Home Goods Pricing and Promotion Strategies

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01
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Part
01

Pricing and Promotion Strategies - Home Goods and Target

The pricing strategy of HomeGoods is to offer brand name products at prices 20-60% below other department stores, while the strategy of Target is to offer low-priced store-exclusive brands. The target consumer of HomeGoods is middle to upper-middle income fashionable females, while Target's target consumer is upper-lower to middle income young families.

HomeGoods

  • HomeGood's offers well-known, top brands at discounts of 20-60% below other department stores. They do not focus on sales or discounts on top of their already-discounted prices.
  • The pricing strategy of HomeGoods and other TJX stores has not changed since 2016.
  • The strategy is working, with TJX, the parent company of HomeGoods, predicting that it could potentially double the number of HomeGoods stores in the future.
  • The target customer for TJX, the parent company of HomeGoods, is a fashionable, value-conscious, middle to upper-middle income female between 25-54 years old.

Target

  • Target's pricing strategy is to offer low prices as well as exclusive, stylish brands.
  • After poor results in the wake of the 2008 recession, Target shifted their strategy in 2016 to improve in-store customer experience, to offer more Target-exclusive brands, to target younger consumers, to improve the online segment, and to lower prices.
  • The strategy is definitely working, with Target reporting positive financial results, beating analyst expectations, and holding its own compared to its competitors.
  • Target's target audience is young families with some discretionary income.
Part
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Part
02

Pricing and Promotion Strategies - IKEA and Walmart

Both Walmart and IKEA focus on keeping prices as low as possible. IKEA has a very broad customer base, focusing on those customers that want design-quality furniture at a low price point, while Walmart focuses on lower to lower-middle income consumers who are focused on affordability over quality.

IKEA

  • IKEA's current pricing strategy is to focus on cost leadership. By maintaining low cost products and making them available to a large audience, and by packing products flat (instead of assembled) to decrease the required space, IKEA is able to achieve economies of scale and still profit.
  • Specifically, the company states: "low prices are the cornerstone of the IKEA vision, business idea and concept. The basic thinking behind all IKEA products is that low prices make well-designed, functional home furnishings available to everyone."
  • IKEA also maintains low prices by picking the price point first, and then designing the item with that price point in mind.
  • IKEA's main promotion strategy is their loyalty program, IKEA family. The IKEA family program rewards loyal customers with discounts and keeps them coming back by providing perks like free coffee.
  • Additionally, IKEA offers vastly discounted prices by selling returned or damaged pieces in their "As-Is" section.
  • IKEA's pricing strategy does not seem to have changed since 2016, when low cost, quality home furnishings were still the focus.
  • The strategy is working, based on the fact that IKEA's 2018 profit was 38.8 billion Euros. Additionally, in 2018, IKEA opened 19 new stores, had over 2.5 billion visitors to their website, and had 957 million customers visit their physical stores.
  • IKEA has a very broad target customer. In fact, their target customers generally have one thing in common — the desire for well-designed, good quality, lower priced furniture.

Walmart

  • Walmart focuses on its "Every Day Low Price" guarantee. This includes a focus on have lower prices than all its competitors, including online retailers like Amazon. Walmart maintains profitability with their low prices by focusing on operating in areas where consumers have few other options and keeping operational costs extremely low. Additionally, due to its massive size, Walmart demands low wholesale prices from their suppliers.
  • Walmart's pricing strategy has not changed over the last four years. In 2016, the company was working to even more drastically decrease prices in order to beat out their competition.
  • Walmart's pricing strategy is working; Walmart is currently the largest retailer in the world with around 100 million customers per week.
  • Walmart's target customer is a lower to lower-middle income consumer looking for value rather than quality.
Sources
Sources