Defining diversity: Target Diversity Case Competition 2011

Defining DiversityBullseye Consulting

Life is a Moving TargetOBJECTIVE: Obtain market saturation of the growing minority consumers in the United States

NPV: $14,777,521

Outline

Situation

Analysis

Strategy

Implementation

Financials

Beyond the Bullseye

S i t u a t i o n | A n a l y s i s | S t r a t e g y | I m p l e m e n t a t i o n | F i n a n c i a l s

• Great brand recognition• Strong relationship with community• Diverse employees• Target Sourcing Services• PFresh

• Minority market: 1/3 of US Population• Customized Marketing: Location& Ethnicity• Social Media i.e. Facebook • Minority Designers for Apparel • Cultural food produce

• Late to enter global market• Not international, brand recognition among

immigrants not strong• Low association with specific product

segments

• Large retailer already opening stores targeting specific ethnicity

• Current ethnic-specific stores already established

• Economy still in recovery

Strengths

Weaknesses

Opportunities

Threats

Demographics


San Fransisco

Los Angeles

Whites 48.5%Asians 33.3%Latinos 15.5%Other 2.7%

Latinos 48.5%Whites 9.6%Native American 11.3%Asian 3.2%

Understanding Our Guests


Anne Chou

Anna-Maria

Young, well-educated, moderate-to-better income families

Median Age of 42Median Income of $60,00051% with college degrees33% with children

Consumer Behavior: Family Oriented, purchase things in bulk

Competitors Analysis


Fred Meyer

JC Penney Kohl’s Sears Target

Product Variety

Product Quality

Experience

Price Low Low Moderate Moderate Moderate

Strategy Criteria


Effectiveness

Brand/Quality

Community Outreach

Existing Synergy

Capital Expenditure

Decision Matrix


Effectiveness Brand/Quality Community Outreach

Existing Synergy

Capital Expenditure

Full Integrated Store

Partner with Local Market

Online Only Integration

National Shift

Localization Integration

Localization Integration


Food

Apparel

Cultural Holiday

In-Store Presentation

Localized Marketing

Cultural Products: Food


Asian Hispanic

Cultural Products: Apparel

Focus on Minority Designers

National Jersey for World Cup 2014


Cultural Holiday: Customization


Gift Card liabilities: $ 422 million as of January 29th, 2011

Product Variation & Store Environment

Market Research Strategy


• Surveys (Online & Offline)• Test Product

Individualized Marketing Research

• Facebook• Website Cookies• Consumer Feedback

Consumer Demand Research

In-Store Presentation


• Center Piece In P Fresh Area• Target In-Store Catalog• Emphasize products during

cultural holiday

Localized Marketing


Localized Online Ad

Ad Views on Online Video Site

Ethnic Food Page

Strategy Review


• Quick implementation timeline, advantage over slow competitors

• Geographic specific• Low-risk• Scalability

Great timing: include project in Canadian stores opening in 2013 (e.g. Richmond, BC, Canada)

Online marketing may not reach some market segments

Asian American market very diverse. May be hard to capture that market

Strengths

Weaknesses

Opportunities

Threats

Short Term Implementation Timeline


Move to CA, FL, TX

Heavy Community Outreach

Targeted Survey & Ads

Rollout in 2 Locations

Saturate the 3 States

Re-evaluate

Nation Saturation

Move to Re-grow

Expand Premise

Move to Other States

M3 M9 M12 M15M6

Long Term Consideration


Y 2013 +

Ethnic Fresh Produce

Target in Canada:

population is ethnically diverse

Predicted Cash Flows


3 6 9 120

1000000

2000000

3000000

4000000

5000000

Net Cash Flows

Net Cash Flows

Sensitivity Analysis


• 4% APR, Δ10% Purchases• $29,078,087 NPVBest Case

• 2% APR, Δ5% Purchases• $14,777,521 NPV

Initial Assumption

• 1% APR, Δ2.5% Purchases• $7,449,223 NPVWorst Case

Risks & Mitigation


Slow Product Turn Over

Reduction of Product Quality

Increase in Cost

Start with packaged goods.

Last longer than fresh produce

Use of TSS to ensure product quality

Implementing project in multiple stores – reduce cost through

trade discounts

Summary


Minority Market Share• Demographics• Consumer Behavior• Competitors

Localization Integration• Food• Apparel• Presentation• Marketing• Cultural Holiday

Risk, Mitigation and NPV• Quality• Cost• $14.7 Million

Thank YouQuestions?

Appendices

L i f e i s a M o v i n g Ta r g e t

Presentation SlidesBeyond the BullseyeDemographicsUnderstanding Our GuestsCompetitors AnalysisStrategy CriteriaDecision MatrixLocalization IntegrationCultural Products: FoodCultural Products: ApparelCultural Holiday: CustomizationMarket Research StrategyIn-Store PresentationLocalized MarketingStrategy ReviewShort Term Implementation TimelineLong Term ConsiderationPredicted Cash FlowsSensitivity AnalysisRisks & MitigationSummary

TargetBrand RecognitionDistribution CenterImports WarehouseTarget’s Community Outreach

Understanding ConsumersCultural HolidayDemographics: CA, TX & FL

CompetitorCurrent Competitor Localization Efforts: My Macy’sCurrent Competitor Localization Efforts: Wal-Mart de Sup...

StatisticsHULUCash Flow Calculations

Brand Recognition

• “Expect More, Pay Less”• 97% American Consumer recognize the

bullseye logo as Target• Bullseye Dog is a trademark, and the

Bullseye Design and 'Target' are registered trademarks of Target Brands.


Distribution Center

• Regional Distribution Centers: 26– 4 in CA– 2 in TX, etc

• Food Distribution Center for Perishable Food:– Phoenix, AZ– Lake City, FL – Ft. Worth, TX– Cedar Falls, IA


Imports Warehouse

• Import Warehouses receive shipments directly from overseas manufacturers and suppliers. Merchandise is then sent from the Import Warehouses to the Regional Distribution Centers. Target currently operates four Import Warehouses.– Rialto, CA– Lacey, WA– Savannah, GA– Suffolk, VA


Cultural Holiday

• Asian– February

• Chinese Lunar New Year• Tet Nguyen Dan (Vietnam)

– October• Diwali

• Hispanic– February

• 24 - Flag Day (Mexico)

– May• 5- Cinco de Mayo


Demographics: CA, TX & FL


People QuickFacts California Texas Florida USA

White persons, percent, 2010 (a) 57.60% 70.40% 75.00% 72.40%

Black persons, percent, 2010 (a) 6.20% 11.80% 16.00% 12.60%

American Indian and Alaska Native persons, percent, 2010 (a) 1.00% 0.70% 0.40% 0.90%

Asian persons, percent, 2010 (a) 13.00% 3.80% 2.40% 4.80%

Native Hawaiian and Other Pacific Islander, percent, 2010 (a) 0.40% 0.10% 0.10% 0.20%

Persons reporting two or more races, percent, 2010 4.90% 2.70% 2.50% 2.90%

Persons of Hispanic or Latino origin, percent, 2010 (b) 37.60% 37.60% 22.50% 16.30%

White persons not Hispanic, percent, 2010 40.10% 45.30% 57.90% 63.70%

Target’s Community Outreach

• Donate 5% of revenues to charities• Partner with schools and libraries• Community-based projects• Scholarship/sponsorship of minorities – i.e.

Hispanic Scholarship Fund, National Urban League

Our Recommendation:• Community projects in International Districts• Sponsor ethnic resource centers


Current Competitor Localization Efforts: My Macy’s

• Customer-centric localization, 20 select geographic markets beginning in spring 2008.

• Focused on local customer needs and preferences• 13 of Macy’s top 15 best-performing geographic

markets in December were My Macy’s pilot districts• My Macy’s will be implemented nationally to new local

markets.• Conclusion: Largely successful. Similar implementation

plan of starting in select locations and expanding to new locations.


Current Competitor Localization Efforts: Wal-Mart de Supermercado

• Opened 2 Supermercado de Wal-Mart stores in Houston and Phoenix in 2009

• The company also will be opening up new locations in Hispanic submarkets of Dallas.

• Mas Club, the Hispanic version of Sam’s Club

• Conclusion: Was successful. Creative retail strategy


HULU

• 48.1 ads per viewer, over 50% more than the average for the top ten video properties by ads viewed

• Hulu now has 289 advertisers on board who all need to get their ads shown

• 224.3 minutes average per user• Users view ads every 4.66 minutes.


Cash Flow Calculations


Percentage Minority in

Target Market

Sales Volume Per Store Per

Day

Change in Purchasing

Number of Stores

Implemented

Defining diversity: Target Diversity Case Competition 2011

Business

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