Lowes Case Study

Introduction

Lowe's Inc. is a home improvement retail chain store based in the United States and also has locations in Mexico and Canada. Lowe's began in 1946 in North Carolina and now currently has 1,825 stores. It is the second largest home improvement retailer in the United States and in the global market behind Home Depot. This case will detail how Lowe's attempted to roll out a new full service kitchen remodeling service while engaging the customer from incubation to after project completion. Lowe's, a company whose use of traditional media has always been sufficient to their business plan (due to the assumption that the consumer knows what they want) will need to find a different approach to be successful. Brad Simpson, a marketing-manager for Lowe's, needs to decide how the "Next Generation of Installed Sales (NGIS)" will be implemented. This case study will make suggestions on a final recommendation after analyzing the data with a SWOT analysis, defining the problem, and developing and evaluating alternative course of action.

SWOT Analysis

* Strengths

o Sales of $48.2 Billion

o Work for new remodeling program guaranteed by Lowe's

o Continues to be the fastest growing home improvement retailer in the United States.

o Because of the nature of their store and current business model, they are able to easily support kitchen modeling.

* Weaknesses

o While Lowe's guarantees their work, they still rely on third parties to do the job.

o Lowe's is not the first in the market to offer a program like this. Home Depot had one before them and this gives Home Depot first mover advantage.

o Lowe's receives very low consideration for projects at only 8%.

o Customers are not engaged in Lowe's traditional model in the beginning and final stages of purchase process.

* Opportunities

o Internet's popularity and growth with more interest in kitchen remodeling research.

o Market caters to a range of customers, including mid-range buyers.

o Kitchen market at all time high at $17 billion (since 2008).

* Threats

o The recession in 2008 hurt business across the board no matter how well they were doing, due to people not spending.

o Home Depot is the price leader and has the larger portion of the market.

o The incubation period is very long because it is an involved purchase.

o Market is very fragmented.

Analysis

In the mid 1990's, Lowe's came out with a program to service the DIFM sector in kitchen remodeling under their then product driven business model. This accounted for about 6-8% of their revenue. As times and certainly business change, Lowe's realized that they must change in order to compete with other big box stores whose service sectors in kitchen remodeling took significant shares of the market. Lowe's realized that operating their kitchen remodeling sector as a product based model with the complete price transparency that customers had access to from the internet would not help them create value for customers. To change, Lowe's conducted extensive research customer surveys, customer mapping, on site research, and more. After contractors at 60%, they found out that 30% of people would go with Home Depot and only 8% percent with their company. Lowe's needed to tackle its perceptual problem. Another major thing Lowe's found out was that the consumer stakeholders held heavy weight in the buying process. This means that Lowe's didn't only need to appeal to the direct buyer but also the influencers.

Simpson came across a number of dilemmas when deciding how to go about using communication channels for NGIS. For example, television reaches mass audiences and could communicate to past customers. However, it would also be hard to communicate detail and it is very expensive. Simpson had a strong sense of needing digital marketing, but he had didn't have the know-how.

Defining the Problem

The overall scope of the problem in this case is finding the correct combination of digital and traditional media to satisfy the objectives of the NGIS.

In the short run, Lowe's must find a way to solve the following:

* First, become top of mind on their customers and stay there in order to be considered as prospects. Lowe's marketing team should attempt to lower the incubation period with this action.

* Secondly, Lowe's must gain awareness and hold it. This means that value must be effectively communicated by marketing and in store/in the field once consumers' attention has been caught.

Across the buying process and beyond:

* Throughout