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

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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

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

$-

$20

$40

$60

$80

$100

$120

SuperTarget WalmartSupercenters

Costco WholesaleGroup

Meijer, Inc.

Sale

s in

Bill

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s ($

)

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

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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.

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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

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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.

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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

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

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ReligiousInstitutions

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Per

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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

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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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