Cost Structures

*Creative Commons Photo

Target focuses on a cost-driven business, focusing on being able to offer low-price, well-made products.  Buyers for Target work with manufacturing companies and designers to get the best possible prices.  With over 17,000 stores, covering more than 233,618 thousand square feet, they must buy items in bulk.  This allows them to take advantage of economies of scale for an even lower price.

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As part of this, they take advantage of both their, and their manufacturers', ability to utilize economies of scope.  By increasing the number of products in each brand, such as the 800 products available in the Up&Up brand, they are able to offer a large variety and decrease their manufacturers' production costs.  This allows for an additional discount.