The Home Depot, Essay Example

Company Background

The Home Depot is a big-box format store that is concentrated on selling products that are dedicated to home improvement. The business currently operates in three districts that are considered as the primary distribution ports of the organization; one is in the District of Columbia, another is in Puerto Rico and the largest collection of the operating branches the business owns is located in the United States. Some smaller branches of the organization could also be found in Canada and some location in Asia.

At present, the organization holds a distinct position in the market, thus affecting the reputation they carry in front of the communities they hope to serve. Practically, this reputation allows Home Depot to engage in massive business operations that give them a better option of gaining the attention even from newer markets they hope to affect accordingly. Considering that the business faces both international and local competition, it is believed that the administration tries to take on distinct operations that would basically make a determinable impact on how the organization fares expansive pressure from the international and the local market. One strategy the business takes into account is related to pricing.

Points to Consider

What pricing objectives does your firm appear to be pursuing?

Given the established reputation that Home Depot is already known for, the business strategy for pricing that the organization adapts is dependent on the objective of pursuing the concept of quality over price. It is evident that the notion of high-priced items being the quality ones, is taken into fair account by the administrators of the business. Nevertheless, the administrators make sure that such price ceilings are carefully mandated. Not putting the market they serve in a dwindling situation, the organization hopes to make sure that when they offer a product in the market, that it would be reasonably priced based on production cost, quality and the convenience that each item offers to the public.

What is the pricing strategy pursued by your organization?

Due to the fact that the business operates under the home-improvement genre, it could be noticed that there are other organizations in the market that offer the same set of items that are set to improve the homes of the people. Likely, several items in the product list of the company are produced for mass consumption. These items are the basic necessities at home that are usually consumed easily by the market. There are also some products that cannot be mass-produced, instead, they are manufactured according to the rate of appreciation and attention they get from the market during particular months of the year-sales. From such evaluative approaches, the administration is able to identify whether or not the allowance of production should be heightened or lowered in speed.

Measuring the market demand and the release of the supply of such products is essential in determining the perfect timing that is needed for such strategy of pricing. Both strategies fall under the contribution margin-based pricing. Understandably, this approach to pricing is considered as he process by which the administrators closely look into the sales statistics of the organization, thus imposing on how to manage the production and distribution operations of particular products. Relatively, the statistical analysis of the matter could be gained from taking a closer look on each branch’s performance and the products that are likely to be accepted by the market based on the behavior of the buyers in each community served by the said outlets. Considering this, it could then be realized that there are instances when the pricing approach used in one branch could be different from what the other uses. Nevertheless, there are still some pricing ceilings considered especially considering the legal and the organizational policies adapted into pricing operations.

Discuss any revenue management approaches that apply to your organization.

To manage the revenues of the business, Home Depot supervisors [from each separate branch] are required to send in a detailed report on the results of their business operations in a quarterly basis. Relatively, this consideration on how the organization grows based on operations direct administrators to focus on the reports of investment and inventory. Through calculating the ratio and proportion between the profit and loss reports garnered from operations of the business within the year, the administrators are able to see the rate of revenue garnered in each year.

The concept of development that could be adapted by the organization is measured through such report-analysis. Insisting on the idea of creating a definite pattern of development from such results, it is most often than not effective to take note on how the growth of the business could be directed accordingly, even towards determining how each branch is to take on the challenge of expansion.

Does you firm face any ethical issues in its pricing?

At present, Home Depot does not face any form of ethical pricing issues. The truth is, the organization is considered to be among the organizations releasing the most reasonably priced products in the market. The proper management of the organization’s assets leads the whole business into a brighter course that identifies well with the desire of the organization to grow according to the developments of the industry as a whole.

These indicative factors that identify well with the pricing operations of Home Depot shows how important it is for business organizations to take the option of growing alongside what the market can provide as payment for the products that the company releases for utilization as part of the home-improvement goals of the market. Relatively, this concept of operation does provide a distinct sense of realization on what the business could still do and embrace in relation to how it grows according to the development of the industry it is involved with. Through the years of development, the pricing strategy that the organization adapts serves the business goal accordingly. It could be analyzed that through this aspect of realization, the business is able to take on new heights of development that could improve the manner of profit-earning that the organization takes into account.

Organizations like Home Depot is expected to face massive competition especially in relation to established names in the market. Other emerging organizations are also making a great impact on how the business operates. Relatively, it could be understood that with careful consideration to pricing strategy, it has been understood that determining a better course of development, especially related to the changing attitude and perception of the market and how the business adjusts accordingly to such changes. The pricing strategy adapted by the organization is highly dependent on the response and appeal that the products they open for public consumption and how much these products are being demanded for by their target buyers in both the international and the local markets.

Works Cited

Kotler, Philip & Gary Armstrong. Principles of Marketing 13E, 2010, Pearson Prentice Hall, p.293.

Monroe, Kent B. The Pricing Strategy Audit, 2003, Cambridge Strategy Publications, p.41

Gregson, Andrew. Pricing Strategies for Small Business 2008. Self Counsel Press.

Nagle, Thomas and Holden, Reed. The Strategy and Tactics of Pricing. Prentice Hall, 2002. Pages 84-104.