Christmas-time is a magical time for retailers: sales in this quarter are higher than any other. Complicating this already-stressful season is the entry of competitor Target into the Canadian market, especially now that they’ve ironed out their initial inventory problems. With an extremely competitive atmosphere fraught with undercutting, retailers need a strong marketing strategy to differentiate themselves, and ultimately win the battle for the mind of the consumer.

The Financial Post provides two recommendations for retailers in this article. The first is a cost leadership strategy, while the second is both a differentiation, and focus differentiation strategy.

Ultimately, I believe that the differentiation and focus strategies will be more successful this season. The article points out that despite lower gas prices, consumers this season will be more responsive to price decreases thanks to rising personal debt and mortgages. However, all retailers will be attempting to lower prices, and these will end up simply as points of parity in a race to the bottom.

The strategy of Target, for example, to offer exclusive merchandise with celebrity endorsements will certainly attract a segment of customers who are seeking something quite specific. By drawing in these customers with differentiated products, Target can entice them to purchase other goods that would otherwise not be as attractive.

Which Strategy is Best?

I believe that retailers should disregard this article’s advice – a cost leadership strategy as outlined by Michael Porter will most likely be unsuccessful. Rather, Target should invest significant resources towards the provision of differentiated goods, and strong marketing to cement Target in the consumer’s mind.

Sources Used

http://business.financialpost.com/2014/10/30/key-to-better-holiday-sales-brand-tie-ins-says-new-report/
http://www.quickmba.com/strategy/generic.shtml

http://upload.wikimedia.org/wikipedia/commons/0/01/Target_store-Springfield-2005-10-15.jpg