Target brings marketing and brand management savvy to private label like
few others do. Here's how it achieved its private label brand success and
Ask Todd Maute, senior vice president and partner at New York-based branding and design
company CBX, what he thinks about Target’s private label products and he’ll tell you about a
juvenile diabetes research charity auction he attended not too long ago. As he waited for the
black-tie event to kick off, Maute wandered over to the prize area to see what would be
auctioned. What he saw were baskets filled with Target private label brands like Archer Farms.
Minneapolis-based Target, the store that made discount shopping chic long before the recession
hit, is doing the same with its private label food and household product offerings. Those include
basic line Market Pantry, upscale Archer Farms, and Up & Up, its line of more than 800
household cleaners, health and beauty care items and other sundries. Target wants more
consumers to come to Target for their groceries, increasing their frequency of visits and the
company’s overall sales in the process. The retailer rang up estimated private label grocery sales
of $6.7 billion in 2009, putting Target at No. 7 on PL Buyer’s exclusive list of North American
private label grocery retailers, as compiled by London-based research firm Planet Retail. Private
label grocery sales will reached a Planet Retail-projected $9.5 billion for Target by 2014 as it
continues rolling out is PFresh food format, which offers more fresh products along with other
groceries including its private label brands.
Welcome to private label taken to a branding level beyond where most other retailers are today.
Key components of Target’s private label strategy include:
Consumer research to develop private label products and brands
Backing private label with a full array of marketing tools ranging from national ads to
extensive in-store displays
Strategic thinking that goes beyond just addressing price as the main driver of consumer
“Any supermarket could do exactly what Target has done but it’s going to take a non-traditional
approach. They [supermarkets] have to become marketers, not just merchandisers. They have to
really think about their brands,” says Blair McCaw, president of Constellation Management
Group, a Chicago-based brand management consultancy. Unlike some other food retailers,
Target “is more focused on ‘how do I create not a price image but a store image and how do I
use that to drive store loyalty.’ I think they understand what they want out of their private label
program and they execute it flawlessly,” says Jim Hertel, managing partner with Willard Bishop,
a Barrington, Il.-based retail consulting firm. “The thing [Target] has done historically better
than anyone else is they really have approached their branding as a CPG marketer would,” adds
McCaw. “They understand segmentation, they understand their consumer; in food, they have a
tiered [brand] strategy and they seem to understand very well how those brands are different.”
Indeed, responding to written questions from PL Buyer, Annette Miller, senior vice president,
merchandising grocery for Target, explains the retailer’s brand segmentation strategy in terms of
the chain’s “Expect More, Pay Less” ad slogan. “Archer Farms clearly stands for the Expect
More part of our brand promise, while Market Pantry represents Pay Less,” Miller says (see page
tk, to read more of Miller’s responses).
Target senior management also understands how its brands reflect the Target image. The
company in 2009 rebranded its household lines to the up & up moniker, taking the traditional
Target bull’s-eye and Target name off scores of products.
The reason, explained Annie Zipfel, director of owned brands at Target, during a speech she
delivered at a private label conference in September, was because Target didn’t want its name
and logo on products that consumers thought of as basic. “Basic and generic sure didn’t feel like
Target,” she said. Retail analysts applaud that decision even though it runs counter to what other
retailers are doing, namely putting their banner names on more rather than fewer products. “The
cache of the Target brand was really being run down” by being on commodity products, says
Christopher Durham, a retail consultant, member of PL Buyer’s editorial board, and private label
blogger who runs mypbrand.com. Changing to up & up addressed that, he adds. Agrees Maute,
“It used to be the only place you saw the bull’s-eye was on value-driven, non-food items. I
always thought that was one of their mistakes” that’s been corrected with the change to up & up,
On the up and up
The Up &Up launch in June 2009 is a good example of how Target approaches its store brands.
The company began a review of its brands roughly five years ago that eventually led to the
decision to take the Target name off products and replace it with the up and up line, Zipfel said
during her presentation. Research included looking at more than 4,000 shopper comments about
Target’s store brand offerings. Consumer feedback led to reformulation of more than 130
products. The company used an outside testing facility to examine such product qualities as
flavor, aroma, ease of package use and appearance. Up & up was created as a brand that would
reflect “everyday optimism” Zipfel said, in everything from its name to its clean white packaging
with different colored arrows for different product categories. Taking the Target bull’s-eye off
the packaging “was a pretty big deal,” Zipfel recalled. “The discussion was how do we replace
the bull’s-eye by being Target?” Some think the arrows also serve as a subtle reminder that up &
up is a Target brand since arrows and targets are associated in archery. The packaging was
designed without fine print but with inviting design, Zipfel said during her presentation. It was “a
brand that’s always looking on the bright side,” she said.
The line launch was backed with extensive marketing that included in-store displays and even
floor graphics, the last being something Target doesn’t normally do. Even valuable end cap space
was given over to the brand. “When a retailer is committed to giving their brand prime space that
shows they are committed to their brand,” says Maute. “We were concerned when it launched
that it looked a little nondescript and anonymous but subsequent store visits have shown us that
the range is well sign-posted and marketed with a fairly vigorous value message,” says Bryan
Roberts, global research director with Planet Retail. “The fact that Target has been directly
comparing up & up with brands is a bold move, but it seems to have gone down pretty well with
shoppers.” Target also promoted up & up with aggressive couponing for at least one key
product, reports Teri Gault, CEO and founder of thegrocerygame.com, a Web site that tracks
coupons offered across the country. “To drive the brand in the fall of 2009, Target offered
amazing coupons to print from their Web site or at kiosks in their store for up & up baby wipes,
which with the sale on refills and with coupon sometimes made them free. This promotion really
drove the brand virally, sparking a lot of talk on the Web about the quality. Moms were sold and
I think it really worked to drive the entire up & up brand in all categories,” she says.
The wipes continue to be priced aggressively, Gault adds. “Grocery Game databases show that
the up & up baby wipes retail for $13.69 for large package of 480-528 baby wipes. They go on
sale for $9.19. By comparison, Huggies 320-360-count package retails for $10.99, goes on sale
for $9.99, and typically has coupons for $2, making the final price $6.99. At that price, the same
number of Huggies would be $10.50, making the up & up wipes a better deal on sale for $9.19,”
Gault reports. Why the push behind baby wipes? “If mom can trust you and your products in the
baby category, then she’s going to continue shopping in the other categories,” says Scott
MacLennan, director of store brands at STR, a Canton, Mass.-based provider of quality
assurance services to private label retailers and others.
Target also has moved into more upscale markets with such house brands as its Choxie
chocolate line and food items carrying TV celebrity chef and cookbook author Giada De
Laurentiis’ name. Choxie has developed enough cache to be a gift purchase for consumers. The
brand has been promoted with the Target marketing arsenal of TV ads, in-store merchandising
and promotions, says Patrick Rodmell, president and chief operating officer of Toronto-based
Watt International Inc., a brand consultancy and design firm. The retailer “has used the brand to
build on the cache of Target,” he says. Target’s Miller confirms that Choxie is a gift-oriented
product, writing: “The flavors and forms differentiate the collection and provide a perfect
opportunity for our guest to purchase as gifs or as an indulgent treat for themselves.”
The De Laurentiis products, debuted in January 2010, are moving Target into the super premium
specialty food arena, notes McCaw. “They’ve taken a page out of their fashion and beauty
strategy [which often uses celebrity endorsers] and turned it to food,” he notes. Indeed the De
Laurentiis deal includes a cookware line.
Back in the everyday grocery aisles, Target has worked to distinguish Market Pantry from
Archer Farms. Archer Farms includes more than 100 organic offerings, for example, delivering
on a brand promise that stresses quality.
The brand personality revolves around authenticity which means “a genuine connection to
traditional values,” says Rodmell. “You can’t just demonstrate that in the way you look, it’s in
the way you act,” he says.
While others think Target has successfully distinguished between Archer Farms and Market
Pantry, Rodmell would like to see the retailer do more. “Make sure the distinction between the
two is clearly understood,” he advises.
Beyond continuing to define its various private label brand personalities, Target faces the larger
challenge of rolling out its Pfresh food format across it store network. By late 2011, Target is
expected to spend more than $2 billion to renovate 740 stores to include the Pfresh fresh
products assortments that include fruits, vegetables, meat and dairy products.
Being able to source fresh products, work out delivery logistics and convince shoppers quality is
high could separate Target from other non-supermarket food retailers, Rodmell notes. Having
“bakery, meat and produce meeting and exceeding standards found in supermarkets is a recipe
for success,” he says. “That will be the tipping point for success or failure of that concept.”
Target won’t be expanding Pfresh in a retailing vacuum. Asked about clouds on Target’s
horizon, Planet Retail’s Roberts says he sees “the Walmart cloud. It’s investing heavily in stores
and private brands to close the gap [with Target]. I think the competition from Walmart is going
to intensify but I think Target is more than capable of holding its own.” Even troubled mass
merchandiser Kmart is rolling out private label food products to grab a slice of the food shopping
Traditional supermarkets also are showing more private label smarts, so they shouldn’t be
counted out as strong competitors for Target’s expansion plans. Kroger and Safeway are two that
seem to be taking strategic rather than merely tactical approaches to their private label efforts, for
example, notes McCaw.
Reaching the private label grocery sales for 2014 that Planet Retail projected will test Target’s
marketing prowess, but most analysts think the company has set a course that will get it to where
it wants to go on the private label front.
“Target differentiates itself from Walmart and Kmart with its dynamism and overall more
attractive brands,” says Laurent Bourscheidt, executive creative director at STC Associates, a
New York-based brand management company. What Target offers is “an incredible unified
range of products that are easy to spot, easy to understand and look fun and smart in complete
synergy with the Target brand.” Not a bad formula for private label success.
Here are some examples of Target’s private (they own them) brands:
1. Discuss the advantages of moving away from one brand name (Target) for all private label (store
label) brands. Include the low-price (lower quality?) disadvantages.
2. Explain the role of tier pricing as it pertains to the entire brand strategy including the
price/quality target segments, positioning, and product mix.
Designing Marketing Programs
to Build Brand Equity
After reading this chapter, you should be able to
1. Identify some of the new perspectives and
developments in marketing.
2. Describe how marketers enhance product
3. Explain the rationale for value pricing.
4. List some of the direct and indirect channel
5. Summarize the reasons for the growth in
Part of John Deere’s
success is its well-conceived
and executed product,
pricing, and channel
Source: Eric Schlegel/The
New York Times/Redux
PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
This chapter considers how marketing activities in general—and product, pricing, and distribution strategies in particular—build brand equity. How can marketers integrate these activities to enhance brand
awareness, improve the brand image, elicit positive brand responses, and increase brand resonance?
Our focus is on designing marketing activities from a branding perspective. We’ll consider
how the brand itself can be effectively integrated into the marketing program to create brand equity.
Of necessity, we leave a broader perspective on marketing activities to basic marketing management texts.1 We begin by considering some key developments in designing marketing programs.
After reviewing product, pricing, and channel strategies, we conclude by considering private labels
in Brand Focus 5.0.
NEW PERSPECTIVES ON MARKETING
The strategy and tactics behind marketing programs have changed dramatically in recent years
as firms have dealt with enormous shifts in their external marketing environments. As outlined in
Chapter 1, changes in the economic, technological, political–legal, sociocultural, and competitive environments have forced marketers to embrace new approaches and philosophies. Some of
these changes include:2
Rapid technological developments
Greater customer empowerment
Fragmentation of traditional media
Growth of interactive and mobile marketing options
Channel transformation and disintermediation
Increased competition and industry convergence
Globalization and growth of developing markets
Heightened environmental, community, and social concerns
Severe economic recession
These changes, and others such as privatization and regulation, have combined to give customers and companies new capabilities with a number of implications for the practice of brand
management (see Figure 5-1). Marketers are increasingly abandoning the mass-market strategies
that built brand powerhouses in the twentieth century to implement new approaches for a new
marketing era. Even marketers in staid, traditional categories and industries are rethinking their
practices and not doing business as usual.
Can wield substantially more customer power.
Can purchase a greater variety of available goods and services.
Can obtain a great amount of information about practically anything.
Can more easily interact with marketers in placing and receiving orders.
Can interact with other consumers and compare notes on products and services.
Can operate a powerful new information and sales channel with augmented
geographic reach to inform and promote their company and its products.
Can collect fuller and richer information about their markets, customers,
prospects, and competitors.
Can facilitate two-way communication with their customers and prospects, and
facilitate transaction efficiency.
Can send ads, coupons, promotion, and information by e-mail to customers and
prospects who give them permission.
Can customize their offerings and services to individual customers.
The New Capabilities of
the New Economy
Can improve their purchasing, recruiting, training, and internal and external
CHAPTER 5 • DESIGNING MARKETING PROGRAMS TO BUILD BRAND EQUITY
Started in 1990 by avid cyclist Gary Erickson and named to honor his father, CLIF® Bar set out to offer a
better-tasting energy bar with wholesome ingredients. With very little advertising support, it grew in popularity through the years via word-of-mouth and PR. The CLIF Bar product line also grew to include dozens
of flavors and varieties, some formulated especially for kids and women, and for energy, healthy snacking, and sports nutrition. Behind CLIF Bar products is a strong socially and environmentally responsible
corporate message. The company is active in its local community and known for its passionate employees,
who are allowed to do volunteer work on company time. It uses extensive organic ingredients, relies on
biodiesel-powered vehicles, and supports the constructions of farmer- and Native American–owned wind
farm through carbon offsets. Its nontraditional marketing activities focus on athletic sponsorships and
public events. To broaden its appeal, it launched its “Meet the Moment™”campaign in the summer of
2011, in which participants provided stories and photos of inspirational athletic adventures. The integrated
marketing campaign featured a fully interactive Web site and mobile applications for iPhone and Android
systems. All these marketing efforts have paid off: CLIF Bar was the number one breakaway brand in a
survey by Forbes magazine and Landor Associates measuring brand momentum from 2006 to 2009.
CLIF Bar has adopted modern marketing practices to build
a highly successful twenty-first-century brand.
Source: Clif Bar & Company
The new marketing environment of the twenty-first century has forced marketers to
fundamentally change the way they develop their marketing programs. Integration and personalization, in particular, have become increasingly crucial factors in building and maintaining strong brands, as companies strive to use a broad set of tightly focused, personally
meaningful marketing activities to win customers.
In today’s marketplace, there are many different means by which products and services and their
corresponding marketing programs can build brand equity. Channel strategies, communication
strategies, pricing strategies, and other marketing activities can all enhance or detract from brand
PART III • DESIGNING AND IMPLEMENTING BRAND MARKETING PROGRAMS
equity. The customer-based brand equity model provides some useful guidance to interpret these
effects. One implication of the conceptualization of customer-based brand equity is that the
manner in which brand associations are formed does not matter—only the resulting awareness
and strength, favorability, and uniqueness of brand associations.
In other words, if a consumer has an equally strong and favorable brand association
from Rolaids antacids to the concept “relief,” whether it’s based on past product experiences,
a Consumer Reports article, exposure to a “problem-solution” television ad that concludes
with the tag line “R-O-L-A-I-D-S spells relief,” or knowledge that Rolaids has sponsored the
“Rolaids Relief Man of the Year” award to the best ...
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