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With the growth of the internet as an important marketing tool, Home Depot has developed a special site that is dedicated to the marketing of its products. It also contracts other online advertising companies that are charged with the promotion of services and products offered here. Bowman’s strategy is a tool that is used to examine the competitive position of the organization and its offerings as compared to competitors. It is done by considering its cost and competitive differentiation advantage . Bowman and Faulkner made an expansion in Porte’s five forces model based on perceived value and price. As a result of development, they extended five dimensions into eight.
The pricing for the different commodities offered by Home Depot is often below the competitors’ pricing levels. This pricing method has made the company remain above the competitors in the form of positive performance. The principle opportunities that Home Depot has as a growing business include the potential for expansion in other markets and the available customer service initiatives (Chan, Goff, Stafford & Winkler, 2001). The management has planned to improve the company through performance enhancement as opposed to expansion. Therefore, Home Depot has specialized in quality customer service by offering a new range of services to the existing customers as well as prospective ones. An example of an initiative in place at the institution in the facilitation of this concept is the Service Performance Initiative (Chan, Goff, Stafford & Winkler, 2001).
International Marketing
The amount spent on international adverting in television networks is over $100,000. Radio advertising accounts for over $50,000 while $20,000 may be spent on magazine advertising in one month (Weinberger & LaPadula, 2001). Internet advertising per month can be projected at over $70,000 while the billboards can account for $40,000 per month. However, the international marketing budget Home Depot adopts is dependent on the market dynamics and the area that it is likely to enter.
Porter proposed three competitive generic strategies for organizations through which they can gain a competitive advantage over their competitors. To analyze the competitive position of the Home Depot at a global level, porter’s proposed generic strategies have been taken into consideration. These three strategies include cost leadership, differentiation, and focus.
Tilt-up construction design of stores
As the knowledge and expertise of the organization increases, it can enhance its business in the foreign exchange. The advantage of this approach to Home Depot will be that it will not have to face maximum risk . This strategy proposes that pricing has a significant impact on the success and failure of the organization (Hosford-Dunn, Roeser, and Valente, 2008). It is the strategy that acquires the phenomenon of the lowest cost producer of products and services. Through this strategy, the organizations gain a more extensive section of the market that is influenced by price.
The Pro Initiative as another program was set to improve the services available to customers in the company (Chan, Goff, Stafford & Winkler, 2001). The nine windows model is important in the analysis of the global expansion of companies. It provides a strategic route that may be followed to ensure an organized expansion strategy. The company can be said to have followed a detailed expansion strategy in its global expansion. Our founders' vision of one-stop shopping for the do-it-yourselfer came to fruition when they opened the first two Home Depot stores on June 22, 1979, in Atlanta, Georgia. The first stores, at around 60,000 square feet each, were cavernous warehouses that dwarfed the competition and stocked 25,000 products, much more than the average hardware store at that time.
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The Canadian operation consists of 182 stores and employs over 28,000 people in Canada. Home Depot Canada has stores in all ten Canadian provinces and serves territorial Nunavut, Northwest Territories, and Yukon through electronic means . In 2017, Home Depot acquired the online presence of The Company Store from Hanover Direct. The Company Store was founded in 1911, operating primarily as catalog and online sales, but with five physical locations. The Home Depot entered the Mexican market in 2002 with the acquisition of the home improvement chain Del Norte. In addition, The Home Depot had begun construction of stores in Mexicali and Tijuana.
The other threat that affects Home Depot is cannibalization where the opening of a new store in an area reduces the performance of existing Home Depot stores. Over the last few years, the number of stores in regions where Home Depot operates has increased significantly. These new stores are a threat in that the company recorded a decrease in consumers, with most of the clients opting for competitors that offer better rates. This cannibalization can be attributed in part to the saturation that is being observed in these markets.
Nine Strategic Windows Model
Advertising will also have to be increased in this organization, and hence the need for increased financing of this part of the organization. External opportunities that may prove useful to the international expansion of Home Depot include the strong performance of the global market. The world economy has undergone significant improvement ever since the onset of the global economic crisis that was observed in the period around 2007. The performance in the areas where Home Depot operates has also improved, with the regional economies reporting growth in the respective sectors. The US economy where Home Depot has a large number of stores has reported significant growth in the home markets, and hence an opportunity that the company can utilize to improve its performance. The macroeconomic elements in regions such as Mexico, Asia, and South America have been favorable to the company, with the most important of them being an increase in the consumer purchasing power.
Home Depot management had an ambitious plan to overtake its biggest competitor, RONA, which has about four times as many stores. However, some of RONA's stores are smaller than the typical Home Depot store. In terms of big box stores, the Home Depot has more stores than RONA (not including other Rona banners such as Réno-Dépôt or Cashway). The Home Depot now faces competition from Lowe's as they have moved into the Canadian market effective the end of 2007; Lowe's now has 35 outlets in Canada. In 2016, RONA was purchased by Lowes increasing its total store count to over 500 units. The main marketing strategy in Home Depot is similar in most of the regions where it has asserted its presence.
Globalization has led to the emergence of the global market as an important part of any organization. Companies that wish to succeed market their goods and services on the global front. This strategy adds the profits that are available in their local branches. Globalization has also introduced diversity, along with a number of challenges that may hinder the performance of companies. Marketing has undergone a series of changes in the wake of globalization, especially due to the differences in these new areas.
In tilt-up construction, the concrete is poured onsite, lifted into place, and then attached to the roof. The engineers told the Star that the practice, while normally safe and efficient, is dangerous in major storms because once the roof is lifted the walls collapse in a domino effect. Seven people were killed in the front of the store when the 100,000-pound walls collapsed on them, while 28 people in the back of the store survived when those walls collapsed outward. Engineers noted that when concrete block construction fails, structural elements break in pieces and usually not in huge slabs.
Wal-Mart has a variety of services in many countries around the world. It operates discount stores, warehouses, and superstores (Chan, Goff, Stafford & Winkler, 2001). Home Depot has several competitors both in the local and international front. The main competitor is Lowe that provides similar goods and services to those offered by Home Depot. The geographic distribution of Lowe’s stores is similar to that of Home Depot. Home Depot’s competitors are mainly those located in the United States because the company has the largest part of its operations being located in this region.
Expansion into new international markets has proved expensive in the past, with finances in this company being channeled here instead of being used for other activities such as marketing and customer services. In the past, Home Depot has been forced out of international markets such as Chile due to the existing macroeconomic factors (Weinberger, & LaPadula, 2001). International expansion into countries such as Mexico is also a challenge to Home Depot. This form of expansion may be a liability instead of a source for growth in the company.
In 2004, Home Depot employees at a suburban Detroit store in Harper Woods, Michigan, rejected a bid to be represented by a labor union, voting 115 to 42 against joining the United Food and Commercial Workers. If the union had won, the Michigan store would have been the first Home Depot to have union representation. This article's lead section may be too short to adequately summarize the key points. From start-ups to market leaders, uncover what they do and how they do it.
Home Depot’s substitutes come from different segments of the market, whereas it is providing all under one roof. More alternatives to Home Depot can be the new homes and choice of the customer to perform installation services of the product by themselves. But, currently, most of the customer prefers to take products from the market that limits the threat of substitute . In the case of China, the risk of alternatives is high for Home Depot because double-digit growth new home market has been witnessed in China . According to the research report of IBIS World , the annual growth of the home improvement industry is 4.1 percent. In the United States, the industry has moderate barriers to new entrants due to high start-up costs and relative labor availability because the industry is labor-intensive.
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