Best Buy Strategy

3. What new retail concepts can you identify? How might you learn about more? What strategies do you suggest for learning about new retail concepts?

Best Buy Co., Inc. is organized as a Richfield, Minnesota, based US Corporation and operates a multi-business unit structure. Company’s Board of directors consists of nine members with a Chairman and CEO and eight directors. Best Buy Co., Inc.’s operations consists of seven departments whose heads are directly responsible to the Chairman / CEO. The current organizational chart of the Best Buy Co., Inc. is as

Best Buy is a multinational retailer of consumer electronics, computing and mobile phone products, entertainment products, appliances, and related services. The company operates retail stores and call centers and conducts online retail operations under a variety of brand names such as Best Buy, Best Buy Mobile, The Carphone Warehouse, Five Star, Future Shop, Geek Squad, Magnolia Audio Video, Pacific Sales, and The Phone House (Bestbuy.com, 4). The domestic segment consists of all operations within the United States, while the international segment includes all operations in Canada, Europe, Mexico, and China. The Best Buy 's success is contingent on the market 's demand for electronics. The company 's strategy is to provide good customer service combined with lower prices (news.cnet.com). Best Buy 's success is directly related to economic conditions, the cost of goods, and other things like fuel prices. The company 's strategy depends upon the ability to offer customers a broad selection of name-brand products; therefore, leading its success to depend upon satisfactory supplier relationships (Bestbuy.com, 8). Best Buy, as it is included in the retail segment, is a seasonal store. Their stronger quarter is the fourth quarter, which they can contribute to the holiday season for their success.

From 1966, Richard Schulze, had suggestions for improvement(s), but, wasn’t token seriously from other people. early in his managerial career, Schulze, allowed himself to show-off his uncanny ability to adjust to market trends and seek out profitable opportunities. Since, 1966, Best Buy began

Unlike Target, who’s profits allow them to self fund the company, by back debts, and pay higher dividends, the gross profit margin for Best is rather low; currently it is at 24.5%. Also, financial analysis and quick ratios show that Target is in a superior position, whereas Best Buy is very weak and demonstrates a lack of ability to pay short-term obligations (Standard).

Best Buy is electronic retailer that has brand names under 11 brand names in the United States. The company also has services in Canada, China, Europe and Mexico. It specializes in selling technology and entertainment products and services. The company became successful by using a low cost strategy and high cost customer service practices. The company has a lead market position because of its differentiation strategy, its brand names that are reputable and the many series of acquisitions.

In the international segment each of the nine European countries run their operations at a smaller level than the Best Buy branded stores but the rest of the branded stores in those territories run an operating model similar to that used in the U.S. stores. The only differences would be in Canada and China where Best Buy runs and supports two principal brand companies. In Canada the Future Shop stores “Have commissioned sales associates who take a proactive role in assisting customers and driving

In business, three major strategies comprising of cost leadership, differentiation, and focus strategies exist. The focus strategy emphasizes on providing services and products to a specified buyer group or market segment within a given geographic market. The differentiation approach is often defined as provision of services or products that are perceived to be unique in the market place. Wal-Mart emphasizes on the long-term strategy of cost leadership. Through this strategy, the company ensures that it offers customers with quality products at relatively lower prices than other providers in the industry. Through overall cost leadership strategy, Wal-Mart has been offering better quality products at a lower price than any competitor can offer. For the organization to achieve this goal, it has developed long-term supply chain management, which ensures that products are made available to the market at the required time (Enz, 2010).

Best buy has done a good job reducing their transaction cost on their website. One thing I notice was that they had a Best Buy Marketplace. Best Buy Marketplace sells and ships products through a third-party Marketplace sellers. The downside of buying products from Marketplace sellers is that you’re unable to use you Best Buy points towards any

Best Buy had a history of being able to adapt to the changing markets and their ability to do so contributed to their success (i.e. the vastly expanded product line, evolution to superstores, expansion, acquisition, converting from commission to salaried sales force.). The perception that customers were focusing less on the technical aspect of products and redirecting their attention to service and support, led to Anderson’s custom-centricity initiative. This transition and the rollout of 144 new “centricity” Best Buy stores was being blamed for the company missing third quarter earnings in 2005, resulting in a 12% decline in stock value and a loss of nearly $2B in market capitalization. Did Anderson perform the proper strategic market planning analysis before selecting and implementing the centricity initiative?

Price matching and service are the core competencies for in big-box retails. The upgrading speed of in-box goods is very fast, and the cost is more and more low, which leads to more and lower price. Price has always been a most important factor that customer focus on, so the fast price matching is crucial. In addition, customer service is also an important means of attracting consumers. Convenient return policy and free maintenance services will gain and sustain a competitive advantage for in big-box retails. Finally, I want to mention the shipping services, and door-to-door maintenance service. These two services will help in big-box retails get more customer loyalty.

A competitive strategy is a plan of action that a company develops towards attaining a competitive advantage over its competitors in the industry. Companies examines and research their competitors strengthen and weaknesses and compare them to its own. A company strategy can incorporate efforts to please customers, ward off competitive threats, and meet a unique competitive advantage.

Best Buy provides good quality products at a great price. They also understand that customers want hassle free shopping, which draws consumers into their store to window shop. For many industries this may not be strength, but for Best Buy it is.

It makes sense for Best Buy to worry more about Wal-Mart, which is getting more involved in electronics retailing, and less about Circuit City. The competitors are a diverse lot today, and for them to continue to grow they're going to have to get much better at everything they do and define themselves in clear ways. Best Buy's plan is to revamp its stores according to the types of customers they serve. A strategy previously mentioned, customer centricity, focuses on targeting five prototypical customers, all of whom have been given names: "Jill," a busy suburban mom; "Buzz," a focused, active younger male; "Ray," a family man who likes his technology practical; "BB4B" (short for Best Buy for Business), a small professional employer; and "Barry," an affluent professional male who's likely to drop tens of thousands of dollars on a home theater system. Their most current focus is on a "Jill" based store, the soccer mom who has money to spend but typically hasn't a clue of where or how to find products in the store. According to the data Best Buy has collected, Jill shops a few times a year, usually twice at an electronics store, but she usually spends a significant amount.

According to this case, and concerning about the strategy that Best Buy has created, retailers can similarly create a retailer-led product strategy to leverage their customer knowledge for product differentiation and to understand what the needs of the customers are; they must discover what satisfies the customer and what not. In addition, the retailer can seek for news partnerships, new stores, new countries and new categories and services in order to increase their net sales and their share market. It’s very important invest in marketing study aiming to discover what the other companies are doing. Besides, with the time, the smaller retailer can increase significantly even more than the