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The Home Depot Kirsten Bailey Kelly Coonan Ajay Brivic Robert Abasolo Jennifer Blohm


Table of Contents 1

What’s the Problem?

2

Company Overview

4

Industry Overview

6

Consumer Insight

8

Where We Are Going

9

Why We're Going There

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How We'll Get There

12

Our Medium

14

Sources


Whats the Problem? The Home Depot’s current target of the average American is proving too broad and expensive to reach. To pair down our target, we must decide whether targeting males or females would more beneficial for The Home Depot. Furthermore, we must determine if The Home Depot should reach their target through advertisements that focus on home improvement (task specific) or those that focus on beautiful living spaces (results specific)?

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Company Overview

History

Founded by Bernie Marcus and Arthur Blank, The Home Depot first opened its doors in 1979. Headquartered in Atlanta, Georgia, Blank and Marcus aimed to give the do-it-yourselfer the ideal home improvement store; a store where they could get everything they need in one stop. At the time, they had more stock than any other hardware store. Customer service has been a top priority, its motto being “whatever it takes”. In 1991, The Home Depot introduced Expo Design Center, a chain which focused more on the interior design and lifestyle aspect of home improvement. The entire chain was recently shut down in 2009. According to CEO Frank Blake, Expo’s business “weakened significantly

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as the demand for big ticket design and decor projects has declined in the current economic environment”.

today

Today, The Home Depot sells a plethora of building materials, home improvement and lawn and garden products. They also offer installation, clinics, and even commercial construction. The Home Depot stocks their stores with regional materials, catering to the needs of the community. They are now the largest home improvement retailer in the United States, and the fourth largest general retailer. Across the world, The Home Depot operates 2,200 stores and employs 321,000 people. The Home Depot is also the fastest growing retailer in the U.S, making $66.2 billion in revenue in 2010, an increase of 2.8%


Company Overview Marketing

• Advertising low prices has always been key to The Home Depot advertising campaigns • Purchasing trends indicate that Lowe’s and The Home Depot have the same percentage of women customers but Home Depot is not associated socially with women • In 2002, The Home Depot targeted audiences through home improvement or task specific achievements • In 2010, The Home Depot added the Martha Stewart collection to appeal to female consumers

Slogans (early 90’s to present) • “The Home Depot, Low Prices are just the Beginning” • “When you’re at the Home Depot, You’ll feel right at Home” • “The Home Depot: First in Home Improvement!” • “You can do it. We can help.” • “More saving. More doing.”

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Industry Overview statistics

industry TRends

• Industry comprised of 23,000 total • Despite the downturn in the stores economy, The Home Depot • Annual revenues of nearly $150 has seen revenues, profits, and billion margins increase over the past • Home improvement category very decade top heavy • Stores in this category have been • Top 4 retailers account for 90% of strugglng to move more expensive revenues items like appliances • The Home Depot is the top retailer in the category at approximately $66 billion in sales

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INDUSTRY OVERVIEW competitors

Lowe’s Over the past 10 years, Lowe’s has earned a significant amount of market share, cutting into Home Depot’s. To counter Lowe’s, Home Depot has strengthened it’s image by adding more customer friendly store interiors and stronger supply chain. Lowe’s has set itself apart from the competition by optimizing on one critical component, customer service. Lowe’s recently introduced an incentive program for customers who regularly use the store’s credit card. Furthermore, as an added benefit to the company’s card program, Lowe’s has made it a point to not charge annual fees to their customers. Lowe’s market share in the home improvement category is not the only one growing. As Lowe’s continues to identify with its customers as a customer service oriented store,

it’s plumbing, electrical, and kitchen market share is also growing. Even though Lowe’s is #2 behind Home Depot, Lowe’s is still an extremely profitable company, making America’s 50 biggest companies. Ace Hardware Ace Hardware is a much smaller competitor and threat to The Home Depot company. Ace’s extensive history beginning in 1943, to developing the self-service concept in 1952, has distinguished itself in the home improvement market. Ace Hardware shares similar motives as Lowe’s by emphasizing that it is committed to delivering excellent customer service. Apart from that Ace tries to market itself as a company that delivers quality among all else.

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Consumer Insight MRI Data

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Customer insight consumer trends

• With the poor economy, consumers are shifting from high cost renovation projects to cheaper repair and maintenence items and projects • Women are responsible for 70% of home renovation projects • Due to the collapse of the housing market and the sharp decline customer profiles in home purchases, The Home Do It Yourself Customers Depot has seen sales to builders • Customers who like to attack their and contractors decrease. own home improvement projects Do It For Me Customers • Customers who purchase materials at The Home Depot then hire professionals for installation Professional Customers • Professional contractors or repairmen • Largest group of customers (in sales)

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Where We are Going • We are going to target women and while focusing on home improvement, or task specific achievements • We are going to focus on selling appliances since studies have shown that there is a decline in appliance purchases (The Home Depot is currently focusing their ads on this) • We will target women using the Martha Stewart collection but keep them in the store longer with great deals on appliances • The Home Depot is known for low prices. However, consumer’s don’t equate the brand with customer service, especially compared to Lowe’s. To solve this probwe will need to boost customer service and also make that apparent in our ad campaign

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WHy we’re going there WOmen are an important customer base

• Women are responsible for half of all purchases made • Approximately 43% of women have visited Home Depot in the past 12 months (compared to 48% of men) • Women are responsible for 70% of home-renovation projects • Women index higher than men in decision making for electric, household, and kitchen appliance purchases

YEt women still feel uncomfortable in home depot

• Women are less satisfied than men with their experience in the homerenovation industry • Men are twice as likely as women to agree with the statement “I Like to Look Through Hardware/Automotive Stores” (31.38% vs. 14.68%)

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Why We’re Going THere

INcrease visits

With women responsible for 70% of home-renovation projects, it’s likely that they actually drive more purchases than the data leads on. Because women tend to be uncomfortable in home improvement stores, they very well may be sending a man to the hardware store with a list. Our ad campaign would aim to position The Home Depot as a friendly resource for women as they engage in projects around the home. This way, when women begin a home improvement project, the first thing they do is head to The Home Depot. Because women are more likely than men to wander around a store browsing, merely having women enter and feel comfortable in the store will drive impulse buys, and consequently revenue.

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Drive Appliance Sales

As the data shows, women index higher than men in decision making for most appliance purchases. Due to the economy, home improvement retailers are having difficulty selling appliances. Targeting women, the primary appliance purchasing decision makers could lead to a boom in this falling category.


How We’ll get there LIFestyle or Project FOcused media?

A Canadian Precedent

The Depot Generally, women respond well Home Canada has to advertising that demonstrates how seen sucthe product will make life better and cess  (20% to statements health benefits”. Typisales lift) with cally, lifestyle focused media, which their Dream emphasizes these factors would be Book, a cataan appropriate decision. log targeted to However, with the economic wards women downturn, people are making fewer which focuses major renovations, instead investing on projects around the house. The in smaller projects. Publishing adverDream Book was created to attract tisements of lifestyles that are unatwomen, much like IKEA’s catalogues tainable could alienate the audience. do, and inspire them to action. Women want to see an accu rate reflection of their life and world In this same vein, we would view, so the use of project based like to utilize publications which publications will likely resonate more do highlight beautiful spaces, but with the budget minded audience we focus more on the projects that are targeting. create the atmosphere rather than the atmosphere itself.

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Our Medium: Better Homes & Garden There are countless other publications that could successfully target The Home Depot’s key influencer group; however, in addition to embodying the message we believe The Home Depot should portray, the reach of Better Homes and Gardens is unmatchable. As the biggest publication in its category, Better Homes and Gardens is the perfect publication to reach our intended audience with the right message and the right breadth.

size

Better Homes and Gardens is the fourth largest magazine in the country. They consis-

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tently sell more magazines than any other magazine in their category. This gives an extreme advantage to The Home Depot because they will reach the maximum number of women possible.

Audience

80.1% of readers are part of our key influencer group. This means that The Home Depot will be able to almost exclusively reach their target.

Reader  breakdown   Female   Male  

Total  subscrip.ons  per  month   Percentage  that  owns  home  

  80.10%   19.90%  

1,279,583   76.80%  


Our Medium: Better Homes & Garden 76.8% of readers own their likely to pass along what they own home. These readers will are reading to their family and be much more likely to do their friends. own home improvement projects, as opposed to those who PRoject based lease or rent houses and have landlords to do their renovations The magazine heavily fofor them. cuses on project ideas in their articles. For example, the top picks on bhg.com are “Cheap Community and Chic Headboard Projects,” 5.2 people on average read Pretty Headboard Decorating one copy of Better Homes and Ideas,” “Before and After: ExteGardens. Women enjoy disrior Ideas,” and “Organize Now: cussing what they read and are Simple Weekend Projects.” By using the same task-specific focus in The Home Depot’s ads, we can target specifically to women who are task oriented.

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Sources • • • • • • • • • • • • • • • • • • •

www.hoovers.com finance.yahoo.com/news/Homeowners-delay-renovations-rb-1793111621.html?x=0&.v=5 www.wikinvest.com/stock/Home_Depot_%28HD%29 MRI Data money.cnn.com/2009/01/26/news/companies/Home_depot/index.htm knowledge.wharton.upenn.edu/article.cfm?articleid=1848 adage.com/article/special-report-housing/lowe-s-ikea-emphasize-consumers-eye-home-upkeep/228887/ Thomas, Yaccato Joanne, and Sean McSweeney. “Chapter 3: Going Beyond 2x4s and Nails.” The Gender Intelligent Retailer: Discover the Connection between Women Consumers and Busi ness Growth. Mississauga, Ont.: J. Wiley & Sons Canada, 2008. 39-59. www.adbrands.net/us/lowes_us.htm www.dailyfinance.com/2011/05/14/lowes-can-gain-market-share-with-new-customer-incentives/ www.ourcompany.acehardware.com/history.asp bhg.com allyoucanread.com redbooks.com homedepot.com wikipedia.org, stores.org www.usatoday.com/money/advertising/adtrack/2002-12-08-depot_x.htm www.ajc.com/business/home-depot-woos-women-384271.html

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Home Depot POV