Show Rooming at Best BuyHarvard Business School

Thales TeixeiraElizabth Anne Watkins

Group 5 | Master of International Marketing | Pricing Strategy | Prof Mike Berry

Background….……………………………….….2min

Show Rooming……………………………...…..2min

Key Pricing Decisions…………………....……2min

Recommendations……………………….…….4min

Questions……………………………….……….5 min

Background

Online Retail USACAGR 08-15: 17%

Background

2004 2012

Technological Devices

Online Shopping

“The everything Store”

Penetration Price Strategy 1) Lower operation costs 2) Product Cost Negotiation 3) No sales tax (USA)

Price Comparison Apps Price Transparency

On lineAdd complexityto purchase decision

Problem Situation

StimulusZeroMOT

FirstMOT

Awareness Discovery Purchase

In Store In StoreMedia

2004

2012

StimulusZeroMOT

FirstMOT

Awareness Discovery Purchase

Media In Store On line

ShowRooming

High Fixed Costs

Penetration PriceCompetitors

Sales LossTransfer Profits

Price War - Permanent price match online retailers.

Use Price-match strategy during the seasons.

Avoid Price War – Block bar codes to price comparison apps.

Key Price DecisionsKey Price Decisions

Until2011

Early2012

Nov2012

Price War - Permanent price match online retailers.

Key Price Decisions

PROS

Fairness

Recover Sales Breakeven Risk

Key Price Decisions

Tripled Stock Price Reactive

CONS

Willingness to pay, not value

Strategic Pricing

Proactive

Value-based

Profit-Driven

Success in pricing requires master the art of diplomacy, not the art of war.

Price Match reduce show rooming, but it does not overcome it.

Moving Forward

StimulusZeroMOT

FirstMOT

Awareness Discovery Purchase

Key Success Factor: Complete Understanding of Consumer Journey

Media In Store On line

ShowRooming

Media Online In Store

ReverseShowRooming

SecondMOT

UltimateMOT

Experience Recommendations

Recommendations

StimulusZeroMOT

FirstMOT

Awareness Discovery Purchase

Media In Store On line

Media Online In Store

SecondMOT

UltimateMOT

Experience Recommendations

Taking Advantage

of Show Rooming

Capitalizing in Reverse

Show Rooming

Target Collaboration

with the industry

Partnership Brick and Click

Recommendations

You CAN showroom, but you MUST share

Mobile Platform linked with social media where users can share their technological aspirations, ask for friend`s advices, they also can build the living room of the dreams .

Recommendations

StimulusZeroMOT

FirstMOT

Awareness Discovery Purchase

Media In Store On line

SecondMOT

UltimateMOT

Experience Recommendations

Taking Advantage

of Show Rooming

Mobile Strategy

Sales TeamImpulse purchase

Visitor’s Profile• Not ready to buy just browsing.• Don`t have information.• They will not get a

basket when they get in the store.

E-Commerce

Recommendations

Media Online In Store

Capitalizing in Reverse

Show Rooming

StimulusZeroMOT

FirstMOT

Awareness Discovery Purchase

SecondMOT

UltimateMOT

Experience Recommendations

Online Portal Sales Team Social MediaExcellence in Post Sales

ServicesFidelity Program

Visitor’s Profile• Informed clients.• Ready to Buy.

RecommendationsZeroMOT

Discovery

In Store

Target Collaboration

with the industry

Vantages for the Industry:

Price Consistence;

Product Exposition;

In Store

FirstMOT

Purchase

Transfer Price

Standard Promotional

Calendar

Controlling inventory in the Online Channel

Experiencein Store

Recommendations

Partnership Brick and

Click

FirstMOT

Purchase

On Store

Amazon inventoryIn Best Buy

Purchase Amazon Inventory

In Best Buy

Cut Amazon delivery

Costs

Best BuyStores would

offer products in better prices than On line

Cost Savings are translated in better

margins to Amazon and a discount in final price

Questions

StimulusZeroMOT

FirstMOT

Awareness Discovery Purchase

Media In Store On line

Media Online In Store

SecondMOT

UltimateMOT

Experience Recommendations

Taking Advantage

of Show Rooming

Capitalizing in Reverse

Show Rooming

Target Collaboration

with the industry

Partnership Brick and Click

THANK YOU

Group 5 | Master of International Marketing | Pricing Strategy | Prof Mike Berry

References

Holden, Reed K, and Mark R Burton. Pricing With Confidence. Hoboken, NJ: Wiley, 2008.

Price Waterhouse Coopers, (2015). [online] Available at:https://www.pwc.com/es_CL/cl/publicaciones/assets/retailing2015.pdf[Accessed 6 May 2015].

Anon, (2015). [online] Available at: http://uk.businessinsider.com/reverse-showrooming-bricks-and-mortar-retailers-fight-back-2-2014-2 http://www.wsj.com/articles/wake-up-brick-and-mortar-retailers-1416874241 [Accessed 6 May 2015].

Anon, (2015). [online] Available at: http://retailindustry.about.com/od/statisticsresearch/p/retailindustry.htm https://www.youtube.com/watch?v=Y8nX_mKnQg0 [Accessed 6 May 2015].

Key Price DecisionsReferences