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

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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 ..............................................................................................................................................16

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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.

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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.

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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 0.35

2. Product Line Growth 0.30

3. Company Geography Growth 0.20

4. Employee and Growth Satisfaction 0.15

1.00

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.

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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 20-55

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

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Prices will be reducing at a 10% interval for large purchases

2) Position Best Buy as the business purchaser of choice.

Primary Target:

o Business to Business

o 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 Business to business

o On-line shoppers

o Bargain shoppers

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Positioning Statement:

The on-line shopping is a great service offered by Best Buy that simplifies shopping for on-

line 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

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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 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)

Consumer

Benefits/Satisfaction

0.35 0.35(6)=2.1 0.35(7)=2.45 0.35(7)=2.45 0.35(4)=1.4

Product Line

Growth

0.30 .30(7)=2.1 0.30(5)=1.5 0.30(3)=0.9 0.30(9)=2.7

Company

Geography Growth

0.20 0.20(4)=0.8 0.20(2)=0.4 .0.20(9)=1.8 0.20(6)=1.2

Employee and

Growth Satisfaction

0.15 0.15(5)=0.75 0.15(4)=0.60 0.15(2)=0.30 0.15(6)=0.90

Total 1.0 5.75 5.45 5.45 6.2

***Scale rates from 1-10, 1 being not related to criteria at all. 10 being strongly related to criteria

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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 business-

to-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

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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.

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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.

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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

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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 2

2013

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 15

2013

To gain

background

knowledge of

industries and

governments

buying processes

3. Develop Products and

services

Research and

developers

Research and

development

department

February 1

2013

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 3

2013

Create a huge

marketing

campaign to

advertise Best

Buys business

solutions.

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Appendix B

Second Quarter Timeline

Steps What Who Where When Why

1 Mass produce the

business packages

Marketing

Department

Marketing HQ April 4 2013 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 20 2013 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 28 2013 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 1 2013 To gain a market

share, and

competitive

advantage in

governments and

industries.

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