Marketing Management – SOM 610

Case 4: THE HOME DEPOT INC.: A DIGITAL

TRANSFORMATION FOR CUSTOMER EXPERIENCE
Group 1 – Section A

Q1.) What are Home Depot’s major customer segments? What do these segments value today and
how might expectations change in the future? How does Home Depot position itself for these
customer segments?
A1.
1. Do-It-Yourself Customers – They complete the installations on their own. Online resources
help them complete their work. Baby boomers comprise them.
2. Do-It-For-Me Customers – Third party service providers are hired by them, to do their work.
There are 7-8K customers for this category in Home Depot. There is a good scope of growth in
this sector.
3. Professional Customers (Pros) – They are the largest customer segment comprising of 40% of
the total revenue. They are professional renovators, remodelers etc. They are offered customer
loyalty programs by home depot.
According to US generational data, there will be an increase in generation X, Y, and Z consumers in
the future. They would heavily rely on technology to meet their demands and guide their purchasing
decisions. Even now, some clients choose to seek counsel from professionals, while others favoured
self-help. In order to meet the consumers' digital requirements, it would be necessary for the retail
environment to evolve.

Q2.) Who are Home Depot’s major competitors? How does the company compete with traditional
brick and mortar retailers versus online-only retailers?

A2.
Direct competitors included
• Lowe’s Companies Inc.
• Menards
• The True Value Company
• Ace Hardware Company
• Sherwin-Williams Company
• Lumberyards such as Builders First Source Inc
Electrical and plumbing supply companies, independent hardware stores, home décor shops, tool
and equipment rentals, and flooring suppliers were indirect rivals. Additionally, when e-commerce
expanded, Amazon and other online merchants also became direct rivals. The firm competes with
brick-and-mortar shops due to its advantage of managing more than 2200 locations with more than
400000 workers in the US and having expertise running these stores successfully.
The company invested in IT expertise and maintained its correct focus throughout the financial crisis,
enabling it to increase its online sales from 1% in 2011 to 7% in 2016. Additionally, the business
offers its clients exclusive training sessions, workshops, and guidance on home upkeep and repair.
This benefit also helps the company compete with online-only vendors, who lack the know-how and
thorough understanding of the industry that come with the conventional method. The company is
also shifting its focus toward digital marketing, spending more than half of its marketing budget on it
in 2016. This will increase its visibility both online and offline.
The company can offer flexible and in-store experiences to customers, many of whom wish to use
both interchangeably, since it has physical locations. Home Depot, for instance, competes in the
omnichannel context with its "Buy Online, Deliver from Store Service" initiative.

Q3.) What role should online channels fill? What role should brick-and-mortar channels fill? How
should Home Depot best leverage the distinct characteristics of the online and in-store channels to
gain a competitive advantage?

A3.
The function that online channels play is as follows:
a. Online distribution makes it simple to reach a larger audience and offers them practical
purchasing alternatives.
b. Enhances the seller's capacity to create an efficient marketing campaign using digital customer
data to convey the appropriate message about its product and provide appropriate options for
customers to purchase the product.
c. Online platforms make it simple and clear to get information about products, including their
pricing, features, and reviews, making it easier to compare them and select the best option.
The following positions need the use of brick and mortar channels:
a. They provide the buyer the choice to first test the thing out and then buy it if they like it. Between
the buyer and the vendor, this fosters loyalty and trust.
b. They provide face-to-face communication between the customer and seller, which is seen as a
reliable method for resolving any issues with the goods.
c. They can also serve as a partner who supports online selling by helping with order pickup,
product-related assistance, etc.
The following is how Home Depot may most effectively take advantage of the distinctive qualities of
the online and in-store channels:
a. Businesses must integrate their online and offline presence in order to satisfy customers'
increased demands for convenience and higher-quality goods.
b. They should concentrate on combining the best practises from each mode to provide a hybrid
mode that effectively solves customer issues.
c. In order to foster loyalty and confidence, they can concentrate on providing practical customer
care over the phone as well as approachable care in offline mode.
d. They are capable of integrating the return or exchange of goods across online and offline modes
without any issues.
e. They can also provide clients with targeted promotional offers depending on their preferred
methods of shopping.

Q4.) What are the current challenges and future considerations for Home Depot in providing a
seamless customer experience?
A4.
Home Depot strives to offer top-notch customer service at reasonable prices. They are concentrating
on raising the calibre of service offered by their staff in order to accomplish this. They will have
several difficulties in doing so from a commercial, operational, and long-term viewpoint. The entire
list of difficulties they will experience is shown below:
Marketing Challenges:
a. Finding the most effective method of media outreach to a potential client base is the main
problem in marketing.
b. Traditional media might assist the business in reaching a large client base, but digital media offers
a more affordable and personalized option.
Operational Challenges:
a. Developing the best method to fulfil online orders requires understanding the cost structure. The
key to this is making use of the data to draw reliable conclusions.
b. Complete online and offline operational integration to give customers a seamless experience.
c. Securing volume orders from brick and mortar mode of operations moving ahead, as brick and
mortar mode cannot operate without volume orders.
Long-term Planning:
a. The company must develop ways to integrate its offline and online modes of operation in the long
run.
b. The inventory model should be data-driven to integrate the relevant components, allowing for
precise demand forecasting to increase service levels while also cutting operating costs.
c. Delivering and satisfying an enhanced client experience while being commercially sustainable.