Introduction
The marketing plans and strategies of the Home Depot network of construction organizations regarding the product development strategy, market penetration and growth of the company differ. Home Depot’s product development strategies include a leadership strategy, which consists in giving the product special qualities that are different from competing products, and thereby ensuring an increase in demand in the market (Wang et al., 2019). The plan for this strategy is expressed in the fact that unique construction facilities are being created, ultramodern building materials and advanced technologies are used.
The Home Depot market development strategy is quite effective, since under the influence of external factors, the demand for the products of a construction organization increases significantly. In particular, this is possible due to the withdrawal of the most active competitors from the local market, as a result of increased migration processes or the emergence of new opportunities for traditional consumers. The decline in inflation and the growth of investment activity leads to a temporary shortage of construction capacity, which created the prerequisites for a plan based on the effective use of the market development strategy. Home Depot’s growth strategies assume such a direction as intensive growth of the company. It is justified in cases where the firm has fully used the opportunities inherent in its current products and markets (Wang et al., 2019). The main plan for the possibilities of intensive growth of Home Depot is a deep introduction to the market, when the market capacity of this construction product is large, and the production capabilities of the construction organization are almost unlimited.
Home Depot’s Target Market
The main principles of target segmentation of the construction products market, according to which the portrait of the consumer is formed, are: geographical, demographic, socio-economic, psychographic, behavioral and situational Home Depot. Segmentation by geographical features involves the breakdown of the construction products market into different geographical units: municipalities, regions, countries, and continents. For Home Depot, the market segment is not limited to the region and is distributed nationwide.
Demographic characteristics determine the segmentation of buyers by gender, age, family composition and stage of the family life cycle. Profiles of Home Depot customers include mainly both married couples with children and young couples without children from 25 to 60 years old (Kaplan-Bucciarelli, 2019). Segmentation of the construction products market by socio-economic characteristics is multidimensional. Target market Home Depot assumes taking into account such market parameters as effective demand, the level of income of the population, the degree of investment and production activity, etc. The client’s profile represents an employee with an average salary (Abu-Monshar et al., 2022). In psychographic segmentation, buyers are divided into groups by belonging to a social class, by lifestyle and personality characteristics.
Home Depot customers have such an important psychophysical personality trait as the desire for comfort. Behavioral signs characterize the commitment of consumers to goods, manufacturers, trade organizations, etc. Home Depot customers take into account the reasons for improving the purchased goods, looking for benefits, and the portrait of the client is characterized by a high intensity of consumption (Abu-Monshar et al., 2022). The signs of a situational nature include certain kinds of benefits, forms of organization of relationships between participants in the investment process, etc. The construction organization Home Depot, which has priorities over others, occupies the market segment of government orders.
SWOT analysis
Strength
Among the strengths of Home Depot, it can be noted that the company has a positive reputation and connections in government agencies. It also has a simplified scheme for obtaining permits and commissioning facilities. The advantages of the organization include highly qualified personnel, experienced management, the presence of a large authorized capital and decades of successful work in the construction sector (Wang et al., 2019). Home Depot takes the lead in the market due to the customer orientation of the company.
It is flexible in its relations with customers, and the presence of a project department allows for the multi-variant solution of engineering problems through the use of innovative technologies and equipment. The strengths of Home Depot also lie in brand awareness appeared, which appeared due to the business reputation and high image of the company, and a wide production and product line of works and services (Bahadori-Chinibelagh et al., 2019). The company has systems of professional training and advanced training, as well as approved standards of the organization. Home Depot actively uses the social responsibility program and carries out post-construction monitoring of precipitation of buildings and structures. In addition to after-sales service, the advantages of the company include a long-term partnership with leaders in the global and European markets, which provides access to advanced technologies and ensures the rapid finding of innovative solutions.
Weakness
Among the weaknesses of Home Depot, the quality of the facilities, worsened by reducing the cost of materials can be singled out. There have also been cases of delayed wages for employees due to the fact that the bulk of funds are in circulation and delays in construction (Abu-Monshar et al., 2022). Among the shortcomings of the Home Depot company, the lack of working capital to finance the necessary strategic initiatives can be highlighted.
The organization is characterized by the volatility of cash flow due to a long period of turnover of accounts receivable. Concern is caused by the low profitability of production activities due to the weak organization of supply and technical service of mechanisms. High production costs and cumbersome organizational functional structure due to the lack of formalization of management processes are also disadvantages. In addition, Home Depot has a weak marketing policy, which results in irregularity and unpredictability in receiving orders (Bahadori-Chinibelagh et al., 2019). The potential internal weaknesses of the enterprise also lie in the not strong enough organizational structure of the enterprise and the lack of a material inventory management system. The growth of circulation costs and insufficient mobility in the development of the enterprise are also shortcomings that need to be corrected.
Opportunity
Among the possibilities of the Home Depot company is the purchase of a land plot for the development of economy-class residential buildings, since there is such a need. It is also possible to consider proposals for the construction of letters in the elite housing sector, an increase in the number of buyers in connection with the acquisition of new real estate and entry into the international market (Abu-Monshar et al., 2022). As market opportunities for Home Depot, we can note the growth of the construction segment, opportunities for rapid growth and the presence of new attractive geographical markets. There is a potential emergence of new technologies for high-rise construction and development of underground space, as well as the influx of private and foreign capital into the construction industry. Reducing trade barriers to entry into attractive foreign markets can be considered as a potential opportunity. The potential external capabilities of the enterprise are the possibility of further participation in public tenders and quotations.
The main opportunity for Home Depot is the diversification of activities. This is one of the forms of concentration of own or borrowed capital in order to carry out new types of activities and penetration into new markets of services, products and goods that the enterprise would not have been able to carry out previously due to the lack of one or more necessary components (Abu-Monshar et al., 2022). Potential opportunities for Home Depot are diversification projects — a set of organizational, economic, technical and technological measures related to the transition of the enterprise to a new type of activity, which previously Home Depot would not have been able to carry out due to the lack of licenses, labor and material resources. Such components of a chain of construction stores are licenses, fixed assets, qualified labor and intangible assets.
Threat
Among the threats to the Home Depot chain of construction stores arising from the weaknesses of the organization, it is possible to highlight the emergence of competitors, lower prices for building materials and instability in the foreign exchange market, which increases the cost of work and reduces demand. Low availability of finance and high competition in the construction materials market can also negatively affect the development of the company (Ramos et al., 2020). Production risk factors at the enterprise include malfunctions in the operation of machines, mechanisms, vehicles, failure of power and water supply systems, as well as poor quality of materials, parts, structures, equipment that do not allow them to be used for their intended purpose.
Despite the fact that innovations create opportunities, the development of alternative technologies and equipment analogues can also serve as a threat due to the obsolescence of marketable goods. Changes in the control system in construction, a high degree of control of business by the state and the lack of standards for standardization of new technologies can also have adverse attention (Bahadori-Chinibelagh et al., 2019). The problems of Home Depot are created by a shortage of specialists, which is why it is necessary to regularly spend large amounts of money on training employees and retain a highly qualified workforce, agreeing to the conditions offered by them. Potential external threats to Home Depot are the saturation of the market with construction materials and services, an increase in inflation rates and an economic crisis.
Strategic Alternatives & Recommendations
Based on the above factors, it is possible to identify private strategies and solutions that will allow fix issues present at Home Depot. They will make it possible to realize market opportunities and avoid market threats, using the company’s strengths and leveling its weaknesses (Bahadori-Chinibelagh et al., 2019). Strategic alternatives are sorted by importance, starting with the most popular strategy and solution in the current situation at Home Depot. First of all, it is necessary to implement an offensive marketing policy.
Home Depot has great potential, given the lack of systematic efforts to organize sales so far and increased competition. The market moment is so favorable that rising prices are likely to attract subcontractors from other regions and possibly competitors or former customers with their own equipment (Kaplan-Bucciarelli, 2019). The main task in such conditions is to gain a foothold in the market in new conditions and expand its share, expand the list of customer companies.
It is important to understand that only a strong marketing strategy is protection from price wars. The price lever is the way to dumping and zero profitability. For rapid growth, it is possible to introduce diversification by industry: housing, transport, underground and others (Ramos et al., 2020). It is necessary to continue this strategy, since the purchased equipment must work and pay back the investment. The solution of international geographical expansion has great potential given the accumulated experience, competencies and high qualifications of the company.
The low profitability of the enterprise in recent years, among other things, is caused by high cost. In such conditions, the solution is cost control – an important factor not only in improving profitability, but also the competitiveness of the company as a whole (Kaplan-Bucciarelli, 2019). Taking into account the fact of increased competition within this market segment, it is necessary to set integrative growth as a way to reduce costs as the company’s development goals.
Strategies strengthening organizational culture and the introduction of quality management in the future is inevitable, as more and more competitors are implementing them. In the current market conditions, a company cannot be a recognized brand in the market without having an impeccable quality of its services (Kaplan-Bucciarelli, 2019). It is possible to implement a functional leadership strategy, but it requires significant investment in research and development work. It is necessary to make better use of current resources and technologies that carry functional leadership.
For Home Depot, the most appropriate and safe strategy is a deep penetration into the existing market, however, given the current competition conditions, it is necessary to consider an alternative. This will be the strategy for the development of goods and services, that is, it is necessary to offer new innovative types of construction services to the same market (Bahadori-Chinibelagh et al., 2019). The strategy of focus on differentiation is most suitable for the company. Home Depot should focus on becoming the best in its niche market. This can be done by focusing either on product differentiation, or on the basis of offering favorable and flexible prices in this segment.
Operations Plan
In order to solve the problems identified in the course of the study in the organizational structure of Home Depot, it is advisable to carry out a number of improvements in the organizational structure that contribute to strategy implementation. The Home Depot company is proposed to introduce the position of Deputy General Director for Economics and Finance and develop a job description for this position (Kaplan-Bucciarelli, 2019). It is necessary to create a new position of deputy executive director.
The following will be added to the duties of the Deputy Executive Director for General Issues. They will organize the management of the formation, use and development of the company’s personnel on the basis of the maximum realization of the labor potential of each employee (Kaplan-Bucciarelli, 2019). Moreover, the Deputy executive director at Home Depot will lead the work on the formation of personnel policy, determining its main directions in accordance with the company’s development strategy and measures for its implementation.
Strategy implementation will also consist in organizational reorganization – improving the management structure of the enterprise, optimizing the number of managerial personnel by eliminating duplication of managerial functions and reducing management costs. Economic and financial rehabilitation will be implemented through the normalization of accounts receivable and accounts payable and the sale of excess property (Bahadori-Chinibelagh et al., 2019). An important point of the plan will be marketing rehabilitation with market research in order to increase the share of sales in existing markets, and search for new markets.
References
Abu-Monshar, A., Al-Bazi, A., & Palade, V. (2022). An agent-based optimisation approach for vehicle routing problem with unique vehicle location and depot. Expert Systems with Applications, 192(11), 1735-1741.
Bahadori-Chinibelagh, S., Fathollahi-Fard, A. M., & Hajiaghaei-Keshteli, M. (2019). Two constructive algorithms to address a multidepot home healthcare routing problem. IETE Journal of Research, 56(7), 832-842.
Kaplan-Bucciarelli, J. (2019). Going to college is not like going to the Home Depot. Suny Empire State College, 52(6), 75-81.
Ramos, T. R., Gomes, M. I., & Póvoa, A. P. (2020). Multi-depot vehicle routing problem: A comparative study of alternative formulations. International Journal of Logistics Research and Applications, 23(2), 130-120.
Wang, Y., Wang, Z., Li, B., Liu, Z., Zhu, X., & Wang, Q. (2019). Closed-loop supply chain models with product recovery and donation. Journal of Cleaner Production, 227(15), 861-876.