Marketing 396 Assignment 1 Raibail Waseem 3210350 MKTG396v7 Assignment 1 January 17, 2014
Question 1 (20 marks) Identify four actors in the microenvironment that have affected Target’s performance over the past few years. The company – Target was a company all about style and fashion, offering designer brands at low prices. This image affected the company during recession as people focused more on fulfilling their basic needs over brands, style, and fashion. Target then reacted by changing around some of its operations, promoting more of it’s own brand and even introducing a grocery section in order to restore sales. It changed its bull’s eye logo to an arrow pointing upward on a white background. Customers – Consumers became more frugal with money during recession. They re-evaluated their needs and wants, and resorted to even lower prices, which affected sales at Target. Competitors – Target had a hard time keeping up with its major competitor, Walmart. Although target offered fashion and style at low prices compared to other fashion brands, it’s prices were still slightly higher than that of Walmart. This caused consumers to resort to common brands at low prices over fashion brands at slightly higher prices, affecting Target’s sales. Public – Target was criticised by a major investor, William Ackman, who invested $2 billion on the company, and lost 85% of it. His words, “Target is not Gucci,” show that Target made a mistake of focusing more on designer brands and less on low prices. This resulted in 5 board members losing their seats, as they were labeled as being inexperienced. MKTG396v7 Assignment 1 January 17, 2014
Question 2 (10 marks) Describe how economic and cultural factors affected Target’s marketing strategy during the economic downturn. Economic factors such as the recession caused changes in consumer spending, resulting from a rise in unemployment and fall in income. People started buying less and more carefully. They also looked for value marketing. Cultural forces also affected the company. Before the recession, those who once gave more priority to spending over saving money found out the importance of saving money during recession. It caused a cultural shift such that it made people careful spenders even after recession subsided. Marketers look out for cultural shifts to spot new opportunities or threats in their environment.
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