372 PART FOUR IDELIVER C AND COMMUNICATE THE VALUE PROPOSITIO Marketing in Actio
ID: 362384 • Letter: 3
Question
372 PART FOUR IDELIVER C AND COMMUNICATE THE VALUE PROPOSITIO Marketing in Action Real Choice Case When can offering too choices theory, everythi stuff in the syst Target's su rget has can choices become too much to efficiency. Amy f bad press an unacceptabl customers and decreased sales. The discount retailer bliev that it can solve the problem by reducing the brands and varieties of product options on stock-outs that upset number of at the increased efficiency will allow changes as we tured to hold r the shelves. Bria rooms and ont to adjust case for more focus on priority home goods, apparel, and baby products." categories "like wellness, stylish shipped cartor Target's distribution process became more complica with the expansion of its grocery merchandise e meat, fresh produce, and dairy products. Then, single-day ar business to include per- ishables lik the situation became even more complex when it beg warehouse eliminating th lows shipmen without pena achieve its go John Mu ing suppliers a key to succ also mean th the compan its value pro competitive an lowing online customers to receive orders directly from its s or pick up their online orders in stores. Because of the mess, Target has committed to redesigning its supply chain to make it more streamlined Target has a rich history of success. In 1902, George company in Minneapolis, Minnesota, called Dayton Dry Goods Company. Over the years the company went through various retail format changes and in 1962, the first Target store opened in Roseville, Minnesota. It called itself discount stores" differentiated by merging key department store features with the lower prices of a dis- the "new idea in counter. Target became "a store you can be proud to shop in, You M and exciting to visit." The retailer is the third largest U.S. store 1-34. Wh a store you can have confidence in, a store that is fun to shop chain, operating over 1,800 retail locations throughout the 11-35. United States established stores has been hindered by unacceptable stock 11-37, SIO Despite this lofty history, more recently growth at its 11-36, W levels because of their overly complicated supply chain 38. W Target is spending more than $5 billion (yes, BILLION), to upgrade its distribution network and technology infrastruc- ture to reduce stock shortages and facilitate the capabilit for online growth. In addition, the retailer is shrinking th number of different products it keeps in stock and reducing da y Based an Pta earjaccessed May the number of sizes across those products. These changesbe will lresult in less overall inventory and improved handlingExplanation / Answer
11-34:
Target is facing following decision issues:
1. The Decision related to the number of brands on offer to the consumers
2. The decision related delivery of goods, the supply chain system and duration of lead time
3. The decision related to the delivery options, offered to the consumers
11:35
Following factors are important pertaining to the decision situation:
1. Addition of value to the consumers in terms of the services and product variety on offer
2. Reduction the loss associated with the stock-out cost
3. Need to make strong brand and consolidation of the market share
4. Efficiency and productivity of the supply chain system
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There are following alternatives:
1. Reduction in the brands on offer and consolidate the two brands into one
2. Adapt efficient supply chain with the real time supply or one day supply
3. Restrict the number of delivery options to one or two to reduce the complications
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Following decisions should be recommended:
1. Give incentives to suppliers if they deliver within the one day of the order in terms of coupons and cash discount. It will reduce the losses associated with the stock-out.
2. Giver delivery option of either pickup from the store and or delivery to home so that a confusion is prevented and company can streamline its supply chain. Here, the warehouse will be free from any additional confusion of delivery at the warehouse.
3. Slow removal of those brands who offer poor sales. Immediate removal of some of the brands will create shock and negative rumors. Hence, it should be done slowly and gradually.
11:38
The first way is to bring incremental improvement and change as per the recommendations. It is better to adapt gradually and progressively. The second way is the systematic change where scope of improvement is fixed in one improvement initiative.
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