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Page 1: Vivid Visions FINAL REPORT
Page 2: Vivid Visions FINAL REPORT

ii

Proposed to

Brian Cornell

President and C.E.O.

Prepared by

Vivid Visions Soonyeub Lee

Alec Harris

Christopher Wright

Elleree Evans

Anastasia Kilmer

April 13th, 2015

A Golden Bridge Between Target Home and the Market

Page 3: Vivid Visions FINAL REPORT

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Kelley School of Business

1309 E. 10th Street

Bloomington, IN 47405

Brian Cornell, President and CEO

Target Corporation

1000 Nicollet Mall

Minneapolis, MN 55403

Dear Mr. Cornell,

SUBJ: Leveraging Pinterest to Improve Shopping Experience and Marketing in the Target Home

Vivid Visions appreciates the opportunity to support Target Corporation’s traditional brand

promise, “Expect More, Pay Less”. Within a year, we will work with the Home department to

proactively accommodate the consumer trend, which shows a demand for brand engagement

through social media. Target Home has begun to utilize several social media such as YouTube,

Facebook, and Pinterest to market its product assortment. Amongst all social media applications,

Pinterest suits best for marketing Target Home’s line of products. Vivid Visions will further

leverage Pinterest’s high marketing potential by integrating it directly into Target’s online channel

infrastructure. To deliver an omnichannel shopping experience that reflects this marketing strategy,

we will develop a system that will allow Cartwheel mobile application users to scan barcodes of

products in-store and seamlessly engage a shopping experience through Pinterest.

Growth of e-commerce in the last decade has provided consumers with unprecedented market

transparency. Competition among retailers stiffens as consumers increasingly use e-commerce to

research products and find optimal deals. Reflecting the changing consumer behavior, Target can

better cater as well as attract consumers by expanding its marketing presence in the online channel

through Pinterest. Utilizing Pinterest is cost free and an effective online marketing tool for

attracting consumers who use social media to make purchasing decisions. While Target currently

has a strong online presence in the retail sector, it can stay ahead of its competitors by taking

advantage of Pinterest and all it has to offer.

We would like to thank Professor Dana Cattani of Indiana University for her aid in our report.

For any questions, feel free to contact Vivid Visions by email at [email protected] or by

phone at (937) 844-7428. We look forward to being of further assistance to Target and its Home

Department.

Sincerely,

Vivid Visions

Page 4: Vivid Visions FINAL REPORT

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Table of Contents

Letter of Transmittal ……………………………………………………………………..iii

Table of Contents ……………………………………………………………………………….iv

List of Figures .……………………………………….………………………………………….v

Executive Summary …………………………………………………………………………….vi

Target Races to Capture Audience in Online Channels …………………………………….. 1

Target Successfully Engage Modern Consumers with Technology………………………1

A Little Bump in Target’s Efforts ……………….………………………………………..1

Young Consumers Shop with Research…………………………………………………...2

Wal-Mart is a Leader in Digital Consumer Engagement…………………………………….3

Pinterest Integration into Target’s Online Infrastructure…………………………………….3

Target’s Use of Pinterest Accommodates Consumers ……………………………………4

What Does Pinterest Bring to the Table for Target Home? ………………………………4

Target needs to bridge limited in-store with limitless online……………………………..4

Implementation…………………………………………………………………………………..6

The first step is choosing which products to include……………………………………...6

Target’s IT team will funnel network barcodes through Cartwheel………………………6

Target will market on social media with Pinterest perks………………………………….7

Pinterest will blossom as a marketing tool for Target Home……………………………...8

Profit Analysis…………………………………………………………………………………...8

Best Case Scenario………………………………………………………………………..9

Implementation is expected in 10 months! ………………………………………………..9

Appendices……………………………………………………………………………………...10

Appendix A: Pre-SWOT Analysis……………………………………………………….10

Appendix B: Post-SWOT Analysis……………………………………………………...11

Works Cited…………………………………………………………………………………….12

Works Consulted……………………………………………………………………………….15

Page 5: Vivid Visions FINAL REPORT

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List of Figures

Figure 1: Total Minutes Spent via Target Mobile……………………………………… 1

Figure 2: U.S. Consumer Spending By Age……………………………………………. 2

Figure 3: 2013 Q3 Unique Visitors in Top Retailers…………………………………… 3

Figure 4: Selected Top Retailers: Percent Change in Mobile Visitors…………………. 3

Figure 5: Target Home’s Current In-Store Display…………………………………….. 5

Figure 6: How Customers Use Mobile Phones In Stores………………………………. 5

Figure 7: Sample Database Structure………………………………………………….. 6

Figure 8: Pinterest Link On Target.com………………………………………………. 6

Figure 9: Barcode Scanner To Be Used on Cartwheel App………………...…………. 7

Figure 10: Special Coupons For Target Home Will Be Offered Through Pinteret…… 8

Figure 11: Best/Base/Worst Case Scenario Profit Analysis……………………………. 9

Figure 12: Implementation Expected in 10 Months…………………………………… 9

Page 6: Vivid Visions FINAL REPORT

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Executive Summary

Purpose of the Report

Our report (1) details recent changes to the consumer landscape and (2) recommends a

marketing strategy that utilizes Pinterest social media to effectively connect Target Home with

consumers in both online and in-store channel. The report will outline the major details of

implementation of the strategy.

Unique Change in Consumer Demographics and Behavior

By 2020, millennials will account for 30% of US retail sales and become the major

consumer group (Seamless Retail). As always, a shift occurs every twenty years in consumer

demographics that place a particular generation as a major spending group. The current shift is

important for Target since the millennials have a unique consumer behavior; for they are the first

generation to truly rely on technology to make purchasing decisions. To connect with this growing

consumer demographic, Target needs a profitable marketing strategy that seamlessly engages

guests through a technological medium in both the online channel as well as brick-and-mortar

stores.

Target Targeting on Pinterest Audience

Pinterest is a platform that Target’s current demographic of consumers as well as

millennials use to share and review products. The platform emphasizes the use of photographs to

describe products and displays many photographs of home goods in application. For instance,

many listings of Target Home décor products on Pinterest show photographs of the décors set in

real-life settings. Product photographs allow consumers to naturally compare products visually and

aid their purchasing decisions. For each product listing, users can also leave reviews, which can

further help consumers in product research. Despite research showing 69% of online consumers

who visit Pinterest have found an item they’ve purchased or wanted to purchase as compared to

only 40% of online consumers who visit Facebook, Target’s Pinterest engagement is lackluster

compared with its attention to Facebook and Twitter (Moth). Target Home can capitalize on

Pinterest’s large consumer audience to effectively capture attention for its product assortment.

Implementation

1. Extract product assortment selected for listing on Target’s Pinterest

2. Integrate Pinterest into Target’s website infrastructure

3. Market the Target/Pinterest system through social media and Pinterest-specific coupons

Page 7: Vivid Visions FINAL REPORT

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Target Races to Capture Audience in Online Channel Target Successfully Engage Modern Consumers with Technology

Target has strived to engage the rising generation of technological consumers. In 2013,

Target launched the Cartwheel mobile application to provide personalized, membership

discounts for customers. The application launch proved to be successful. In complement with the

shopping mobile application, Target increased the overall traffic in its mobile channel. In

comparison between September 2013 and September 2014, Target’s mobile usage increased by

78%, with Cartwheel accounting for the majority of that increase (State of the U.S.).

Figure 1 (State of the U.S.)

Target maintains presence on YouTube, Twitter, Facebook, and to a limited extent,

Pinterest. If Target can effectively leverage the marketing potential of social media, Target can

establish stronger prominence in the online channel, which is a key factor in attracting current

consumers.

A Little Bump in Target’s Efforts

During mid-December 2013, Target experienced a data breach that compromised 40

million credit/debit card accounts, as well as personal data for roughly 70 million people (The

Target Breach). The event rendered in 46% drop in profits during the fourth quarter of 2013 and

has negatively affected consumer confidence towards the company (The Target Breach). To

instill a positive image of Target into the consumers’ mind, Target must do more than simply

reinforce its security. With excellent service and products, Target must obtain consumers’

attention and engage them closer. Currently, Target can effectively communicate with consumers

through social media, because for today’s consumers, social media is one of the most prominent

mediums of communication.

Page 8: Vivid Visions FINAL REPORT

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Young Consumers Shop with Research

Millennials will be the next prime spending consumers within the retail industry. This

demographic of 13 to 30 year olds makes up approximately 15-30% of the US population, and

expects easy access to comment on the world through computers and social media (Kiersz).

Millennial shopping has grown a steady 3% and will account for nearly one-third of total

spending by 2020 (Donnelly). By this time, Millennials will surpass the Baby Boomers with a

collective spending power of $1.4 trillion (Jenkins).

Figure 2

(Kiersz)

75% of millennials research a product before making purchasing decisions, which implies

that online presence is essential for retailers (Lewis). They research before purchasing to search

for the lowest prices and shipping costs amongst all other retailers. As compared to other

demographics, millennials are 247% more likely to be influenced by social networking sites

(Inside the Heads). 63% of millennials stay up-to-date on brands via social media while 44% are

willing to promote brands on their social networks (Jenkins). In addition, 28% of millennials will

make a purchase due to social media recommendations (Donnelly). Such numbers manifest the

significant influence of social media on consumers. Providing information to this demographic in

real-time is crucial to influencing their decision-making.

Interestingly, although millennials heavily use technology to make purchasing decisions,

they still like brick-and-mortar stores. In fact, 82% of them prefer to shop and make transactions

in brick-and-mortar stores (Donnelley). In addition, 68% of all millennials demand an integrated,

seamless experience regardless of the channel. They want engagement that transitions

effortlessly from smartphone or personal computer to physical store in their quest for the best

products and services (Cox).

Page 9: Vivid Visions FINAL REPORT

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Wal-Mart is a Leader in Digital Consumer Engagement Figure 3 (State

Target has risen in the ranking of top retail sites; it

ranks fourth in the number of total website visits during the

third quarter of 2014 (State). Yet, Target’s major competitor,

Walmart, still leads in the number by 22 million visitors

(43%) (State). Isolating the number of website visitors in the

mobile channel, Walmart recorded 84% growth in the

number of visits from 2013 to 2014 while Target recorded

35% growth, respectively. Target needs to take lead in

capturing consumers’ attention in the online channel (State.

Figure 4 (State of the U.S.)

Pinterest Integration into Target’s Online Infrastructure

To foster the usage of Pinterest’s marketing potential, the social media must become

directly integrated into Target’s infrastructure. For shoppers engaging Target.com, users can

seamlessly connect to Pinterest for respective products though hyperlinks. For users who engage

Target’s Pinterest initially, there will be direct reverse links to product descriptions on

Target.com. This access is an opportunity to link customers to product reviews, and leverage the

marketing potential of Pinterest through Target’s website.

In physical stores, barcodes create a quick and seamless transition between smart phones

and Pinterest/Target.com. Through the Cartwheel application, shoppers can scan barcodes and

become directed to Pinterest for the respective products. On Pinterest, customers have access to a

collection of information to support consumer decision-making in-store including images

ranging from simple product pins to showroom images. The strategy will appeal to the

expectations of quick-paced, tech-savvy consumers and compensate for the lack of limited in-

store showrooming at Target Home. This in-store strategy will accommodate millennial

consumers that expect a seamless omni-channel experience.

Page 10: Vivid Visions FINAL REPORT

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Target’s Use of Pinterest Accommodates Consumers

Establishment of presence in online and mobile platforms is already in Target’s arsenal,

but Target’s engagement is misplaced. While 71% of consumers are likely to make purchases

based upon social media referrals (Stadd), and 51% of millennials say website opinions have

greater impact on purchasing decisions than family and friend recommendations (Talking To

Strangers), some platforms outreach others. Target has accomplished 22 million Facebook

followers, but is still missing out on a large section of the market by barely engaging with only

146 thousand Pinterest followers, despite 43% of Pinterest millennials reporting interactions with

retailers and brands they like (Nanji). In fact, 69% of online consumers who visit Pinterest have

found an item they’ve purchased or wanted to purchase as compared to the 40% of online

consumers who visited Facebook (Moth). While 64% of millennials feel companies need to offer

more engagement and opportunities to share opinions with other consumers, Target is yet to

mention their Pinterest account in the past three months (Talking To Strangers).

What Does Pinterest Bring to the Table For Target Home?

Pinterest, an online sharing forum where images are ‘pinned’ to collection boards for

public views and comments, is now the 3rd most popular social network site (2012 Digital

Marketer). In addition to its popularity, Pinterest’s top searched topics include home décor and

design (Hanson). 28% of Pinterest guests are age 25-34 and are looking for products to fill

household space (Ledbetter). As a platform for feedback and consumer engagement, Pinterest

already has the traffic base with a claim of 63 million monthly active users in the fourth quarter

of 2014 (Will Pinterest Reach). Pinterest is the ideal social media for building a bridge between

Target Home and home goods shoppers.

Target’s needs to bridge limited in-store with limitless online.

Target Home’s product assortment layout does not reflect the trendy image that Target’s

website and brand suggest. They do not offer options to explore products in stylized settings like

competing retailers like Ikea, and Bath, Bath and Beyond. In Target Home, merchandise is

shelved as if sold in a warehouse, without styled layouts to demonstrate the potential of the

stocked items. This lack of visual appeal and functionality disrupts the preference of 68% of all

millennials for a seamless shopping experience regardless of channel (Donnelly).

Page 11: Vivid Visions FINAL REPORT

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Figure 5

Data regarding recent consumer trends suggests that utilizing technology can compensate

for Target Home’s limited in-store product layout. 86% of retailers report that customers use

mobile phones while shopping in stores (5 Ways). In addition, 58% of guests said they preferred

to look up information on their mobile devices while shopping, rather than talk to an in-store

employee (5 Ways). This was especially true among shoppers between the ages of 25 and 44 (In-

Store Mobile). Such a large number of smart phone users in store imply that consumers need an

effective bridge to incorporate smart phone usage into the traditional in-store shopping

experience.

Figure 6 (5 Ways)

Page 12: Vivid Visions FINAL REPORT

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The first step is choosing which products to include

For organizational purposes, the Operations Department will create a database of Target’s

products that will be listed on Pinterest. This will allow efficient and accurate maintenance of

Target’s Pinterest account. Moreover, the database will include attributes for each product such

as date of post on Pinterest, respective barcodes, and pictures. Maintaining the database allows

operators to keep track of old product listings that may need removal. Target’s Pinterest will

continuously cycle products by deleting out of season and out of stock items.

The sample database structure depicts at an example of a Pinterest pinned products’

database in low attribute detail

Figure 7

Target’s IT team will funnel network barcodes through Cartwheel.

Target’s Information Technology department will develop a mechanism to direct customers

back and forth between Target.com and Pinterest. Online hyperlinks on selected products will

direct shoppers to the products’ respective Pinterest pages to receive product information and

reviews. In addition, there will be direct reverse links to product descriptions on Target.com.

The IT department will also modify the Cartwheel app to allow in-store customers to scan

product barcodes. Upon scanning, the Cartwheel app will direct users to Pinterest to view the

scanned product. If a product is not on Pinterest, users will be directed to Target.com.

To ensure success, this infrastructure must be timely and maintain live and active links.

Figure 8

Page 13: Vivid Visions FINAL REPORT

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Figure 9

Target will market on social media with Pinterest perks.

The marketing department will attract shoppers to Target Home’s Pinterest website by

posting information about its availability on other social media such as Facebook and Twitter.

The marketing department will also need to develop exclusive discounts for Target’s customers

who use Pinterest. Website links that direct shoppers from Pinterest’s product description page to

Target’s product description page will become embedded with a code that will provide Pinterest-

exclusive discounts.

Page 14: Vivid Visions FINAL REPORT

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Figure 10

Pinterest will blossom as a marketing tool for Target Home.

Rather than using the traditional marketing schemes of sending store catalogs and

advertising products directly on Target Home’s website, using Pinterest as a marketing tool will

effectively align with the millennial consumer trends. Pinterest will accommodate the increased

millennial reliance on technology to research products and engage in product reviews. The use of

Target’s existing structure to integrate Pinterest will not require additional capital expenditure,

which makes it a cost-effective strategy.

Profit Analysis

Consumers are 10% more likely to buy products when Pinterest directs them to the

retailer’s website (Krizter). After they are directed, the average user spends roughly $170

(Gregory). The home department accounts for 17% of Target’s yearly revenue, which equals

roughly $12.2 Billion (2013 Annual Report). Best-case scenario, after the implementation of our

report, Target Home will have a 15% increase in their sales. Base case scenario, there will be a

10% increase. Worst-case scenario, there will only be a 5% increase.

20% OFF

Page 15: Vivid Visions FINAL REPORT

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Current Revenue

from Home

Furnishings/Décor

% Increase from

Pinterest usage $ Increase

Total Increased

Revenue

Best Case Scenario $12.2 Billion 15% Increase $1.8 Billion

Increase $14 Billion

Base Case

Scenario $12.2 Billion 10% Increase

$1.224 Billion

Increase $13.464 Billion

Worst Case

Scenario $12.2 Billion 5% Increase

$617 Million

Increase $12.8 Billion

Figure 11 (2013 Annual Report/Krizter/Gregory)

Best Case Scenario

Pinterest becomes a major attraction for Target customers interested in purchasing home

decor. This attraction leads to an increase in Target revenues with little to no added costs. The

profits earned from the new social media implementation can be used to develop future projects.

Target shoppers show their satisfaction with the new Pinterest account by posting reviews

on Target’s Pinterest page. Target uses analytical data from its business linked Pinterest page to

see which products are most valued by the consumer. It then uses this data to determine what

items to produce in the future to best satisfy the consumer need.

Implementation is expected in 10 months!

The implementation of our strategy is possible within 10 months because certain

processes can become accomplished simultaneously. While the Operations Department is

composing the assortment list, the Information Technology department can modify the online

infrastructure to help integrate Pinterest. Figure 12

Page 16: Vivid Visions FINAL REPORT

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Appendices

Appendix A: Pre-SWOT Analysis

S

Consumers 35-64

US presence

Post-recession consumer:

“Expect More, Pay Less” value

marketing

Variety of products, consider

better than Wal-Mart

Designer relationships

Expanding fulfillment centers

“Shops at Target”

W

Walmart e-commerce sales

increased 21% in Q3 of 2014

Closed Canada operations- issues

with vendors

Cartwheel not reliable.

Failed former partnerships

(RadioShack/Verizon)

Security breach

Consumers using Target as

showroom for low-price vendors

(Amazon, etc.)

Not a “destination” for home décor

O

People use mobile in-store to

enhance experience

Mini-stores/clinics rising in

popularity

94% of retail is brick and

mortars (touch and feel, instant

gratification)

T

Walmart looking for better image

1/3 of online shoppers hesitate

because of credit card fraud.

Gap- new exec of e-

commerce/marketing

Neiman Marcus- memory mirror

in products in stores

Page 17: Vivid Visions FINAL REPORT

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Appendix B: Post-SWOT Analysis

S

Consumers 35-64

US presence and International

Post-recession consumer: “Expect More,

Pay Less” value marketing

Variety of products, consider better than

Wal-Mart

Designer relationships

Expanding fulfillment centers

“Shops at Target”

Larger customer bade from social media

Increase social Media act

Online Presence

Customer satisfaction through reviews

and display

Cartwheel will become a reliable retail

app

Destination for home décor from

Pinterest

Less time spent in store

W

Walmart e-commerce sales

increased 21% in Q3 of 2014

Closed Canada operations- issues

with vendors

Failed former partnerships

(RadioShack/Verizon)

Security Breach

O

People use mobile in-store to enhance

experience

Mini-stores/clinics rising in popularity

94% of retail is brick and mortars (touch

and feel, instant gratification)

Pinterest is more reliable then Facebook

and twitter when it comes to purchased

items

Pinterest’s top searched category is home

décor

T

Walmart looking for better image

1/3 of online shoppers hesitate

because of credit card fraud.

Gap- new exec of e-

commerce/marketing

Neiman Marcus- memory mirror

Overlap in products in stores

* App security (hacks & viruses)

Page 18: Vivid Visions FINAL REPORT

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