Tuesday, August 27, 2013

An Example

(This was done by a student who took this course in Fall 2012 in Week 6.)

Title: : Target to Match Online Prices, Following Best Buy

Target Corp. announced on Tuesday the plan to combat “showrooming” by shoppers who check out products in its stores buying them on competitor’s websites, often at lower prices. The retailer company is going to compete in the market with the following key ideas:

First of all, Target's pricing strategy consist on offering competitive products. However, the Target Chief Executive Gregg Steinhafel said that he wasn’t concerned that price-matching would dent the company’s profit margins. Target rock solid in price, although competitors can offer some products with a lower price consumers are seeking for one-stop shopping. For instance, earlier this month Target unveiled its "Shops at Target" concept in which it will open small boutiques within its large stores, featuring a handful of specialty retailers for several weeks at a time.

Second, Target's pricing strategy is based on being competitive in the trade market area, an example is that the items you can find may vary from Target store to Target store within one metro area. Actually, according to consumers the difference isn't just a few pennies, sometimes it's several dollars. Target said its prices are based on being competitive and may vary from one location to another. But it adds it does not adjust prices according to demographic or economic conditions.

Third, Target tries not to be compared with its competitors, thus Target asked to the vendors to produce more exclusive merchandise that would make it harder to compare items to similar things in other stores. The limited editions and exclusive merchandising are the clue to keep with the price strategy and to not be attacked by the other’s companies price similarities.

Overall, the tendency of the “showrooming” is just another sign that makes evidence of the high competition in the retail market between Target, Wal-Mart, Amazon.com, BestBuy.com, Toysrus.com and Babiesrus.com. New technology and new strategy will be needed to survive in this fierce market.