Since its start in 1966 Best Buy Co. , Inc. has become a leading multi-channel global retailer and developer of technology services and products. The company is headquartered in Richfield, MN and currently has 180,000 employees. Best Buy operates in the U. S. , Canada, Mexico, Europe, as well as China. Their product offerings include mobile products, televisions, e-readers, digital cameras, computers, appliances and many others. Best Buy attributes their steady growth over the years to their deep commitment to innovation and their customers.
They continually adapt their product offerings to meet and exceed the ever changing technology needs of their customers.
Best Buy recognizes that in the world of retail company’s need to constantly be finding new ways to attract, and retain customers. This has led the company to transform their operating models, as well as their stores to have a more customer-centric focus instead of the product-centric focus they once had (BBY, 2012). Recently Best Buy has been forced to make some difficult decisions regarding their company in an effort to stay competitive.
With the departure of Best Buy’s CEO, Brian Dunn the company had to deal with some negative press regarding his inappropriate behavior with a company employee. In addition the company’s founder and chairman of the board of directors, Richard Schulze, was also caught up in this negative press and also resigned from the company. Recently Best Buy announced the closure of 50 of their big box stores, and lay off of hundreds of employees in an effort to cut costs (“Opportunity amid,” 2012).
As online shopping increases in popularity, Best Buy’s current website may not be equipped to capitalize on this trend. This was demonstrated last holiday season when a malfunction of the company website cost Best Buy sales as well as credibility with consumers (“Company’s strength,” 2012). These recent events are forcing Best Buy to reevaluate their once very successful business model as they look to the future. Situation Analysis The electronics retail industry that Best Buy operates in is one that is constantly evolving as technology and customer preferences change.
Business models that were successful in this industry in the past are not as effective in today’s world, thus companies are forced to adapt their techniques to retain their market position in the industry. Over the years Best Buy has built a strong brand recognition in the U. S. as well as around the world. This reputation helps the company maintain a solid market share in the industry. Another advantage for Best Buy is that they are becoming one of the few companies where customers can actually go to a store and try out electronics.
Their stores give customers the opportunity to ask questions about electronics, something that online-only companies are lacking (Katsenelson, 2012). In addition Best Buy also offers customers a more personalized experience with their in-house group of electronics experts known as the Geek Squad. Since Best Buy purchased the unknown computer repair group in 2002 the Geek Squad has grown into the world’s largest tech-support operation with annual revenues exceeding $1 billion (“Company’s strength,” 2012).
This industry contains two different types of retailers both offering similar products. One type of retailer are those that offer electronics in stores, such as Best Buy, Wal-Mart, and Target. The other type of retailers are those that sole offer their products online, like Amazon, EBay, and Newegg Inc. There is a huge opportunity for Best Buy to really focus on redesigning their website, in an effort to compete with the online-only retailers. The company should work toward building a tighter collaboration between their website and their physical stores (Katsenelson, 2012).
In order to truly capitalize on their stores, Best Buy should consider investing more in customer service training for their employees. When customers shop at a Best Buy store the company has an opportunity to personalize the technology experience for them. In the past Best Buy employees have been too focused on selling customers what they want to sell them instead of what customers actually need (“AT BEST,” 2012). Improved customer service will also help in the battle to turn Best Buy stores into more of an asset instead of a liability.
Customers are testing products in Best Buy stores, and asking employees questions about them but then ultimately going to an online competitor to make their purchase for a cheaper price. Providing employees with more customer service training may help reduce the threat of losing sales to online-only competitors (Katsenelson, 2012). In addition to improving customer service at Best Buy the company should also focus on reinventing their customer rewards program.
By creating a solid rewards program and promoting it the company could encourage more repeat business, and build a more loyal customer base. This industry is also characterized by intense competition, where many different retailers are offering the same products, thus making price one of the main motivators for customers. Best Buy’s main competitors are discount chains such as Target, Wal-Mart, and Costco. As well as online-only companies such as Amazon, EBay, and Newegg Inc. When it comes to appliances Best Buy also competes with home-improvement superstores such as Home Depot and Lowes.
In an industry that is driven mostly by price companies will need to discover ways to set themselves apart from the competition in an effort to gain market share. Based on the company information for Best Buy, as well as the industry analysis a SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis was created to summarize key items that the company should address. This SWOT analysis will help guide Best Buy as they look to implement a new marketing plan that will hopefully lead to a successful future. SWOT Analysis
Strengths (Internal Factors):Weaknesses (Internal Factors): Brand recognition Cost of operating large stores Extended portfolio of products and services Recent negative press regarding departure of upper management Geek Squad Disconnect in regards to pricing between stores and website Opportunities (External Factors):Threats (External Factors): Focus on redesigning company website Intense industry competition Improve employee customer service training Customer information stored on website being hacked Work with vendors to offer bundled products available exclusively at Best Buy
Customers shop products in Best Buy stores but ultimately buy product cheaper from online-only competitors Enhance customer rewards program New product launches by major vendors Implementation Control Best Buy executive leadership should review this marketing plan quarterly to track the marketing strategy. Executive leadership should assign individuals to take on responsibility for pushing projects along to meet the marketing strategy. Management must create a schedule and budget to monitor progress but also adapt to any unexpected events that may occur and plan accordingly.