In Marketing, Less Equals More Revenue

Some large businesses set practical standards that serve as models, and others make mistakes that are so blatant that you wonder how they became industry giants.

The giant I refer to is Home Depot who, last week, announced that they are closing 15 stores throughout the U.S.

From the May 2nd edition of New Jersey’s The Record:

“Some analysts and large investors have worried that as Home Depot got bigger, it would invariably put new stores in direct competition with existing stores…”

Here in the New York metro area (and probably in other U.S. regions), Home Depot is one of many chain stores that have broken two rules we learned in marketing class: don’t locate your business next to competitors, and don’t cannibalize your locations.

I committed the same infraction that Home Depot suffers from today with the same consequences.

One of my adult school classes is extremely popular, and I decided to offer it at numerous schools in the same region. This was a big mistake. I cannibalized my class, resulting in low enrollment numbers at each session.

Now I conduct classes at three schools rather than 10, and the enrollment fills each class because there’s no overlap.

If your marketing plan includes multiple locations, be sure to avoid cannibalization. As we see, the Home Depot approach does not always work.

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