It was in May 2010, and the results were in. By Doug Scovanner was CFO Target Corporation, was not good news, and it was not bad news. Recent trials of a new rewards program RedCard in Kansas City, Missouri, and San Antonio, Texas, have yielded mixed results. In San Antonio, the new rewards program offered customers a discount of 3% in the target when a REDcard purchases used, but produced a significant increase in sales in this market. Moreover, the trial in Kansas City, a 5% discount on purchases of redcard destination, resulted in a significant increase in sales. In fact, if the results are applicable to the entire chain, the program would add 1% of its comparable store sales for the fourth quarter of 2010 and provide an even greater boost in 2011. There were risks involved in decisions, without incremental sales, 5% reduction would the profitability of the company. Opt for trials increase its own set of questions: Does the company to get more information? And what about the opportunity cost of waiting to implement the program at national level? Scovanner must then decide whether the program should be set for the fall and holiday.
by
Robert M. Conroy
Source: Darden School of Business
14 pages.
Date Posted: November 15, 2011. Prod #: UV5629-PDF-ENG
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