TK Maxx Strategic Marketing Plan: Objectives and Strategies

Introduction and Company Overview

TK Maxx is expanding beyond the brick-and-mortar footprint that helped it rise to the top of retail operations in the United Kingdom. As with its competitors, TK Maxx has entered the mobile digital market and is implementing multiple distribution channels (McVey, 1960). The company has a clear target market that transcends the various channels over which its goods are marketed. This is the case because the market segment targeted by TK Maxx is made up of digital natives — consumers who have discovered the benefits of being technologically savvy, particularly for shopping.

The TK Maxx Company's presence in Europe includes stores in Germany, Poland, the United Kingdom, and Ireland. The company was founded in 1994 with the idea of providing off-price retailing in brand-name and designer fashion for family apparel, footwear, accessories, luggage, home furnishings, and home textiles. With 307 European stores at the end of 2010, TK Maxx intends to respond to the European market with up to a total of 725 stores over the long term. This marketing plan provides an overview of the company, including its mission and vision, and a discussion and evaluation of the firm's marketing objectives. Recommendations for marketing strategies are provided and tied to the overarching evaluation strategy for the proposed marketing plan.

A range of marketing strategies have been assigned to address the marketing objectives, including positioning through product differentiation, place with regard to distribution channels, and promotions for brand awareness. The main thrust of the strategic marketing analysis is customer-centric, followed by channel considerations and competition. Pressures from competitors and increasingly brand-engaged consumers are key drivers for TK Maxx's ventures into online markets and social media networking sites. The impact of the TK Maxx business model on the brand equity of products from suppliers is also discussed.

The corporate vision of TK Maxx is to grow a global off-price and value company. The mission is to deliver to the market every day a rapidly changing assortment of quality brand-name merchandise priced 20 to 60% less than the regular prices of specialty stores and department stores (Corporate Governance Documents, 2012).

Corporate Mission and Vision

Briefly, off-price retailing entails offering brand-name merchandise at discounted prices that encourage buyers to take advantage of great values. Unlike most retailers that buy from vendors just four times each year, the opportunistic behavior of TK Maxx buyers enables them to conduct daily transactions with over 10,000 vendors in 60 countries, thereby ensuring the inventory churn for which the company is known. This opportunistic buying strategy ensures that merchandise is in-season and close to customer need, enabling TK Maxx to consistently offer same-season apparel, with only a single-digit percentage of their inventory sold out-of-season. Off-price retailing is characterized by substantially lower prices than the regular merchandise prices of department stores and specialty stores. Low cost structures, aggressive inventory management, and rapidly churning assortments of apparel are the foundation of the off-price retailing business model (McGoldrick, 2002). Competitors include the Federated Department Stores, Inc., The May Department Stores Company, Target Corporation, J.C. Penney Corporation, Inc., Sears, Roebuck and Co., The Gap, Inc., Kohl's Corporation, Wal-Mart Stores, Inc., Kmart Corporation, Limited Brands, Inc., Ross Stores, Inc., and Value City Department Stores, Inc. (Burt & Sparks, 2003).

TK Maxx has established an operating foundation based on its socially responsible values. In addition to fulfilling its mission of delivering value to customers, the company is focused on returning value to shareholders, ensuring that the company's vendors meet specific standards in the way they conduct business, and adding value to the communities in which the company operates. TK Maxx is a strong proponent of green strategies and earns money for its corporate giving program by charging customers for plastic bags (Lamb, 2005).

The marketing objectives for TK Maxx are as follows: (1) to increase market share for children's shoes by 25% by September 2018; (2) to increase market share in home textiles by 15% by September 2018; (3) to increase e-commerce sales of designer bags and accessories by 15% by 2015; (4) to increase brand awareness on social networking sites by 30% by 2015; and (5) to quadruple the rate of purchases in the UK and Ireland by 2015.

This marketing objective aims to increase market share in the children's shoe market. The target market for TK Maxx is a shopper who is female, between the ages of 25 and 54, earns or has access to a middle to upper-middle income, shops at high-end department stores and specialty stores, and is both value conscious and fashion conscious. The TK Maxx customer base is 65% from the ABC1 socioeconomic demographic (Thompson, 2009). The ABC1 nomenclature breaks down as follows: A represents customers in higher managerial, administrative, or professional roles; B represents customers in intermediate managerial, administrative, or professional roles; and C1 represents customers in supervisory or clerical, and junior managerial, administrative, or professional roles (Mintel, n.d.).

Marketing Objectives and Strategies

The marketing strategy for the TK Maxx children's line of shoes and clothing is focused on product positioning. Applying the TK Maxx overall target market profile to the new line of children's shoes means marketing primarily to women with school-age children and to grandparents of school-age children. Since this market segment makes up a good portion of regular customers in the brick-and-mortar stores, the marketing strategy will focus on promoting the new children's shoe line as a continuation of the TK Maxx strategy to bring value to its customers. The children's shoe line is one of several inroads being made by the company that do not strictly follow the prescriptive off-price model — home textiles is another new stand-alone product line.

TK Maxx is gearing up to be a one-stop shop, much like many department stores, a number of which are direct competitors. The addition of home fashion, home textiles, children's toys, and children's apparel is a strong indicator of movement in this direction. Five retailers accounted for 60% of the sales in the general merchandise category over the past several decades: K-Mart, Target, Costco, Sears, and Wal-Mart. Much of their productivity was attributed to the use of information technology (Johnson, 2002), and general merchandisers tend to use information technology at higher rates than other retailers. TK Maxx is beginning to employ information technology in a manner similar to its big-box competitors in order to learn more about its customers (Cavazza, 2004). TK Maxx will rely increasingly on data mining as it moves toward new e-commerce configurations.

This marketing objective aims to increase TK Maxx's market share in the home textiles industry. The marketing strategies that will address this objective are based on the company's key strengths: extensive expertise in off-price buying and inventory management, substantial buying power resting on solid relationships with manufacturers and merchandise suppliers, sophisticated supply-chain and distribution networks, and deep organizational experience built over decades of off-price retailing.

The core competencies of TK Maxx can be brought to bear on this new product line, which will be marketed primarily to existing customers. The stand-alone home product and home textiles lines are sold in stores and are not yet available online, but given the increasing number of products now offered through the online store, it appears that these lines will be available online before long (Spriggs, 1994).

In the mid-1990s, consumers began to be more attracted to items of higher quality. As a result, the productivity of retail labor rose because, theoretically, it takes the same amount of effort to sell a $30 blouse as it does to sell a $20 blouse in the same store by the same employee (Hristov, 2004; Hristov & Reynolds, 2007). According to retail experts, the shift toward preferring higher-value goods can be attributed more to increased wealth and higher incomes than to any effort by retailers to change the quality of the goods they sold (Hristov, 2004; Hristov & Reynolds, 2007). The same dynamics appear to be in play today, as consumers demand higher-value goods and retailers focus on how to meet that demand profitably (Hristov, 2004; Hristov & Reynolds, 2007).

The marketing tactics for the home textiles product line will target both new and existing consumers. Attracting a new customer base will entail promotions intended to increase brand awareness. TK Maxx has conducted several creative promotional activities to make its brand and stores more salient. At one point, the company procured a bundle of Apple iPods and distributed them to stores to sell at a loss of approximately $8,000 to TK Maxx. The promotion caused a media frenzy as customers went wild trying to find the deeply discounted iPods, of which only a limited number were available. Apple was not pleased, customers were delighted, and TK Maxx was satisfied that the episode went viral.

During the holiday season, a campaign in the United Kingdom coupled a televised advertisement with a special promotion welcoming TK Maxx customers to a late-night shopping event. Helpers were on hand in the stores to guide holiday shoppers to gifts, carry their shopping bags, demonstrate popular toys, offer style advice, entertain their children while they shopped, and offer neck and head massages to tired and stressed shoppers. The message to customers was clearly that TK Maxx could help relieve the strains of holiday shopping, making the festive season more fashionable while easing the shopping experience.

This marketing objective is focused on the e-commerce business TK Maxx has launched, in which designer purses and accessories are sold. Offerings of designer handbags were quickly expanded to include accessories such as scarves, belts, and watches. In the short time since the launch of the e-commerce store, the range of products has expanded even further to include clothing for men and women, luggage, ski and outdoor wear, swimwear, and wedding and bridesmaid dresses.

The approach taken for the e-commerce product offerings is to sell to existing customers who have a proclivity for online shopping. With competitors such as QVC, Craigslist, and eBay, TK Maxx stresses the fact that all products sold online are new, unused items (Burt & Sparks, 2003). A web banner reads: "Brand New Lovely Stuff: We've just put over 600 new items online — grab them before they go!" In effect, the marketing strategies for the online store are designed to take market share away from competitors such as eBay, Craigslist, QVC, and conventional department stores like Nordstrom, which has been growing its online business at an extraordinary rate and has operated its own overstock stores — Nordstrom Rack — for many years.

Differentiation is a key strategy for the e-commerce store, as the convenience of online shopping is coupled with the adventurous, off-price value shopping experience of the ever-changing TK Maxx brick-and-mortar stores (Reynolds & Cuthbertson, 2004). TK Maxx intends that its marketing will establish differentiation based on consumers' perceptions that TK Maxx represents great value in terms of fashion, quality, brand name, and price. This differentiation is perceived as an entertaining consumer experience that feels something like a treasure hunt through the churning assortment of goods on offer. TK Maxx is not focused on being the cheapest retailer; rather, the company is focused on providing the best overall value.