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5 Ways Target Uses Psychology to Perfect Its Experience

Cheap-chic retailer Target is one of the best-loved brands in America, and for good reason. Their store, pickup, delivery, and drive up experiences are industry-leading. They made $25 billion in 2021 with about 1900 stores dotted across the US. Fortune named them number seventeen on its annual “World’s Most Admired Companies” list.

But it’s not just Target’s financials that are impressive —  it’s how much its customers love the store. It’s been described as “relaxing,” a “mini-vacation,” and blogger Samantha Taylor even said
“Walking into a Target is a mild high in itself.”

But why do people love Target so much? You might be surprised to hear that it’s down to their use of psychology and behavioral science principles throughout the stores — applied consciously, or not. 


The Target Effect

If you love Target, you know how easy it is to go in for just one thing, then come out $100 bucks later with a coffee in your hand and wonder what the heck just happened. Urban Dictionary has named it the Target Effect, but there’s actually a psychological explanation for what’s going on. 

Called the Gruen Effect (or sometimes, the Gruen Transfer) it describes a store experience that’s intentionally overwhelming — with lots of different sights, sounds, and smells.

Gruen Effect: An overwhelming store experience can make customers more likely to impulse buy. 

It’s named after Austrian architect Victor Gruen. He spent his early life wandering the cafes and public squares of Vienna, Austria. When Gruen moved to America, he wanted to recreate that community atmosphere in the car-centric US and he did so with the modern mall.

The Dayton Company — which would eventually become the Target Corporation — actually commissioned Gruen to build the very first, indoor climate controlled shopping mall in 1952, called Southdale Center. 

The Southdale Center in Edina, Minnesota | Source: Wikipedia CC-By-SA-3.0

The Southdale Center in Edina, Minnesota | Source: Wikipedia CC-By-SA-3.0

But after construction, Gruen started to notice that customers seemed overwhelmed by all the sights, sounds, and smells of the mall. He also noticed that when you overwhelm customers with lots of stimulus, they forget what they came in for, lose track of time and end up buying way more than they intended when they came in.

Modern-day Targets also use the Gruen Effect — purposely or not. They have snack bars and Starbucks stores just inside their doors. Targets are shiny and clean, full of vibrant colors and bright lights, all of which is designed to transform your mood and mindset.

Right near the entrance, you’ll see an area called Bullseye’s Playground and the Dollar Spot. It’s a discount section designed to distract you right away with cute, cheap, seasonal knickknacks (check out the video below for a quick tour).


The Cult of Tarjey

Target doesn’t just have fans, it has a cult following. Even celebrities like Beyonce, supermodel Heidi Klum, and even Al Pacino love Target. And that didn’t happen by accident. 

The brand has mastered a mix of aspirational design with affordable prices that give it a little something that the Walmarts of the world can’t duplicate. Target calls this strategy “design for the masses” and it’s an important part of their success. Basically it works like this:

  1. A well-known designer, like Issac Mizrahi, or higher-end fashion brand like Victoria Beckham or Vineyard Vines, partners with Target to create an exclusive collection that’s only available for a limited time.
  2. Target builds big hype around the partnership, gets a lot of press in upscale publications like Vogue, and then uses Scarcity tactics to make sure that people know that they might miss out if they don’t buy the collab as soon as it’s launched.
  3. So shoppers rush to the store to see what they can get their hands on. But even if the collection is all sold out, they’ll still grab a few things while they’re in the store.

Not only do these partnerships give people a reason to visit the store, but they also give Target design credentials that rub off on their brand and make it feel more upscale.

The psychology behind this is something called the Halo Effect. It describes peoples’ tendency to let one positive trait guide our total opinion of a person, product, or experience.

The Halo Effect: Our tendency to let one positive trait guide our total opinion of a person, product, or experience.

And when Target partners with famous fashion designers to create more accessible versions of their products, Target themselves seem a little fancier.That’s how they got the nickname Tarjey — by borrowing some of the shine from more expensive brands.

Other examples of the Halo Effect in action include:

  • Using celebrity “creative directors” or spokespeople. Actor Matthew McConaughey has been the creative director of Wild Turkey bourbon since 2016.
  • Collaborating with other brands or celebrities on the creation of a product. Rapper and designer Ye (Kanye) West partnered with Adidas to create billion-dollar fashion brand Yeezy. This partnership highlighted the risks of partnering with another brand or celebrity.
  • Merchandising well-known brands next to unknown or generic brands so they feel like a better value. If you missed this edition of the free Choice Hacking newsletter, I dived into an analysis of how Walmart uses well-known electronics brands to drive value perceptions, leveraging Authority Bias as well as the Halo Effect. 

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How Target’s Pricing Strategies Break Your Brain 

Target’s slogan is “expect more, pay less.” This is where their Tarjey reputation can work against them. If customers don’t believe the “pay less” part, Target misses what makes them special. So they use three strategies to gamify shopping and always make you feel like you’re getting a deal (even if sometimes you aren’t).


1. Circle Offers: 

First, the Target app has something called Circle, which are limited time deals that you have to add to your cart. The deals change all the time, so you have to make sure you open the app every time you’re in the store.

That’s Target using the psychological tactic of Scarcity. It says when people know something is in limited supply, they want it even more. 

Scarcity: When something is in limited supply, we want it more.

So as soon as you walk into Target, you’re triggered to open the app and check the deals.


2. Odd-even Pricing:

When you’re shopping in Target, you’ll notice they use a lot of prices that end in $0.99. It’s a psychological pricing strategy called Odd-even pricing.

This strategy describes how prices that end in odd numbers, like $0.99 are more persuasive for certain types of products because they make us feel like we’re getting a deal. 

Odd-even Pricing: Prices that end in odd numbers make us feel like we’re getting a deal. 

Odd-even pricing has been proven to increase demand for lots of products but seems to be most effective for lower-priced items. And that’s good news for Target because that’s mostly what they sell.


3. Red Card Discounts: Cashless Effect

Target offers debit and credit cards called Red Cards, and if you use one you save 5% off the top of your entire purchase — even sale items and products you’ve already used coupons on.

Why? It’s because Target wants to take advantage of a principle called the Cashless Effect. It says that people are more likely to spend more when they use a credit or debit card vs. cash. 

Cashless Effect: We tend to spend more when we pay with a credit or debit card.

So not only are you likely to spend more when you use the card, but you’re enticed to get it with the 5% daily discount. No matter how big your bill is at the end of a Target shop, you always know you’re going to save 5% more, and that’s pretty persuasive.


The Bottom Line

Target is one of the best-loved brand in the world for very good reason — they use psychology to create an experience that people not only love, but always makes them feel like they’re getting a deal. 


 If you enjoyed this article, check out my podcast episode about Target: 


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