innovative reaction to this trend to stay at the forefront of the market place
Target case final
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Target case final
Background Strategy ImplementationIntroduction
Timeline of Implementation
Trial Period
•Select number of “walking cities”
•Aggregate sample size data & check for
profitability
Executive Decision
•Analyze data & make decision on whether to
standardize app for all Target locations
•Keep it region exclusive or all locations?
Application of App & Drive Thru
•Implement app & drive-thru permanently
Executive Decision
•Analyze data & make decision on whether to
standardize app for all Target locations
•Keep it region exclusive or all locations?
Application of App & Drive Thru
•Implement app & drive-thru permanently
Background Strategy ImplementationIntroduction
Strengths
• Increases market
demographic
• Creates a more
convenient and
efficient shopping
experience
Opportunities
• Introduces innovative
shopping techniques
• Pick-up station located
in back of store
• Convenience would be
#1 selling point
Weaknesses
• R+D Costs
• Additional training and
staffing expenses
• Potential sunk cost
(Poor reception)
Threats
• Idea could not create a
sustainable advantage
should competitors
react quickly
Strengths, Weaknesses, Opportunities, & Threats of Strategy
Target could take advantage of this opportunity to integrate
technology into their guests’ shopping experience
Background Strategy ImplementationIntroduction
Market Trends and Rationale to Solutions
Social Media
Technology in the
Supermarket
• Connects with guests on a more
personal level
• Helps increase brand awareness for
Target
• In turn, will increase revenue
• If any breaking news occurs, Target
should be the first to release a
statement
Background Strategy ImplementationIntroduction
Social Media
Technology in the
Supermarket
• Grocery Gadget
• Helps organize shopping lists and
find specials
• “consumer trends are likely to
continue to be driven by the need
for convenience without sacrificing
quality or increasing costs”
-- FFVA Harvester
Market Trends and Rationale to Solutions
Background Strategy ImplementationIntroduction
Value Achieved through Implementation
Guest Experience
Market Position
Value Added
• More Convenience
• Easily Accessible Service
• Personalized
• Target further establishes itself as a one stop shop
• Target makes an innovative response to market
• Places Target in a position ahead of competitors
• Project adds value to Target
• Overall Project Net Present Value: $9 Billion
• (Appendix: Exhibit A & B)
Background Strategy ImplementationIntroduction
Value Achieved through Implementation
Guest Experience
Market Position
Value Added
• More Convenience
• Easily Accessible Service
• Personalized
• Target further establishes itself as a one stop shop
• Target makes an innovative response to market
• Places Target in a position ahead of competitors
• Project adds value to Target
• Overall Project Net Present Value: $9 Billion
• (Appendix: Exhibit A & B)
Background Strategy ImplementationIntroduction
Value Achieved through Implementation
Guest Experience
Market Position
Value Added
• More Convenience
• Easily Accessible Service
• Personalized
• Target further establishes itself as a one stop shop
• Target makes an innovative response to market
• Places Target in a position ahead of competitors
• Project adds value to Target
• Overall Project Net Present Value: $9 Billion
• (Appendix: Exhibit A & B)
Trend Analysis
Current social trends lean towards continued use of
mobile apps
All inclusive: non-exclusive to certain demographic section
Technological necessity as society becomes more
modernized with integrated technology
Trend Analysis
Current social trends lean towards continued use of
mobile apps
All inclusive: non-exclusive to certain demographic section
Technological necessity as society becomes more
modernized with integrated technology
Add-in to mobile app would help Target increase their market
presence while integrating innovative technology to maximize
brand exposure
Appendix
Exhibit A. Forecasted Project Value
Appendix
Exhibit B. Weighted Average Cost of Capital Calculation
Appendix
Work Citied
"10 Hot Produce Trends." Harvester. Web. 11 Apr. 2013.
Hamstra, Mark. "Target Slows Pace of PFresh Remodels." Supermarket News.
N.p., 5 Mar. 2012. Web. 12 Apr. 2013.
Stych, Ed. "Target CEO Steinhafel: PFresh Concept Going Well, 230 More Stores
to Be Converted in 2012." Minneapolis/St. Paul Business Journal, 2 May 2012.
Web. 12 Apr. 2013.
Tang, Olivia. "IBIS World Industry Report 44511." IBIS World. N.p., Dec. 2012.
Web.
Target 2011 Annual Report. Rep. Web.
Appendix
Work Citied Continued
Turcsik, Richard. "Hitting the Bull's Eye." Macfadden Grocery Headquarters LLC.
N.p., 1 May 2012. Web. 12 Apr. 2013.
"U.S. Grocery Shopper Trends 2012 Executive Summary." Food Marketing
Institute. Web.
Zwiebach, Eliot. "Impact of Target PFresh Seen as Minimal." Supermarket
News, 1 May 2012. Web.

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Target case final

  • 1. DBZ Consulting Group Kevin Cai Julius Chen Brian Lee Daniel Yang Target Case
  • 2. Background Strategy ImplementationIntroduction Target Corporation Mission Our mission is to make Target your preferred shopping destination in all channels by delivering outstanding value, continuous innovation and exceptional guest experiences by consistently fulfilling our Expect More. Pay Less.® brand promise Key Numbers • First opened 1962 in Roseville, Minnesota • 365,000+ current employees at Target • 1,763+ locations currently open nationwide
  • 3. Background Strategy ImplementationIntroduction Agenda How can we better utilize technology to innovate our food strategy so our guests think of Target first when it comes to food? • of current situationAssessment • pronged, multi faceted solution to key issueThree • value added of solution to Target CorporationProjected
  • 4. Background Strategy ImplementationIntroduction P-FRESH was introduced to Target in 2009 and has been standardized into almost every single store 2009 Present With introduction to PFresh, Target became an all-inclusive, one stop shop Total # of Stores (~1800) Converted Expected Remaining
  • 5. Background Strategy ImplementationIntroduction 2009 With introduction to PFresh, Target became an all-inclusive, one stop shop “Recently, we’ve worked on increasing grocery awareness with Target guests by employing shopper marketing tactics to drive grocery conversion—which is when a general merchandise customer begins to add grocery items to purchases” - Target Lisa MacMillan, customer vice president PFresh’s goal is to entice their customers to shop the store more frequently , & and to not directly confront its competitors PFresh is not a substitute for a full grocery store visit, but it is certainly a great fill-in
  • 6. Background Strategy ImplementationIntroduction (Food & pet supplies) Total # of Stores (~1800) Converted Expected Remaining 13% 60% 27% “Ultimately, PFresh allows Target to enter guests’ shopping routines more frequently because they offer food and perishables, just like a traditional grocery outlet or their primary mass competitors without having to invest in building stores with a larger Super Target footprint.” - Steven D. Althaus, Target Director of Customer Product Sales
  • 7. Background Strategy ImplementationIntroduction Current Strengths, Weaknesses, Opportunities & Threats to the PFRESH brand at Target Strengths •High quality goods at affordable price •“Expect more, pay less” Weaknesses •Lack of market presence •PFresh not as recognized compared to competitors (Walmart) Opportunities •New market segments allow room for growth and change Threats •Competing in a saturated market •General misconception of Target’s “high prices” Target’s financial standing and brand recognition allowed them to expand with PFresh in order to form a strategic approach to increase market presence in produce.
  • 8. Background Strategy ImplementationIntroduction Our case focuses on implementation of technology to increase the brand recognition of PFresh & expand its demographic audience Value Achieved Key Questions Solutions Objective • Marketing of PFresh, making sure when people think of groceries, they think of Target • Create value added with money-savings, “Expect more, pay less” • How can we better utilize technology to innovate our food strategy so our guests think of Target first when it comes to food? • How can we increase market presence of Target as a one stop shop? • Add-on to Target App • Goal: expand target demographic markets • Increase PFresh brand recognition • Achieving more convenient shopping experience for guests
  • 9. Background Strategy ImplementationIntroduction Our case focuses on implementation of technology to increase the brand recognition of PFresh & expand its demographic audience Value Achieved Key Questions Solutions Objective • Marketing of PFresh, making sure when people think of groceries, they think of Target • Create value added with money-savings, “Expect more, pay less” • How can we better utilize technology to innovate our food strategy so our guests think of Target first when it comes to food? • How can we increase market presence of Target as a one stop shop? • Add-on to Target App • Goal: expand target demographic markets • Increase PFresh brand recognition • Achieving more convenient shopping experience for guests
  • 10. Background Strategy ImplementationIntroduction Our case focuses on implementation of technology to increase the brand recognition of PFresh & expand its demographic audience Value Achieved Key Questions Solutions Objective • Marketing of PFresh, making sure when people think of groceries, they think of Target • Create value added with money-savings, “Expect more, pay less” • How can we better utilize technology to innovate our food strategy so our guests think of Target first when it comes to food? • How can we increase market presence of Target as a one stop shop? • Add-on to Target App • Goal: expand target demographic markets • Increase PFresh brand recognition • Achieving more convenient shopping experience for guests
  • 11. Background Strategy ImplementationIntroduction Our case focuses on implementation of technology to increase the brand recognition of PFresh & expand its demographic audience Value Achieved Key Questions Solutions Objective • Marketing of PFresh, making sure when people think of groceries, they think of Target • Create value added with money-savings, “Expect more, pay less” • How can we better utilize technology to innovate our food strategy so our guests think of Target first when it comes to food? • How can we increase market presence of Target as a one stop shop? • Add-on to Target App • Goal: expand target demographic markets • Increase PFresh brand recognition • Achieving more convenient shopping experience for guests
  • 12. Background Strategy ImplementationIntroduction How technology has changed the shopping experience?
  • 13. Background Strategy ImplementationIntroduction How technology has changed the shopping experience? Key Take Away Target should anticipate this increasing adoption rate of technology and have an innovative reaction to this trend to stay at the forefront of the market place
  • 24. Background Strategy ImplementationIntroduction Timeline of Implementation Trial Period •Select number of “walking cities” •Aggregate sample size data & check for profitability Executive Decision •Analyze data & make decision on whether to standardize app for all Target locations •Keep it region exclusive or all locations? Application of App & Drive Thru •Implement app & drive-thru permanently Executive Decision •Analyze data & make decision on whether to standardize app for all Target locations •Keep it region exclusive or all locations? Application of App & Drive Thru •Implement app & drive-thru permanently
  • 25. Background Strategy ImplementationIntroduction Strengths • Increases market demographic • Creates a more convenient and efficient shopping experience Opportunities • Introduces innovative shopping techniques • Pick-up station located in back of store • Convenience would be #1 selling point Weaknesses • R+D Costs • Additional training and staffing expenses • Potential sunk cost (Poor reception) Threats • Idea could not create a sustainable advantage should competitors react quickly Strengths, Weaknesses, Opportunities, & Threats of Strategy Target could take advantage of this opportunity to integrate technology into their guests’ shopping experience
  • 26. Background Strategy ImplementationIntroduction Market Trends and Rationale to Solutions Social Media Technology in the Supermarket • Connects with guests on a more personal level • Helps increase brand awareness for Target • In turn, will increase revenue • If any breaking news occurs, Target should be the first to release a statement
  • 27. Background Strategy ImplementationIntroduction Social Media Technology in the Supermarket • Grocery Gadget • Helps organize shopping lists and find specials • “consumer trends are likely to continue to be driven by the need for convenience without sacrificing quality or increasing costs” -- FFVA Harvester Market Trends and Rationale to Solutions
  • 28. Background Strategy ImplementationIntroduction Value Achieved through Implementation Guest Experience Market Position Value Added • More Convenience • Easily Accessible Service • Personalized • Target further establishes itself as a one stop shop • Target makes an innovative response to market • Places Target in a position ahead of competitors • Project adds value to Target • Overall Project Net Present Value: $9 Billion • (Appendix: Exhibit A & B)
  • 29. Background Strategy ImplementationIntroduction Value Achieved through Implementation Guest Experience Market Position Value Added • More Convenience • Easily Accessible Service • Personalized • Target further establishes itself as a one stop shop • Target makes an innovative response to market • Places Target in a position ahead of competitors • Project adds value to Target • Overall Project Net Present Value: $9 Billion • (Appendix: Exhibit A & B)
  • 30. Background Strategy ImplementationIntroduction Value Achieved through Implementation Guest Experience Market Position Value Added • More Convenience • Easily Accessible Service • Personalized • Target further establishes itself as a one stop shop • Target makes an innovative response to market • Places Target in a position ahead of competitors • Project adds value to Target • Overall Project Net Present Value: $9 Billion • (Appendix: Exhibit A & B)
  • 31. Trend Analysis Current social trends lean towards continued use of mobile apps All inclusive: non-exclusive to certain demographic section Technological necessity as society becomes more modernized with integrated technology
  • 32. Trend Analysis Current social trends lean towards continued use of mobile apps All inclusive: non-exclusive to certain demographic section Technological necessity as society becomes more modernized with integrated technology Add-in to mobile app would help Target increase their market presence while integrating innovative technology to maximize brand exposure
  • 34. Appendix Exhibit B. Weighted Average Cost of Capital Calculation
  • 35. Appendix Work Citied "10 Hot Produce Trends." Harvester. Web. 11 Apr. 2013. Hamstra, Mark. "Target Slows Pace of PFresh Remodels." Supermarket News. N.p., 5 Mar. 2012. Web. 12 Apr. 2013. Stych, Ed. "Target CEO Steinhafel: PFresh Concept Going Well, 230 More Stores to Be Converted in 2012." Minneapolis/St. Paul Business Journal, 2 May 2012. Web. 12 Apr. 2013. Tang, Olivia. "IBIS World Industry Report 44511." IBIS World. N.p., Dec. 2012. Web. Target 2011 Annual Report. Rep. Web.
  • 36. Appendix Work Citied Continued Turcsik, Richard. "Hitting the Bull's Eye." Macfadden Grocery Headquarters LLC. N.p., 1 May 2012. Web. 12 Apr. 2013. "U.S. Grocery Shopper Trends 2012 Executive Summary." Food Marketing Institute. Web. Zwiebach, Eliot. "Impact of Target PFresh Seen as Minimal." Supermarket News, 1 May 2012. Web.

Hinweis der Redaktion

  1. With the introduction of PFresh, Target has now become a one-stop shop for its guests to offer the most complete shopping experiencePFresh, itself, has not brought in significant additional revenues; however, it has increased the margins due to the Target structureEach Target store is unique in the sense that Target tailors their stores to meet demographic needsIt’s structure is strategically laid out to have guests naturally encounter everything that Target has to offer, not just what they are looking for
  2. “What is interesting about Target’s strategy is that the vast majority of incremental spending is coming from existing customers who are coming more frequently and buying fresh,”it is probably taking a little bit of share away from the traditional grocery store chain.”
  3. The proof that guests love the addition of food can be found in the numbers.The food and pet supplies segment of Target’s business continues to grow each year, accounting for 19% of the retailing giant’s $68.5 billion in annual sales in 2011. By some counts, in just one year Target has been able to snare 2% to 3% of the entire sales in the supermarket industry.
  4. Tie together the fact that trend towards being more mobile and apps are geared towards younger demographicPeople who really value accessibility & convenience in today’s hustle & bustle society.World is becoming more technologically integrated.