Company Case 7
Target: Where Store Brands Offer More Than Low Prices
Synopsis
Target is the number two mass discount merchandiser, second only to Walmart. And
while Target is only about one-sixth the size of Walmart in terms of revenue, it has plenty
of strengths. This case focuses on Target’s store brand strategy. While Target carries all
the popular national brands, it also has expanded its store brands into most of the product
categories that it carries. Not only does it have a strong presence of store brands, its store
brands have an image of quality and cachet that is on par with many national brands.
Teaching Objectives
The teaching objectives for this case are to:
1. Understand the basics of brand image.
2. Understand the importance of creating customer-brand relationships.
3. Analyze a store brand strategy.
4. To consider the advantages small brands can have over market leaders.
Discussion Questions
1. What benefits does Target receive from its store brands?
Target delivers the general benefits of discount mass-merchandising—one-stop
shopping (everything under one roof) and low prices. Walmart clearly has it
outdone on variety and selection (Walmart Superstores have far more items
than the typical Target). And public perception still seems to favor Walmart on
low prices, even though Target has cut its costs and lowered its prices such that,
2. Is Target’s store brand strategy working? Explain.
In short, the answer is yes. The case explains the trends across the retail
industry toward store brands. Target is on the leading edge of such trends. It
has developed numerous store brands that “don’t seem like store brands.” They
1
Part 1: Defining Marketing and the Marketing Process
3. What could Target do in the future to further develop strengths in store
brands?
The case lays out such a strong case for Target’s store brands. It is clearly
ahead of its retail competition with respect to its store brand strategy. So it is
difficult to suggest things that it can do to improve other than “keep on keeping
on.” There should be somewhat of a distinction between Target’s designer
4. What potential problems does Target face in continuing its focus on store
brands?
As a percentage of its sales, the share contributed by Targets store brands is
increasing. It seems as though this will continue in the future. The biggest
Teaching Suggestions
Prior to reading the case, have students consider brands that they are familiar with that
Target carries. You could ask them to make a list of brands that they have recently
purchased at Target. Or, you could ask them to make a list of brands that they know are
available at Target. Once they have had a few minutes to make such lists, ask for some
feedback on brands. You might even make a master list of the brands on the board. Then
have students classify which brands are Target brands and which ones are national
brands. Next, have students read the case (either in class, or as they are departing, prior to
the next class).
This case was developed to be used with Chapter 7. This case also works well with the
marketing environment chapter (Chapter 3), the consumer behavior chapter (Chapter 5),
the market targeting chapter (Chapter 6), and the branding chapter (Chapter 7).
2