Best Buy Case Study. MKT2316 Section 315. The Seven Marketeers

Transcription

1 Best Buy Case Study MKT2316 Section 315 Claude Lloyd The Seven Marketeers Janick Lobb, Amanda Scobie, Shirley Mark-Stewart Menarick, Liam Moorhead, Kristopher McMahon, Doug Barrowman, Jennifer McMullin March 23, 2012

2 Table of Contents Executive Summary...3 Situation Analysis...4 Assumption...5 Central Problem...5 Evaluative Criteria...5 Alternatives...6 Analysis of Alternatives...9 Decision and Justification...11 Implementation...12 Appendices...14 Bibliography P a g e

3 Executive Summary Best Buy is considered one of the largest consumer electronics retailers in North America and has stores all around the world, with annual revenue that exceeds 50 Billion USD and a profit of 2.7 billion USD (Best Buy (BBY), 2012). They have done well in adapting to the changing market of consumer electronics, but are still facing plenty competition from Wal-Mart and other Big Box stores. In order to keep their stocks in the market, they need to adapt and improve their available products and services. The Seven Marketeers are pleased to provide an analysis of possible ways to create Best Buy s stake in the business-to-business market as well as increase their stake in the business-to-consumer, so that they can compete with other consumer retail companies. A situation analysis was conducted to better understand where Best Buy currently stands, and what can be done to improve the company. The final conclusion where Best Buy has an excellent name and brand association that will help create a clientele for a business-to-business venture. Also, by taking opportunities in the development of a business-to-business program, it will help with possible threats to the company, where the major threat being the competition from other companies. Based on the situation analysis and research of the completive market segments, four (4) ideas were purposed to Best Buy. These four alternatives were evaluated on specific criteria, and then one was chosen that would best help Best Buy in the long run. The recommendation for Best Buy is to expand the Best Buy s product line allowing businesses to purchase items needed in their business with discounts given for their large amounts of purchases. Also to be equipped with knowledgeable staffs to help businesses to pick the products that suit their company the best. The benefit of this alternative is to create a one-stop-shopping experience that is easy and beneficial to businesses. By implementing these alternatives, a detailed timeline is included, Best Buy will be able to expand its business-to-consumer market stake and gain a sizable share in the business-to-business market. 3 P a g e

4 Situational Analysis Internal Analysis Strengths: Strong Market Share of 16% Name brand exclusivity called Insignia Geek Squad Installations for home offices and corporations/businesses Specialty Stores Mobile, Cannon Store, Movie Rental Kiosks, Home and Lifestyle On all major social sites advertising company name and brand Company product lines ex. Best Buy Credit Cards Weaknesses: Locations in major cities Overpriced products Employees are not completely knowledgeable about every product the company has to offer No customer benefits Limited Suppliers External Analysis Opportunities: Exclusive brands On-line advantages Multiple business purchasers are also consumers Threats: Competition such as Wal-Mart, Future Shop, and Staples Local Competitors On-line companies that sell products at larger discounts (E-bay) Apple Inc. although very independent sells to large corporations such as universities and colleges. 4 P a g e

5 Assumptions Assumptions as applied to Best Buy for this case analysis: There is a spot in the market to introduce a new company to supply business equipment. This is an enhancement. Best Buy has no previous stake in the business-to-business market. This is a constraint. It is currently financially feasible for Best Buy to start a new business-to-business cliental under the Best Buy label. This is an enhancement. Central Problem Best Buy does not currently have promotional material directed towards potential business clients and our objective is to create one. Evaluative Criteria Evaluative Criteria as Applied to Best Buy: Criteria Evaluated Criteria 1. Consumer Benefits/Satisfaction Product Line Growth Company Geography Growth Employee and Growth Satisfaction Consumer benefits/satisfaction was chosen because Best Buy does not have potential business clients and does not benefit consumers who purchase in large amounts. Product Line Growth was chosen because Best Buy does not offer office supplies and equipment. Company Geography Growth was chosen because Best Buy s Locations are located only in major cities. Employee growth and satisfaction was chosen because some employees are not familiar with the products that the company has to offer. 5 P a g e

6 Alternatives Alternatives Criteria as Applied to Best Buy: List of Alternatives as applies to Best Buy: Market Best Buy as a business to business market. Position Best Buy as the business purchaser of choice. On-line. Advance Best Buy product line into a department store. 1) Market Best Buy as a business to business market. Primary Target: o Small to medium size businesses o Buyers who will buy office products in bulks o Males/Females between the ages of Positioning Statement: Best Buy is an electronics store that provides high quality products at low cost for business customers who need promotional products for their businesses. Compare to a store like Wal-Mart, Best Buy s large selection of reliable products and staff offers superior service. Marketing Mix: Product Business and office products at low cost when purchasing large amounts of each product for small to medium size businesses. Place Best Buy offers online service for businesses or an in store section. Promotion Best Buy will utilize media, such as the internet and TV, to advertise their business to business product line. Pricing 6 P a g e

7 Prices will be reducing at a 10% interval for large purchases 2) Position Best Buy as the business purchaser of choice. Primary Target: o o Business to Business Small to medium businesses that need computers and equipment. Positioning Statement: The new explored side of Best Buy is a positive environment to purchase large amounts of supplies that help small to medium size businesses receive the required tools and services that need the necessary resources on electronics and appliances. Opposed to Staples, Best Buy s employees and geek squad will be please to help the clients at any time necessary. Marketing Mix: Product Best Buy offers office equipment and supplies for small to medium size businesses Place Service is received at the given business s placement Promotion Best Buy offers assistance service in store and out of the store Price Businesses receive discounts for large purchases at intervals of 50 products 3) On-line Primary Target: o o o Business to business On-line shoppers Bargain shoppers 7 P a g e

8 Positioning Statement: The on-line shopping is a great service offered by Best Buy that simplifies shopping for online shoppers and businesses that need large and/or quick orders. Not like other competitors like Wal-Mart, Best Buy s website will offer a wide variety of electronics and office equipment. Marketing Mix: Product Best Buy offers large orders to businesses to be completed on website Place Best Buy s website provides at home/office ordering from on-line Promotion Best Buy uses social media to advertise to businesses Price When purchasing on-line additional discounts are available, while large orders discounts automatically appear. 4) Advance Best Buy product line into supermarket. Primary Target: o Business to business o Customers o Government o Producers Positioning Statement: The newly restructured Best Buy department store will be a one stop shop experience that will offer all products that is needed in one location for businesses and customers who need electronics and all necessary appliances. In opposed to Wal-Mart, Best Buy s department store will have employees who are knowledgeable in their field of work. Marketing Mix: Product 8 P a g e

9 Best Buy offers all electronic equipment needed to run a business and/or office Place Best Buy offers there affordable products at any of their big box retail stores in major cities Promotion Best Buy utilizes signs, busses, and flyers for advertising to promote their business to business store Price The competitors price will be matched if necessary Analysis of Alternatives Criteria Consumer Benefits/Satisfaction Product Line Growth Company Geography Growth Employee and Growth Satisfaction Weighted Value Alt. 1 (Market Best Buy as BUSINESS- TO- BUSINESS market) Alt. 2 (Position Best Buy as the business purchaser of choice.) Alt.3 (On-line) Alt.4 (Advance Best Buy product line into supermarket) (6)= (7)= (7)= (4)= (7)= (5)= (3)= (9)= (4)= (2)= (9)= (6)= (5)= (4)= (2)= (6)=0.90 Total ***Scale rates from 1-10, 1 being not related to criteria at all. 10 being strongly related to criteria 9 P a g e

10 Advantages and Disadvantages Alt.1 Market Best Buy as a Business-to-Business market Advantages: It will bring Best Buy s business side into the light and in full view, which leads to a product line expansion, because of greater demand, increases sales. Disadvantages: It will increase costs, retraining employees with new products and services. Penetrating the businessto-business market is a discerning factor. Alt. 2 Position Best Buy as the business purchaser of Choice Advantages: It will create more relationships with small businesses and expand its clientele. It will give customers with the most satisfaction possible, and will also increase sales in the short-run. Disadvantages: It does not focus on major companies, just small to medium businesses. Best Buy must expand its product line to meet the demand of being the clear option. The training for new employees for the positions will be done. Alt.3 On-Line Advantages: It will be very convenient and easy for the customers. It will also bring in international companies. It will be safe and secure. Disadvantages: There will be possible system failures and technological weaknesses, the consumer dissatisfaction may occur due to not actual seeing the product in front of them. Alt. 4 Advance Best Buy product Line into Supermarket 10 P a g e

11 Advantages: It will expand into the consumer market, then into government and producers market. It will give the opportunity to dominate the business-to-business market, and gain market share in the business supplies market. Disadvantages: Securing government contracts difficult and must lower prices to get in. It would have to expand current locations to keep up with new supplies; it will also be very costly in renovations. Decision and Justification The Seven Marketeers suggests that Best Buy implement alternative 4 Advance Best Buy product line into department store, to help solve the central problem. Having many services attracts more than just the average business consumers. The lack of customer care must be altered in order for Best Buy to surpass other electronic stores in the market. Having a very user friendly website will encounter businesses getting the word out in the business consumer community. Prices of electronics are quickly decreasing and Best Buy s main competitors are capable of keep up with the price reductions. As products prices decreases, Best Buy must keep up with the most up to date products in order to increase its revenue. Due to the alternatives said, Best Buy will be able to spend this extra revenue on creating better services, with a possibility of expanding its geographical locations. This alternative provides the best overall increase in the company s evaluative criteria. Employee and growth is a little short but will be able to make small adjustments. This best supports the company s long term objectives and mission because it will provide the most growth for products and expand its market shares. Unfortunately the employee satisfaction will not be able to increase as much as it should, which could harm the increase in sales, if employees are feeling they do not get enough. Keeping the employees happy will alter an atmosphere that will welcome local businesses, and also have the employees to be more willing to assist and connect with the business consumers. The benefits that outweigh the disadvantages with this alternative, for instance it provides an increase in percentage Best Buy s product growth, giving the customers the lastest equipment for their business. 11 P a g e

12 Company geography growth is not high, which saves millions on construction expenses and put those profits towards advertising or improving our purchasing and selling ways. Best Buy will have one of the best employee growths which will reflect strongly towards other businesses making them happy with their purchases. Implementation As stated previously, the alternative of choice is advancing Best Buy into a department store. This means making Best Buy the purchaser of choice for not only privately owned businesses but also the government sectors and industries. What Best Buy needs is something to give to their potential business clients. They need a package that draws in businesses and other markets, which is something Best Buy does not currently have. Product Best Buy must develop their product line that will also suit businesses and industries. Clients do not only want electronics but want the accessories and furniture to go with it. Best Buy must develop its product line more convenient. Place Best Buy must put the business solution packages to its locations, and also to expand its markets. They have to have all business solution inventories on hand and in stock. This should be done in order to market to businesses. Price Price is one of the deciding factors in the department store that Best Buy should expand to. Given that the government takes the lowest bid from tenders, Best Buy has to be the lowest bidder with a great offer good that also have good quality products. Promotion Best Buy has to create a business solutions package to promote the business-to-business side of Best Buy. This package will include products that Best Buy carries, services they do, with purchase discount information. 12 P a g e

13 Best buy must implement the following steps to advance into the supermarket: 1. Reinvent business strategy. Best Buy has to rethink and reinvent its way of doing business, shifting from business-to-consumer, to business-to-business clientele. 2. Marketing Research. Best buy has to research the department store that it should enter to. The government market and industrial market is not the same as privately owned small and medium sized businesses. 3. Product and service changes. To expand into these markets Best Buy must change its products and services to sell more than electronics, but office furniture, supplies, 4. Penetrate into the supermarket. Appendix A and B. has the detailed timeline 13 P a g e

14 Appendix A First Quarter Timeline Steps What Who Where When Why 1. Reinvent Best Buys way of thinking and make it a business to business powerhouse Head of marketing department Best Buy headquarters January To become a business to business company 2. Research the supermarket that Best Buy is entering into Head of research and development department Best Buy marketing department January To gain background knowledge of industries and governments buying processes 3. Develop Products and services Research and developers Research and development department February To sell the products and provide the services to a different buyer 4. Begin promoting Best Buy as a business to business company. Marketing department Marketing HQ March Create a huge marketing campaign to advertise Best Buys business solutions. 14 P a g e

15 Appendix B Second Quarter Timeline Steps What Who Where When Why 1 Mass produce the business packages Marketing Department Marketing HQ April The more business packages created, the more business Best buy will attract as clients. 2 Distribute packages to businesses, government agencies and industrial headquarters Marketing Department Businesses that are potential customers. April Give the businesses the packages that will provide them with solutions with all their business needs 3 Bring out new products and a new service that will grab businesses attention Research and development department Research and development department HQ April With new products, comes new interest in the company, it hooks in potential clients. 4 Enter the supermarkets BestBuy president Government markets, and industries. May To gain a market share, and competitive advantage in governments and industries. 15 P a g e

16 Bibliography About Us - Best Buy Canada - Best Buy Canada. (n.d.). Best Buy Canada - Best Buy Canada. Retrieved March 20, 2012, from: 8ae2438cb28c580en99 Best Buy (BBY). (2012, April 4). Retrieved April 4, 2012, from wikinvest: nt Best Buy for Business - Best Buy Canada. Best Buy Canada - Best Buy Canada. N.p., n.d. Web. 22 Mar a80en99 Best Buy for Business - Best Buy Canada. (n.d.). Best Buy Canada - Best Buy Canada. Retrieved March 30, 2012, from: 5f3 fba80en99 Best Buy for Kids - Best Buy and the Environment - Best Buy Canada. (n.d.). Best Buy Canada - Best Buy Canada. Retrieved March 30, 2012, from: Cinemanow.com, e., & hosted. (n.d.). CinemaNow Digital Movies - Best Buy Canada. Best Buy Canada - Best Buy Canada. Retrieved March 30, 2012, from: GEEKSQUAD - Best Buy Canada. (n.d.). Best Buy Canada - Best Buy Canada. Retrieved March 30, 2012, from: 16 P a g e

17 Home & Lifestyle - Best Buy Canada. (n.d.). Best Buy Canada - Best Buy Canada. Retrieved March 30, 2012, from: 93e7c45407fen01 Kiosk Movie Rentals for Less - Best Buy Canada. (n.d.). Best Buy Canada - Best Buy Canada. Retrieved March 30, 2012, from: Kodak Gallery - Best Buy Canada. (n.d.). Best Buy Canada - Best Buy Canada. Retrieved March 30, 2012, from Lamb, Charles W.. MKTG. Canadian ed. Toronto: Nelson Education, Print. Overview - Best Buy Co., Inc.. (n.d.). CCBN is now a part of Thomson Financial. Retrieved March20, 2012, from: Part Store - Best Buy Canada. (n.d.). Best Buy Canada - Best Buy Canada. Retrieved March 30, 2012, from Reclaim - Best Buy Canada. (n.d.). Best Buy Canada - Best Buy Canada. Retrieved March 30, 2012, from Search Results - Best Buy Canada." Best Buy Canada - Best Buy Canada. N.p., n.d. Web. 22 Mar q=olympus%2520rg% &sp=bby_en-ca_site- WideSP&Facet=cBBYMCCPCatalogenCADep artments%2523%2523-1%2523%2523-1%257e%257eq4f6c796d %257e%25 7encBBYMCCPCatalogenCA26515%2523%25230%2523%2523a&viewall=true&targetCategory= Wal-Mart. Walmart. N.p., n.d. Web. 22 Mar P a g e