Strategic Plan for Target Australia

This study analyzes Target Australia's business problems and recommends a new marketing strategy to improve its brand positioning and EDLP strategy.

Running head: TARGET AUSTRALIA
Diploma in Business Management
[Target, Australia]
Name of the student:
Name of the university:
Author note:

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Executive summary
This study analyses Target Australia based on a few factors such as those being covered in this
study. The study finds that Target has had few business problems in the past few years. It has
struggled with its brand positioning strategy. The study also finds that Target has struggled with
its EDLP strategy. Therefore, the study recommends a new marketing strategy for Target. On
implementing the proposed marketing strategy, Target could be able to communicate a clear
positioning strategy. Moreover, the new strategy encourages to target consumers specifically in
the middle-income group with mid-range premium priced products. As found in the study, Kmart
has registered a sharp decline in sales in the first half of 2019. This is already benefitting Target.
Moreover, the recommended marketing strategy could further boost the performance of Target.

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Table of Contents
1. An overview.................................................................................................................................3
2. A brief synopsis of the plan.........................................................................................................3
3. Business analysis.........................................................................................................................4
3.1 Vision, Mission, Values and Objectives................................................................................4
3.2 Strategic planning process.....................................................................................................4
3.3 SWOT analysis......................................................................................................................4
3.4 SMART goals........................................................................................................................7
4. Industry Analysis.......................................................................................................................10
5. Competitive Analysis.................................................................................................................10
6. Marketing Plan...........................................................................................................................11
7. Gantt chart.................................................................................................................................12
References......................................................................................................................................14

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1. An overview
This study is aimed at designing a strategic plan for a chosen company “Target Australia”
to help the company re-establish its market reputation and to boost its sales. The strategic plan to
be designed in this study is in response to the problems identified in the chosen company. Target
Australia, a subsidiary business of Wesfarmers, has been doing really good until recently being
affected by the growing success of Kmart. Kmart is another subsidiary business of Wesfarmers
(Wesfarmers.com.au, 2019). Target seems like losing its competency to Kmart. Target’s failure
in recent times could be credited to its inefficiency to execute the strategies. On a broader aspect,
Target, unlike Kmart, has struggled to capture a valuable market position. It is more due to
Target’s incapability to position its brand image. Moreover, Target has been less effective as
compared to Kmart in respect to the “Everyday Low Price (EDLP)” strategy (Özer & Zheng,
2015). These two problems are not just the reasons why Target need a new strategic plan. Rather,
there are still possibilities left for the company. A revised and more effective positioning
strategy, and the EDLP can do some good things for the company. The strategic plan to be
designed will specifically help Target to reinvent its capability in terms of EDLP strategy and the
positioning strategy. Therefore, the main purpose of this study is to design a strategic plan for
Target implementing which the company can possibly be able to reinvent its market value.
2. A brief synopsis of the plan
The strategic plan will include various elements. The strategic plan will have a thorough
business analysis of Target. The plan will also include an analysis of the industry and Target’s
competitors. Moreover, a marketing plan will be proposed to help Target do marketing
communication in a more effective manner. Finally, the strategic plan will also have a Gantt
chart showing the timeline for tasks included in the strategic plan.

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3. Business analysis
This section gives a detailed analysis of Target from various perspectives. The list of
perspectives includes but is not limited to SWOT analysis of the company and setting SMART
goals to be included in the proposed strategic plan.
3.1 Vision, Mission, Values and Objectives
Target’s mission is to be the most preferred brand for the community in which it
operates. They want to become the most loved department brand in the country (Target.com.au,
2019).
The vision is to offer the products under the “everyday low price segment” to the middle-
income groups (Target.com.au, 2019).
Target wants to deliver values through the range of items in the most effective pricing
bracket. Target wants to satisfy customers under all age brackets (Target.com.au, 2019).
The objectives of Target include offering quality products under a competitive price
range and acquiring a leadership position in the EDLP segment (Target.com.au, 2019).
3.2 Strategic planning process
Target is into the business as a subsidiary business entity of Wesfarmers. It is basically a
chain of department stores. The department retailing industry in Australia is highly saturated
(Ibisworld.com.au, 2019). It is mainly dominated by four major players. This very fact raises the
question of whether Target has been able to sustain a position among the top four major
departmental retailers.
3.3 SWOT analysis

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Strengths Weaknesses
 Large product portfolio (Challenge)
 A large number of stores in Australia
(Opportunity)
 Brand image (Challenge)
 Inventory management (Challenge)
 Positioning strategy (Challenge)
 Market competition (Challenge)
Table 1: SWOT analysis of Target
(Source: News.com.au, 2019)
The above table conducts a SWOT analysis of Target. Based on the information as
included in the table, it appears that Target has very few opportunities in the industry while it
faces numerous challenge. Target definitely needs a strategic plan that could be helpful in
countering these challenges and converting opportunities into real profits. Based on the
information as mentioned in the table below is the list of challenges and opportunities for Target:
Opportunity:
The one opportunity that Target has is its presence in Australia. Target is Australia's
largest chain of department stores with respect to the number of stores. The number of stores is
close to 300 (News.com.au, 2019). New opportunities can be gained at these stores by redefining
the shopping experience for customers. A redefined shopping experience can include things like
reduced wait time at cash counters, product profiling at these stores, etc. In addition, more stores
should be opened to make it highly accessible to consumers. New warehouses closely placed
with both new and existing stores can help to reduce the inventory stocking cost at the stores, to
avoid shortage of stock and to speed up the order's delivery for the online customers
(Hajiesmaeili et al., 2016).
Challenges:

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The large product portfolio is a good thing to have provided that it makes any sense to
consumers. Target despite having a large product portfolio has struggled to define its brand
image. Their brand image is confusing at times for a fact they are not focused on one specific
line of product. They sell fashionable as well as basic clothing items. In addition, Target also
sells consumer electronics and cosmetics items. Understandably, fashionable clothing is
expensive and rarely fits into the EDLP model as being followed upon by Target (Cachon &
Feldman, 2015). There should be a clear communication whether the brand Target is more
specific with costlier items or the EDLP model.
As stated in the above paragraph, Target has not been able to build upon one specific
brand image. It is due to these customers hardly find any differences between Target and Kmart
while later being more influencing with its EDLP strategy and the brand image. Similarly, the
positioning strategy has been creating problems for Target. The company should either position
it as a retailer providing luxury items or budgeted products. Inventory management has been
problematic as well. Target, unlike Kmart, has no clear strategy to sell the in-demand items only.
Instead, the product portfolio is unnecessarily very huge on considering the productivity of a
relatively smaller product portfolio for Kmart. The Australian departmental retailing sector is
hugely competitive and is being dominantly occupied by top departmental brands such as Big W,
Myer and Kmart (News.com.au, 2019). Kmart has just picked up in recent years and is turning
more competitive than Target. Indeed, Target appears more or less following the similar model
as being followed upon by Kmart. This in addition to the EDLP and positioning strategy of
Target has affected the company badly in recent years. As a consequence of declining
performance, Target is significantly losing its stores. A significant number of stores is about to

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be closed while a few others will be rebranded under the Kmart brand (Mekraz & Gundala,
2016).
The objective to be considered in the proposed strategic plan:
 To provide in-demand items only at the most competitive pricing
3.4 SMART goals
Objective Specific
(S)
Measurabl
e (M)
Achievable (A) Relevant (R) Time-
based
(T)
Offering
in-demand
items at
the most
competitiv
e pricing
range
Making
the
product
portfolio
much
more
compact
and
ensuring
adherenc
e with
the
EDLP
strategy
The
progress
will be
measured
against a
few key
performanc
e indicators
(KPIs) to
be
discussed
later in this
section
 The
product
portfolio
can be
made
shorter as
compared
to the
existing
product
portfolio
of the
company
provided
 Considering
what has
benefitted
Kmart in
recent years
Target should
also be able to
reduce its
product
portfolio and
offer the most
competitive
pricing to the
consumers.
Target
should
fulfill
the
criterion
identifie
d as
quickly
as
possible.
It is
because
there are
Target’s

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that Target
has
improved
forecasting
capability.
 The EDLP
strategy is
attainable
provided
that Target
is able to
develop an
enhanced
inventory
manageme
nt
capability.
However, this
will a lot
depend on
Target's
proactive
approach to
enhance its
competitivene
ss.
stores
on the
verge to
be
closed.
Table 2: SMART goals
(Source: As created by the author)
Key Performance Indicators (KPIs):
This section covers the KPIs to be followed to monitor the progress of the objective identified for
the strategic plan.
KPIs Explanation

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1. Net sales This will indicate whether the sales have increased or
else. Sales figures obtained at the end of every
quarterly period of a fiscal year will be compared
with that of the figures of the same quarterly period
in the previous fiscal year. Such a comparison of
figures could be conducted at the end of every
quarterly period.
2. Growth in revenue Growth in revenue will indicate whether there is a
growth in sales or else. Moreover, this could be
measured at the end of every fiscal year.
3. Net and Gross profit margin The net and gross profit margin will indicate the
percentage of growth in the annual revenue. This will
also be conducted on an annual basis.
4. Operational cash flow Operating cash flow will also be measured at the end
of every fiscal year. The figures will indicate whether
the capacity to maintain the operations and
experiment with innovative ideas have decreased or
else.
5. Number of customers retained This could also be measured at the end of every fiscal
year. If the figures have improved from that in the
past customer feedbacks could be obtained by doing
online surveys. The findings of such surveys could be

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utilised to devise more impactful strategies.
6. Percentage of market share This will also be calculated at the closing of every
fiscal year. An increased percentage of market share
will indicate that the strategic plan has been
successful so far.
Table 3: Key Performance Indicators (KPIs)
(Source: As created by the Author)
4. Industry Analysis
Sales have kept on falling for the department retail stores in the last five years. The
decline could be attributed to the increasingly growing online shopping. On the other hand, the
retailing environment has been quite negative across the major department brands. The changing
consumer behaviour such as their increasing price-consciousness has impacted their payment
method. They are preferring to pay more through credit cards and thereby, boosting their
savings. Industry revenue has fallen approximately by 0.2% each year since 2014
(Ibisworld.com.au, 2019). The trend continues to be the same. The current year is expected to be
even worse than in the past 4-5 years. It is expected to witness a drop in sales by 0.5% due to
uncertainty around the economic conditions and increasing competition from online retailers
(Ibisworld.com.au, 2019). The department industry is highly saturated and occupied largely by
top four department retailers (Ibisworld.com.au, 2019). Hence, they are themselves competing
with each other severely.
5. Competitive Analysis

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Major competitors of Target are Kmart, Myer and Big W (News.com.au, 2019). Target
has seen its ups and downs. Target has taken off to a good start and maintained a solid run until
being affected by Kmart, another subsidiary business of Wesfarmers. Now, in the first half of
2019, the sales figures have started to dip off for Kmart and thereby leading ways to Target and
Big W to occupy on the opportunities thus created. Kmart registered a drop of 0.6% in the first
half of the fiscal year 2019 (News.com.au, 2019). According to the CEO of Kmart, the declining
figures have come in a time of Kmart’s transition to the next phase of the growth. On the other
hand, Big W has registered a sharp growth in sales up by 0.7% in the first half of 2019
(News.com.au, 2019).
Information furnished as above indicates that the department retailing sector in Australia
is highly saturated. The competition is between four major brands. Target is benefitted from
declining sales figures for Kmart. However, Target should work on its marketing strategy to
communicate and let their target people know the changes to be made.
6. Marketing Plan
Target can continue with its existing marketing plan; however, a few changes to this plan
is needed. This section specifically discusses the proposed changes needed to be introduced to
the marketing plan of Target.
Positioning:
Target is a department retailing brand where consumers get quality products at the most
competitive pricing. The target consumer segment is the people falling in the middle-income
bracket. Brand positioning in this way will help Target differentiate its image from Kmart, which
is widely popular as a retailer offering cheap pricing.

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Market Strategy:
Pricing: Mid-range premium products should be sold to people classified as the people in
the “mid-income group”. The product portfolio was earlier very confusing as it had both
budgeted and premium-priced products.
Product: Mid-range premium products those that are in-demand should be only sold.
Promotion: Promotion strategy for social media channels should be revamped. More
customisation should be introduced to its official website to increase the website traffic and click
rate. Search Engine Optimisation (SEO) needs an improved content strategy, so that, the brand
name of the target appears in the top searched items. Loyalty scheme should also be introduced
to create added attraction.
Place: Wait-time at the cash counters should be reduced in stores. Stores if possible
should be made more spacious as ‘mid-income’ consumers prefer avoiding congested market
areas.
7. Gantt chart
Activities Start
Date
End
Date
Duration Statu
s
Month
Week 1 Week 2 Week 3 Week 4 Week 5
1. Positioning
2.1 Pricing
2.2 Product
2.3 Promotion
2.4 Place

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Key
Performance
Indicators
(KPIs)
1. Net Sales 3 months
2. Growth in
Revenue
Every
fiscal
year
3. Net &
Gross Profit
Margin
Every
fiscal
year
4. Operational
Cash Flow
Every
fiscal
year
5. Number of
Customers
Retained
Every
fiscal
year
6. Percentage
of Market
Share
Every
fiscal
year
Table 4: Gantt chart
(Source: As created by the Author)

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The above table is a Gantt chart indicating activities to be performed under a certain
timeline.

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References
Cachon, G. P., & Feldman, P. (2015). Price commitments with strategic consumers: Why it can
be optimal to discount more frequently… than optimal. Manufacturing & Service
Operations Management, 17(3), 399-410.
Hajiesmaeili, A., Rahimi, M., Jaberi, E., & Hosseini, A. A. (2016). Studying the influence of
logistics on organizational performance through supply chain strategy: case study in
Goldiran electronics co. International Journal of Economics and Management
Engineering, 10(4), 1065-1073.
Ibisworld.com.au. (2019). Department Stores – Australia Industry Research Reports |
IBISWorld. Retrieved from https://www.ibisworld.com.au/industry-trends/market-
research-reports/retail-trade/other-store-based-retailing/department-stores.html
Mekraz, A., & Gundala, R. R. (2016). Leadership style and retail store performance-A case study
of discount retail chain. Journal of Business and Retail Management Research, 10(2).
News.com.au. (2019). ‘Target is almost mimicking the Kmart model’. Retrieved from
https://www.news.com.au/finance/business/retail/a-tale-of-two-retailers-target-stores-
could-be-converted-into-kmart-following-profit-crash/news-story/
5192e281d208cc143e963dd1dc67c7b4
News.com.au. (2019). Is Kmart’s golden run over?. Retrieved from
https://www.news.com.au/finance/business/retail/kmart-target-myer-performance-of-big-
name-department-stores-in-the-spotlight/news-story/f702a9a493e23f2c3755cef35a0cf925

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Özer, Ö., & Zheng, Y. (2015). Markdown or everyday low price? The role of behavioral
motives. Management Science, 62(2), 326-346.
Target.com.au. (2019). Retrieved from https://www.target.com.au/
Wesfarmers.com.au. (2019). Retrieved from https://www.wesfarmers.com.au/docs/default-
source/default-document-library/2017-annual-report.pdf?sfvrsn=0