lowe's brand strategy

Lowe’s Canada | Ebube Anizor (209347741)

MKTG 6550U COMPETITIVE BRAND STRATEGY ANALYSIS

The recent recession precipitated by the collapse of the US housing market has been felt globally. The ripple

effect of the downturn caused Canada’s hot housing market to cool and consumer spending to decline. The

home improvement (HI) industry was hit particularly hard as spending in this sector is considered discretionary.

As a means of spurring growth the Government of Canada introduced the Home Renovation Tax Credit

in January 2009 with the rationale that renovations were smart investments for the long term value of a home

and provided immediate economic activity by “increasing the demand for labour, building materials and other

goods.”1 Households could receive up to $1350. Early indication is that consumers are reacting positively.

MARKET DEFINITIONBy way of definition the HI market consists of decorative materials (e.g. paint, tiles), non-decorative materials

(e.g. doors, window frames), electrical hardware, hardware and tool segments. Non-decorative is the largest

segment with 35% of the market value.2 From an industry perspective, while approximately 50% of the market

is comprised of independent dealers there is a palpable trend towards consolidation - with larger corporations

digesting or creating affiliations and partnerships with smaller dealers.

CUSTOMER ANALYSIS

TRENDS Customer Variety. HI has evolved from a functional to discretionary and leisure-based activity creating

with it new Do-It-Yourself (“DIY”) customers who have taken on some or all aspects of home projects.3

Big-Box Stores. Expansion of the customer base beyond the pro to the general consumer and the time

pressures that families face has created a preference for shopping at stores that carry a wide product range.

Home Improvement Television. Channels like HGTV and shows like TLC’s Trading Spaces have created,

reflected and exposed the design, renovation and transformation appetite of millions of Canadians.

Private Labels. Customers across industries have shown increasing willingness to buy private label

products as the quality gap disappears and prices stay favorable when compared to brand name alternatives.

EBUBE ANIZOR 209347741 - MKTG 6550U - COMPETITIVE BRAND STRATEGY ANALYSIS (LOWE’S CANADA)

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Multi-Use Homes. As growing numbers work from home they demand more out their space and require

multi-functional rooms. While these consumers may be price sensitive they still desire quality and style.4

Smaller Jobs. There is a drop in sales of large ticket items and discretionary projects as consumers focus on

necessities and opt for making small, incremental changes or accents that still transform their living space.5

SEGMENTATIONWithin the particular market segments (above) the typical industry segmentation is as provided below;6

however research indicates that nearly 80% of home improvement decisions are initiated not by men, but by

women.7 This is a possible indication that retailer emphasis on design rather than renovation may gain more

traction.8 Upcoming segments that can be considered for future targeting include single women home

buyers, younger (Gen X & Y) home buyers, new immigrants, baby boomer remodelers.9

DIY customers. Typically home owners who purchase products and complete their own projects.

Do-It-For-Me (“DIFM”) customers. Typically home owners who purchase materials themselves and hire

third parties to complete the project or installation, or both.

Professional customers. Remodelers, contractors, repairmen, small business owners and tradesmen.

MOTIVATION A Lowe’s survey indicated that even in the light of the recession nearly 50% of Canadians plan to do some

home renovations by February 2010; with quality of life being the key motivator, followed by increasing home

value and energy efficiency.10 Beyond the survey the following additional motivations are suggested.

Creative expression. Individualism and a sense of ownership drive the DIY consumer. TV and the web

have empowered consumers who now envision themselves as designers, interior decorators and handymen.

Prosumerism.11 Connected to expression is the growing need for people to ‘produce content’ and share with

the world. Reality TV, blogs, social networks and YouTube make us ‘stars’.

UNMET NEEDS


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Metropolitan/urban consumers who require the selection and services provided by big-box stores (and

cannot be provided by a local hardware store) without needing to travel to distances to suburbs.

Younger home buyers looking for individualization in their homes.

COMPETITOR ANALYSISBecause of the wide range of products and services offered by Lowes competition legitimately runs the gamut.

However, strictly speaking Home Depot (HD) is Lowe’s greatest competitor in Canada and the US. In Canada,

Rona holds the second position and further competition is provided by Home Hardware. See Appendix B.

HI products are largely commodities and customers tend to lack loyalty to a particular retailer so the

industry is highly competitive with firms battling on price, store location, service and product. Barriers to entry

are considerable given the brand equity of incumbents and the scarcity of prime real estate. Nonetheless with

more than 50% of the market consisting of small dealers opportunities for growth are available. See Appendix A.

HOME DEPOT

Market leader with the largest number of locations in Canada. Positioned to the DIY consumer who is looking for great product choice and good prices in one convenient location. HD will help you get the job done.

Market leader with the largest number of locations in Canada. Positioned to the DIY consumer who is looking for great product choice and good prices in one convenient location. HD will help you get the job done.Brand identity Leader, good prices, variety, helper in getting jobs doneStrengths/strategies Size and buying power, popular portfolio of private brands, many store locationsVulnerabilities Poor customer service in terms of product knowledge and other quality factors. Brand

once associated with skilled personnel – shift towards cheaper staff has hurt image.

RONA

Canadian chain with network of 680 stores. Positioned to the DIY consumer who has an eye for design, trends and innovation and is looking for a retailer to help transform their space.Canadian chain with network of 680 stores. Positioned to the DIY consumer who has an eye for design, trends and innovation and is looking for a retailer to help transform their space.Brand identity Canadian, innovative and eco-friendly.Strengths/strategies Good shopping experience, Quebec roots make it strong in the province, launched “My

Rona Home” TV show in fall 2009 to feature new trends and promote eco-friendliness.Vulnerabilities Possible disjointed experience across franchisees and affiliates, much smaller resources

for expansion, operates under multiple banners so may not leverage brand.

HOME HARDWARE

Network of 1000 independently owned stores. Positioned to the everyday consumer who is looking for good product choice and friendly, reliable service. Network of 1000 independently owned stores. Positioned to the everyday consumer who is looking for good product choice and friendly, reliable service. Brand identity Canadian, local, friendly service.


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Strengths/strategies Personal care, Canadian identity, variety of services, “nice guy” postureVulnerabilities Share loss as independents get acquired, disjointed customer experience across network.

INTERNAL ANALYSISLowe’s 60 plus year history spans its origins as a small town hardware store in the 40’s, to a professional

homebuilder focused entity in the 70’s, a DIY retailer in the 80’s and the transition to its present consumer and

professional friendly warehouse orientation. An acute customer-perspective that informs merchandising, store

layout and marketing decisions has helped Lowe’s credibly position itself as a “kinder, gentler, big box store.”12

STRATEGIES AND PRACTICES Loyalty. Establish long term relationships with customers by moving beyond selling products to helping

complete projects. Accomplished partially via specialty website, how-to-videos and in-store displays.

Pricing. Everyday Low Price policy guarantees that Lowe’s will beat price of local competitors by 10%.

Supported by New Lower Price guideline as signal to customers that Lowe’s wants to save them money.13

New Format Stores. Prototyping smaller stores and multi-level stores to serve customers in metropolitan

areas where land availability is scarce. Could address unmet needs of marketplace.

COMPETENCIES Value Chain. Logistics allows low inventories to be kept but customer demand to be quickly met. Store

associates empowered to use tools such as Lowes.com to locate and ship product to meet customer needs.

MARKETING MIX

Product. Variety of national brands and strong private labels to match consumer need for quality and price.

People: customer service. Continued investment in knowledgeable and warm staff. Programs like “no

receipt-return” saves time and hassle and sends the signal that Lowe’s understands its customers.

Place: shopping experience. Store layout targets specific segments and customer needs. This includes

drive-through lumberyards, space allocated for commercial customers, an integrated shopping experience

and environment, and displays that provide project ideas and create cross-selling opportunities.14


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Promotion. As established brand in the US marketing has shifted from mass media to direct. In Canada the

brand is leveraged, but awareness lower so ads emphasize service quality and included the simple “Home

Improvement Warehouse” tag (vs.“Let’s Build Something Together” used in US) to get established.

LOWE’S BRAND IDENTITY

BRAND ESSENCE• Service excellence

CORE IDENTITY• Service Quality: Knowledgeable, friendly and ready to stretch to satisfy customer needs.

• Value: Works hard to keep prices at guaranteed low. Provide better than expected quality products at

attractive prices.

EXTENDED IDENTITY• Assistant: All the tools, services and knowledge is available to create successful projects.

• American: Red, white and blue logo creates association with “get the job done” American persona.

• Runner up: Although quite successful, still remains humble and underdog to Home Depot.

VALUE PROPOSITION

FUNCTIONAL BENEFITS• Shopping Convenience: Wide variety of products in one location. Store layout enables easy navigation

for different customers.

• Guidance: Many tools provided to help customers do projects themselves.

EMOTIONAL BENEFITS• Pride: Getting the job done by oneself.

• Satisfaction: Pride in enjoying living space by making small (inexpensive) changes.

• Creativity: Exploring the expressive side.

SELF-EXPRESSIVE BENEFITS


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• Can design, decorate, build and fix like the experts on television.

RELATIONSHIP• “Let’s Build Something Together”


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APPENDIX A: HOME IMPROVEMENT INDUSTRY 5-FORCES ANALYSIS

(FROM PERSPECTIVE OF LOWE’S)


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APPENDIX B: COMPETITOR MARKETING COMPARISON

Product • Great variety across in houseware, tools, building and garden

• National, Private & Exclusive brands

• More upscale brands

• Installation services• Credit services• Design services

• 40k products in houseware, tools, building and garden



• Great variety across in houseware, tools, building and garden

• Focus on full life-cycle eco products

• Store is “product” and focus of customer experience



• Product focus/mix varies by location (see place below)


Price • Everyday low price • Great value on

proprietary products

• Reduce volume of one-time sales in favour of everyday low prices

• Competitive prices • Competitive prices

Place • Exclusively big-box stores

• Strong distribution network

• Special Order system

• NO online sales (in Canada)

• Project ideas and help via web site: LowesCreativeIdeas.com

• Exclusively big-box stores

• Online sales

• Big-box: wide variety at low prices

• Proximity: hardware and seasonal product

• Commercial: building materials and plumbing

• Affiliates: small and mid size dealers well established in their communities

• Quebec is largest market

• Currently optimizing distribution network

• Online sales

• Hardware: tools, houseware & wide variety of supplies

• Building Centre: lumber, building materials

• Furniture: variety of appliances and furniture

• Primarily smaller hardware stores

• Network of independent stores

• NO online sales


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Promotion • Website focus on DIY

• Model rooms in store

• Marketing has focused on customer service

• Advertising focus on DIY customer not professional

• Reduction in mass media advertising

• Increase in direct mail and affinity programs

• Website focus on price savings

• Strong brand connection to orange signage

• Model rooms in store• Marketing has

focused on helping customer get the job done

• All promotions focus on Canadian identity

• Olympic partnership to create awareness and build empathy

• “My Rona Home” TV show to promote environment & homebuilding

• Marketing focus on customer experience & innovation

• Air Miles loyalty program

• Model rooms in store• Operates under

several banners

• Website focus on variety of services

• Focus on local /hometown retailer

• Focus on Canadian heritage

• Aeroplan loyalty program

People • Customer service a cornerstone – invests heavily in sales associates

• Staff type: 65% full time, 8% salaried

• Returning to more knowledgeable & engaged staff

• Distinguishes itself by ‘culture of service’

• Kept training levels high during recession

• Neighbourly service• Owners also serve

APPENDIX C: LOWE’S BRAND IDENTITY

Product Organization Person SymbolScope• Extensive• Upscale• National brands• Private brands• Wide services

(credit, installation, how-to, design)

Attributes• Efficient• Customer focused

Personality• Reliable• Trustworthy• Runner-up

Visual Image and Metaphors• Red, white & blue

logo = USA = get the job done

Attributes• N/A

Local vs. Global N/A

Customer/Brand Relationships• Large but accessible• Partner

Brand Heritage• N/A

Quality/Value• Low price guarantee• Good quality and

price on private labels

Use Experience• Helpful displays• Easy to navigate

stores• Online resources


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Users• DIY customers• DIFM Customers• ProfessionalsCountry of Origin• USA


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1 “Canada’s Economic Action Plan: The Home Renovation Tax Credit, Budget 2009.” http://www.budget.gc.ca/2009/pdf/pamphlet-depliant3-eng.pdf. Accessed October 6, 2009

2 “Home Improvement in Canada: Industry Profile”. Data Monitor. September 2009.

3 Hernandez, T. “Emerging Trends in Home Improvement Retailing”. http://www.csca.ryerson.ca/publications/2001-11.html. Accessed October 6, 2009

4“Home Improvement in Canada: Industry Profile.

5 Lowe’s Annual Report 2008.

6 Home Depot explicitly segments its customers as indicated; a breakdown suitable for all in the industry. Annual Report 2008.

7 Wang, Shaoyong. “Lowe’s Research Report,2005”. http://fisher.osu.edu/fin/courses/sim/rosenfieldreports/report_lowessummer.pdf. Accessed October 6, 2009

8 Lloyd, Jeromy. “DIY, WITH HELP”. Marketing Magazine. December 24, 2007.

9 “Lowe’s Companies, Inc. and The Home Improvement Industry In 2007”, http://www.cluteinstitute-onlinejournals.com/PDFs/524.pdf . Accessed October 7, 2009.

10 “Tax Credit Spurs Spending Among Canadian Homeowners”. http://www.lowes.ca/lowesforpros/jobop.aspx. Accessed October 6, 2009.

11 Prosumers are consumers that go beyond purchasing or consuming content to also creating the very content (e.g. online videos).

12 DIY, WITH HELP.13 “Lowe’s Signage….Guidelines”, http://www.loweslink.com/llmain/pubdocuments/Signage_Guidelines_InfoSec.pdf. Accessed October 7, 2009.

14 “Lowe’s Profile”. Data Monitor. September 2009

http://www.budget.gc.ca/2009/pdf/pamphlet-depliant3-eng.pdf




http://www.csca.ryerson.ca/publications/2001-11.html

http://www.csca.ryerson.ca/publications/2001-11.html

http://fisher.osu.edu/fin/courses/sim/rosenfieldreports/report_lowessummer.pdf

http://fisher.osu.edu/fin/courses/sim/rosenfieldreports/report_lowessummer.pdf

http://proquest.umi.com.ezproxy.library.yorku.ca/pqdweb?RQT=572&VType=PQD&VName=PQD&VInst=PROD&pmid=53168&pcid=38167921&SrchMode=3

http://proquest.umi.com.ezproxy.library.yorku.ca/pqdweb?RQT=572&VType=PQD&VName=PQD&VInst=PROD&pmid=53168&pcid=38167921&SrchMode=3

http://www.cluteinstitute-onlinejournals.com/PDFs/524.pdf




http://www.lowes.ca/lowesforpros/jobop.aspx

http://www.lowes.ca/lowesforpros/jobop.aspx

http://www.loweslink.com/llmain/pubdocuments/Signage_Guidelines_InfoSec.pdf

http://www.loweslink.com/llmain/pubdocuments/Signage_Guidelines_InfoSec.pdf

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