Marketers Shift Focus to Value

Target, Kraft Play Up Low Prices to Appeal to Strapped Consumers

By Published on .

NEW YORK ( -- Marketers are settling in for the long haul. With economic news worsening by the week, companies, including Target, Tween Brands and Kraft, are trying to frame stronger value positions.
Doing Justice: Instead of Limited Too.
Doing Justice: Instead of Limited Too.

Target, which has honed its reputation as a purveyor of cheap-chic goods, now is emphasizing the cheap part of its message. Tween Brands is converting hundreds of its more expensive Limited Too nameplates to the lower-priced Justice brand. And Kraft has reworked the messaging for a number of its brands to appeal to budget-conscious consumers.

For Target, the problem is particularly poignant in that its carefully crafted brand positioning has led some consumers to believe its prices are steeper than competitors such as Wal-Mart.

"The customer is very cash-strapped right now. And, in some ways, our greatest strength has become somewhat of a challenge, in that our stores are fun and unique, and we have both what you need and what you want," Gregg Steinhafel, president-CEO of Target, said during a conference call with analysts. "So we're still trying to define and find the right balance between 'Expect more. Pay less.' The current environment means that the focus is squarely on the 'Pay less' side of it."

Kathee Tesija, exec VP-merchandising at Target, said circulars have been revamped to feature strong value headlines, fewer products with bigger images and broad price points. In-store signage posted at the end of aisles is also being evaluated to ensure the value messaging is loud and clear.

Having it both ways
"We understand that guests sometimes equate clean, well-designed stores and fast and friendly service with higher prices," said Ms. Tesija. "But we believe guests can have a superior shopping experience and save money. ... By increasing communication to our guests about our value and convenience, we will ensure they turn to Target for their needs and wants."

At Tween Brands, a close look at sales trends helped executives decide it was time for a shift in strategy. The company said sales at Justice, which is priced 20% to 25% below Limited Too, were far outstripping its sibling brand. Parents of tweens can't or won't pay as much for their children's clothing, said Michael Rayden, chairman-CEO of Tween Brands, noting that all customers are looking for value in this environment. That led to the decision to convert about 560 Limited Too stores by the end of the first quarter in 2009.

"We have been reviewing our strategy for several months as the retail environment deteriorated," Mr. Rayden said during a conference call with analysts. "Even though we believe the tween-apparel market will stabilize, we also believe our customers will continue to choose stores with more value-oriented apparel. We see this as a long-term shift that isn't going to change anytime soon."

Food companies are also revamping their messages as consumers face rising food costs and shrinking budgets.

"Whether it's the cost of a gallon of milk or a box of macaroni and cheese or the cost of an airline ticket, costs are escalating for our customers and trying to understand fundamentally what that means to our consumer is really, really important," Kraft chief marketer Mary Beth West said at Ad Age's Women to Watch luncheon earlier this month.

'Spend into it'
Once you understand your customer, Ms. West said, the marketing opportunity is to reframe your brand's value positions and then "spend into it." Kraft has said it will boost marketing spending $200 million this year.

As part of its emphasis on value, the company has bankrolled an Oscar Mayer deli-meat tour bus, which is making 150 pit stops around the country dispensing free sandwiches and 100,000 coupon booklets for $6 in savings on meat, cheese, condiments and pickles.

Kraft is also repositioning its Kool-Aid brand, focusing on its low price, one-third that of soda. "We thought there was an opportunity to reach more households that were challenged with doing more with less, especially in light of the current economic conditions," said Gregory Nesmith, brand manager, Kool-Aid.
Most Popular
In this article: