Marketing Strategy and SWOT Analysis of Home Depot
Everything that practically has something to do with homes, you can find in these stores. From construction tools to flooring, and garden supplies. It is nice to know that with just one shopping trip you can make a few alterations to your home at once. Having success in selling well in multiple categories, Home Depot is the topic of today’s blog. Home Depot is the biggest home improvement retailer in the United States. What is it that makes this company so special? Well, with the help of research, and the use of analytical skills, we are about to find out more in this blog.
First of all, we are going to take a look at the mission and vision statements of Home Depot.
The mission statement of the company is as follows.
“To provide the highest level of service, the broadest selection of products and the most competitive prices”.
Everything that you could ask for, this company has already taken into account.
High-quality service, broad product selection, and competitive prices altogether attract a good number of consumers.
Obviously, for a wide consumer base, good service needs to be present. People are most likely to go back to a store if they feel welcome there. If a customer is treated poorly, what are the odds that they will revisit the shop?
A broad selection of products allows one to take care of everything they need with only one stop. It enables a smart usage of time management, completed productively and enjoyably.
Competitive prices, on the other hand, act almost as a magic trick of attracting more customers.
Onto the vision statement.
Home Depot goes by two vision statements.
The first one is:
“one-stop shopping for the do-it-yourselfer.”
And this is the second statement:
“To create a company that would keep alive the values that were important to us. Values like respect among all people, excellent customer service, and giving back to communities and society.”
The values that this company has set for itself are much deeper than aiming to sell more products. They are much more than the ultimate qualification of respectable marketing choices.
We already talked about the convenience of this company being a one-stop store while discussing the mission statement.
What we did not mention, however, is the significance of social value. At the end of the day, companies should always remember that their products are sold to human beings. Thus, they should put all their power into creating something genuine.
The next topic that we are going to cover is the positioning strategy of Home Depot.
To do so, check out this Instagram post.
The photo is of a cozily decorated kitchen. It is not just cabinets and a fridge. We see a few shelves attached to the wall. On top of them, there are items that not only look appealing but, at the same time, are useful in the chosen environment. On the right side, there is some sign with hooks on the bottom that can be used for keys, and other things that you can hang.
As a finishing touch, the company used a caption for this post. The message is that no matter what kind of style you have, you can always find something to match your personality. Especially from places like Home Depot, where a wide product range is available.
The caption kind of makes everybody feel like they belong. Truly, it feels good to be different. In this day and age, it is important to not lose oneself while big celebrities influence people to become like them.
But it is also great to know that there are communities that put an effort to make everyone feel included. Even if those communities are businesses, it is still special.
Then, what does Home Depot sell? Yes, this exact post is talking about the decor. However, isn’t that decor something useful? Something that utilizes more space in a small kitchen.
And lastly, most of the items that this company puts out there are obtainable for most people since they are priced moderately.
All of the points that we just mentioned prove one point. The archetype that Home Depot belongs to is the Everyman.
What do we know about it?
Desire: connection with others.
Aim: to belong, fit in.
Strategy: develop ordinary solid virtues, the common touch, blend in
The messaging levels of the archetype are the following.
Level One: loneliness, alienation
Level Two: the orphan, feeling abandoned and alone, seeking affiliation
Level Three: the joiner, learning to connect, fit in, accept help and friendship
Level Four: the humanitarian, believing in the natural dignity of every person regardless of his or her abilities and circumstances
The Everyman archetype provides a good identity for brands:
- Whose use helps people belong or feel that they belong
- Whose function is something used commonly in everyday life
- With pricing that is moderate to low
- Produced or sold by a company with a down-home organizational culture, and
- That want to differentiate themselves positively from a higher-priced or more elitist brand.
Coming up, let’s review the SWOT analysis of Home Depot.
Strengths
The largest retailer in the market: Among all companies specializing in home improvement, Home Depot is the leader. Thus, understandably enough, this company has managed to build a great reputation for itself. Not only the products are of wide selection ranging from weekend projects to full-scale builds. But, even the consumers have varying requests. Home Depot sells to both contractors and casual users.
High Profitability: According to Forbes the net income margins of the company have risen from 8.4% to 10.9%. The profits of Home Depot are pretty advantageous. That goes out to all different groupings, from stocks to sales. As a result, not only does the company earn more income but the consumers are given exceptional value.
Great value offering for the money: Home Depot is supplied with numerous brands. All of those are tried and appreciated by most consumers. As a result, the company has got loyal consumers that make excellent use of the goods that the company puts out there. Some brands are of “private label”. But they are so preferred that some customers will purchase them above the rest of the product line.
A boost of a wide variety of products: Home Depot has everything that a homeowner or a tradesman could ask for. Every product needed for even the smallest repair to a new assembly. Materials among those include paint, power tools, landscaping tools, etc.
Excellent customer service: Everybody loves to be independent and look for necessary items of their desire themselves. However, things such as home improvement or construction are complicated, to say the least. Thus, there is no worry in asking for help. Home Depot employees are outstandingly sweet and understanding, and happy to share their knowledge.
Increasingly focused on e-commerce: As the technology has evolved immensely in the past few decades, so has online shopping. Some people prefer to do their purchasing via internet websites rather than physical stores. Home Depot has taken advantage of this situation and grown its business even further.
A major drive of online purchases: Online shopping is not limited to the loss of the desire to go in-store. With careers progressively advancing and time-management skills being put to use more cleverly, people choose to shop online.
This saves them a lot of time and energy. All they have to do is add an item to their cart, and it will be delivered to their front door in a matter of time. There is even this new ‘buy online, pick up in stores’ option which is pretty self-explanatory.
Instead of going to the store and looking for the items, you can just find them online, and the workers will have them ready for you to collect.
Loyal customer base: This company has achieved great success in acquiring loyal customers. They prefer to go back to a place they are familiar with rather than exploring a new store.
As they know the layout and the offered products by memory, their shopping trips are highly effective. Also, Home Depot is provided with products that are particular to Home Depot only.
Weaknesses
Limited locations: Although it is impressive to own stores in most of the US, Canada, and Mexico, this approach is also risky. Practically, any major change in the markets of the mentioned locations can be harmful to the company.
A significant event may come to the picture affecting the company’s foundation. Therefore, investing in worldwide markets could be a brilliant next step.
Outdated infrastructure: This issue is almost solved as of now. However, back in the day, Home Depot struggled to carry on with the times. For a while, its websites were out-of-date and unexciting.
Later adoption of e-commerce: There was a time where the competitors of Home Depot were way ahead with their marketing tricks. One of the instances of their tactics was the earlier entry to online sales. It left Home Depot a lot of room to grow and endure.
Limited supply chain: Several suppliers choose to avoid selling raw materials to numerous manufacturers. It allows them to prevent sanctions. Here is a good instance of this occurrence. Manufacturers that supply Lowe’s with specific products may decide to not provide Home Depot with those same items. That is for their own good so they steer clear of impacting their bottom line.
Opportunities
Expansion of offerings in home decor: Although painting the walls and completing different installments to make it more convenient is great, they are not enough. The decor is what makes the space appealing and homey. Home Depot offers limited products in this category. So it could benefit from introducing more items that have to do with interior design.
Increase in online sales: As already mentioned online shopping is becoming more and more convenient and time-efficient. This company could think of ways to profit from online sales a bit more. For instance, it can come up with new offerings that are more advantageous in the case of online purchasing.
Expansion beyond North America: As stated before, Home Depot is mostly rooted in America. It could not only solidify its focus on North America but also form new deals with emerging markets worldwide. Eventually, this could ensure Home Depot be a larger entrant.
Acquirement of struggling brands: Another way of increasing revenues is the investment in struggling brands. For instance, this has already been done before back in 2017. When Home Depot obtained The Company Store, an interior design brand, the latter had a huge asset.
Threats
Intense market competition: It is awesome when a company has brand loyalty and a great reputation. However, that is far from enough. In some cities, Home Depot and its biggest competitors are located immensely close to each other.
Also, there are companies such as Amazon that continue acquiring more brands in different categories. So, all of these companies are facing major threats. What Home Depot can do to remain safe is to find fresh ways of preserving its customer base.
Pricing deflation: Marketing is tricky. In any sort of circumstance, companies have to find a way to come out stronger. For instance, lumber, which is a raw material, has declined in recent years. As a result, profits have been reduced. Fluctuations or decreases like such could be considerably harmful.
Last but not least, we are going to check out the segmentation strategy of Home Depot.
But first, let’s watch this video.
The video is advertising tiles. A multipurpose material for decorating a house. It can be used on the floors, the walls, the stairs, anywhere you want to put your mind to. They even come in a variety of styles depending on where you want to use them. Another surprising truth about tiles is that they have affordable prices. “More saving, more doing” is what we see in the end on the screen.
And in all actuality, it gives the biggest hint as to what we are trying to find out here.
The tendency to be smart about where their money goes is something very specific about the segment. Then, the modernistic approach is another thing, proven by the great skills of interior design. Also, the overpowering presence of home, the space of family time. All of these lead us to infer that the segment that Home Depot has chosen to target is Actualizers.
What do we know about them?
Lifestyle and values:
Actualizers are perfectionists. They set goals for themselves and plan their steps out to get to the wanted target.
This segment cares deeply about pursuing a career. A career is so much more than a means of earning money, although that aspect is important as well.
Home is where Actualizers feel their best. It is not as much the idea of home as it is the element of family.
This segment goes by a healthy lifestyle eating healthily and exercising regularly. This is an area of life they don’t save money on.
Actualizers are modern and informed on a variety of sectors of events that are happening in the surrounding environment. They care about the world and the restriction of its damage.
When it comes to style, all this segment cares about is comfort.
Attitude to shopping:
Actualizers do not tend to waste money on unnecessary things. However, if it is an item they truly need, the price of the good does not matter.
As soon as new products launch, this segment is on its way to purchasing them.
If they can get most of their desired goods at the same store, that is the way to go. Actualizers do not enjoy procrastinating or wasting time. Thus, they always plan their shopping trips ahead.
Interesting facts about Actualizers:
They
- Feel good at home with family and friends
- Like hanging out with family
- Prefer a quiet evening at home or in the garden
- Enjoy having weekend dinners with family
- Care about the meaningfulness of their chosen activities
- Love reading books, watching movies, admiring arts
- Are drawn to films about nature and arts
- Feel like for their kids to be provided with interesting activities, they need to often go outside to places like theaters, cinemas, exhibitions, concerts, walks, and why not even restaurants
- Do not typically go in for sports but watch them and read about them
- Read local and international news to stay informed about what is happening in their surroundings and the world
- Are interested in politics, economics, environment, finance, business, and real estate
- Really care about the development of their kids. And they will go out of their way to try fun ways of upbringing the children.
- Are very comfortable with using the internet
- Watch TV only for rare occasions when looking for specific programs.
- Are above-average radio listeners.
To sum up, Home Depot is a massive home improvement retailer. In this blog, we talked about the tactics it uses to keep being successful. We started out by pointing out its mission and vision statements. Then, we looked through the archetype that it belongs to, its SWOT analysis, and the targeted segment. We hope that this got you interested to check out more blogs on our website where we frequently come up with new stuff.
