Market Segments, Competition, And Environmental Factors Affecting Target Australia

Growth of Target Australia

Owned and operated by the Wesfarmers, Target Australia is one of the largest chain of departmental stores operating in different parts of the country. It was founded in 1926 when the store specialized in selling garments, furnishings and fabrics. The retail stores later started displaying an array of goods including cosmetics, electronics and home wares. Later in 2016, the Wesfarmers declared that the stores will be selling pet care items and toys as well. Target got involved in various financial scandals during the Wesfarmers era and it had deeply affected the company’s sales. The purpose of this assignment is to evaluate the opportunities and threats of the organization and prepare a marketing audit based on the current trends in growth, profitability and macro environment. The paper outlines and examines the major market segments of the organization and identifies the primary and secondary target markets. It discusses the level of involvement the primary segment is likely to have towards the organization in terms of decision making. Following this, the paper will describe the nature of competition in the industry and finally, the assignment concludes with  a market positioning of the company based on the competition and the level of involvement the company has in that competition.

After Kmart replaced Guy Russo as managing director, the change in leadership approach has been instrumental in a successful turnaround in the business. As per the June 2018 financial reports by Wesfarmers, there was only a 3% increase in the annual revenue. On the other hand, the company also has an EBIT record of about 9 billion dollars, an increase of over 21% within a span of 12 months. Under the leadership of Kmart, the profits of the company have increased five times while cost base was reduced considerably. The department stores presented records that clearly displayed the massive value created for the shareholders. The impairment charges that included fixed assets, goodwill and brand name, summed up to a total of 238 million dollars. The authorities in the management noted that these charges indicate difficult conditions in trading and reflect a moderated outlook of the business.

Political: Some of the members in then management have expressed strong views in issues relating to society and politics. The company has also been involved in socio-political issues. Corporate lobbying and participation in the process of public policy have also been detrimental to the growth of the company. Political factors therefore have a high influence on the operations and brand name of the company. Target Australia as a major chain of retailer store has a history undertaking controversial steps in socio-political issues.

External environment analysis

Economic: The retail sector in the industry has been suffering a slowdown since past few years. Australian law has increased the minimum wage levels and Target has been using it to its advantage to impact the profitability in the long run.

Social: Retails shops like Target at the mercy of consumers and hence a slight shift in their preference pattern has high consequences for the sales of the company. The global endorsements of ethics and consumer awareness have been instrumental in shifting the preference of the consumers from materialistic expenditures to experiential investments. Target is known for ethical treatment towards employees and contribution to the communities. The company lends a helping hand to those in need and their products cater to the preference of a diverse consumer base.

Technological: Target aims to be savvy when it comes to technology and the social media. Some workers are allotted with the responsibility of connecting with the consumers regularly on social networking sites. The feedback forums allow consumers share and browse product reviews and this helps creating the healthy relationships with the customers. The technology used for transporting products are a bit outdated and use of more modern technology would be both cost-efficient and timesaving.

Environmental: Target has adopted eco-friendly means of business operation to prevent contamination. The company is determined to minimize waste disposal and uses solar energy in the shops. Besides this, Target shops offer fresh and organic produce for health conscious customers.

Legal: Target has previously suffered from liabilities and product recalls which affect the consumer’s safety concerns. The business operations must strictly abide by the laws of the country to avoid abolition. The labor laws, employment laws, security and privacy laws are aspects they must look into.

Target stores offer a wide variety of products ranging from pet supplies and athletics to shoes and pharmacy. The company has a lower median age of consumers and targets households that have an income of at least 58,000 dollars. Majority of the target consumers are middle-aged women and the secondary segment consist of college students. The primary segment of Target consumers consist of middle-aged women, who are mostly housewives while the college-going youth comprise the secondary segment. Educated consumers are more likely to purchase products from Target than its competitors. The market segment of the company heavily influences the decision-making process of the management. For instance, the shops decided to make the décor more visually attractive during exam seasons, since most of the crowd that will be coming to the shops are college-going youths who are easily impressed by decorative outlets. Target uses drop ceilings and wide aisles for bringing out the chic department store feeling. Target takes a direct approach for marketing their products, and focuses on current trends for appealing to the primary segment. The primary segment of Target consist of women, mostly housewives with children, and they rarely have the spare time to sit and analyze complex codes of commercials.  Hence, a simplistic approach would work best on a target segment that is keener on looking out for the interests of their children than purchasing products based on current trends. On the other hand, the clothing line of the company bases its advertisements on contemporary pop culture because they are primarily focusing on the youngsters who are influenced by trends and prefer to remain updated in style and clothing. The level of involvement in the primary segment is limited. Buying decisions of the consumers in the primary segment is influenced by their knowledge and experience. A consumer with no prior shopping experience will be more involved than the regular buyer.  As far as culture is concerned, Target takes special care in campaigns and the promotional advertisements launched during the festivities. Target is widely known for its symbol, this must be accredited to the fact that the logo has been designed keeping in mind the sensitivity of all cultures. The company has unique strategies for setting itself apart from the competitors in the market. The product differentiation is done through offering the best services at cheap prices. Several internal influences affect the consumers as well, the products are positioned strategically to help them stand out in the market while simultaneously reaching out to the target audience.

Market segments of Target

If Maslow’s theory of need hierarchy is applied to the customers of Target, they will fall under the “esteem” category. These individuals are conscious about status, prestige and superiority. Target customers can also be categorized under the VALS segment system. The customers fall under the achiever’s dimension under the system with a majority of the female crowd with upper income levels and high living standards.  

Target combats fierce competition in the industry as many existing and newly emerging retail shops are offering excellent services at prices more economical than that of Target’s. One of the top competitors of Target is JcPenney which generates a revenue of 16 billion dollars annually, about thrice more than what target earns. While JcPenney has a strong and secured economic position in the market, its outlets are outnumbered by Target. Although, financial security is not the only advantage that JcPenney has over Target. JcPenney offers free haircuts to kids and have gained immense popularity after launching a variety of private levels. Another top competitor of Target is Macy’s, a brand that has maintained the high-class appeal for decades and has successfully kept adapting to the changing tastes and preferences of the customers. The inclusion of Bloomingdale’s in the clothing section was perhaps the most prospective decision taken by the company since it has attracted more customers with higher purchase ability. The market portfolio of Macy’s is far more impressive than that of Target. An industry analysis of both the companies reveals Macy’s as the chief competitor of Target. The strengths and weaknesses of the companies are compared and contrasted in the table below:

Name of company	Strengths	Weaknesses
Target	· Well-established brand reputation. · Customers are extremely loyal to the company, it has never faced any resentment from the customers unlike the rival firms. · The marketing strategies are well-formulated and highly beneficial for growth. · The shops create an enjoyable shopping experience for the buyers and maintains a cordial relationship with customers. · The products are extremely appealing to the youngsters. · Target represents itself both as a middle class and an elite brand, enabling them to secure a wider customer base.	· Target operates in big box stores and supercenters whereas many shoppers prefer shopping at small stores in the neighborhood. · The company has not changed the business model to adapt to the changing market scenarios. · Target does not have proper ecommerce facilities unlike most of its rival firms. · The other retail giants are larger and more diversified than Target. It has limited sore locations and is vulnerable to economic recessions. · Target has been unsuccessful in coming up with lucrative ideas in the retail industry, this includes financial services and filling stations.
Macy’s	· Concrete Omni-channel operations. · Impressive portfolio and tie ups with other private brands. · The store offers merchandises from upscale fashion brands such as Chanel, Armani, Burberry, Dior and Jimmy Choo. · The sales approach uses  a multi-channel strategy for providing customers with an excellent shopping experience. · The company has received good rating due to their ability to resolve customer qualms and involvement in corporate social responsibility. · Offers individualized merchandize.	· Marcy’s has a high employee turnover rate since the employees do not have job security. · During the peak seasons the company hires the maximum number of employees, making it difficult to cover the cost of training, development and retention of employees. · Low inventory turnover, indicating high storage costs and high chances of poor consumer experience and product obsolescence.   · Like Target, the stores are not diversified enough for developing into a line business.

JcPenney	High quality      Macy’s
Cheap        Target	Expensive Walmart   Low quality

The chief competitors of Target are JcPenney, Macy’s and Walmart; all of which are highly reputed brands with considerable advantages over Target. Macy’s offers quality products at reasonable prices while Walmart is blessed with customer loyalty that never falters. The primary segment of Target belong from middle-class background and are mostly women. This segment of customers are highly involved with the brand as they need reliable shopping centers like Target for ensuring a quality lifestyle for their families by availing good products at cheap prices. The customers are therefore deeply involved with the company and greatly affect its decision making process. However, the intense competition with the dominant rival firms in the market in terms of product quality, diversity of location and brand awareness, Target encounters a lot of challenges. The biggest advantage Target has over the competitors is that it offers high quality products at considerably cheap prices. The disadvantage is that the company does not have as many strategic tools for promotion as its competitors, hence Target is deprived of the opportunities that the rival firms easily access due to their well-formulated promotional strategies.

Conclusion

The discussions in the paper suggest that Target has truly emerged as one of the most reliable shopping centers in Australia, where customers are given the privilege of purchasing quality products at reasonable prices. The healthy manager-customer relationships built by the firm is favorable for brand reputation. The market positioning of Target is suited to the tastes, preferences and economic condition of the middle-class, although a section of the product ranges caters to consumers of high-class society. In terms of advertisement and brand promotion, Target has a long way to cover, if compared to the competitors. The company should also channelize the locations of shops in remote areas since the majority consumer population are housewives and they would prefer shopping in the neighborhood rather than visiting the supermarket for groceries. Additionally, Target also needs to adopt new business model for keeping up with the contemporary trends in the market. Market positioning is important for reasons more than one. It helps the firm de what is and what is not. And it ends here with a conclusion.

References:

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