Home Depot's Corporate Strategy Essay
Parnell (2014) defines corporate strategy as “the basic thrust of the firm, or the direction that managers would like to lead the firm”. For Home Depot, the corporate strategy is growth. Since its inception in Atlanta, Georgia in 1978, Home Depot has continuously endeavored to be the principal, most profitable supplier of home building supplies in the industry. Home Depot is currently the biggest player in the home improvement retail industry in the United States and their plan is to remain in that position, if possible (Smithson, 2016). Home Depot currently attempts to remain competitive in the market by building large warehouse type stores and placing them in strategic locations that will produce lucrative sales and profits margins, but acquisition of smaller companies is still their primary mode of achieving growth (Smithson, 2016). To maintain their market position, they will need to continue to grow and look for locations that they can successfully enter the market. The business level strategy is low cost-differentiation. Home Depot
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offers everyday low pricing. This means that if an identical, in-stock product is found offered at a lower price from a competitor, Home Depot will match that price plus beat it by 10% (The Home Depot Guarantee, n.d.). Home Depot has developed a new logistics initiative which gives them a cost saving advantage. Instead of individual stores placing orders, they now rely on regional distribution centers (Kalogeropoulos, 2016). They have also recently began installing Bloom Energy fuel cell technology devices that decrease electricity costs by 15-20 percent in locations that it is utilized and serves as an environmentally friendly alternative (DiChristopher, 2016). The differentiation part of their strategy comes from their quest to offer high quality services and make a broad array of services available to their customers. Quality comes from hiring highly qualified employees who are occasionally experts in the field. Some of their employees are former carpenters or plumbers, who can provide expert advice to customers. The fact that they offer how-to clinics and have an online presence of do-it-yourself videos also lends way to the customer experience. Hitting on both differentiation and cost strategy, Home Depot offers products and services that meets all levels of customer spending. For example, they offer kitchen projects at different pricing ranges. A consumer who can afford to replace cabinets can pick out new cabinets in the Home Depot store; however, those who are restricted in their spending can still get a kitchen makeover by having just the visible parts of their old cabinets refinished or replaced (Cheng, 2011). Home Depot currently markets to the DIY market.
They know their market well and they have become experts at getting the attention of those types of consumers. Home Depot uses the DIY spirit to makes sales. They often post project inspirations on their website, social media pages, or internet videos, which inspire consumers to come into the store to purchase the necessary supplies. On the subject of social media, they utilize Facebook and Twitter to connect with their customers. They post DIY videos to YouTube and Vine and they provide online communities where actual employees answer consumer’s questions and help on projects that consumers may be experiencing trouble with (How Home Depot, 2014). They also offer DIY books and free home improvement workshops. The company has branded themselves as experts in the DIY world. They hire people who can give expert advice and help customers finalize projects that they have
started. Home Depot’s marketing strategy fit perfectly with their corporate and business level strategies. The Corporate strategy is growth. Growth is only achievable if they have customers to support them. The marketing strategy that they have devised is aimed at keeping customers happy and satisfied with their ability to create products that they want all by themselves or with assistance of an expert store associate if needed. The business level strategy is low-cost differentiation which also fits the marketing strategy well. The company markets that they will not be undersold on an identical product that is found in-store. They also market that they offer a wide array of products and the best possible selection. I believe that Home Depot has set themselves up nicely for a lucrative future of growth and sustainability.
offers everyday low pricing. This means that if an identical, in-stock product is found offered at a lower price from a competitor, Home Depot will match that price plus beat it by 10% (The Home Depot Guarantee, n.d.). Home Depot has developed a new logistics initiative which gives them a cost saving advantage. Instead of individual stores placing orders, they now rely on regional distribution centers (Kalogeropoulos, 2016). They have also recently began installing Bloom Energy fuel cell technology devices that decrease electricity costs by 15-20 percent in locations that it is utilized and serves as an environmentally friendly alternative (DiChristopher, 2016). The differentiation part of their strategy comes from their quest to offer high quality services and make a broad array of services available to their customers. Quality comes from hiring highly qualified employees who are occasionally experts in the field. Some of their employees are former carpenters or plumbers, who can provide expert advice to customers. The fact that they offer how-to clinics and have an online presence of do-it-yourself videos also lends way to the customer experience. Hitting on both differentiation and cost strategy, Home Depot offers products and services that meets all levels of customer spending. For example, they offer kitchen projects at different pricing ranges. A consumer who can afford to replace cabinets can pick out new cabinets in the Home Depot store; however, those who are restricted in their spending can still get a kitchen makeover by having just the visible parts of their old cabinets refinished or replaced (Cheng, 2011). Home Depot currently markets to the DIY market.
They know their market well and they have become experts at getting the attention of those types of consumers. Home Depot uses the DIY spirit to makes sales. They often post project inspirations on their website, social media pages, or internet videos, which inspire consumers to come into the store to purchase the necessary supplies. On the subject of social media, they utilize Facebook and Twitter to connect with their customers. They post DIY videos to YouTube and Vine and they provide online communities where actual employees answer consumer’s questions and help on projects that consumers may be experiencing trouble with (How Home Depot, 2014). They also offer DIY books and free home improvement workshops. The company has branded themselves as experts in the DIY world. They hire people who can give expert advice and help customers finalize projects that they have
started. Home Depot’s marketing strategy fit perfectly with their corporate and business level strategies. The Corporate strategy is growth. Growth is only achievable if they have customers to support them. The marketing strategy that they have devised is aimed at keeping customers happy and satisfied with their ability to create products that they want all by themselves or with assistance of an expert store associate if needed. The business level strategy is low-cost differentiation which also fits the marketing strategy well. The company markets that they will not be undersold on an identical product that is found in-store. They also market that they offer a wide array of products and the best possible selection. I believe that Home Depot has set themselves up nicely for a lucrative future of growth and sustainability.