One of the six trends McKinsey & Company predicted marketing would change is how companies would need to segment their target markets. In particular, they noted that companies would need to move away from using demographic data alone to segment their markets and instead use a combination of demographic, psychographic, and behavioral data. One Company that has done this effectively is Target. Target has long been known for its ability to use data to segment its customer base and then tailor its marketing and product offerings to those segments.
Target Market Demographics
Target Corporation is a retailer targeting virtually all populations ranging from children, parents, and young adults (Corrigan et al., 2014). However, the main target shoppers are between 18 and 44 years old. In addition, the target shoppers are mostly married white women in their thirties. This group is mostly upper and middle class, with an estimated income of up to $80,000 per year. On average, target customers visit the retailer once every few weeks and spend roughly $50 for every visit.
4P’s Marketing Mix
According to Sukanta and Muis (2022), the marketing mix, or the 4 Ps, is a framework for creating marketing strategies. It includes the four critical components of marketing: product, price, place, and promotion. The pricing strategy of Target corporation is embedded in selling a wide variety of products, which are mostly medium and lowly-priced and affordable to most people. The Company’s product strategy entails selling items that people need for their day-to-day activities. This strategy allows the Company to retain its customers and always view it as its one-stop shop. Target Corporation uses many promotional strategies, ranging from flyers to commercial advertising and offering customers coupons and discounts. Regarding the place strategy, it is important to note that the Company places its stores closer to residential areas, around malls, and places with many visitors.
Political factors – Target operates in several countries, subject to different political system risks and regulatory environments, which may be beyond its control.
Economic factors – Various macroeconomic factors like foreign exchange rate and inflation rate, by extension, affect the Company’s profitability since they ultimately affect the aggregate demand and investments made in the economy.
Social factors – Social culture and norms impact a company’s overall approach. Target upholds the same by recognizing that shared attitudes and beliefs are important in understanding the customer better.
Technological factors – the retail sector has witnessed a tremendous shift in people’s purchase behaviors, with many paying much attention to e-commerce. Target should consider this by improving its online business units to compete favorably.
Environmental factor – Before opening new stores, Target corporation is recommended to consider the required environmental standards to operate within the market. This is premised on the fact that different markets have different set rules and regulations, which may affect the profitability of a business.
Legal factor – Analysing the legal framework of the market or country Target corporation seeks to venture in would go a long way in helping the Company denote its competitive advantage in the market.
Target has been at the forefront of incorporating market segmentation to widen its market share. Even so, the Company must pay keen attention to the prospective customers and their primary need to ensure that their products are tailored according to the client’s needs, usefulness, and demands. They should further incorporate behavioral data in segmentation to compete favorably in the market. Finally, segmentation should help the Company identify various underserved market segments that may be a new source of revenue. In doing so, they must pay attention to market research trends considering that approximately 81% of companies surveyed by the Marketing Research Association said they used market research to inform their investment and marketing strategies.
Corrigan, H. B., Craciun, G., & Powell, A. M. (2014). How does target know so much about its customers? Utilizing customer analytics to make marketing decisions. Marketing Education Review, 24(2), 159-166.
Louth, J. D. (1966). The changing face of marketing. Mckinsey quarterly.
Sukanta, S., & Muis, M. A. (2022). MARKETING MIX OF 4P’S FOR CUSTOMER PURCHASING DECISIONS. Dinasti International Journal of Digital Business Management, 3(3), 432-439.