In the recent hardships of America’s economy, many discount retailers have become a prime spot for consumers to purchase goods and merchandise. There has been several retailers that have come and gone as the time has passed, however amongst those businesses Walmart and in recent years Target, have operated business strategies and models that have continuously ranked up profits. Walmart and Target have been desirable to many different types of consumers regardless of their selected target market, but what discount retailer is more appealing to the Millennial buyers. Millennials are important for establishing the retailing view in countless ways. Other than being the largest of the generational cohorts in America, their distinct buying preferences and how they spend their money resonate with Target’s and Walmart’s marketing mix and value proposition. The 80 million members of the of Millennial generation, born between 1977 and 2000, represents 25% of the U.S. population, with an estimated growth to 88.5 million by 2020. Millennials are now the leading generation with the most buying power with more than 200 billion dollars annually. These changes have led to Walmart and Target changing their strategies, omni-channels, and marketing mix, to appeal to this growing category of consumers, which leads to the question of whether the millennials prefer Walmart or Target. In this report we have to chosen to analyze this research question, by comparing and contrasting the two retailers, by researching their vision, target market, segmentation strategy, omni-channel presence, and the four categories of their marketing mix, in order to explain which discount retailer’s strategies, products, and promotions present as more desirable to the millennial buyers. This report finds that Walmart is more desirable to Millennials than Target, because of their successful marketing mix, omni-channel approach, and vision.
Walmart is not only the largest grocery retailer in the United States, but the world’s largest company by revenue with over five hundred billion dollars, according to Fortune Global 500. Founded by Sam Walton in 1962, his envision was to help people around the world save money and live better anytime and anywhere in retail stores and through eCommerce. Target is the second largest discount retailer in the United States. Founded by George Dayton in 1902, his mission was to offer customers everyday essentials and fashionable, differentiated merchandise at discounted prices. Both of these companies share a similar vision based around low pricing, qualifying them for their title of discount retailers, as they believe in making goods and merchandise affordable for their consumers. However, Target’s statement uses the word fashionable, which may give a reason for the trendy seeking millennials to find their merchandise more appealing.
Walmart’s main marketing message is to assist its customers to save money by making sure they offer the lowest prices in the market. The target market of Walmart is defined by their low prices, as it attracts the hardworking middle class and the lower class. Walmart’s approach has made them a very popular brand in the US. This confirms why the the company has a retail store in every city in the country (Ferrell & Hartline, 2008). Now that Walmart defined their target market, they developed techniques to segment their market. Walmart’s market segmentation is used to decide where to open a new store and what type of merchandise and goods to stock in that store. They practice two types of market segmentation in their marketing strategy. Firstly, they use demographics, income and age to be specific. The message Walmart delivers reaches out to the middle and lower class with low and middle income, a category who make up a large part of the American population as well as other countries, giving Walmart a large target market to work with and dominate. The other demographic factor is the age of customers in a certain region, where they try to stock their stores to appeal to the age in that area. Walmart tries to target customers of all ages, but especially gain attention from the millennials and generation X. Secondly, they use geography, a common strategy that divides the market based on their region or location to decide where to locate their stores. Geographical segmentation also means identifying the location so they know what to stock in the particular store. For example, Walmart does not stock snow shovels in its cities like San Diego because there is hardly snowfall in that side of the country (Capon, Noel, & James, 2011).
Target chooses to see its retail position as a discount department store, rather than a discount store. This may be owing to their desire to go up and beyond the common customer needs of a discount store. Target views themselves as a store that presents brands at a low price by bringing down expenses, then lowering prices on lower quality items. Target’s slightly higher prices targets those in the middle class more than the lower class, and those with more income. This company uses demographics for its market segmentation, such as age, gender, and income. According to Target’s website, their guests have the median age is 40, the median household income of approximately 64 thousand dollars, and approximately 43% have children at home and 57% have completed college. Although, Target’s median age is fairly high their statement Expect More, Pay Less, works to communicate with their target audience of younger, more affluent, and brand purchase intention.
Overall, Walmart and Target’s target market and segmentation share a similarity in terms of their approach to demographics, as they both target consumers based on their income, gender, and age. Also, both of the companies lower prices on lower quality items to appeal to those of a lower income. However, with Walmart’s target market being aimed at those mostly with a lower income and middle income, they open themselves to a large demographic, and therefore may be more appealing than Target, who aim for those who have a slightly higher income. Perhaps driving millennial buyers to the cheaper option at Walmart.
Walmart’s 2018 K-10 states that, their omni-channel presence gives access to a broad assortment of merchandise, including products not found in their physical stores, and services online through eCommerce family of brands’ websites and third party retail partnership channels, as well as through related mobile commerce and voice-activated commerce applications. Walmart strives to give their customers and members a great digital and physical store shopping experience. In 2000, the company began their first eCommerce initiative by creating walmart.com. Since then, their digital presence has continued to grow. In 2007, walmart.com launched its Site to Store service, enabling customers to make a purchase online and pick up merchandise in stores. In 2017, walmart.com launched free two-day shipping on more than 2 million items and created Store No 8, a tech incubator with a focus to drive commerce forward. These eCommerce efforts have led to omni-channel offerings in many markets, including over 1,100 “Online Grocery” pickup locations in the U.S. Walmart’s omni-channel offerings also include capabilities like “Click & Collect” in the United Kingdom and grocery pick-up and delivery business in several other markets. In the markets in which where they have eCommerce websites or mobile commerce applications, those websites and applications help differentiate the company from competitors and help them compete with other retailers for customers and their purchases, both in our digital and physical retail operations. Walmart’s ability to develop and deliver a customer-centric omni-channel experience largely determines their competitive position within the retail industry. including omni-channel transactions that involve both an eCommerce platform and a physical format. The growth of Walmart’s digital marketplace is to attract the more technological savvy young shoppers to its e-commerce site, mainly millennial’s.
Target’s 2018 K-10 states that they operate as a single segment designed to enable guests to purchase products seamlessly in stores or through their digital sales channels. In 1999, the company launched its Target.com website as an e-commerce site as part of its discount retail division, allowing guests to shop a wide assortment of fashionable, affordable merchandise from the comfort of their own home. In 2012, Target continued to innovate it’s mobile and online shopping, allowing their guests to navigate a Target store, browse the Weekly Ad, and refill prescriptions. Further forward, in 2013, the company took a big progressive step forward by introducing Target Subscriptions, which allows their guests to order on a reoccurring schedule. This was originally for 150 baby-care related products, like formula and diapers, but due to the program being so successful Target expanded to almost 4,000 convenience items, such as pet, health, and home office products. Later that year, Target launched a store pickup program, where their guests could select what they want, order online and then pick up in a few hours and even a ship to store option. During the course of 2013, Target elevated mobile commerce through a multi-prong strategy that included a big push in leveraging social to better meet mobile shoppers’ needs, making it easier for in-store shoppers to engage with the retailer and challenging developers to innovate the shopping experience, Chantal Tode wrote in the Mobile Commerce Daily story. Most recently in 2017, Target introduced same-day delivery services to some cities in the country.
In the omni-channel age, discount retailers Walmart and Target have had to expand their consumers shopping experience by integrating different methods of shopping. This is due to the smart use of technology in sales and marketing becoming more important to their consumers, mainly Millennials. Millennial buyers want an omni-channel experience that is fast, social, organized, user friendly, and gives the consumers real value. Target and Walmart have both done exceptionally well to appeal to this category of consumers, by introducing many innovations over the past 18 years. However, Walmart appears to have had more success with their omni-channels as they have offered more range for their consumers, within the US cities and other countries. They allow their users to select any delivery option, web catalog, and compare prices. Walmart has had great success with their App, as it fits effortlessly into millennials always-connected lifestyles. Target on the other hand, is still in the process of testing out their same-day delivery in select cities, putting them behind Walmart who are rapidly updating and progressing. Therefore, Millennial’s are mostly likely to choose Walmart in terms of the omni-channels they have to offer.
Price for Walmart is a very important part of their marketing mix, as their strategy is to lead on price. The companies approach to leading on price is aimed to win the trust of their customers every day, by supplying a broad assortment of quality merchandise and services at everyday low priced. EDLP is Walmart’s pricing philosophy, where they price items at a low price every day so their customers trust that their prices will not change under reoccurring promotional activity. Price leadership is important to Walmart’s identity. Everyday low cost is also Walmart’s commitment to control expenses so those cost savings can be passed along to their customers. Other than those strategies, Walmart has employed programs called Savings Catcher, Save Even More and Ad Match, that aims to meet or be below a competitor’s advertised price, and Rollbacks, that commits to pass cost savings on to the customer by lowering prices on selected goods. Due to Walmart’s great pricing strategies they have a presence in nearly every market segment, and can reach a wide customer base. In our one hour of observing Walmart, we saw signs dangling over several aisles saying Low prices. Every day, and saw large baskets in the middle with signs saying Special Value and Rollback. We also looked at the prices of some items and noticed most of them ended in 99 or 97 cents. The minor penny cuts contribute to their low pricing strategy, as these pennies are what stands between Walmart and other retail discounts offering cheaper goods and merchandise.
Target takes an alternative approach to Walmart’s price leadership strategy. By upscale discounting, a concept associating style, quality of products, and price competitiveness. Target’s cheap-chic strategy means that other than their prices being low, the products are appealing to design-conscious consumers. With this strategy, Target’s prices are slightly higher in groceries and must higher in clothing. Target lacks in programs offering temporary discounts, but they do offer a price match guarantee. In our one hour of observing Target, we saw hardly any signs mentioning low prices, other than a few temporary discounted products. We looked at the pricing of some merchandise and noticed they were quite pricey for a discount retailer, but because of the trendiness and good quality the prices were worth their value.
Both discount stores take a different approach to pricing, but they both specialise in offering low prices. However, when observing and comparing both retails prices on certain products we found that Walmart was the cheapest every time. For example, we took the price of Walmart’s Similac Advance Infant Formula 23.2 oz which was $25.94, and compared it with the same product at Target which read $27.99. Another product we saw was Walmart’s Cheetos Puffs 8 oz which was $2.50, and compared with Target it was priced at $3.69. Some of the products in Target were cheaper than Walmart, but overall Walmart has the lowest prices. Millennials as a whole look for cheaper options when buying goods and groceries. This is because many Millennials are cash strapped, as many are students, unemployed or underemployed, and most are struggling with college loan debts in today’s economy. Therefore, this generation is most likely to shop at Walmart to spend less.
Place in Walmart’s marketing mix is strong, due to there being over 11,000 stores worldwide. In the US alone, there are over 5,000 stores, and because of this 90% of all Americans live within 15 miles of a one. Within a 20 mile radius of the UIndy campus, there are 22 Walmart’s. The large number of stores means that the company is reaching more customers. This shows that the place factor in Walmart’s marketing mix helps attract consumers by being available, therefore making shopping convenient for them. When observing Walmart we noticed how the lighting was quite dim, and the store layout seemed poorly organised and cram packed. The store was clean but the appearance is overwhelming. One issue we noticed was the lack of lanes open when trying to purchase, and the extremely slow lane speed, unfortunately this does let down the experience and convenience.
Target has over 1,800 stores with them all located in the US. This company sits quite low with the amount of stores they have, meaning that they may not be able to reach out to as many customers as they hope to. Within a 20 mile radius of the UIndy campus, there are 13 Target’s. When observing Target we instantly noticed the bright fluorescent lights and the modern and organized layout. We were also drawn to the plastic carts that glide across the store floors quietly, instead of loud metal rattles. A great innovation we saw was Target’s Caroline Carts, which functioned for kids with disabilities. Another observation was the several lanes open and speed of service.
Out of the two discount retailers Target was the most presenting store. With a better appearance and modern organization the store was more appealing to shop at. However, Target has not become as ubiquitous as Walmart, with only having 1 Target store to 2.5 Walmart stores their chances of attracting more Millennial’s appears to be harder. By there being less Target stores, Millennials are most likely to go to what’s closer, which will most probably be a Walmart. Unless, Target has something Walmart doesn’t offer then one may be willing to travel further. Yet, Walmart and Target before offer similar goods.
The products in Walmart’s discount stores carry general merchandise and limited groceries. These range from groceries, hardware, furniture, appliances, health goods, wellness, to entertainment. Walmart offers their own store brands, which are lower-priced alternatives to name brand products. In March 2018, Walmart introduced three new private label clothing lines to compete against Target. They are Time and Tru, a brand of women’s clothing, shoes, and accessories, plus size brand Terra & Sky, and lastly children’s brand Wonder Nation.On the other end, Walmart’s great value brand covers hundred of household and consumable items, such as frozen vegetables, canned food, and trash bags. The consumable pharmacy and health and beauty items at Walmart also have their own brand called Equate, which includes pregnancy tests, body lotion, and shaving cream. From our observations at this discount store, we noticed that the range of products was broad, but not deep, as they didn’t have much variety or other recognized brands. For example, in the electronic department Walmart didn’t have stock much Apple products, like the Mac Computers, iPad Pros, or Apple watches. The hair and beauty products were also limited in the black hair products. We also looked at the clothing and noticed how the items, were basic and not trendy. The quality of the material looked very cheap and flimsy. We were not impressed by the products, as they were not exactly what we wanted or of good quality.
Target is dedicated to providing guests with the right merchandise mix, from everyday commodities and grocery offering to trend-right home and apparel lines. There are five categories of merchandise stocked in Target, which is consumables and commodities; toys, electronics, entertainment, and sporting goods; apparel and accessories; home furnishings and d©cor; and food and beverages. This company is a mass merchandiser offering a diversified product range with lots of variant options, in hopes to encourage the single-stop-shop concept. Other than being deep in assortment, Target has several private label brands. Most recently, Cat and Jack, a children’s line of apparel and accessories, as well as a children’s bedding line called Pillowfort. From our observations at this discount store, we saw many product varieties. The hair and beauty section had a large range of black hair products, and many premium items in the electronic section, such as iPads and the latest iPhones. The apparel offered in Target was brilliant, with latest trending styles, bright colors and patterns, and great quality.
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