The Home Depot

Kirsten BaileyKelly Coonan

Ajay BrivicRobert AbasoloJennifer Blohm

Table of Contents

What’s the Problem?

Company Overview

Industry Overview

Consumer Insight

Where We Are Going

Why We're Going There

How We'll Get There

Our Medium

Sources

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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 tar-get through advertisements that focus on home improvement (task specific) or those that focus on beautiful living spaces (results specific)?

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history Founded by Bernie Marcus and Arthur Blank, The Home Depot first opened its doors in 1979. Headquar-tered in Atlanta, Georgia, Blank and Marcus aimed to give the do-it-your-selfer 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 pri-ority, its motto being “whatever it takes”. In 1991, The Home De-pot 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. Ac-cording to CEO Frank Blake, Expo’s

business “weakened significantly

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 installa-tion, 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 improve-ment 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

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marketing• Advertising low prices has always

been key to The Home Depot ad-vertising 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 tar-geted 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.”

Company Overview

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statistics• Industry comprised of 23,000 total

stores• Annual revenues of nearly $150

billion• Home improvement category very

top heavy• Top 4 retailers account for 90% of

revenues• The Home Depot is the top retailer

in the category at approximately $66 billion in sales

industry trends• Despite the downturn in the

economy, The Home Depot has seen revenues, profits, and margins increase over the past decade

• Stores in this category have been strugglng to move more expensive items like appliances

Industry Overview

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competitorsLowe’s Over the past 10 years, Lowe’s has earned a sig-nificant 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 interi-ors and stronger supply chain. Lowe’s has set itself apart from the competition by optimizing on one critical component, customer ser-vice. 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 an-nual fees to their customers. Lowe’s market share in the home improvement category is not the only one growing. As Lowe’s con-tinues 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 Ameri-ca’s 50 biggest companies.

Ace Hardware Ace Hard-ware is a much smaller competi-tor and threat to The Home De-pot company. Ace’s extensive history beginning in 1943, to developing the self-service concept in 1952, has distinguished itself in the home im-provement market. Ace Hardware shares similar motives as Lowe’s by emphasizing that it is committed to delivering ex-cellent customer service. Apart from that Ace tries to market itself as a company that delivers quality among all else.

INDUSTRY OVERVIEW

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mri data

Consumer Insight

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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 in home purchases, The Home Depot has seen sales to builders and contractors decrease.

customer profilesDo It Yourself Customers• Customers who like to attack their

own home improvement projectsDo 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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• 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

Where We are Going

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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 home-renovation 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 uncom-fortable 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 en-ter and feel comfortable in the store will drive impulse buys, and conse-quently revenue.

drive appliance sales

As the data shows, women index higher than men in decision making for most appliance purchas-es. Due to the economy, home im-provement retailers are having diffi-culty selling appliances. Targeting women, the primary appliance purchasing decision mak-ers could lead to a boom in this fall-ing category.

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How We’ll get there

lifestyle or project

focused media? Generally, women respond well to advertising that demonstrates how the product will make life better and to statements health benefits”. Typi-cally, lifestyle focused media, which emphasizes these factors would be an appropriate decision. However, with the economic downturn, people are making fewer major renovations, instead investing in smaller projects. Publishing adver-tisements of lifestyles that are unat-tainable could alienate the audience. Women want to see an accu-rate reflection of their life and world view, so the use of project based publications will likely resonate more with the budget minded audience we are targeting.

a canadian precedent

The Home Depot Canada has seen suc-cess (20% sales lift) with their Dream Book, a cata-log targeted to-wards women which focuses on projects around the house. The Dream Book was created to attract women, much like IKEA’s catalogues do, and inspire them to action. In this same vein, we would like to utilize publications which do highlight beautiful spaces, but focus more on the projects that create the atmosphere rather than the atmosphere itself.

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Our Medium:Better Homes & Garden

There are countless other publications that could success-fully target The Home Depot’s key influencer group; however, in addition to embodying the mes-sage we believe The Home Depot should portray, the reach of Better Homes and Gardens is unmatch-able. As the biggest publication in its cat-egory, Better Homes and Gardens is the perfect publication to reach our intend-ed audience with the right message and the right breadth.

size Better Homes and Gardens is the fourth largest magazine

in the country. They consis-

tently sell more magazines than any other magazine in their cat-egory. This gives an extreme advantage to The Home De-pot 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 ex-clusively reach their target.

Reader  breakdown      Female   80.10%  Male   19.90%  

Total  subscrip.ons  per  month   1,279,583  Percentage  that  owns  home   76.80%  

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76.8% of readers own their own home. These readers will be much more likely to do their own home improvement proj-ects, as opposed to those who lease or rent houses and have landlords to do their renovations for them.

community 5.2 people on average read one copy of Better Homes and Gardens. Women enjoy dis-cussing what they read and are

likely to pass along what they are reading to their family and friends.

project based The magazine heavily fo-

cuses on project ideas in their articles. For example, the top picks on bhg.com are “Cheap

and Chic Headboard Projects,” Pretty Headboard Decorating

Ideas,” “Before and After: Exte-rior Ideas,” and “Organize Now: Simple Weekend Projects.” By

using the same task-spe-cific focus in The Home Depot’s ads, we can tar-get specifically to women

who are task oriented.

Our Medium:Better Homes & Garden

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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-up-

keep/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