Best Buy Case Study

Answer

Best Buy Case Study

Synopsis

Best Buy is a consumer electronics retailer equipped with more than two thousand stores on a global scale. Its operational goals include revenue increase through growth of customer base to gain a higher market share globally (Keller and Magid 4). It also aims at implementing sales and marketing strategies in order to acquire multiple brands to accommodate different customer acquisitions, preferences, and styles of products. Its store operations were categorized into eight different sections to ensure that a certain retail field officer monitored performance through assigning of managers at different levels to discuss operational strategies like loyalty in programming, promotion of sales, and introduction of new products.

Best Buy faced a new rival after the Circuit City’s downfall, Wal-Mart, which greatly expanded its consumer electronics and facilitated rise in competition over a fixed price that the latter aimed at winning (Keller and Magid 4). Best Buy, therefore, had to face the competitive challenges without lowering the set prices, but by setting unique strategies and goals for development. It had a task of establishing the right methodologies for improving its ability to be differentiated from others. It was, however, very difficult for the retailer to keep up due to the adverse economic climate and financial stress within the company’s management (Keller and Magid 4). As a result, it was challenging for it to maintain its innovative products, quality customer services, and top-notch type of employees for it to compete favorably with its competitors like Wal-Mart.

There were questions on survival capacity of Best Buy, and whether it could constantly price-match other competitors despite high prices. Shifting towards internet purchases had a negative impact on stronger entry barriers to customer loyalty, in that consumers would identify products they intended to purchase, and then window-shop on ones with the least price. Best Buy company utilized barriers of economies of scale for obtaining cost advantages generated from suppliers of high quantity orders. Larger firms had the potentiality of increasing advertisement budgets in order to deter all new entrants in the field of market (Keller and Magid 4). The smaller firms were, therefore, unable to define market budget to help in massive television campaigns, even though it was the best strategy in marketing for the retailers. Despite the fact that there was continuous growth in internet sales, Best Buy was brick-and-mortar dominated. 

Resources

• Customers’ knowledge of products and services
• Stores
• Employee education
• Feedback
• Company’s vision

Capabilities

• Marketing
• Outsourcing
• High pricing
• Consumer Support
• Reduced third party costs
• Showrooming

Core Competencies

• Cost cutting through perfection of marketing strategies processes
• Outsourcing component of showrooming
• Product diversification.
• Brand Name
• Knowledge and collective learning.
• Customer service support

Finding of Fact

There was an emergent problem in relation to showrooming of products and top-notch services by Wal-Mart Company, where products in stores were merchandised and bought online at a lower price (Keller and Magid 4). Most of the online retailers bought the products at a lower price as compared to the brick-and-mortar retailers like Best Buy, due to existence of lower overhead. There was a high decline in the firm’s net income and operational margins due to increased costs and high pricing pressure. According to prevailing global economic condition, most electronic products prices had been laid low due to both forces of competition and economic pressures. Such low prices led to decline in margins which negatively affected operational margins and existing net income.

Recommendations

Utilization of the Long Train marketing system for utilization of drive traffic within a given website is the most favorable approach in enhancing effective and positive competition within the Best Buy. The Long Train system can equally allocate effective ways of expanding products within entertainment software, categorization of appliances and user consumer electronics to enhance coexistence of recommendation panel (Keller and Magid 4). Utilization of products basing on how they were derived from customer review allows for recommendation of potential products that may quench the customer’s interest. Upgrading the quality of product tags is also a recommendation for ensuring that they purchase more items for the firm’s performance, and continue providing a more pleasing shopping experience to their clients.

Removal of Google adds especially the ones displayed across pages on different websites to avoid provision of effective deals relating to identical products that users browse for, with an exception on offers given by other competing websites. This will cut down on the number of sales Best Buy loses on the accounts of such ads. Providing consumers with the option of sharing products to their private social network sites is key in ensuring a fairly developed system for enhancing customer reviews (Keller and Magid 4). Their customers can also develop a ranking system which ensures that customers gain adequate points per review made, allowing many people to share links to other reviewers. This can be achieved through provision of customers with a dependent incentive ranking system to boost rate of reviewing by customers and in turn maintain reward ranking. Establishment of the ‘Include Related Best Buy Products’ by Best Buy.com will aid in pulling down of high online traffic from a product’s consumers. This will in turn facilitate translation of more online made sales through reward system implementation.

Moreover, halting of big box store expansion allows shifting of focus to strategic online selling. It also allows focusing on making stores more appealing to consumers as opposed to integration and shutting down of stores. Best Buy is therefore expected to streamline all available physical stores through subleasing and increase in opening of smaller formats to ensure it keeps up with its aggressive competitors like Wal-Mart and Apple (Keller and Magid 4). All savings made from cost cutting must afterwards be put forward to improve customer services and investment options to be highly competitive from a pricing stand point. Best Buy can also aid in utilization of existing void by getting rid of large appliances through revamping of space into a more convenient environment to give the consumer an easy time to ascertain the electronic products on offer. This allows a consumer to create a stronger bond with the product and turn the entire transaction into a driven impulse buy.

Finally, encouragement of the firm’s employees to identify strategies for understanding how their products could be more compelling and how customers would utilize the most of the products under purchase. Employees had to appreciate the fact that customers are different, and in turn identify the best method through which customers could enjoy and maximally make use of their product. This can help Best Buy shift from a low price strategized retailer to a quality service oriented firm which based mostly on a high differentiation strategy.