Image is the key to differentiation - Target and Madison Avenue - Brief Article

DSN Retailing Today, April 8, 2002 by Molly Prior

When it comes to advertising, Target is in a class of its own. Over the course of the last decade in particular, Target has used its marketing muscle to transform its trademark bull's-eye into a universally recognized symbol, and, in turn, establish its retail format as a unique destination in the eyes of the discount consumer.

By conveying this high-end, pop-art image through such media as glossy magazines, prime-time television commercials, billboards and circulars, Target has shown the rest of the world there's something refreshingly different about this big-box retailer. In short, its image comes off as hipper, edgier and more fun than the retailer down the street.

Most important, though, this trend-right image has not come at the expense of a value message. Take, for example, Target's campaign in apparel. According to Carol Henderson, partner and creative director at McKee Wallwork Henderson, the company has succeeded in impressing on consumers that spending $8 on a basic white T-shirt in its stores, rather than $18 at Gap stores, is not only smart, it's cool.

"I'd love to think it was all planned," Henderson said. "But I think they just wanted to make Target a cool place to shop."

To create its differentiated "bargain" shopping experience, Target takes its cue from successful specialty retailers outside the discount space, such as Pottery Barn, Restoration Hardware and The Gap.

Target borrows from these retailers to create compelling merchandising displays for its slew of exclusive brands, such as Michael Graves, Mossimo and Freestyle by Danskin.

Its "expect more, pay less" strategy resonates with consumers. "Value always wins," president of Target.direct Dale Nitschke told an audience of analysts and media at a recent Forrester Research conference. Consumers demand more and are not willing to pay a premium price for it, he added. That said, reinforcing price perception without sacrificing quality, trend-right merchandise underlines Target's strategy.

Each initiative the retailer undertakes-from the flashy Times Square billboard to the outfitting of a Tribeca townhouse--aims to ensure the ongoing ascendance of the Target brand.

Target's marketing focuses on the retailer as the brand. "Target is the brand, just as Home Depot is the brand," said George Whalin, president and ceo of Retail Management Consultants. "It's a very viable way to do business." Whalin added Target's marketing approach is far from traditional, pointing to department stores as a foil. Sears markets itself to consumers as the brands within its stores, said Whalin. The Kmart brand also takes a back seat to those it carries in its stores.

It has traditionally been "Martha Stewart at Kmart." Target's message is the opposite, "Target has Mossimo," said Henderson.

That's not to suggest Target fails to support the national brands lining its shelves. Its recent postmodern style "Color My World Campaign," a continuation of last year's award-winning "Pop Art" program, features a monochromatic sampling of national brands. One ad, for example, includes a trio of crimson-clad models, Big Red chewing gum, Iams dog chow, Pringles potato chips and Coca-Cola against a red backdrop. The campaign won Target Best in Show for the eighth year running at Retail Advertising Council's award ceremony last February.

"Target's ads are full of product, but are nothing but image," said Henderson. "Wal-Mart's ads imply price, price, price. Pricing is its brand."

Henderson applauded Target's advertising, saying the campaign seems to just get smarter and smarter. "Target had been a difficult animal to promote because of its range of products and range of consumers," she said. Target's "Get Together" campaign was the first to show a range of products in a really hip way.

But the question remains: Do these image ads compel consumers to go into the stores? Henderson says yes. "I think sales have skyrocketed. For the first time, Wal-Mart has a serious competitor."

Over the last three years, advertising costs, totaling $825 million for the year 2000, have increased at approximately half the rate of Target's historical square footage growth of 8% to 10%.

Target has staked out a sizeable territory and forced Wal-Mart to give up a consumer segment--the smarter, cooler, hipper shopper. Whalin cautioned that Target's edgy positioning could potentially turn off older consumers. "The buying power is controlled by the baby boomers. No major retailer can rely on a single consumer segment," he said. Whalin added if Target's image advertising fails to pull shoppers into the stores, its circulars certainly do.

"Target's thinking may very well be, 'We may get a few years from mom, but what we really want is to win over mom's 14-year-old daughter--we'll get 30 years out of her,'" said Henderson. Kmart spent $508 million in 2000 in an unsuccessful bid to woo mom, whose attention already was divided among the likes of Wal-Mart, Kohl's and Sears.

While a hefty ad budget certainly helps get Target's message out, the key to the retailer's success may be as simple as likability.