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A new marketing campaign emphasizes the chain's customer service and do-it-yourself clinics.
February 23, 2003
ATLANTA -- Home Depot, facing a sales slump and questions about customer service, is launching a new marketing campaign that focuses on teaching people how to build things, rather than just selling supplies.
New ads feature a child and his father leaving a store with a wooden birdhouse and the tag line "You can do it, we can help." They begin airing tonight during the Grammy Awards.
Midwest Research analyst Eric Bosshard said the ads mark a change in marketing philosophy, noting that Home Depot's campaign last year focused on price and value -- not customer service.
"If you're trying to fix a leaky sink or toilet, you're less concerned about how much it will cost; you're more concerned with how you're going to fix it," Bosshard said.
The ads play up Home Depot's do-it-yourself clinics, which teach people home improvement skills, from building tables to repairing electrical outlets. Its all-women clinics have surged in popularity in the past 12 months.
"In these challenging times, homes are more of a sanctuary than ever before. Consumers are looking for solutions and resources they can trust," said John Costello, chief marketing officer of Atlanta-based Home Depot.
The Richards Group of Dallas developed the new campaign.
It is only the fourth national advertising campaign the company has run in its 25-year history, Costello said. Previous slogans were "First in home improvement," "Driving down the cost of home improvement," and "Low prices are just the beginning."
The new campaign, part of more than $360-million the company plans to spend on advertising this year, comes amid Home Depot's warning of modest earnings growth this year and ahead of Tuesday's release of its fourth-quarter and year-end 2002 results.
Mark Mandel, an analyst with Blaylock and Partners in New York, said the home improvement chain isn't breaking new ground with the ads but is working to improve its image with customers.
"At a very basic level, they have to improve how they take care of people coming into the store," Mandel said.
Home Depot has been trying to retool its identity in recent years, as Lowe's, based in Wilkesboro, N.C., has gained ground on the longtime market leader.
Bosshard, the Midwest Research analyst in Cleveland, said the ads are a step in the right direction, but the key will be transferring the image to the product.
"I think this is a perfect marketing program for their business, but they must then follow through at the store level to live up to the tag line of this program," he said.
Last month, Home Depot said it would try to broaden its customer base and launch a $250-million store remodeling program. Chief executive Bob Nardelli has said the company needed to make its 1,500 stores easier to use and cleaner.
The company said at the time overall sales declined up to 10 percent during December. The company had been expecting a drop of 3 to 5 percent. The company hesitated to say things would improve in 2003.
"These business trends indicate the likelihood of a challenging environment well into the next fiscal year," Nardelli said.
Shares of Home Depot rose 76 cents, or 3.5 percent, to close Friday at $22.41 on the New York Stock Exchange.