Target Case Study Joshua

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Target Case Study

Joshua Machicado
Hannah Green
Ly Huynh
Kelly McQuilkin
Towson University
Professor: Lisa Simmons
Table of Contents
Introduction
How can Target drive kids toy sales
3
3
Body
Focus on the Guests
SWOT Analysis
Promotion Description
Cost
Marketing Stategy
Advertising
Online Sales
3
3
3
4
4
5
6
7
Return on Investment
Conclusions
Appendix
8
9
Case Study: How to attract more kids to the store for the holidays
Target the Kids
Targets historical financial data shows that kids toy sales plateau between Black Friday and
Christmas. The goal for the 2015 holiday season is to keep sales consistent through the weeks in
between, increase both in-store and online traffic and to keep the shelves stocked with the toys
that kids want at the prices the parents like.
Since toy sales are driven from the children, Target will focus on the kids this season. Target
invites parents to bring their kids into the store to experience the joy of holiday shopping. Every
guest who walks into the store will have the chance to spin a wheel that is full of prizes. Targets
goal is to give to the guest so that the guest may give to someone else this holiday.
Focus on the Guests

After drafting a SWOT analysis, it is clear that Target has a lot of strengths, but there are also
many weaknesses and threats that if improved upon will benefit sales during the time between
Black Friday and Christmas. One of the biggest strengths and opportunities that Target should
capitalize on is giving back to the community. Not just giving back the 5% to the community, but
also giving back to the guests. Guests should feel appreciated for doing their holiday shopping at
Target. Target will give each guest a spin at the wheel to win a prize.
One of the biggest threats to Targets online sales is Amazon Primes free two-day shipping.
Amazon loses roughly one billion dollars per year to the cost of shipping for consumers.
Monthly, that number is $83,333,333. That figure is not feasible for Target. Providing free five to
seven-day shipping, as opposed to two-day, from November 1st through December 25th should be
cost effective and Target should not lose as many online transactions to Amazon.
Another opportunity for Target is the potential to increase guests non-commodity spending. A
majority of guests shop at Target for commodities. By giving guests a chance to win coupons or
gift cards, Target should see an increase in the amount of money guests spend on non-commodity
items. Stocking the store with this seasons hot toys, dcor and fashion trends will encourage
guests to splurge on themselves or others. Target wants guests to buy toys specifically because
the profit margin is so high, 35-40%.
SWOT Analysis
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Strengths
Strong brand: 1,801 stores in the US
One of the top 3 toy retailers
Cartwheel app
Have a great variety of products
Quality product and great prices Expect
More. Pay Less.
Giving back to community: 5% of net
profit each week given
Weaknesses
Guests dont know about Cartwheel app
and Red Card
Seasonal profit (revenue will drop
because of seasonal disadvantage)
Challenges in opening smaller, urban
stores due to expensive labor and real
estate costs.
Not as many locations as Wal-Mart
No stores in Vermont
Opportunities
New market: Expanding international
market
Increase Online Sales and advertising
Enhance efforts to be environmentally
friendly
Increase guests non-commodity spending
Giving to the community
Threats
Credit Card scandal 2014
Increasingly strong competition
(Amazon, Wal-Mart)
The inflation forcing out customer to
move towards low price rather than better
quality
Amazon Primes free 2-day shipping
Supply Chain issues; uncertainty about
new shipments coming into stores
Guests Spin the Wheel to Win Prizes

Spin it to Win it! Target will drive kids sales through the Spin it to Win it wheel. Each guest will
get a spin at the wheel. Kids who bring in a progress report card or test with an A on it will
receive an extra spin to reward hard work.
The wheel offers seven prizes including:
Prize
5 % off Coupon
$5 Gift Card
Target Holiday Magnet
Target Holiday Stickers
Coloring Page & Crayons
Target Gift Wrap
Target Gift Tag
Probability
1/12
1/12
1/12
1/12
2/12
2/12
4/12
Spin it to Win it Wheel Will Cost

$4,784,400
The Spin it to Win it Wheel will be on display in

the lobby of each Target store. The interactive
wheel is made on a free app and will be displayed
on an iPad. Assuming every Target store has access
to an iPad, there is no additional cost for the construction of the wheel.
A Target store sees about 3000 guests per day. During the holiday season Target should see an
increase in traffic to 4200 guests per day. Estimating that only 75% of guests will spin the wheel
5
or use the prizes on the wheel, each Target store can expect to spend $2,706.00 in 28 days
between Black Friday and Christmas.
Prize
5 % off Coupon
$5 Gift Card
Target Holiday Magnet
Target Holiday Stickers
Coloring Page & Crayons
Target Gift Wrap
Target Gift Tag
Per Store Total
Total (1801 stores)
Cost if 75%
Redeem
$902
$984
$16
$16
$82
$584
$73
$2,658
$4,784,400
The wheel includes 7 prizes. The graph below

shows the probability of winning each prize.
Since the 5% off coupon, $5 gift card and gift
wrap will cost the company the most, there is a lesser probability of the guest winning those
prizes.
Marketing Strategy is to Make Guests Excited About Giving

Target prides itself on giving back to the community. Giving is especially important during the
holiday season. In order to make guests excited about giving, Target will start by first giving to
them. Target will give guests chances to win discounts, coupons and prizes redeemable on their
Target purchase. Specifically, kids will be targeted. Kids love receiving during the holidays, but
this year Target hopes to make kids love the giving part too.
Eight-Year-Old Wants to Give this Holiday

Target interviewed an eight-year-old to see whether she if she was more interested in giving or
receiving this holiday season. After showing her the interactive Spin it to Win it Wheel, she
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stated If I used this wheel, I would be more excited about giving to my family and friends this
year! Kids are obviously excited to receive toys as gifts, but the intent of the wheel is to show
that giving is even more rewarding than receiving. By giving guests the chance to save money
and win prizes, kids especially should see the spirit of giving that the holiday season should
bring.
Target Shelves Will Feature Star Wars and LEGOs

As a part of focusing on increasing kids holiday toy sales, Targets shelves will be full of this
seasons hottest toys. Target has spent money this past year bettering the supply chain, so stores
should have no problem with inventory and always being stocked for the guests.
The following toys are forecasted to be the biggest sellers this season. Targets shelves will
feature: Roominate, Compose Yourself, LEGO App Brick, VEX Robotics Ball Machine,
Meccanoid and Star Wars.
Target will Advertise on Facebook, Pinterest and TV

Advertising will increase Targets online and in-store traffic. For online advertising, Target will
use Facebook and Pinterest. Target will use a general ad on Facebook. The ad will be tailored to
adults who are over the age of twenty-five, who live near a Target store and who are parents of
young children. Target will purchase a general Facebook ad for $20 per day. At the cost of 66
cents per view, Target should see 30,300 views per day.
Pinterest is another social media website that will be used to target mothers. 50% of all Pinterest
users have kids. For a website that sees 1 million visitors per week, that is 500,000 potential
guests when they see Targets promoted pins. The costs for advertising are Pinterest are done by
bidding. Target will plan for $50 per day spent on Promoted Pins on Pinterest. The total amount
of advertising on
Target will also advertise on TV. Prime time networks and child networks like Nickelodeon will
be the two channels used. To target the kids, commercials will be shown on Nickelodeon
highlighting
Each type advertising channel will be promoting the Spin it to Win it Wheel. The advertisement
will show a demonstration of the wheel spinning and multiple prize options becoming available.
Virtual Wheel
To increase online sales, Target will offer the Spin it to Win it Wheel electronically at checkout.
Only one spin will be allowed per transaction, per day. Target will also offer free shipping on all
online orders with no minimum spending amount. Between the potential to win prizes and the
7
free shipping, Target should see an increase in online sales during the 28 days between Black
Friday and Thanksgiving.
The virtual Spin it to Win it Wheel will compliment Targets upgraded online presence. After
spending $1 billion in improving Targets online presence this past year, Target should finally
start to see some return on investment, especially with the wheel and the free shipping.
Return on Investment is 200%

To run the promotion in each Target store, the daily cost will be $2,658 per store. Every Target
store's daily sales are estimated to increase 15% from $328,440 to $386,400 per day. Based on
shopper statistics, when coupons are used, 55% of shoppers are likely to spend on average of $25
more in that visit than they planned. Multiply that figure by the amount of shoppers receiving
gift cards and discount coupons, this promotion should increase sales 2.24% per store, per day.
Cost per store

$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$-
Cost of investment
Revenue from investment
Target should see a return of 200% on its investment. This ROI shows that Target should triple
the amount of money that was spent on this promotion.
Nationwide Cost for the Holiday Season

$350,000,000
$300,000,000
$250,000,000
$200,000,000
$150,000,000
$100,000,000
$50,000,000
$-
Cost of investment
Revenue from investment
To increase the return on investment, Target will focus on keeping costs for this promotion as
low as possible. Each Target store will present the wheel to guests using in-store demo iPads, so
no money needs to be spent on a physical wheel.
The cost per day for each Target store is the summation of the costs of the items multiplied by
the number of guests predicted to land on that specific prize space. For the items that require
guests to redeem them, like the gift card, 5% off, and gift wrap, only 75% of guests are expected
to redeem the items.
The most expensive spots guests can land on the wheel are the $5 gift card and the 5% off
coupon. Since these are the most expensive spaces for Target, the wheel is made to have the least
probability on those spaces. For the less expensive items, the probability that guests will land on
those spaces is much higher.
All of these promotional deals will expire on Christmas Day. This ensures that losses are not
sustained from this promotion after the busy holiday shopping season.
Pros Outweigh the Cons

Targets 2015 promotion to increase kids toy sales will be a financial success. The promotion
will also make Targets guests, both adults and kids, feel the excited about the holiday season.
With prizes from the Spin it to Win it Wheel, guests will feel instant winning gratification.
Guests will also win exclusive deals from the wheel that they will not have from competitors.
This promotion is available in store and online.
In order for the promotion to be successful, Target will need to put a lot of focus on advertising
and making sure Targets guests know about all of the things that Target offers. Although the ROI
may vary from store to store, Target should see an increase in kids toy sales nationwide.
Appendix
Inside Amazon Prime. (2015, February 3). Retrieved November 23, 2015, from
http://fortune.com/2015/02/03/inside-amazon-prime/
Morrow, S. (2009, December 1). Cost of Marketing II: Advertising on cable TV. Retrieved
November 23, 2015, from https://www.legalzoom.com/articles/cost-of-marketing-ii-advertisingon-cable-tv
Reagan, C. (2015, October 29). Target to roll out free shipping for the holidays. Retrieved
November 23, 2015, from http://www.cnbc.com/2015/10/29/target-to-roll-out-free-shipping-forthe-holidays.html

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Target Case Study

Focus on the Guests

Guests Spin the Wheel to Win Prizes

Spin it to Win it Wheel Will Cost

The Spin it to Win it Wheel will be on display in

The wheel includes 7 prizes. The graph below

Marketing Strategy is to Make Guests Excited About Giving

Eight-Year-Old Wants to Give this Holiday

Target Shelves Will Feature Star Wars and LEGOs

Target will Advertise on Facebook, Pinterest and TV

Return on Investment is 200%

Cost per store

Revenue from investment

Nationwide Cost for the Holiday Season

Revenue from investment

Pros Outweigh the Cons

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