“Our competitors are better because Wal-Mart exists,” (Bergdahl, 2010). Wal-Mart and the Target Corporation are considered as some of the most prominent and highly reputed departmental stores which have succeeded in establishing their credibility and reliability among the innumerable customers that visit them each day. Apart from being large multinational departmental stores, both of these places are also immensely active in providing healthy and sometimes even fierce competition to each other. Since the nature of business performed by both is the same, the intensity of the competition between the two also enhances. Before we move onto the different economical and financial dynamics of both these multinational corporations it is important to understand and highlight the various aspects of both these organizations that actually account for the success that they have achieved.
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Formed in the year 1962 by Sam Walton in the American state of Arkansas, the public corporation chain of departmental stores of Wal-Mart has emerged as the largest public corporation in the world. At the end of the year 2010, the company registered its assets to have a value of $170 billion, whereas the net income of the organization as registered by the end of the year 2009 was estimated to be $14.33 billion. The company provides employment to approximately 2,100,000 people all over the world.
In contrast, the Target Corporation or the organization which is simply known as Target came into inception in the year 1902 and was initially known as Dayton Dry Goods Company. After changing its name, the company inaugurated its first store by the name of Target in the year 1962 in the American state of Minnesota. Some of the statistics and financial figures that manifest the competency and potentials of the company are that at the end of the year 2008 the total assets possessed by the company were valued at $44 billion, whereas the net income of the corporation was estimated to be $2.2 billion. In comparison to Wal-Mart, Target Corporation provides employment to a rather low number of employees which were approximately 351,000 at the end of the fiscal year 2009. (Davis and Andrew, 2010)
Target Markets of both Corporations
First and foremost it is important to understand that organizations like Wal-Mart and Target Corporation do not possess a limited or restricted target audience. The nature of the business they are involved in does not allow focusing or emphasizing on a specific number of a special genre of people or audience.
According to the surveys and statistics that were collected regarding the target markets of both these organizations and the perspectives of people that they expressed in the form of questionnaires and simple questions, accentuated on the fact that Wal-Mart has no specific market. In fact, Wal-Mart’s target audience encompasses everyone who is either a consumer or involved in the merchandizing business. From the results that can be deduced from the different opinions voiced by people, it is crystal clear that Wal-Mart and its target market includes each and everyone who is in any way or the other involved in the merchandizing business and activities, who seeks to gain his merchandize at a convenient location and at an affordable price.
According to the opinions of some people, Wal-Mart targets each and every person of the society especially the middle-class segment of the society whose living is dependent from paycheck to paycheck. Wal-Mart can also be said to target the blue-collar group and segment of society which encompasses those people who are always in search of getting the best quality product in the most affordable price coupled with a convenient location of availability. Regardless of the fact that the target market and audience of Target Corporation follows a much similar trend and nature as that of Wal-Mart by focusing on the interests of middle-class and mediocre background people by claiming to provide them facilities at a much cheaper rate than other stores, the difference between the two most probably lies in the credibility gradient that contributes to a difference in their ratings. Target started out as trying to compete in the low price sector like Wal-Mart, but needed to differentiate. Instead, it went for the quality products at lower prices.
Wal-Mart has triumphed in understanding the needs and wants of its consumers in a much better way than that by Target. Moreover, another prominent difference that lies in the registering of different figures by the two corporations can also be attributed to the fact that Wal-Mart shows a better understanding and potential to manifest and reflect the very same feelings as that of the customers themselves. This can be vindicated from the fact that during the time when the economic downturn reached its apogee and invaded the US markets, seizing the affordability capacity of the consumer, it was Wal-Mart who suspected the change that was supposed to have a profound impact on it sales figures and therefore reacted immediately by devising an ingenious strategy of plummeting their prices so that their target market and potential consumers will not go disappointed from the store. With the implementation and adherence to this strategy Wal-Mart was not only able to weather and insulate itself from the deteriorating financial condition, but at the same time was able to establish greater credibility and trust among its old customers that the organization shoulders all kinds of troubles and toils with its consumers.
On the other hand, Target Corporation did devise a similar kind of strategy to entice customers but failed because of the time they invested in finalizing their decision. The need for such a decision at that point of time was urgent and dire which was taken by Wal-Mart to maintain its top position among its consumers. (Steverman, 2009)
The Positioning Strategy of Brands
Positioning involves implementing the brand’s unique benefits and differentiation in customer’s minds. The reason for doing positioning is to convince customers to believe the marketer’s offerings are different in some way from its competitors on an important benefit sought by the market. For instance, if a customer has discovered that he has a need for an affordable laptop computer, a company such as Dell may come to mind since their marketing efforts position their products as offering good value at a reasonable cost.
To position successfully the marketer must have thorough knowledge of the key benefits sought by the market. Obviously the more effort the marketer expends on segmentation the more likely they will know the benefits sought by the market. Once known, the marketer must tailor marketing efforts to ensure their offerings satisfy the most sought after benefits, and communicate to the market in a way that differentiates the marketer’s offerings from competitors.
The firms that seek to appeal to multiple target markets need to have different positioning strategies for each market. For example, a marketer may sell the same product to two different target markets, but in one market the emphasis is on styling while in another market the emphasis is on ease-of-use benefits. The important point is that the overall market strategy must be evaluated for each target market since what works well in one market may not work as well in another market.
It is better to be first and establish leadership. “If a product is not going to be first, it then must find an unoccupied position in which it can be first,” (Ries, and Trout, 2010). Volkswagen was forced to think outside the box in this instance and jumped at the chance to put their smaller car, the Beetle, in the front running of consumers’ minds. They created the slogan, “Think small” during a time when larger cars were popular. By using this creative slogan,Volkswagen was able to claim the position of being first with the small cars, even though they were not the first of the small cars. Other positions that firms successfully have claimed include: (Ries, and Trout, 2010)
High price (Mobil 1 synthetic engine lubricant)
Gender (Virginia Slims)
Time of day (Nyquil night-time cold remedy)
Place of distribution (L’eggs in supermarkets)
Quantity (Schaefer – “the one beer to have when you’re having more than one”)
It most likely is a mistake to build a brand by trying to appeal to everyone. There are too many brands that already have claimed a position and have become entrenched leaders in their positions. A product that seeks to be everything to everyone will end up being nothing to everyone.
Targeting a certain type of consumer can define the nature of competition, or consumers in that segment may look to certain brands in their purchasing decisions. Brand choices are best understood by understanding what the consumer wants and their behavior towards a product. After identifying the target market the marketers then use the appropriate Point of Difference (POD) and Point of Parity (POP) associations.
Wal-Mart Vs Target
Some firms find it easy to choose their positioning strategy. For example, a firm well known for quality in certain segments will go for this position in a new segment if there are enough buyers seeking quality. But in many cases, two or more firms will go after the same position. Then, each will have to find other ways to set itself apart. Each firm must differentiate its offer by building a unique bundle of benefits that appeal to a substantial group within the segment.
The positioning task consists of three steps: identifying a set of possible competitive advantages upon which to build a position, choosing the right competitive advantages, and selecting an overall positioning strategy. The company must then effectively communicate and deliver the chosen position to the market.
Wal-Mart is the largest Super Store chain in the United States with approximately 5500 stores having annual revenue of more than $350 billion in the year 2006. (Useem, 2007) In 2006, Wal-Mart took a clear and well-thought stance of reducing cost, first for six demographic groups of United States. The prominence and differentiation strategy of Wal-Mart of reducing costs ultimately proved fetal for small as well as large competitors. The bankruptcy and selling of a big chain like Albertson’s in 2005 proved this notion. Some other chains like Heck’s, Arlans, Federals, Ames, E.J. Korvette, Atlantic Mills, and W.T. Grant were also affected and finally went out of business in the decade of 90s due to the price reduction strategy of Wal-Mart. (Camerius, 2006)
However, there are some shortcomings also in Wal-Mart’s differentiation and marketing strategy. Out of five basic dimensions of marketing, i.e. quality, service, convenience, selection, and price, Wal-Mart only focuses on price and selection. (Rigby and Haas, 2004) According to a report prepared by Wal-Mart ad agency GSD&M for high executives of Wal-Mart, too much focus on price reduction led Wal-Mart to a point where it forgets its brand importance and brand values. The report stated, “‘Shopping at Wal-Mart used to mean saving money and being patriotic, being a member of the community, being part of the ‘American Dream.’ Today, it just means saving money. All value – no values,” (Daye & VanAuken, 2007).
One study also reveals that Wal-Mart’s prices are not always the lowest. According to this study, Wal-Mart charges more on at least one-third of its products as compared to other competitors. (Crawford and Mathews, 2001) Thus, it is possible for large competitors to compete with Wal-Mart on specific product’s prices.
Target is the second largest chain of super stores after Wal-Mart. Its revenues grew at a steady rate of 6% per annum. According to Gerald Storch, Vice Chairman of Target, Target, in the beginning, considered three positioning and branding strategies to compete in the retail market, i.e. “to specialize, to become the low-cost producer, or to differentiate [itself],” (Economist, 2001). Even though the first choice may impede future growth, and being that Wal-Mart is already in the market as champion of cost reduction strategy, they decided to go for third choice and market it as the mass merchandiser of chic goods. Those goods will be of good quality at affordable prices. Target found its niche with this differentiation strategy.
The major attributes of both Wal-Mart and Target outlets are price and the type of merchandise. If we compare Wal-Mart and Target with other retail outlets, they both fall in the category which offers mass merchandise at low price. Target’s prices are slightly higher than the price of merchandise offered by Wal-Mart. A perceptual map is used as “visual tools to portray perceptual differences among brands expressed by the consumers,” (Keller, 2008). The following perceptual map shows Wal-Mart and Target’s position in comparison with other retail outlets.
Mass MerchandiseSee Figure 1 Below
Figure : Perceptual Map
Point of Parity (POP)
According to Keller (2008) the points of parity associations (POPs) “are not necessarily unique to the brand but may in fact be shared with other brands.” Within the POP associations are two types – category and competitive. (Keller, 2008) A category POP is useful to show all the services within a brand that create expected elements of that brand.
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The category points of parity are associations that consumers view as essential to be a legitimate and credible offering within a certain product or service category. While, the competitive points of parity are associations that are designed to negate competitor’s point of difference. To achieve point of parity on a particular attribute or benefit, a sufficient number of consumers should believe that the brand or the product is doing well on the dimensions or attributes the customer’s use to evaluate the product. The product does not have to be equal to that of the competitors. But, the consumer should feel that the product is doing well. If they feel the product is doing well then the consumer’s may be willing to base their decisions favorable to that particular product. However, with points of difference, the consumers should be able to identify the attributes that are different from that of the competitors to make favorable decisions towards the product.
Both Wal-Mart and Target are in retail market business and both offer mass merchandisers at the best affordable rates but the positioning strategy of these two competitors is entirely different from each other.
Point of Difference Strategy (POD)
“Points of difference (PODs) are attributes or benefits that consumers strongly associate with a brand, positively evaluate, and believe that they could not find the same extent with a competitive brand,” (Keller, 2008). Creating strong, favorable, and unique brand associations that make up the points of differences is a challenge, but essential in terms of competitive brand positioning.
Target never tried a head on collision with Wal-Mart, it rather focuses on other quality and shopping environment related issues, like cleanliness of stores, or shorter waiting time to remain competitive in the market. Due to their specific positioning and differentiating strategy, Target created a reasonable clientele mainly consisted of young and energetic customers.
Target also emphasizes more on advertising and always comes up with innovative and interesting advertising ideas. Wal-Mart spends 0.3 percent of its revenue on advertising with one advertisement agency; Target uses more than half a dozen advertising agencies and spends almost 2.3 percent of its revenue on advertising. Target’s bull’s eye icon has become a household symbol which is recognized by 96 percent of American consumers and enjoys the same popularity as McDonald and Nike. (Cuneo, 2003)
The growth of Target in the retail market, where formerly Wal-Mart single-handedly devoured other retailers like K-Mart and Albertsons, depends mainly on its differentiation strategy of quality, shopping environment, and its excessive, incessant, creative and innovative advertising. “Points of parity are thus easier to achieve than points of difference, where the brand must demonstrate clear superiority. Often, the key to positioning is not so much achieving a point of difference as achieving necessary or competitive points of parity,” (Keller, 2008).
Brand Elements of Wal-Mart and Target:
Wal-Mart and Target are the two retailer companies that provide services of somewhat the same functionality. The products that they are producing have many similarities. Both corporations have changed their prices to the extents that are almost equal to the prices of product produced by both the companies. For selling purposes, they targeted the same market places that are convenient and appropriate for their products. The marketing strategy they used to adopt has the approach of heavy marketing for the promotion of their products to achieve significant amount of customers. They are following the rule as much you put in is as much as you get while keeping in mind to be faithful to the customer; this is the reason that one will find a feeling of trust among the consumers of these departmental stores throughout the country.
“At Wal-Mart, if you couldn’t explain an idea or a concept in simple terms on one page of paper Sam Walton considered the new idea too complicated to implement,” (Brainyquote.com, 2010) Due to this fact, Mr. Walton stuck to the basics – a low price model with great customer benefits. The key benefits to their customers come with the one stop shop method. Wal-Mart wanted to be able to give their consumers everything they needed under one roof – groceries, electronics, house wares, auto, toiletries, and pharmacies – at the lowest price possible. Aside from all the national and local brands Wal-Mart carries, they went a step further and developed their own well known brand – Great Value, which has become the “biggest, fast moving consumer brand in America,” (Branding Strategy Insider, 2009). The overhaul that Wal-Mart is doing within its stores to update they are also carrying over to update their brand. “Despite lower prices, the reduced production costs and zero marketing expense of Great Value mean it will always deliver more profit per unit to Wal-Mart than the equivalent manufacturer brands. And as the penetration and market share of Great Value increase, the space and sales available to manufacturer brands are reduced, and Wal-Mart’s already legendary bargaining position with suppliers is strengthened,” (Branding Strategy Insider, 2009).
Wal-Mart has gained recognition and exposure from their slogans and brand image. The slogan, “We Sell for Less. Satisfaction Guaranteed” was the initial staple slogan of the store but later changed it to “Always Low Prices. Always.” This was then updated and changed with, “Save Money Live Better.” in 2007 as an effort to bring the brand into the new century after 19 years with the previous slogan. (http://www.walmart.com) Their brand logo also updated and changed in 2008 from WAL*MART to removing the star in the middle and putting it at the end,
Walmart *. Wal-Mart has a website that is accessible to anyone, at any time of the day. They offer daily specials at Walmart.com, as well as being able to directly ship items to the stores for pick up with no shipping costs.
Through logos, characters, slogans, and packaging Target has won the heart of their audience. “Compared with those of other discounters, Target’s customers, referred to as ‘guests,’ are on average younger, better educated, and more affluent. The company has successfully associated its name with a younger, hipper, edgier, and more fun image than its competitors. Target is often pronounced in faux French, ‘Tar-zhay,’ to connote its trendy sensibility,” (Barwise & Meehan, 2004). These small connotations have taken Target to a place where Wal-Mart has not been able to go, nor do they have interest in going due to the strong position in the market. “Target has been successful at going slightly above where Wal-Mart is. Wal-Mart may not be perfectly associated with a trading-up image, but my guess is they can buy brands that have that panache as well as anybody else, or even better,” (Knowledge, 2006). When put side-by-side Target typically gets stereotyped as the fancier version of Wal-Mart. With any new retailer there are always angles that the companies must consider in order to enter a new market. Target considered theirs to be in specialization, become a low-cost producer, or to differentiate itself in a way that other competitors had not done. Target saw that Wal-Mart had already taken the low-cost niche so the company felt that they should reposition themselves in order to produce mass amounts of affordable attractive goods. (Barwise & Meehan, 2004) Due to this decision, Target has prided themselves on appealing to the “hip discounter” and strives to make their brand come across as artistic and fun that can stand up and rival the best of its competitors and even the high end non-competitors. (Arlen, 2001) John Geisse, founder of Target, seemed to sum it up best when he stated that Target would rather offer high-quality merchandise at low margins than cheap merchandise at the cheapest prices. Their products are more reliable and their audience is more consistent than that of Wal-Mart because their faithful services. They have achieved a level where it is common to see Target’s products in public usage, whereas Wal-Mart is currently in a struggling period and we hardly hear about their products.
Their website www.Target.com has given consumers a chance to see what is available at the stores or specifically online. Daily specials are shown and the website goes even further into the convenience factor with wedding and baby registration access. Need to get the perfect gift in a hurry? Ship them a give from browsing online or a gift card all at the click of a mouse. Target has tried to keep a cleaner, somewhat higher class customer base and many people would rather shop there than wade through the lines at Wal-Mart.
Target also has its own brand called “Up & Up” and an arrow is now replacing where the world famous Bull’s-eye once had residence on packaging. The arrows come in bright colors and appear more vibrant and exciting. The Bull’s-eye – the staple logo of Target, and one of the most recognizable brands in the world, will still be present here and there, along with the bright red and white colors people have come to expect from Target. Together with their slogan, “Expect More. Pay Less.” the Target owned brand Up & Up will add a new pizzazz to the company.
It is a common assumption that achieving a good market place solely depends upon the marketing plan. This is not actually the truth. The customers never come across a marketing plan, but instead the company’s logo, advertisements, and brochures. To achieve a successful marketing campaign, it is necessary to design a company’s logo, ads, and brochures in a way that appeal the customers and will be memorized by them at single glance. In this context it is important to accentuate that the logo. The symbolic representation of Target is much more direct than that of Wal-Mart as it gives a much direct to its customers in the form of a red and white bulls-eye, aka a target. This is much more enforcing and influential than the yellow happy face, or the star, and multi-directional lines of the Wal-Mart symbol. The taglines of both corporations are equally enforcing, but I think that Wal-Mart takes a better leverage here with its much impactful lines such as ‘Save money live better’ and ‘we sell more for less’. This is a good strategy to attain success in business (Armstrong, 2010).
The appearance of the store and buildings represent the feeling of professionalism to the customer and the sense of quality of services. Target’s store is designed more fashionably than Wal-Mart which is an advantage for Target over Wal-Mart. Target has won the place by giving affordable luxury at lower rate and higher quality. Target’s promotions and displays are always more attractive compared to those at Wal-Mart stores. (Scott, Fritz, and Birk, 2008)
Brand Pricing, Distribution and Promotion Strategies
Wal-Mart and Target are the two stores that promote services at lower rates. They take control over their competitors by changing rule of the competition and introduce a new rule of low pricing. They managed to continue their low pricing techniques day by day with superior management strategies, leaving behind other retailers even those of same level.
Target always try to maintain its level even higher than Wal-Mart by offering products of higher quality at lower prices. They do not want their customer to sacrifice quality by paying less; unlike Wal-Mart who emphasizes low prices and does not say much about quality. Due to their strategies of the lowest prices, it is difficult to defeat Wal-Mart in overall sales. However, there was a time when Wal-Mart was not able to come up at the level of Target in sales. But they managed to rapidly grow in sales as compared to its competitors and occupied a powerful position amongst retailers.
Retailer’s advertisement for promotion is closer to local level. In these promotions they usually provide the information regarding their location and the products they are providing. They use intriguing ads and create promotions that stay in the mind of their customers as Wal-Mart and Target do. They aimed their customers of low economical status and used the strategy to provide products at less expensive prices (Lamb, 2009).
They adopt the competitive marketing strategy of provide luxury that is affordable by common people. These companies use a very intelligent approach by merging the pricing and advertising strategies. The promotion that is effective enough to communicate with the customer can help in growing the business rapidly. The marketing strategy should be able to reach the target audience. Only the brand with this kind of strategy survives in the market and Wal-Mart and Target have proven staying power. (Bygrave and Zacharakis, 2009)
The distribution strategy can be improved by increasing the intensive distribution strategy, which increases the selling point through different outlets. The distribution can also be extended by co-branding and aligning of brands with different channels, which is also very good in globally standardizing brands.
Different companies or brands can collaborate with some existing brand by using brand extension strategy. They can even link leverage another brand by linking with them. These brands can be a part of same or different company. This linkage refers to a co- branding. The co-branding comes into place when two different brands set a common brand alliance or it can be formed by marketing together in some trend. This co-branding was adopted by Wal-Mart and Target. In the mid of 1980’s, when the usage of garment like jeans began to revitalize, the Levis jean was brought back into the departmental stores. Levis did it by sub branding it with discount retailers, Target and Wal-Mart (Davis, 2010).
The co-branding increases the sale point of the product by the using the trust of two brand names that have been won by the brands and opens the opportunity of obtaining new customers. Moreover, the target is the one of the retailers of the fresh cap’s sports brand. The fresh cap’s sports were the brand of draw Pearson Company which is a largest chain for adult and kids garments. They do so to target the audience that demands a sound discount in their product. The Wal-Mart was also its major retailers. Toon caps were also included that appointed the target as their retailers.
Target and Wal-Mart contribute a lot in culture by offering a practice of saving money through shopping and in this way they are people of unequal status in economy. (Christine, 2006) Most recently, Target has teamed up with several designers like Alexander McQueen, Isaac Mizrahi, and Justin Timberlake to launch affordable versions of these high-end fashions available exclusively at Target. Wal-Mart’s rebuttal to this campaign came in the form of a line by Miley Cyrus to the Wal-Mart clothing lines. Celebrity lines are becoming more and more popular in the retail world. Vera Wang and Lauren Conrad have been doing it for Kohl’s, and more high end designers and celebrities are taking notes for their entrance into the most widespread market of everyday people who shop in everyday stores like Wal-Mart and Target.
Brand Equity of both Corporations
Brand Equity is defined as the marketing process and their subsequent outcomes which are directly affected by the label and the presence of the brand itself, in comparison to the results that were obtained if the brand name was not there in the first place. (Keller, 2008)
Brands are some of the most valuable assets that an organization or corporation has in possession. Financial and marketing strategists show particular interest in determining and analyzing the study of brand equity for any organization, including corporations like Wal-Mart and Target.
Considering and assessing the case of Wal-Mart first, we come to know that the largest retail store of the county basically came into inception after Sam Walton; the founder of Wal-Mart took a loan of $20,000 from his father-in-law. No one at that time would have thought in their wildest imagination that a loan of just twenty thousand dollars would result in the largest retail store chain in the entire country. Since the year 1962, when the first store of the Wal-Mart chain was opened, many things have happened. From a walk on the Moon to the fall of the USSR and from the 9/11 episode to the severe credit crunch that engulfed the US economy, Wal-Mart has stood strong. Their way of doing business has always remained same for consumers by way of the quality of the products and commodities and their low prices. Obviously, the prices of commodities have changed with the passage of time but despite of their fluctuations they have always stayed and rested within the affordable capacity and range of the consumer.
In order to maintain the consistency of standards the marketing strategy of any organization plays the most pivotal part. It is the strategy part where Wal-Mart has been able to acquire the greatest leverage in the financial mainstream. In order to devise an enforcing and appealing market strategy, this can also help in increasing the brand equity for the organization considered mandatory for success and in order to catalyze this process, the captions and tag lines formulated by the market strategists of the company play an extremely profound role. In this case the taglines and captions of the Wal-Mart Corporation have been extremely enticing and apart from the captivating factor they have also been coupled with a harmonious feeling which successfully portrays a sentiment of public cooperation and support from the massive population that comes at their stores to purchase a wide range of products. Taglines such as ‘Save Money live Better’ and ‘We Sell More for Less’ are a comprehensible manifestation of the marketing strategy that is adhered by the organization. These two tagline phrases have been the central focus of the company and are referred to as special phrases by the help of which the consumers recognize the brand of the company.
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