Copying the market leader: Target and Walmart

Tom Dougherty, CEO – Stealing Share

29 February 2012

 

The market leader always wins if you copy it

 

I’m going to repeat this again. If you copy the market leader, the market leader wins. That’s because, if the message is the same as the leader, then the consumer almost always defaults to the market leader.

Case in point: Target. A recent study, conducted by Kantar Retail, showed that, despite almost identical brand promises, Walmart continues to have lower prices than Target.

Therefore, as it turns out, Walmart is living up to “Everyday Low Prices,” while Target and “Expect More. Pay Less.” are not. No wonder Walmart continues to be the market leader, drawing nearly 10% of all non-automotive spending in the U.S.

Meanwhile, Target’s earnings have dropped 5.2% in 2011 fourth quarter.

market leaderThat’s what happens when you copy the market leader. Even though Walmart also suffered a drop in profit in the fourth quarter from the previous year, market share wasn’t stolen by Target.

It’s a simple thing, really, to steal market share from the market leader. You need to be different and better, which means reflecting the aspirations of your target audience instead of just reflecting yourself. And it means presenting yourself as a true choice.

Target is only different in appearance – wider aisles, a red color palette – but even the supposed higher-tier feel of the place has lost its luster. (Why do they still carry so many CDs?) In fact, it’s the local specialty stores that are stealing share because of their focus and an inherent reflection of that local audience.

Target is even opening up more grocery areas in its stores, just as Walmart has for years. That may be a good business decision in of itself. But, coupled with similar messaging as Walmart, it only reinforces the idea that there is little separating the two.

Of course, as Kantar reports, consumers may believe Target has lower prices, but I doubt it. Basically, if the reason to choose is based only on price, Walmart will win.

Target needs to be more than that.

 

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