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Week 4 Assignment: Target Corporation’s Competitive Advantage
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Week 4 Assignment: Target Corporation’s Competitive Advantage
Introduction
Target Corporation is a multinational company with a high reputation in targeted market segments. The intensifying competition in the industry has challenged Target to sustain its market leadership position and increase its market share without putting in significant effort. The prevailing business setting forces Target to acquire a critical advantage over others to stay ahead of the competition. Being a global brand with a substantial presence worldwide, the company has established its competitive positioning founded on critical factors or priorities that offer a strong advantage over competitors, including Walmart and eBay (Hanaysha, 2018). The competitive priority on cost enables Target to offset the stiff competition in the retail industry. The company remains to have a competitive advantage over its rivals by offering products at affordable prices. Target purposely attracts new customers and onlookers that shop consistently. Competitive cost priority involves offering differentiated products and charging relatively low prices (Meissner & Wulf, 2015). In addition to charging low prices, Target also adopts a business model with very low fixed costs and expenses compared to its rivals’ costs. Healthy supplier relationships, operational efficiency, price affordability, and progressive operations automation are the focal aspects of Target Corporation’s competitive priority on costs.
Competitive Priority on Cost at Target Corporation
When following competitive priority on cost, the company provides customers with products or services at a lower price than most or all of its rivals. To realize a competitive edge over competitors in the industry, the company controls costs all over its value chain activities (Hanaysha, 2018). According to Jacobs et al. (2014), supplier relationships are managed to assure the lowest prices for parts, production or operational activities are performed in the least expensive labor markets, and operations are increasingly becoming automated for maximum efficiency. Target spends as little as possible processing or delivering a product or service to stay profitable in its overall marketing activities while selling commodities at the lowest price.
Focusing on the competitive priority on cost at Target helps preserve its market leadership position via efficient value chain management. This focus enables Target Corporation to expand the market share by targeting the middle-class, which forms the largest percentage of the overall consumer market mix in most nations (Meissner & Wulf, 2015). Generally, middle-class consumers put high value on the pricing factor, and cost-leadership is the best approach to meeting this consumer segment’s needs. Besides, as mentioned earlier, Target concentrates on affordability and easy accessibility of its products globally, resulting in high brand awareness and high sales growth and offering a solid competitive advantage. Apart from charging low prices by reducing production and operations costs and maximizing supply chain efficiency, the retail giant frequently provides coupons and discounts to realize sales objectives and offset the competitive force by its closest rivals such as Walmart and Amazon (Jacobs et al., 2014). The expected outcome of these promotional campaigns and discounts is to enhance brand popularity and encourage consumption.
Competitive Cost Priority as a Strategic Advantage at Target Corporation
Target Company applies the cost leadership business strategy to achieve a competitive priority on cost. The company has found the means to lower the cost of their products but remains at the top of the retail industry and consumer market. Many consumers are unaware that the company’s prices match, although Target does not advertise this information frequently. If a customer finds a product in a printed ad or online that is lower than the amount at which Target is selling it, the firm will match the price. Target also takes coupons from different producers of the items being retailed (Galpin, 2019). The company ensures that its existing customers and potential ones buy its products from its premises and nowhere else. Everyone, including celebrities, wants to purchase products from Target. Katherine Jackson, Britney Spears, Jessica Alba, Heidi Klum, Michelle Obama, Kate Gosselin, and others have been seen at Target.
The company’s logo is “Expect More. Pay Less.” Target wants its customers to understand that the products it sells are charged a reasonable price. The company is proud of setting lower prices than their rivals. While Target’s prices stay low, the quality of its products is high, and the company continues to make remarkable profits. Because of Target’s cost leadership, consumers are not worried. Most of Target’s rivals have copied its strategy yet have not been motivated to copy Target with high-quality products (Galpin, 2019). The firm is an expert in maintaining low prices, and its consumer focus is high. This leads to a continuation of having a strategic/competitive advantage amongst its competitors.
Conclusion
Healthy supplier relationships, operational efficiency, price affordability, and progressive operations automation are the focal aspects of Target Corporation’s competitive priority on costs. The analysis of Target Company’s competitive priority on cost has highlighted several ways of how the company accomplishes this objective, alongside the benefits. The benefits of this competitive priority are expanding the customer base or market share, developing quick brand recognition, promoting consumption, and realizing sales targets by stressing the products’ accessibility and affordability. While competitive priority on cost is Target’s main competitive or strategic advantage strategy, the company also applies other competitive priorities such as quality, dependability, and speed for a sustainable competitive edge in the intensely competitive global retail industry and consumer market.
References
Galpin, T. (2019). Strategy beyond the business unit level: Corporate parenting in focus. Journal of Business Strategy, 40(3): 43-51.
Hanaysha, J. R. (2018). An examination of the factors affecting consumer’s purchase decision in the Malaysian retail market. PSU Research Review, 2(1): 7-23.
Jacobs, F. R., Chase, R. B., & Lummus, R. R. (2014). Operations and supply chain management. New York, NY: McGraw-Hill/Irwin.
Meissner, P., & Wulf, T. (2015). The development of strategy scenarios based on prospective hindsight: An approach to strategic decision making. Journal of Strategy and Management, 8(2): 176-190.
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