Kmart, Target, Big W: Retail Market Positioning and Value Creation

This case study examines the marketing strategies of Kmart, Target, and Big W, three major discount retailers in the Australian market. The analysis begins with a comparison of their marketing mixes, highlighting differences in product offerings, pricing strategies, promotional activities, and store locations. The study then delves into how each retailer creates value for its customers, focusing on factors such as product quality, convenience, pricing, and customer service. Furthermore, the case explores the socially responsible product decisions made by each company and how these decisions contribute to customer value and brand positioning. The study uses evidence from various sources to support its findings and provides insights into the competitive dynamics of the retail market and the strategies employed by these leading retailers to attract and retain customers. The analysis emphasizes the importance of understanding customer needs and adapting marketing strategies to maintain a competitive edge.

Running head: PRINCIPLES OF MARKETING MANAGEMENT
Case Study Analysis: "Kmart's pain is Target and Big W's gain but is there room for
three?"
Name of the Student:
Name of the University:
Author note:

1PRINCIPLES OF MARKETING MANAGEMENT
1. Compare and contrast the marketing mixes for these three retailers and discuss how
each creates a unique position in the retail market?
Kmart Target Big W
Product Retail company with
large amount of retail
products and OTC
medicines. However, it
sells packaged and
frozen foods, but it does
not sell fresh food and
groceries.
Retail chain under
Wesfarmers. It is also a
chain department store
that sells all types of
consumer goods and
daily essentials like
groceries. It also has a
pharmacy, walk-in clinic,
photo centre, optical
clinic, and a salon.
It is a chain discount
department store under
Woolworths. The variety
of products is less in Big
W than the rivals.
Price It claimed to be a
discount retail chain
initially but now it has
adopted everyday low
price (EDLP) strategy. It
has replaced expensive
big brands products with
their home brands which
are cheaper. The average
price in Kmart is AUD 7
It is a discount price store
and has an affordable
price strategy for
different types of brands.
It also offers price match
strategy with the
competitors. Target also
provides discount on all
online purchases and
discount on shipping
The products at Big W
are comparatively costlier
than the market rivals.

2PRINCIPLES OF MARKETING MANAGEMENT
(Satgunaseelan 2017). charges during the
holiday seasons. Target
offers a credit card that
allows the customers to
shop on credit. It gives
variety of sales
promotion deals.
Promotion Kmart promotes
simplicity in its
approach. Good quality
stuff at really cheap price
is the promotional
strategy of Kmart.
Social media is the main
form of free advertising
for Kmart.
It focuses on good quality
products at a lower price.
It airs commercials on
TV and radio, distributes
flyers, coupons and
special offers and prints
ads on newspapers. It
also maintains
promotions on the social
media. It has direct
marketing strategy too
and sends personalized
emails to the customers.
During Thanksgiving and
Black Friday, it offers
huge discounts to various
Big W focuses on the
fashion selection and low
prices. It is promoting its
efforts to be more
relatable with the
customers. Conventional
and digital marketing
techniques are used for
promotion (Mitchell
2018).

3PRINCIPLES OF MARKETING MANAGEMENT
product categories.
Place It has chain store located
at convenient places in
and around the cities and
at some gas stations.
Kmart has around 200
stores across Australia
(Powell 2017).
It has 303 retail stores
across Australia and also
has online network
(wesfarmers.com.au
2019).
It has 183 stores across
the country
(woolworthsgroup.com.au
2019).
Thus, it can be seen from the above table that Kmart, Target and Big W are close rivals in
the retail department store industry in Australia and all these three stores focus on discount
pricing to attract the customers. However, the product categories are more in Target than the
other stores. On the other hand, Kmart has captured the market with every day low prices for
higher quality products and fun shopping experience. Big W however has fallen behind the
competitors as the products are costlier and the variety is less too. The number of stores of Big
W is less too than the other two and it does not provide much promotional offers to attract more
customers.
2. How do Kmart, Target and Big W create value for their customers?
Kmart, Target and Big W all operate in the same industry, that is, discount retail
departmental store industry and all these are chain stores. As stated by Kent et al. (2016), the
retail department stores create value for the customers by focusing on the pain points, that is,
through quality of products and service, exclusivity, convenience, cost, product comparison,

4PRINCIPLES OF MARKETING MANAGEMENT
rewards, and customer engagement. Pain points in retail refer to the real or perceived problems
that the customers try to resolve while making retail purchases. Thus, the retailers must address
those needs or demands of the customers through the above mentioned value creating aspects.
In case of Kmart, the company has opened its chain stores in all the prime and convenient
locations across the country and has rebranded itself as ‘cheap and cheerful’. It has emphasized
on making the shopping experience of the customers fun and enjoyable in its stores and online
site and app. It has changed its pricing strategy from being a discount store to everyday low price
(EDLP) in which Kmart offers price match with the rivals. This has increased the confidence of
the customers on the pricing of Kmart. It offers very good quality products at a lower price as it
has replaced the expensive brands with their home brand and some other exclusive brands (Sung
and Huddleston 2018). This strategy has been beneficial for the growth of its own brand. By
providing spectacular holiday discounts, more and convenient shopping options and great
bargains, Kmart creates values for its customers. Excellent customer service is another value
creation aspect for Kmart.
Target is one of the major rivals of Kmart, which operates under the umbrella of
Wesfarmers. The primary aspect for Target to create value for the customers is to offer a large
number of product categories as well as types of products at an affordable price. In a Target
store, the customers get everyday essentials, including pharmacy, optical store, fashion
accessories, fresh fruits and vegetables, groceries, and salon (wesfarmers.com.au. 2019). It offers
products for all income groups. Thus, the convenience of shopping is much higher in Target.
Furthermore, it also offers online shopping facilities and additional discounts on the online
shopping, which creates values for the shoppers. The company focuses on finding the pain points
of the customers through market research and specifically addresses those to increase the

5PRINCIPLES OF MARKETING MANAGEMENT
customer value. (Price 2016) Moreover, the company invests in technology and resources for
understanding the needs of the customers and addressing those in the most convenient manner at
an affordable price. This increases the return on investments for Target and also for the
customers (Cameron 2018). Target is also creating value through loyal customer membership.
They offer special offers and discount prices to the loyal customers which increase the number of
membership in the loyalty programs. Furthermore, Target has been emphasizing on improving
their online shopping site database, which would make browsing different stores for any
particular product and tracking of order easier (woolworthsgroup.com.au. 2019). This is another
point for creating more values for the customers.
Big W is another retail discount chain store by Woolworths. It also created customer
values by offering range of consumer products and daily essentials. Big W also launched online
site for increasing convenience of shopping for the customers. However, in comparison to Kmart
and Target, Big W has a much less market share (Bailey 2016). In the past few years, Big W has
faced losses and it has led to closure of many stores. It has been found that Big W has failed to
create values for its customers in terms of product range and prices in a competitive market
(Elmas 2017). The brands kept by Big W are considered as dated and dormant as compared to
the brands sold by the rivals. Chung (2018) stated that Big W did not have any value proposition
for the customers and that has led to losses for the company. Thus, it also lost customer goodwill
over the years.

6PRINCIPLES OF MARKETING MANAGEMENT
3. How do Kmart, Target and Big W use socially responsible product decisions to create
and capture customer value? Provide evidence to justify the answers for all three retailers.
As stated by Payne, Frow and Eggert (2017), to increase value proposition for the
customers, organizations must consider the specific needs and wants of the customers and must
evolve its product offerings as per the continuously changing demands of the market. Thus,
market research is an essential activity to gain insights about the customers’ demands and the
firms must improve its service, product offerings and marketing strategies as per the research
findings on the customers’ perspectives. The customers’ perspective can be collected through
market surveys. Based on the feedback collected, the firms change or improvise their strategies
to meet the customers’ demands and expectations. The firms need to create and capture customer
value to gain competitive advantage in the market.
Kmart, Target and Big W, all adopted customer driven marketing strategy to create and
capture customer value. Market research is conducted by all these three companies and as per the
research findings, the companies have made socially responsible product decisions for the
benefit of the companies and also for the companies. For example, Kmart has achieved the
largest market share among the three above mentioned firms in the retail discount department
store industry (Brook 2019). While Kmart focused on providing a cheaper and fun shopping
experience to the customers at the lowest possible price in the competitive market, Target
focused on improving customer satisfaction by providing a very wide range of high quality
products at a reasonable price in the market and also in the online shopping. On the other hand,
Big W could not capture a substantial share in the market as it could not provide much value to
the customers, either through product varieties or through lower price (Bailey 2016).

7PRINCIPLES OF MARKETING MANAGEMENT
Kmart has advertised the concept of everyday low prices and price match guarantee and
Target has been promoting the brand loyalty practiced by the mass, that is, larger population. On
the other hand, Big W has failed to capture its target market even though they have also launched
product varieties and online shopping site for increasing customer satisfaction. The marketing
mix has evolved overtime to enhance the value proposition by the firms. Mortimer (2016)
mentioned that under the management of Guy Russo, Kmart was able to turn around and capture
the larger market share through the positioning strategy of high quality products at an affordable
price and cheap and cheerful shopping experience for the customers, while Target and Big W
could not position themselves as they did not understand their target market, their perspectives
and demands and hence, could not successfully position the brands among the customers. Along
with these, the firms has focused on various marketing strategies, such as, special discount offers
in the holiday seasons, discount prices for online purchases, excellent customer services,
streamlining the product lines, that is, removing the unprofitable brands and replacing those with
home brands and other affordable but good quality brands (Roberts et al. 2015). As highlighted
by Mitchell (2018), Big W has been transforming itself to make the brand more relatable and
thus, incorporating customer feedback in redesigning their product lines. That has been reflected
in their sales growth in 2018 and the losses have reduced from AU $151 million in 2017 to AU
$110 million in 2018 (Chung 2018). However, it can be said that sustainable product offerings at
a reasonable prices and marketing activities are the primary objective of the discount stores and
among Kmart, Target and Big W, the first two firms are successful in create and deliver a
substantial customer value than Big W. Thus, it should expand its range of price offerings and
improve its product quality and shopping experience for the customers to improve its market
position in the long run.

8PRINCIPLES OF MARKETING MANAGEMENT
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9PRINCIPLES OF MARKETING MANAGEMENT
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