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i Presented to: Gregg Steinhafel Prepared by Zenith Consulting Presented by: Kathryn Ferrell Sashwat Garg Max Hand Allison Phillips Hollis Ring Ashlyn Smorch Kids and Dairy: A New Approach to Packing Lunch April 2011

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  • i

    Presented to:

    Gregg Steinhafel

    Prepared by Zenith Consulting

    Presented by:

    Kathryn Ferrell

    Sashwat Garg

    Max Hand

    Allison Phillips

    Hollis Ring

    Ashlyn Smorch

    Kids and Dairy: A New Approach to

    Packing Lunch

    April 2011

  • i

    Zenith Consulting Wells Library, Fifth Floor 1320 East Tenth Street Bloomington, IN 47406 April 20, 2011 Gregg Steinhafel Target Corporation 1000 Nicollet Mall Minneapolis, MN 55403 Dear Mr. Gregg Steinhafel: Attached for your approval is a proposal from Zenith Consulting which presents a new program that will provide a solution to the issue presented to us. We foresee this program differentiating Target’s dairy section and increasing Target’s overall dairy market share. This proposal offers a way to simplify the shopping experience for the Target guest while satisfying their dairy needs. The research we have done has led us to find that the typical Target guest is a busy mother of two who values convenience, nutrition, taste, and making a positive impact on her community. Due to these findings, Zenith Consulting has comprised a program titled “Snacks to Pack” that addresses these needs by drawing guests towards Target’s existing dairy section. The items selected for “Snacks to Pack” are kid-friendly and can easily be packed in school lunches. Furthermore, purchasing the featured items will directly support Feeding America, offering Target guests a hassle-free way to give back to their communities. The implementation of “Snacks to Pack” is relatively simple and takes advantage of Target’s existing marketing outlets to make it a successful campaign. We at Zenith Consulting appreciate the opportunity to recommend our unique program and look forward to working with you on future projects. If any questions arise, please do not hesitate to contact us. Sincerely, Kathryn Ferrell Zenith Consulting

  • ii

    Table of Contents List of Figures ......................................................................................................................................... iii

    Executive Summary ............................................................................................................................... iv

    Introduction ............................................................................................................................................ 1

    Problem............................................................................................................................................... 1

    Purpose ............................................................................................................................................... 1

    Solution ............................................................................................................................................... 1

    Assumptions ........................................................................................................................................ 1

    Typical Target Family .............................................................................................................................. 2

    Background Information ......................................................................................................................... 3

    Shopper’s Problems ................................................................................................................................ 4

    Convenience ........................................................................................................................................ 4

    Nutrition.............................................................................................................................................. 4

    Taste ................................................................................................................................................... 5

    Making a Difference ............................................................................................................................ 5

    “Snacks to Pack” ..................................................................................................................................... 6

    Shopper’s Solutions ................................................................................................................................ 8

    Convenience ........................................................................................................................................ 8

    Nutrition.............................................................................................................................................. 8

    Taste ................................................................................................................................................. 10

    Making a Difference .......................................................................................................................... 10

    Promotion............................................................................................................................................. 12

    Costs ..................................................................................................................................................... 13

    Sunday Circular Costs ........................................................................................................................ 13

    Label Costs ........................................................................................................................................ 13

    Philanthropy Costs ............................................................................................................................. 13

    Children’s Buying Power .................................................................................................................... 14

    Financial Outlook ............................................................................................................................... 14

    Smith Family Conclusion ....................................................................................................................... 16

    Pre-Implementation SWOT Analysis................................................................................................... 17

    Post-Implementation SWOT Analysis ................................................................................................. 17

    Work Cited ............................................................................................................................................ 18

  • iii

    List of Figures

    Figure 1: 2007 Supermarket Sales ...............................................................................................3

    Figure 2 .......................................................................................................................................6

    Figure 3 .......................................................................................................................................6

    Figure 4 .......................................................................................................................................9

    Figure 5 .......................................................................................................................................9

    Figure 6: Benefits of Including Dairy in Diet .................................................................................9

    Figure 7: Charitable Donations by Gender .................................................................................11

    Figure 8: Sunday Circular Featuring "Snacks to Pack" ................................................................12

    Figure 9: Meals for Minds Costs ................................................................................................13

    Figure 10: Projected Revenue and Costs....................................................................................15

    file:///D:/TARGET/Final/target.docx%23_Toc290973474file:///D:/TARGET/Final/target.docx%23_Toc290973475file:///D:/TARGET/Final/target.docx%23_Toc290973476file:///D:/TARGET/Final/target.docx%23_Toc290973477file:///D:/TARGET/Final/target.docx%23_Toc290973478file:///D:/TARGET/Final/target.docx%23_Toc290973479file:///D:/TARGET/Final/target.docx%23_Toc290973480file:///D:/TARGET/Final/target.docx%23_Toc290973481file:///D:/TARGET/Final/target.docx%23_Toc290973482file:///D:/TARGET/Final/target.docx%23_Toc290973483

  • iv

    Executive Summary

    Now more than ever, it is vital that Target takes advantage of growing market trends,

    specifically in the dairy industry. Target has excelled in promoting the “Expect More, Pay Less”

    slogan by offering a large variety of high-quality household and apparel items, as well as other

    every day necessities, at surprisingly low prices. Target has also made a name for itself through

    supporting charitable causes nationwide, donating a total of 5% of their overall proceeds to

    nation-wide charities.

    However, while Target has maintained a positive brand image and reputation, there is still

    room for improvement in Target’s dairy department. Dairy products are simply not bringing in

    a substantial amount of revenue for Target. Despite the economic downturn in recent years,

    the worldwide dairy industry has grown at a rate of 3% annually. Target must step out from

    behind the shadows of industry leaders and differentiate itself from the competitors in order to

    take advantage of this growing industry.

    This differentiation can be achieved through a unique program that centers around typical

    Target guests and their dairy needs. “Snacks to Pack” promotes dairy through convenient and

    nutritious kid-friendly lunch items. It also incorporates the philanthropic initiative, Meals for

    Minds, a partnership with Feeding America that helps feed hungry children nationwide.

    This new promotional strategy targeting children and their parents will lead Target’s dairy sales

    to new heights. This is a result of tapping into the $1 trillion spending power of children in

    America. The convenience of “Snacks to Pack” paired with the giving nature of Meals for Minds

    will increase dairy revenues for Target. In addition, Target will have a competitive advantage

    over industry rivals, ultimately securing a place for Target in the growing dairy segment.

  • 1

    Introduction

    Problem Target is a one-stop shop offering a wide variety of items, ranging from cosmetics to

    electronics, and even groceries. However, while Target excels in sales of household essentials

    and apparel, Target’s grocery department still has the potential to grow, specifically in the dairy

    section. Dairy products, often considered essential items for Target guests, are not bringing in

    an adequate amount of revenue. Target’s lack of differentiation in the dairy department has

    guests overlooking Target when their dairy needs arise. By continuing to operate in the

    shadows of the industry’s leaders, Walmart and Costco, Target is missing out on opportunities

    to increase revenue in a growing market.

    Purpose The purpose of this report is to outline a plan for Target that will increase dairy sales by

    differentiating the dairy department. We at Zenith Consulting believe that with a new

    promotional strategy targeting children and their parents, Target dairy sales will reach new

    heights.

    Solution The growth of Target’s dairy sales will be achieved through “Snacks to Pack,” a creative

    promotional campaign aimed towards hard-working parents with hectic lifestyles. “Snacks to

    Pack” makes it simpler for parents to find tasty, yet nutritional items that their children will

    enjoy by promoting kid-friendly dairy products. In addition, our plan features an expansion on

    one of Target’s existing charitable partnerships, Meals for Minds. Pairing “Snacks to Pack” with

    Meals for Minds will create a competitive advantage in the dairy department for Target among

    other discount retailers.

    Assumptions Small assumptions were made in preparing this report. First, we were unable to find the exact

    percentage of Target’s dairy sales, as the only statistic we found combined grocery and pet food

    sales in the same category. With that said, we assumed that Target’s dairy sales are even lower

    than this percentage. Second, we do not know where Target’s product labels are printed. We

    assumed Target’s label costs are comparable to Maverick Label’s prices. These assumptions are

    conservative and have no drastic effect on the profitability or originality of “Snacks to Pack.”

  • 2

    Typical Target Family

    The Smiths are typical Target guests. Mr. Smith is a car salesman, working approximately 60

    hours per week, while Mrs. Smith is a real estate agent whose schedule is unpredictable.

    Together, the Smith household income is roughly $64,000 a year. Mr. and Mrs. Smith have two

    children: six-year-old Susan and nine-year-old Nicholas. Between working full-time, taking care

    of the kids, and managing extra-curricular activities, the Smith’s lives are extremely hectic. Let

    us lead you through an average morning at the Smith household.

    It’s 5:00 a.m. Mr. Smith wakes up and prepares for a long day at the dealership. One hour

    later, Mrs. Smith’s alarm clock sounds. She jumps in the shower, wakes up the kids, and starts

    to put together school lunches. Scrambling through the kitchen to find healthy items that

    Susan and Nicholas will enjoy, Mrs. Smith is at a loss. Finally, she decides on a peanut butter

    and jelly sandwich, bag of chips, cookie, and a juice box for each of the lunches, the same

    boring meal as every other day.

    The Smith household is a fictional family based off the average demographics of a Target guest.

    Target guests have a median age of 40 with a median household income of $64,000. Roughly 43%

    of Target guests have children living at home (Target, 2011a).

    Source: Oscoda County, MI

    However, this is only the start of Mrs.

    Smith’s problems. It’s 5:00 p.m. Mrs.

    Smith decides to run by the grocery store

    on her way home from work to pick up a

    few lunch items for the kids. With the

    intention of finding more nutritious and

    delicious lunches, Mrs. Smith glances at the

    shelves. She is overwhelmed. There are

    too many options, and as a result, Mrs.

    Smith reluctantly decides on the usual.

    If only there was an easier way to shop for

    and prepare kids’ lunches! Fortunately for

    Mr. and Mrs. Smith, Target can make this

    possible.

  • 3

    $-

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    $40

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    $80

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    $120

    SuperTarget WalmartSupercenters

    Costco WholesaleGroup

    Meijer, Inc.

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    Supermarket Chains

    Background Information

    Target’s grocery department is not differentiated from its competitors. As a result, Target has

    low grocery sales and a very small percentage of the overall grocery market share. With total

    supermarket sales reaching $556.9 billion in 2009, Target’s grocery sales were minimal in

    comparison with earnings of only $10.5 billion, as shown in Figure 1 (FMI, 2009). The top U.S.

    grocery chains include many stores similar to Target, such as Walmart, Costco, and Meijer. A

    recent survey conducted by the Food Marketing Institute ranked Target 19th for annual grocery

    sales, with a $194.046 billion difference between Target and Walmart, the top earner (FMI,

    2007).

    A major component of Target’s struggling grocery department is the dairy section. Because

    dairy products are seen as necessary items, unlike the exciting household goods and apparel

    that Target is better known for, dairy sales are meager. Put simply, guests do not go to Target

    for dairy products. Target’s financial reports illustrate this. In 2010, grocery items combined

    with pet supplies contributed to only 17% of total sales, with dairy sales making up an even

    smaller percentage (Target, 2011b). Although the dairy market has not soared, the future is

    quite promising due to expanding demand. Since 2000, the demand for this industry has been

    growing 3% every year (Yonkers, 2010).

    Source: Food Marketing Institute 2007

    Figure 1: 2007 Supermarket Sales

  • 4

    Shopper’s Problems

    As the Smiths illustrate, it is not always possible to prepare great school lunches. Parents simply

    do not have time to put together nutritional, tasty lunches that their kids will enjoy. In order to

    find a solution to this problem, it is important to first understand the guest’s needs.

    Convenience The typical Target guest has a busy life and does not have time to leisurely shop for groceries.

    Twenty-two percent of moms today choose lunch items out of convenience alone (Jegtvig,

    2008). Saving time is also important. A 2008 Nielson survey found that the average family

    makes 1.9 grocery trips per week (98 trips per year), with each trip taking between 48 to 58

    minutes. The majority of this time is spent on traveling to and from the store (Economiser

    Publications, 2010). In a day and age when time is money, a more simple shopping experience

    is necessary.

    Target prides itself on having a lot of options for their guests. However, the large volume of

    products offered can create an overwhelming atmosphere to shop in. This is called choice

    overload. When a customer is faced with too many options, the differences between the

    choices become smaller, resulting in discouragement. According to Behavioral Marketing

    (2010), choice overload also leads to a lack of commitment, increased regret, and overall

    dissatisfaction with the final choice. In addition, a chaotic environment negatively affects sales,

    as guests either give up looking for the desired item or take their business elsewhere.

    Nutrition The average parent does not have the time or resources to make their child’s nutrition a top

    priority. This ultimately affects the health and well-being of children. According to the

    president of the School Nutrition Association, Dora Rivas, home-packed lunches contain more

    sodium, less vitamin A, calcium, iron and fiber than school lunches (Cullen, 2010).

    According to the Food Standards Agency, the typical bagged lunch consists of a sandwich,

    snack, dessert and sugary beverage, with 87% of lunches containing a white bread sandwich,

    71% containing chips, and 60% containing chocolate (BBC News, 2003). Altogether, this lunch

    adds up to a whopping 750 calories. To put this number in perspective, a cheeseburger, fries,

    and soft drink from McDonald’s, a restaurant chain known for its unhealthy choices, contains

    70 fewer calories (McDonald’s, 2007).

    The Food Surveys Research Group defines certain nutrients as “shortfall nutrients,” meaning

    many people do not consume the recommended amount. In fact, these deficiencies are so

  • 5

    remarkable that the United States Department of Agriculture recognizes this as a national

    concern. Potassium, Calcium, and Vitamin D are among the most common “shortfall nutrients”

    (U.S. Department of Agriculture, 2010).

    Children go through drastic changes during elementary school, both physically and mentally.

    The food they consume is a critical component in their growth and development. According to

    the Child Development Institute (2010), “Recent research shows that nourishing food not only

    makes a child healthier, it makes him more emotionally stable, and it improves school

    performance.” This illustrates how crucial it is for parents to provide their children with options

    that hold nutritional value.

    Taste No one can argue that kids are hard to please when it comes to food. Ninety-seven percent of

    moms think that their children believe taste is the most important factor at lunch (Jegtvig,

    2008). According to Target’s Merchandise Planning Director, Kristin Shane (2011), the typical

    Target guest is a mom with more than one child. This gives the average Target mom multiple

    tastes to satisfy. Because taste is such an important factor for guests when purchasing food,

    offering top quality products at Target is essential.

    Making a Difference The typical Target mom strives to have a positive impact on her surrounding community.

    However, with the chaos of everyday life, it is difficult for Target moms to volunteer and

    participate in community outreach. Moms are looking for fast and simple ways to contribute to

    those in need without altering their already hectic lifestyles.

  • 6

    Snacks to Pack

    The solution to these problems lies in a program

    titled “Snacks to Pack,” a promotion that

    eliminates the chaos in school lunch

    shopping. “Snacks to Pack” works by

    emphasizing healthy, kid-friendly products in

    Target’s grocery section with eye-catching in-

    store signage. With “Snacks to Pack,” moms will

    no longer have to search through product upon

    product to find nutritional items that their

    children will enjoy. Instead, appetizing options

    for school lunches will be easy to spot, making

    the hectic nature of grocery shopping a thing of

    the past. The in-store signage will include small lunch

    bag shaped logos that will promote a variety

    of Target’s tasty snack products. The

    “Snacks to Pack” logo, featured in Figure 2,

    will be placed next to the product’s price

    information, comparable to the “Sale” signs

    in Figure 3. The logos will advertise the

    promotion’s name, “Snacks to Pack”, as well

    as Meals for Minds, a philanthropy initiative

    that will be discussed later.

    Figure 2

    “Snacks to Pack”

    “Snacks to Pack” will incorporate the following kid-friendly dairy products that are appropriate

    for school lunches:

    Yoplait Kids Yoplait Go-Gurt Yoplait Splitz Yoplait Trix Dannon Danimal Products Breyers 100 Calorie Nonfat Yogurt Breyers YoCrunch Yogurt

    Polly-O Kraft String Cheeses Market Pantry Cheese Sticks Laughing Cow Cheeses BabyBel Cheese Snacks Sargento String Cheese Sargento Snack Sticks Jell-O Pudding Cups Jell-O Gelatin Cups

    Source: All Over Albany

    Source: All Over Albany

    Figure 3

  • 7

    These items were chosen for the “Snacks to Pack” promotion because they:

    Are already available at Target

    Prove to be popular items

    Satisfy our kid-friendly direction

    Selecting products Target already carries eliminates some of the costs and hassles typically

    associated with new promotions. “Snacks to Pack” will utilize the resources Target already has.

    In addition, many of the products selected are top-sellers. For instance, the two best-selling

    yogurt brands in America are included in “Snacks to Pack,” Dannon and Yoplait (All Grown Up,

    2010). The selected products also have various characteristics that appeal to children, allowing

    Target to take advantage of the family trend that is currently shaping the grocery industry.

    Even Kristin Shane (2011), Merchandise Planning Director for Target, claims that the dairy

    market is gravitating towards kid-friendly products.

  • 8

    Shopper’s Solutions

    Implementing “Snacks to Pack” will solve many of the problems facing Target guests today.

    Specifically, guests will benefit from added convenience, nutrition, and taste, as well as

    increased charitable opportunities.

    Convenience As previously stated, customers on average are spending 48 to 58 minutes in the grocery store

    per trip (Economiser Publications, 2010). With “Snacks to Pack,” the amount of time spent

    browsing through the grocery aisles will be reduced. Target guests will no longer be

    overwhelmed by many options. Instead, the “Snacks to Pack” logo will lead the Target guest to

    kid-oriented snacks that are both nutritional and appetizing. This time-saving solution will

    enhance the overall Target shopping experience.

    “Snacks to Pack” not only saves time while shopping in the grocery store, but it also saves time

    when parents are packing lunch at home. On average, it takes four minutes for parents to pack

    a lunch, with 20% of parents taking more than five minutes to prepare their children’s lunches

    (Briggs, 2009). With “Snacks to Pack,” there is no need for preparation, as these snacks can

    simply be tossed into a lunch box.

    Nutrition “Snacks to Pack” items provide more nutritional benefits than the average school lunch options.

    Figure 4 illustrates the typical bagged lunch that was previously described, while Figure 5 shows

    a bagged lunch comprised of various “Snacks to Pack” items. By replacing a bag of chips,

    cookies, and a sugary beverage with “Snacks to Pack” yogurt, Jell-O, and milk, the nutritional

    value of the lunch is dramatically increased. Specifically, calories decrease by 250, total fat is

    reduced by 18.5g, and sodium decreases by 100mg. Furthermore, two “shortfall nutrients,”

    Vitamin A and Calcium, increase by 16% and 40%, respectively.

  • 9

    180

    58 56 49 46

    Vitamin D Vitamin A Vitamin B-12 Calcium Riboflavin

    Pe

    rce

    nt

    Dif

    fere

    nce

    Nutrients

    This increase in “shortfall nutrients” is due to the addition of dairy items in the lunch featured

    in Figure 5. Increasing overall dairy consumption corrects the issue of “shortfall nutrients,” as

    shown in Figure 6. For instance, the chart illustrates that those who drink milk regularly

    consume 180% more Vitamin D than those who do not (U.S. Department of Agriculture, 2010).

    Source: Food Company Nutrition Information Source: Food Company Nutrition Information

    Source: National Health and Nutrition Examination Survey, 2005-2006

    These nutritional facts are based off of a

    typical school lunch including a peanut butter

    and jelly sandwich, a bag of Lay’s potato chips,

    a serving of Chips Ahoy cookies, and a Capri

    Sun juice pouch.

    These are the nutritional facts of a lunch

    consisting of a peanut butter and jelly

    sandwich, a serving of skim milk, and “Snacks

    to Pack” items including Yoplait Go-Gurt and

    Jell-O Sugarfree Gelatin.

    Figure 4 Figure 5

    Figure 6: Benefits of Including Dairy in Diet

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  • 10

    Source: thisnext.com

    Taste Can an enticing image translate into good taste? For children this is certainly true. Researchers

    from Yale University found that 85% of children opt to eat snacks with cartoon decorations on

    the packaging rather than snacks with plain wrapping. What is even more surprising is that 55%

    of children insist that cartoon-decorated snacks actually taste better (Cox, 2010)! When

    targeting kids, it is clearly important to focus on taste. However, what this study has proven is

    that fun advertising and cartoon characters may be even more important when trying to appeal

    to children’s taste buds.

    Making a Difference An important aspect of our plan involves Target’s partnership with Feeding America, the

    nation’s leading organization for fighting hunger in the United States. In 2001, Target and

    Feeding America partnered to create Meals for Minds, a program that brings school lunches to

    students who need it the most. Many children in the United States are unable to succeed in

    school because they are simply too hungry to stay focused on the lessons presented in class. In

    an effort to help, 63% of teachers regularly buy food for the classroom with their own money,

    but this is not enough. According to Feeding America’s website, 62% of teachers admit that

    some of their students aren’t getting enough to eat (Greear, 2010).

    Thus far, Meals for Minds has been a successful program, raising $2.3 million in 2010 alone

    (Greear, 2010). "The program is strengthening the relationship between the community and

    the school and really increasing parental involvement. There's a positive difference in the

    Fortunately, Target already offers many products that fit

    this criterion, such as Yoplait Kids, Yoplait Trix, and

    Dannon Danimal products that feature Dora the

    Explorer, the Trix Rabbit, and zoo animals, respectively.

    With these popular and inviting characters, children will

    be begging their parents to purchase “Snacks to Pack”

    products.

    Thanks to the fun packaging of “Snacks to Pack” items,

    Mrs. Smith will no longer have to worry about whether

    or not her children are eating their lunches. In fact, the

    only thing Mrs. Smith will have to worry about is her

    children being pelted with pleas from peers to trade

    lunch items.

  • 11

    35.9

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    ReligiousInstitutions

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    Charitable Causes

    Female Male

    Most importantly, philanthropic partnerships increase customer loyalty. Guests are willing

    to continuously pay higher prices for philanthropic-associated items. For example, Gap’s

    “RED” campaign to benefit AIDS research captured the hearts of people worldwide and

    turned casual Gap shoppers into devout loyal customers (Gap as a Charity, 2009). By adding

    “Snacks to Pack” to the already successful Meals for Minds partnership, the same will

    happen to Target.

    school's overall climate,” said John Shaia, the director of programs and network services for

    Maryland Food Bank (Garton, 2010).

    Because of this success, we believe that Meals for Minds has the ability to increase Target’s

    revenues in a unique way. Our plan is to tie the “Snacks to Pack” promotion directly to Meals

    for Minds. This will involve donating 2% of every “Snacks to Pack” sale, up to $2.5 million

    annually, to Meals for Minds. In other words, when a Target guest buys an item for their child’s

    lunch, a child in need will receive food as well.

    This new collaboration of “Snacks to Pack” and Meals for Minds has the potential to drastically

    boost Target’s dairy sales. Target guests will be more likely to buy “Snacks to Pack” dairy items

    if they know that some of the money they spend will go towards a worthy cause. In fact, a

    survey conducted by Edelman (2009), a public relations firm, found that “61% of people have

    purchased a brand that supports a good cause, even if it wasn’t the cheapest brand.”

    Source: Women Give, 2010

    Moms who shop at Target are

    even more likely to do this.

    According to a survey conducted

    by Cone LLC, a marketing

    research firm, the number of

    mothers who buy philanthropic

    products is more striking than

    any other age group (Palmer,

    2010). Furthermore, “Female-

    headed households are more

    likely or as likely to give as male-

    headed households in every

    charitable subsector” (Women

    Give, 2010).

    Figure 7: Charitable Donations by Gender

  • 12

    Buy any item with this symbol and 2% of the sale with go to Meals for Minds

    Promotion

    “Snacks to Pack” will be implemented in 600 stores nationwide including 250 SuperTargets and

    350 Target PFresh stores. Because these outlets already carry the previously mentioned

    “Snacks to Pack” items, they are ideal candidates for this promotion.

    Advertising for “Snacks to Pack” will be placed in the Sunday Circular. The advertisement will

    be placed at the bottom of the page, as shown in Figure 8. As the circular comes out every

    Sunday, there will be many opportunities to feature the “Snacks to Pack” promotion. In order

    to generate customer recognition, repetition is necessary. This involves introducing the

    promotion by including it in every Circular for the first month of the program and bi-monthly

    after that to keep “Snacks to Pack” present in guest’s minds.

    Original Source: Target.com

    Sn acks

    to Pack

    Figure 8: Sunday Circular Featuring "Snacks to Pack"

  • 13

    During 2010, Target donated $2.3

    million to Feeding America (Greear,

    2010). The Meals for Minds

    component of “Snacks to Pack” will

    be comparable to this amount. Two

    percent of “Snacks to Pack” sales will

    be donated to Meals for Minds with

    a cap at $2.5 million annually. With

    this in mind, projected philanthropic

    costs are relatively close to 2010’s

    philanthropic costs, as shown in

    Figure 9.

    $0

    $500,000

    $1,000,000

    $1,500,000

    $2,000,000

    $2,500,000

    $3,000,000

    2010 Donations Proposed Donations

    Costs

    One of the best features of the “Snacks to Pack” promotion is that it is not cost intensive. This

    promotion can be broken down into three simple costs: Sunday Circular costs, label costs, and

    philanthropy costs.

    Sunday Circular Costs The cost of advertising in the Sunday Circular is merely an opportunity cost for Target. The

    “Snacks to Pack” promotion will simply take the place of other promotions and special offers.

    However, this opportunity cost is worthwhile, because “Snacks to Pack” is a promotion that

    needs to be brought to the public’s attention before it can become a successful campaign.

    Label Costs Labeling costs will be relatively inexpensive for Target. According to Maverick Label

    (n.d.), a 3’’ by 2’’ rectangular label with three colors costs $384.75 for 15,000 units. The

    estimated cost to obtain the 150,000 stickers necessary for the 250 SuperTarget stores and

    roughly 350 PFresh Target stores is $4,000. This allows for approximately 250 “Snacks to Pack”

    labels to be distributed to each store. This quantity is necessary to accommodate the 15

    featured “Snacks to Pack” products. This also takes into consideration the inevitable damage

    that will come to some of the logos over time.

    Philanthropy Costs

    Source: Target Meals for Minds, 2010

    Figure 9: Meals for Minds Costs

  • 14

    Benefits

    Implementing “Snacks to Pack” will have many benefits for Target. By differentiating itself

    through the “Snacks to Pack” program, Target will increase dairy profits.

    Children’s Buying Power Twenty-six percent of moms take their children’s suggestions in mind while grocery shopping

    (Jegtvig, 2008). In addition, the spending power of children in America is approximately $1

    trillion annually, according to the Advertising Educational Foundation (n.d.). This means that

    children have an astounding influence on what groceries their parents buy. By appealing to

    children through kid-friendly products in “Snacks to Pack,” Target will be able to increase profits

    through children’s influence.

    Financial Outlook Target’s total 2010 revenue was $67.39 billion across its 1,755 stores nationwide (Target

    2011b). The “Snacks to Pack” promotion will affect 600 of these 1,755 stores, approximately

    34% of total Target locations. From this, it can be assumed that these 600 stores contributed to

    roughly $23 billion in revenue in 2010. According to Progressive Grocer (2010), dairy sales in

    2010 made up 9.8% of revenue for supermarkets, which is comparable to the revenue of

    SuperTargets and PFresh stores. Based on this data, the 600 stores that will implement “Snacks

    to Pack” brought in $2.25 billion in dairy revenue in 2010. The “Snacks to Pack” promotion

    incorporates 15 products, an estimated 6% of Target’s total dairy section. With that said,

    “Snacks to Pack” items brought in $135 million in 2010.

    According to Lisa Kopochinski, author of Retail Philanthropy, products that have an ethical

    backing increase sales for that product by 17%. This statistic is especially true for grocery

    products (Kopochinski, 2007). This 17% increase will bring in an additional $22.95 million of

    revenue through the Meals for Minds component of “Snacks to Pack.”

  • 15

    $0

    $5,000,000

    $10,000,000

    $15,000,000

    $20,000,000

    $25,000,000

    Increased Revenue Increased Costs

    This $22.95 million increase in revenue is a result of only the Meals for Minds aspect of “Snacks

    to Pack.” We believe the added convenience, nutrition, and taste of “Snacks to Pack” products

    will bring in additional revenue for Target as well. However, a specific increase in revenue from

    these factors cannot be accurately predicted without further market research.

    This $22.95 million increase in

    revenue is significant compared

    to the overall costs of

    implementing “Snacks to Pack.”

    Source: Multiple Sources

    Figure 10: Projected Revenue and Costs

  • 16

    Smith Family Conclusion

    Now that buying dairy products under the “Snacks to Pack” program is possible, let us check

    back in with the Smiths.

    It’s 5:00 a.m. Mr. Smith wakes up and prepares for a long day at the dealership. One hour

    later, Mrs. Smith’s alarm clock sounds. She presses the snooze button. After getting up, she

    takes her time in the shower and then wakes up the children. Because Mrs. Smith’s refrigerator

    has many “Snacks to Pack” options, she no longer has to scramble through the kitchen looking

    for healthy items for Susan and Nicholas. Instead, she grabs a Yoplait Go-Gurt and a Jell-O

    Gelatin Cup to toss into each of the lunches. Not only is Mrs. Smith’s morning off to a great

    start, but her children can’t wait for lunch time!

  • 17

    Appendix

    Pre-Implementation SWOT Analysis

    Pre Implementation SWOT Analysis Strengths Weaknesses

    Competitive Prices

    Wide Product Portfolio

    Recognizable Brands Strong Market Presence

    Non-distinguishable Products

    Inability to Change Shelving Layout

    Opportunity Threats Chance to Differentiate from

    Competitors

    Increase Customer Loyalty

    Growing Dairy Market Building upon Existing Charitable

    Partnerships

    Competing Prices of Industry Rivals

    Competition for Customer Loyalty

    Post-Implementation SWOT Analysis

    Post Implementation SWOT Analysis Strengths Weaknesses

    Appeals to the Typical Target Guests

    Convenient, Nutritional, Tasty, and Philanthropic

    Attached Philanthropy Benefits Community

    Cost Efficient

    New Untested promotion

    Difficult to Advertise Does not Include Butter, Cream

    Cheese, or Other Commonly-used Dairy Products

    Opportunities Threats Target Emerges as a Dairy Leader

    Dairy Product Producers Will Change Their Products to Match the Promotion

    Could be Applied to Other Sections of Grocery Department

    Easy for Other Stores to Replicate

    Wal-Mart Lowering Prices to Rival Promotion

  • 18

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