Economy Leads to "Pay Less" Consumer Attitude

Friday, October 31, 2008

Target punching up ‘Pay Less’ message to outdo Wal-Mart

Expect to see more of less at Target Corp.

The Minneapolis-based retail giant has started a marketing campaign that will be dominant for the rest of this year and in 2009. The campaign emphasizes the second half of its well-known tag line, “Expect More. Pay Less.”

Target doesn’t plan to abandon its promotion of design, style and service, but it intends to “be much more explicit about our pay less proposition because the economic pain that our guests are feeling is real,” said Michael Francis, executive vice president and chief marketing officer, during a meeting with Wall Street analysts last week.

Target knows there is a perception among some customers that competing retailers (especially Wal-Mart Stores Inc.) offer lower prices, he said. “While this isn’t true, we’re working hard to promote products that will both help our guests get through these tough times and erase these misconceptions.”

The company has rebalanced its media mix and budget so nearly three-fourths of its media spending will be devoted to promoting key products with a clear value proposition. Target rebuilt its holiday campaign theme, “We’ve got Christmas Wrapped,” to make sure everything underscores a commitment to value. It also fine-tuned its weekly circulars and increased its radio advertising, midweek mailers and newspaper ads to reflect the low-price push.

Target started the campaign in September, introducing the phrase “For less” in its weekly newspaper ads.

Dave Hopkins, an instructor at the University of Minnesota’s Carlson School of Management who runs its Brand Enterprise consultancy, said Target has such a strong image with U.S. consumers that it can afford to promote lower prices without diluting the quality of its brand.

The biggest long-term risk in pushing the price message would be if Target changes the experiences of its customers in selection or quality of its merchandise, he added. But if it meets or exceeds customers’ expectations, the message can only benefit the brand, he said.

In its stores, Target already is using more large signs to emphasize prices and bargains, such as “Under $5” or “Under 15.”

The new effort also is being used in its TV commercials. For example, “the new movie night” features a couple sitting on their couch watching a new $13 DVD from Target.

Target’s message of value has been worked into less-traditional marketing, as well, such as its four-day design bodegas held in September in Manhattan, Francis said. The shops included “pay less prices” for products from 22 Target designers in small, temporary stores.

Synthesis: During this period of economic downturn, retailers have been forced to reevaluate their marketing strategies, especially during the upcoming holiday season, to meet consumer needs and spending habits. Target has been traditionally know for its low prices, but in recent years has focused its advertising more on style and service to attract a wide range of savvy, and often younger consumers. However, because of the financial burden many are feeling at this time, Target will be shifting its focus on marketing its affordability. Have Target marketers appropriately pinpointed what consumers want at this time and should other retailers take note and focus their efforts on matching their advertising with the economic situation? Also, does this prove what is most important to consumers in all target markets, or just in those that value bargain shopping?

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