Target Developing New Tactic in Electronics Wars
Target (TGT) has been developing a new marketing tactic that it is applying for the Super Bowl, offering zero percent financing on major television purchases.
In doing so, the retailer is making the most of the flexibility its credit card operation provides.
Target announced the promotion, which is tied to the Super Bowl, only on Jan. 29, just 10 days before big game. Having its own finance structure certainly provided the retailer flexibility to mount the initiative, which is fortunate because rival Best Buy (BBY) is providing a zero-financing deal on purchases of $499 or better. And while the Target deal keeps the retailer competitive with its specialist rival, zero financing exceeds a Walmart (WMT) game-day television sales effort, which involves free delivery to homes and a three-percent price break with shipping to a store.
The particular form of the promotion is something Target has been developing over the past year. Spokesperson Eric Hausman said Target first tried a similar zero-financing promotion in select markets last year. Not long after, in November, Target launched its first nationwide zero-financing television effort.
The latest incidence of the promotion actually launched yesterday and included a sale on televisions ranging from a Sylvania 19-inch class 720p LCD HDTV priced at $149, to a Magnavox 42-inch 1080p LCD at $499, to a Vizio 55-inch 1080p 120Hz LCD HDTV at $1,299. Savings, the retailer said, ranged from $20 to $200.
Target offers the financing on television sets with 32-inch or larger screens. From the promotion's start until it ends Feb. 6, shoppers who use a Target credit card account â€" its own or the Visa variation â€" get the zero percent financing on the big sets through Sept. 2010.
The promotion not only pushes television purchases but also encourages consumers to use or even initiate a Target credit card account if they don't have one. The availability of credit turns a major buy, at least potentially, into an impulse purchase. Those who have remained on the fence as regards buying a TV and who might need a bit of extra encouragement â€" or help â€" to hop off on the side of acquisition now have a sale and zero financing to encourage them.
New credit card accounts help build customer loyalty and the promotion helps Target remain competitive with rivals who are aggressively courting the electronics customer. Given the range, nature and scope of electronics promotions in the holiday season, Target needs all the flexibility it can muster to keep on wrestling with its rivals, and the ability to craft promotions that include financing offers in a market where consumer credit is tight is another twist that can help.