Lowe’s: Optimizing Marketing Communication mix case study

Marketing II
Group 2: Bonfanti, Garzelli, Ravelli, Russo
Lowe’s: Optimizing Marketing Communication

Lowe’s is a leading home products retailer in the kitchen remodeling business. Lowe’s is going to launch Next Generation Installed
Sales (NGIS), in order to become an end-to-end solution provider for customer’s projects. Lowe’s will provide free-in-home
consultations and will work with customers throughout the design, purchase and installation.
LOWE’S
81%
19%
US Kitchen renovation market in 2008
Market Lowe
75%
25%
Share between DIFM and DIY
DIFM DIY
53% 52% 55%
32%
47% 48% 45%
68%
0%
20%
40%
60%
80%
less than $25K $25k-49,9K $50K-74,9K $75K+
Remodeling Kitchen Cabinets by Household income
Self/Other household member Outside Service $- $20,000.00 $40,000.00 $60,000.00 $80,000.00 $100,000.00
Mid-range materials
Upscale Materials
Average cost of major kitchen remodeling projects
30%
70%
Market composition by company size
Private, local companies Corporate companies

The business objective is to increase the market share in this segment.
Business background:
KITCHEN RENOVATION MARKET SIZE: 17.5 B $
KITCHEN RENOVATION FOR LOWE: 3.4 B $ (19% market share)
Stable and mature market
LOWE’S BUSINESS OBJECTIVE
+4% in market share – TARGET: 23%
Turnover increase: +690M $ - 20% yoy
Turnover increased through 23,000 new
remodeling projects (each accounting for
30,000 $ on average). Considering a group of
two people as a single customer, we need to
reach 46,000 new customers with a new omni-
channel marketing strategy.
77%
19%
4%
US Kitchen renovation market in 2009
Market Lowe Increase

MARKETING OBJECTIVES
Use an omni-channel Marketing approach, a mix of Traditional and digital media working synergically to deliver a consistent
message in a complementary way.
• Create awareness of NGIS and be top-of-mind for potential customers
• Engage customers through the buying cycle (at touch points)
• Increase customer retention
With a 3 steps strategy:
1. Awareness: Driving awareness with traditional media
2. Perception: Fostering a perception change through digital engagement
3. Lead generation: Creating lead generation and demand generation through paid search method

• Offer products at low prices
• Trusted position of the company
• 2° biggest home improvement retailer in
USA
• Work guaranteed by Lowe’s
• Limited interaction with customers during
the process
• Low after sales service provided
• Limited involvement of the customer at the
beginning and at the end of the buying
cycle
• Low consumer awareness about Lowe’s
value preposition
• Wide customer base
• Improvements of the pain points along the
customer journey map
• Digital marketing tools to enhance Lowe’s
position in the segment
• Strong competition given by Home Depot,
IKEA, SEARS and small players
• Long incubating period
S T R E N G T H S W E A K N E S S E S
O P P O R T U N I T I E S T H R E AT S
InternalExternal
SWOT

MARKETING MIX – CHANNELS EFFECTIVENESS
0
20
40
60
80
100
120
Broad TV Broad Print Direct Mktg In-store Mktg Digital
destinations
Digital
Advertising
Digital Direct Social Media Paid Search Organic
Search
Incubation Active shopping Design Purchase Installation Post-Completition

TRADITIONAL MARKETING
Advertising would have to be mapped to reach the target at the right time of the decision making. Media space would have to be
chosen also to limit competitor access. Content should be close to consumers needs and tastes.
Television and print
Costly. It allows to communicate with a large number of potential customers. Local television advertisings are well suited as the
remodeling program went through a regional rollout. Cable channels can reach specific target audience. Commercials would not
be effective at keeping Lowe’s at the top of mind for consumers, due to the long incubation period in the decision. Print ads are
very selective and it’s possible to show color and «before» and «after» pics. Circulation is known.
Consumer promotions
Coupon / flyers / mail. Can generate interest and enhance awareness. Need to be targeted to appropiate demographic to ensure
success. Work only on short term basis and could erode the value of the brand in the long run.
In-store Marketing activities
Limited information can be displayed. Problem in locate in the store (no specific product sold). More effective at the early stage in
the consumer decision process because some customers could not know that Lowe’s provide such service. Would not work for
consumers who did not traditionally shop at Lowe’s.

DIGITAL MARKETING
Digital communication could be precisely targeted and highly interactive. Higher ROI. Consumer were increasingly using the
Internet as the default starting point for making decisions on kitchen remodeling projects (96% of potential customer look before
going in a store).
Digital Adverstising
Paid search: appear on search results pages, more than 40% of all adversting is spent for this. Classifieds: list the products on
other Internet firms’ websites. Display Advertising: banner or logo on pages. Banners could be seen as annoying. Lead
Generation: qualified purchase inquires. Rich Media: advertising which include sound, animation.
Social Media Tools
Blogs. Review sites. Social Networks. Influencing and promoting events. Share experience with photos of projects. Generate by
consumers and disseminated through social interaction. Due to low average of renovation per person per 30 years, the social
base community would constantly turn over. Good customer could become Lowe’s evangelist but frustrated ones could give
negative reviews.
Web Based Customer Design Tools
Online tool for design and manage projects. This could cut the incubation time if budget and quality are met.
Online Customer Service Tools
«Ask a consultant», «Report a problem», «Track your order». Personnel need training in order to answer a bigger variety of
question. Need to evaluate cost-benefits of this tool.

INCUBATION / VISIONING
BACKGROUND
It is the longest stage, as the time between first thinking
to actual start of the project mainly range from one month
to 1 year. Creating awareness and reaching consumers in
this early stage is critical for the success. Almost 70%
remodelling projects reasons come mainly from purchase
of new home. It’s crucial to move the possible do-it-
yourself consumers to Lowe’s customer. It is also
important to move consumers from local providers, active
in each community.
CONSUMERS BEHAVIOR
They normally do:
1. Set a budget
2. Seeking ideas on and off-line (active)
3. Seeing at firms offers (passive)
CONSUMERS IDEAL EXPERIENCE
They would be able to:
1. View / browse pics
2. Find material info: color, design, funcionality
3. Find pricing: material and labor
4. Get others experience
TOUCH POINTS
• External Marketing
• Website
• Stores

MARKETING GOALS
Based on the background and the consumer map:
• Awareness: reach as many consumers as possible and
let them know the service provided.
• Information: give consumer the chance to find the
information they are lookign for.
ANALYSIS
In order to reach the goals for this stage, Lowe’s has to
use channels which allow to reach big numbers of
potential customers, letting them be aware of the
existence of the firm in this service. Both on a country
and local scale. It is needed to address the active and a
passive role of the consumers and their on/off line
activities.
Using the channel effectiveness graph, it is visible which
channel has a big reach, weighted on cost per reach.

MARKETING CHANNEL DECISION
Based on goals and analysis:
• Television & print: this channel allows Lowe’s to be highly visible and reach passive
consumers. The ads can let family and friends of consumer (which just bought a house or
have to renovate) tell them about it, increasing the reach.
• Paid search: the paid search will address them to Lowe’s stories or website, making it a
reference for them. They will be able to find Lowe’s content and website based on the
request of information they are looing for.
• In-store: well targeted, this will let the active consumers which go to the stores to get
more aware and more involved about the service through promotions.
• Local events: eventually, just on most critical communities, with high increase of home
constructions or strong presence of small players, will give awarness to consumers.

MARKETING CHANNEL DECISION - ISSUES / DRAWBACKS
Based on decision, take care of:
• Television & print: reaches a broad number of customers but it can be difficult to
make a proper segmentation and targeting. It is also very expensive and the message
should be well studied in order to be effective in generating customer’s awareness and
then interest.
• Paid search: competitors could use the same key-words; it could increase costs and it
can be difficult to be effective.
• In-store: requires a continuous personnel training in order to let them have in mind the
promotions.
• Local events: must be well targeted despite being a pure awareness phase, in order not
to disperde resources, and be mainteined.

ACTIVE SHOPPING
BACKGROUND
The active shopping phase is all about getting the right
information. Consumer starts refocusing on project and
developing the vision of it. He browses showrooms and
actively interviews and searches for opinions. He
eventually starts budgeting the remodeling project.
Since consumer is already engaged with Lowe in this phase
it is important to move him/her straight to the point giving
the right tool and information.
CONSUMERS BEHAVIOR
They normally do:
1. Focus on the project
2. Develop a vision
3. Interview and ask for opinions
4. Specify budget
1. Ability to establish a preliminary budget and get a
visual rendering of the remodeled space
2. Establish “go-to” information sources on and offline
3. Obtain recommendations
4. References for contractors are “nice-to-have”
TOUCH POINTS
• Lowe’s website
• Instore experience

MARKETING GOALS
Lowe’s has to create interest in the consumer and let him
use Lowe’s tools to remodeling projects. Both in and off-
line experience are important, but they should be direct to
personas.
ANALYSIS
Lowe’s has to use channels which create interaction in
potential customers, letting them design and budget
their project vision, both on a country and local scale.
Consumers have to be involved in a design tool full of
information, flexible and in line with Lowe’s value
proposition. In addition, an “ask-to-expert” service is
essential to provide customer a feedback.
ACTIVE SHOPPING

• Digital advertising: this channel allows Lowe’s to be highly visible and reach active
consumers. Digital advertising should be coherent with the Lowe’s vision. Design tool
should be advertised as “must-have” experience to exploit consumer needs.
• Paid and organic search: the paid search will address them to Lowe’s stories or
website, making it a reference for them. They will be able to find Lowe’s content and
website based on the request of information they are looing for.
• In-store experience & Direct marketing: In-store marketing and experience
offered to potential customer should focus on the “giving the right information” and to
offer enough consultancy to remodeling projects.
ACTIVE SHOPPING

• Availability of information: consumers are hungry of information, they should get
them in the right format and as fast as possible. Website and accessibility are key succes
factors in this stage.
• Customers design tool: consumers want the project, with their vision, on their
screens, NOW! Powerful design tool is the source of success. They should be able to see a
rendered image of their project as well as a budgeting process.
• Make it real: the digital experience has to be linked to the real one. Once customers
are full of information, they will search for opinions, interviews. We will allow customers to
“ask to an expert “ or reach us at the stores.
ACTIVE SHOPPING

DESIGN DEVELOPMENT / PURCHASE
BACKGROUND
The stage during which customers select the remodelling
company, with the precise design and layout of their new
kitchen. They continue to ask for feedbacks to family and
friends and to look for internet tools and webpages in
order to visualize better their new kitchen, keeping budget
in mind. Customers need to be sure about company’s skills
and experience. They should also avoid to experience
hidden costs or differences and surprises during work in
progress.
CONSUMER BEHAVIOR
They normally do:
1. Select a designer/contractor
2. Finalize price/design/material
3. Sign contracts and ordering parts
CONSUMER IDEAL EXPERIENCE
1. Easily access to specific information
2. Control budget and time constraints
3. Be updated about the status
TOUCH POINTS
• Website
• Stores
• Paid Search

MARKETING GOALS
• Desire: work on final decisions, providing the best
design / layout that suits consumer budget.
• Action: follow customers after they sign contracts,
making their orders status available.
ANALYSIS
Develop an online tool to decrease the decision time by
letting consumers visualize their new kitchen. This tool
should be easy to be reached when searching precise
keywords.
Lowe’s should also reduce influence from families and
friends, increasing brand awareness of quality and
reliability, with “Tell your friend” campaigns and being
active part of forums and social media, increasing its
internet presence. Lowe’s should also involve women
and families in its new campaigns and signing
agreements with famous and trusted appliance
suppliers in order to increase its value.

• Paid Search & SEO strategy: definition of keywords in order to better direct
customers towards Lowe’s shop and online tool. Lowe’s advertising should follow
customers during their journey towards the final decision when they browse internet. Cost
and time information are vital and should be always immediately available.
• Social Media: they can be useful to allow customer take the final decision, reading
about other customers’ stories and feedbacks, looking at pictures of how kitchens have
been remodelled.

• Paid Search & SEO strategy: there should be a high focus on keywords
selection, in order to get higher visibility than competitors. These words should lead
customers directly to what they need: in this phase, they need a quick response in order
to better visualize their future kitchen.
• Social Media: it is tough to make demographic, behavioral, psychographic and
geographic differences among customers through the use of social media. Precise social
contests should target customers leading them to quickly imagine and visualize their future
kitchen, without disperding or confusing them.

INSTALLATION & POST-COMPLETION

BACKGROUND
These are the final stages as customer agreed to remodel
his own kitchen making use of Lowe’s. It is important that
what the customers previously imagined is precisely done.
Consumers require continuous feedbacks and updates,
with responsiveness to any possible unforeseen problem
(e.g. an appliance which does not perfectly fit in the new
kitchen). In post-completion, customers must be
completely satisfied and then loyal, to be willing to tell
their story outside to address new customers to Lowe’s.
CONSUMERS BEHAVIOR
They normally do:
1. Observe progress and address issues
2. Make minor modifications
3. Communicate their experience to others
1. Communicate with contractor
2. Site-visit
3. Be satisfied post-completion
4. Be assisted with future upgrades
TOUCH POINTS
• Website
• Social media

MARKETING GOALS
• Retention: being able to retain his customers, making
them fully engaged with their new kitchen and letting
them “tell the story” outside, influencing family and
friends.
ANALYSIS
During installation Lowe’s is working with the
customers, remodelling their kitchen. Lowe’s has to be
higly responsive in solving possible issues and has to
provide feedbacks of work-in-progress.
During post-completion, customer experience score is
very high: customers can see and enjoy their new
kitchen and for this reason they can spread and share
their experience also outside.

• Digital Direct Marketing: it is extremely effective because it targets already existing
customers who could become interested in Lowe’s kitchen renovation value preposition. It
allows to maintain the relationship with customer even if kitchen renovation process is
completed. Customers can be invited through promotional e-mails to get discounts for
upgrades, being involved in contests or inviting their friends to choose Lowe’s.
• Social media: a social media presence could be useful to share succesful stories and for
referrals, enhancing Lowe’s perception and reputation.
• Broad reach print: used to show how Lowe’s is effective in kitchen remodelling,
showing kitchens before and after and informing customers about new available products.

• Digital Direct Marketing: it must be addressed in a good manner, transmitting the
right message, effectively targeting discounts or offers that customers cannot refuse.
• Social media: could lead to unsatisfied customers posting their negative experiences
and influencing a huge number of Lowe’s visitors. It also requires a high responsiveness, in
order to enhance satisfied customers to share their experience. As said every issue should
be addressed as soon as possible.
• Broad reach print: reaches a broad number of customers and based on the choice it
could have a proper targeting, it is costly and content must be well selected.

MARKETING MIX SUMMARY, BUDGET & OUTCOME

SUMMARY
Incubation / Visioning Active Shopping
Design Development /
Purchase
Installation &
Post-completion

CAMPAIGN BUDGET
CHANNEL Unitary cost Reach Cost Assumptions & notes
Broad TV $450000 12.000.000 $3.600.000 Cost 1 month per channel. 4 months on first two national TV
Broad Print $3000+$69239 800.000 $418.434 On 3 Magazines per 2 issues each
Direct Mktg $0,25 1.000.000 $250.000 Using existing DB of contacts
In-store Mktg $1.000 500.000 $50.000 In the main 50 stores
Digital destinations
(Web tool)
$0,13 400.000 $50.000
Digital Advertising $0,03 3.000.000 $150.000 Estimated reach up to 3M
Digital Direct (e-mails) $0,20 1.000.000 $200.000 Using existing DB of contacts
Social Media $0,08 1.000.000 $75.000
Paid Search $0,25 1.500.000 $375.000 Estimated reach up to 1.5M
Organic Search $0,10 1.000.000 $100.000 Estimated reach up to 1M
TOTAL $5.268.434
Budget prepared for the whole NGIS campaign. On some channel the reach have been estimated based on the buying stage in which
is mainly used. Some assumptions have been made on cost of broad TV and print.

CONCLUSION
Budget has been established to reach the target of 46,000 new customers.
We forecast some overlapping between the different marketing channels especially during
the initial stages. Given that we estimate in 15 mil people the audience of NGIS omni-
channel marketing strategy.
Given the long incubation period we decided to extend the broad TV and print marketing
campaign.
We estimate a success ratio of 0,3 % equal to 23,000 additional kitchen renovation projects
compared to the baseline. These projects will provide NGIS with the targeted additional
sales of 690 mil $ (+20% turnover on kitchen renovation business line) and increase market
share to 23% of the US kitchen renovation projects yearly turnover (+4% on the 19%
baseline).
15,000,000 people audience
46,000 new customers

Lowe’s: Optimizing Marketing Communication mix case study

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