Home Plus Case Study Department Store

Home Plus is a discount big box retailer. They have high end product and low end items with competitive discounts. Their main competitors are Walmart and Target. When I think of Walmart and Target I think of low prices and value products. Walmart has marketed a brand essentially catering to everyday low prices. While Target has products for the middle class consumers, but with a discount. Walmart and Target are both thought as discount stores which carry standard merchandise that are sold at lower prices but in higher volumes.

I would disagree with the proposed change in the marketing strategy. Walmart and Target are not targeting high end consumers and do not have higher-end product lines. Using this strategy will make them loose their competitive

advantage and make them enter into a new consumer market. The disadvantage of this strategy would definitely exceed the advantages. Doubling their higher-end products would make them loose valued customers. They would have to spend more money on the products and setting them up in store. The cost for the products would increase and the security would have to be doubled. The customers would not think of Home Plus as a discount store, but more as a luxury retailer. Home Plus would also loose consumer loyalty who have shopped there for a long time. They would feel that they couldn’t afford to shop there would shop at a different store for their products. Changing their position would also increase the marketing investment. They would be changing their targeted market segment so they would need to advertise to other people. Marketing to different consumers is very expensive and the need to cater to luxury brand consumers is difficult. They would need to increase their product and customer value to alleviate the needs of their new consumers. Some advantages of their original proposal would be their obvious increase in income. Having higher-end products would definitely increase sales and make more money. They would also invite new customers to come to their stores because of their new selection. Compared to their other competitors like Walmart and Target they would have an advantage in product selection.
However, in contrast to the original proposal I would suggest them to concentrate more on its lower-end product lines and half the number of their luxury products.

I think they have a better chance in success if they didn’t put too much emphasis on the higher-end products. Walmart and Target are not retailers that focus on high end products. They give low prices but with good value to their customers. Some advantages of this proposal would be a stronger positioning in their current target market. Their customers want valued products, but with a reasonable discount. They would have more inventory to give to their consumers and hopefully increase sales in the future. The customers would be buying more merchandise which would result in the need for more inventory and increase in profits in the long run. Another advantage would be the increase in inventory space. Since they are decreasing their luxury end products they would have more room to store their lower-end products. They can order more stock as said before and create a profit. Marketing for the store would also be easier for the store. Since they are not choosing a different market segment they can just continue what they are doing now. However, they can now specialize in it and gather more information to pinpoint their marketing better to

consumers.
A disadvantage would be that they are losing out on the higher-end sales. However, I think the profits from the lower end items would outweigh the profits of the higher-end items. Another thing you have to be careful of is that when you increase your lower end products you have to make sure you are still giving your customers value priced items. You can’t give them lower end items that at the end of the day make them unhappy and unsatisfied. You would be losing profits and customers in the long run. You have to have a balance of low prices but valued items.
When choosing what kind of store you want to be you have to make sure you know what market you are targeting. There are many different retail stores and each one of them target to different segments. Specialty stores, department, supermarket, convenience, discount, off-price retailer, and super stores all have different positioning. You need to make sure there is a balance between what you are giving the customers and how much you are charging them. You also need to know what kind of store you are to emphasize what products you will sell. The original proposal is asking the total opposite of their intended target market and they need to focus on the lower end items. If Home Plus follows my advice and emphasizes the lower end items I think they can be very successful.