Case Study Home Depot Eco Options Program Team Name : Jeta. Group Members : Justin Alicastro Elyssa Kemper Thomas Echezabal Andie Tradler

Transcription

1 Case Study Home Depot Eco Options Program Team Name : Jeta Group Members : Justin Alicastro Elyssa Kemper Thomas Echezabal Andie Tradler

2 Environmental Scanning With the environment in a deteriorating shape, The Home Depot decided to introduce a program that could lessen the damage people do to the Earth through a series of green actions in a program called Eco Options. This program is meant to inspire and empower customers to go green without having to go too far out of their way. The Home Depot s goal is to sell environmentally friendly products that aren t too expensive, making it easy to help the planet without having to make it a financial priority. Through this initiative, as well as the store s own actions in going green, The Home Depot hopes to drastically reduce its carbon footprint and create a reputation for itself as an environmentally conscious store. More people are shopping at big box stores now since they ve taken over the marketplace, so it s important for The Home Depot s logo to be displayed proudly on the minds of consumers to outperform its competitors such as Lowe s, Ace, True Value, Menard, as well as other local hardware stores. The Home Depot relies on its convenience factor to improve its reputation as a green store. With sales growing in the home improvement category, they strive to create products that will help homeowners as well as the environment. This way, those working on their homes can be glad to know they are subconsciously being environmentally savvy. The Home Depot has no mission statement, but rather 8 important values: Take care of people, give back to community, do the right thing, excellent customer service, create shareholder value, build strong relationships, entrepreneurial spirit, respect for all. With that comes the backbone of their operation: More saving, more doing. Statement of Problems/Opportunities The Home Depot seeks to differentiate itself from competitors with its unique EO program that will allow consumers to easily identify eco-friendly products that have a less harmful impact on the environment. However, despite The Home Depot s significant investment into marketing efforts, brand awareness and understanding were too low. Research revealed that consumers did not perceive The Home Depot to be significantly more or less devoted to protecting the environment than its primary competitors. Additionally, The Home Depot had targeted too broad of a customer base, which comprised of individuals who ranged in their degree of care and effort to help the environment. The broad target market included mainstream consumers who wanted to do the right thing for the environment but did not want to inconvenience themselves too much. This demographic was too broad to successfully reach with traditional forms of advertising. The Home Depot is also presented with effectively communicating the differentiable selling factors and benefits of the Eco Options products as compared to traditional, less eco-friendly products that are available. They must also differentiate the benefits of the Eco Options program as a whole compared to competitor s environmental efforts. The Eco Options products need to become an easily identifiable product line both on The Home Depot s shelves as well as in households and advertising. The Home Depot has several opportunities that could result from addressing these issues. Primarily, the Eco Options product line could become a household, widely used brand. In turn, The Home Depot has the opportunity to be recognized as greener than its competitors and accomplish its ultimate goal of reducing negative environmental effects. The best opportunity for narrowing The Home Depot s target base for the EO products is to use a multi-segment

3 approach and target the Drifters and Conventionals. The Drifters segment is based on a rather indifferent attitude about the environment unless the issues pertain to them, as well as a desire to follow trends. Conventionals also share many characteristics with Drifters such as median age, salary, income (Natural Marketing Institute, 2008), although they are driven more by practicality, and thus are more likely to be persuaded to buy EO products if provided with the right incentives. Through these actions, The Home Depot can increase its sales of their approved products, increase customer loyalty, and ultimately help the environment. List of Critical Factors Critical factors of The Home Depot s situation include improving marketing messages to target a narrower demographic, differentiating their product line and brand awareness, providing consumers with eco-friendly products at a low price, correct timing and placing of ads, and having a definitive positioning statement for the program. Definition/Formulation of Alternatives The Home Depot can choose to improve their marketing efforts by implementing either a traditional-focused or digital-focused marketing strategy. Both campaigns can be utilized to target the Drifter and the Conventional segments using the strategies specific to either traditional or digital advertising. The traditional-focused strategy entails all of the media types found in a traditional campaign, such as TV, print, billboard and radio advertisements, celebrity endorsements, etc. The digital-focused strategy entails a focused social media-based campaign in which popular social media sites display advertisements that target the two primary markets we are trying to reach. Facebook would be our prominent platform because it allows us to reach our target market segments using behavioral targeting. Through Facebook, we can create ads that direct viewers to The Home Depot s Eco Options microsite. The ad allows for versatility in advertising the Eco Options brand, as it can be used to display a digital advertisement and accompanying link, which appears directly onto Facebook users newsfeeds. Twitter and LinkedIn also use interest and behavioral targeting, connecting users to a product based on selfreported interests, as well as purchase behaviors and device usage. Using these platforms as our primary targeting devices will allow us to emphasize the benefits of Eco Options to consumers of a particular age range and lifestyle. Pros/Cons Discussion of Alternatives Traditional methods of marketing such as celebrity endorsements would increase brand awareness and popularly, creating recognition for the program within the desired market segment. This would create an image of trendiness for the Eco Options brand, which greatly appeals to the Drifters demographic. An incentive that appeals to both Conventionals and Drifters that can be used across all types of media is the promise of donating a percentage of sales of EO products to charities. Statistically, these segments donate most frequently to civic-

4 oriented philanthropies such as The Salvation Army (Natural Marketing Institute, 2008), thus a partnership with this non-profit and others like it would be beneficial to sales for the specific demographic we are targeting. Another aspect of traditional marketing that would be beneficial if used to target these specific demographics is a discount system in which a customer can return a used EO product to The Home Depot s stores to be recycled in exchange for a discount off their next purchase. This can increase sales and customer loyalty. A disadvantage to traditional marketing using celebrity endorsements is the cost of advertising. Celebrity endorsements are expensive and may use a majority of the budget. Celebrity choice is crucial, as choosing one that does not best represent the brand and The Home Depot s mission would be detrimental to sales and reputation. Traditional media can at times be less efficient when attempting to target specific groups. Additionally, the recycling program may not create enough of an incentive for consumers to inconvenience themselves to bring used products back to the store, and it may be altogether ineffective for consumers who are environmentally unconcerned. Digital marketing is significantly less expensive than traditional marketing. Also, it can be tailored to those who use it, particularly within social media platforms. Facebook and Twitter allow advertisers to use behavioral targeting to easily present content to users. Digital ads on social media can directly link consumers to The Home Depot s Eco Options microsite, which can provide them with more information about EO products and their benefits. Behavioral targeting based on consumer s purchasing habits and self-reported Likes is an inexpensive and effective way of narrowing the target market for EO products. This digital marketing strategy may not reach everyone in the target markets. Not every consumer uses social media, and there is a potential for the ads not to be seen by those who don t use social media. The ads could also take a long time to create, and are easily susceptible to public backlash. Recommendation Focusing more on a digital marketing campaign to bring attention to the program would be the better solution for The Home Depot s targeting issues rather than traditional outlets. Home Depot s main problem was incorrectly targeting the right market segment in order to best promote and increase sales of their approved products. They were aiming for too broad of a market, so in order to concentrate on the most appropriate groups for this case, The Home Depot should focus its efforts on marketing through social media; primarily Facebook. Drifters and Conventionals have average ages of 44 and 47 respectively, and fall under the age range with the second highest number of active Facebook users (Apuzzo, 2014). The Home Depot should continue its Earth Day promotions that were implemented in previous marketing efforts; however it should be translated into a digital setting. The Home Depot could potentially reward its customers for engaging with the company on social media by providing additional rewards/discounts for EO products. The EO microsite should also be improved to include factual incentives and graphics as to how the EO brand would benefit the target market. Rather than merely stating what the store itself is doing in an effort to be environmentally conscious, as it is now, it should also clearly state the benefits that consumers will gain from these approved products. Since these benefits will pertain to consumers, they will be more inclined to look into them and (hopefully) buy them.

5 References Apuzzo, Randy (2014, October 20th). Social Media User Statistics & Age Demographics for Retrieved from Energy Efficient. (n.d.). Retrieved January 31, 2016, from Ganguly, Sonny (2015, March 17). Why Social Media Advertising Is Set To Explode In The Next 3 Years. Retrieved from years H. (Ed.). (n.d.). THE HOME DEPOT INC. Retrieved January 29, 2016, from 0&newsCompanyDuns= Murphy, J. H., Cunningham, I. C., & Delewis, L. S. (2011). Integrated brand promotion management: Text, cases, and exercises. Dubuque, IA: Kendall Hunt. Natural Marketing Institute (2008, March). Understanding The LOHAS Market Report. Retrieved from Consumer-11_LOHAS_Whole_Foods_Version.pdf Trefis Team (2014, Aug 5). Robust Spring Sales Expected For Home Depot As U.S. Economy Recovers. Forbes.com. Retrieved from