Jeffrey Jones hit the marketing world’s equivalent of the lottery by landing the top marketing job at Target, a company with a well deserved reputation for clever campaigns and innovative brand activation strategies that will spend an estimated $1.4 billion on advertising this year. What more could a marketer ask for?
Jones arrives at Target after following a comprehensive search that began last October when former CMO Michael Francis left to become president of JCPenney. Jones, 44, most recently served as partner and president of McKinney, an advertising agency based in Durham, N.C. Prior to that he was held several leadership positions at Gap Inc. including serving as CMO where he was responsible for leading marketing strategy, retail store design, store experience and all consumer communication. He also managed Gap Inc.’s gift card subsidiary, Direct Consumer Services LLC serving as president of the division. In addition, Jones previously held leadership positions at marchFIRST Inc., Coca-Cola Company, Leo Burnett Worldwide, and served as president and CEO of LB Works, a Chicago-based advertising agency associated with Leo Burnett.
“Target is a brand I've studied and admired as a marketer for more than a decade, and one my family shops almost daily. I am ecstatic to lead the marketing team and help shape the future of one of the world's most loved and iconic brands,” Jones said. “There has never been a more dynamic time in retailing and the possibilities for where the guest experience, technology and Target's positioning converge are boundless.”
Truer words have never been spoken, especially the part about this being a dynamic time of boundless possibilities. In Target’s case it is also a time when major shifts in the product mix will require the company to rethink some of its marketing approaches. For example, such categories as household essentials, food and pet supplies, last year accounted for 44%, or roughly $30.7 billion, of Target’s total sales of $69.9 billion and that percentage is headed higher in the coming years. Two years ago, about the time the PFresh store transformation initiative was really beginning to gain traction, food and consumables accounted for 39%, or roughly $24.7 billion, of Target’s annual sales of $63.4 billion.
That is a $6 billion swing, and as Target becomes even more reliant on food and consumable categories for a larger percentage of its sales it impacts the marketing message because the competitive set looks different and “expect more, pay less” takes on new meaning for shoppers. In fact, Target’s brand positioning, which relies heavily on design, differentiation and value, has been copied so extensively it becomes increasingly challenging to stand out from a retail crowd where many competitors are touting a similar message.
Target chairman, president and CEO Gregg Steinhafel is convinced the company has found the right person to take on the challenge.
“Not only does Jeff have a proven track record of success in both the development and execution of countless marketing campaigns but Jeff is also a passionate, dedicated leader who understands the importance of working as a team,” Steinhafel said. “Marketing is a key differentiator for Target and I am confident that under Jeff’s stewardship, we will continue to build on our long history of surprising and delighting our guests.”
To accomplish that goal, Jones will have ample resources at his disposal assuming Target’s advertising expenditures as a percentage of sales remain consistent with prior year levels. Last year, Target spent roughly $1.36 billion on advertising, which equates to 1.95% of its annual sales of nearly $69.9 billion. If that percentage remains consistent this year and Target achieves even modest growth from comps-store increases and square footage expansion the company could be looking at advertising expenditures in the neighborhood of $1.4 billion.
Then again, one of the advantages of growth is supposed to be the ability to leverage expenses, including advertising. Weekly circulars are an enormous cost that offer a questionable return and in an increasingly digital world where younger consumers don’t subscribe to their local Sunday paper the long term future of the circular is the subject of debate in the marketing world. Target increasingly has more efficient means to speak directly to its core shoppers with targeted offers designed to grow average ticket size among the company’s most loyal shoppers. The percentage of sales from shopper who pay with a REDcard product nearly double in the past two year to around 9% and will soon be in double digits.