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Target To Raise Marketing Spend in Second Half

19 Aug, 2009 Response This Week

NEW YORK – Retail giant Target plans to raise its marketing spend as a percent of its sales for the third and fourth quarters of the year, reports Executives announced the decision in light of the upcoming holiday period and hoping that consumers will increase spending in the second half.

“We expect to spend more as a percent of sales in Q3 and Q4 this year than we did last year,” said Douglas Scovanner, Target’s CFO, during an earnings call. “For the year, our marketing plan is right on. But we have saved money here in the front half for the expressed purpose of being able to invest it in the back half.”

For the same period last year, Target spent $451 million on measured media, according to TNS Media Intelligence. In the first half of 2009, measured media was down 3 percent from the same period in 2008.

The period will be a test to see if the company’s new “low-price promise” campaign, which launched July 12, will gain traction and help the retailer gain market share against rival Walmart.

Same-store sales during the second quarter continued to lag, down 6 percent, and overall sales fell 3 percent to $14.6 billion. Target’s research says the company’s lagging performance behind Walmart and T.J. Maxx is starting to shift as its advertising and in-store signage changes those price perceptions.

Marketing in the second half will focus on the pharmacy and grocery areas, both of which are outperforming home and apparel.

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