BestBuy case study

Topics: Best Buy, Customer, Customer service Pages: 6 (1965 words) Published: August 14, 2014
Operated over 900 stores across the US and Canada at the time of 2005, Best Buy had the biggest sales footage for consumer electronics and a leading market share of 18% followed by Wal-Mart (Lal, 2006, p.14). As growth through new store openings was found to be unsustainable in the US, the company introduced customer-centricity model in pursuit of continued growth to remain the leading consumer electronics retailer in the US. In pursuit of the new model, the company was making efforts but struggling to shift their focus on marketing operation from selling products to customers (product-out approach) to addressing customer needs (market-in approach) while still leveraging its scale merit in merchandising. Before customer-centricity model, BestBuy was a merchant driven company. Merchant organization primarily had responsibilities for buying, pricing, assorting, and managing inventory planning (Lal, 2006, p.10). With introduction of customer-centricity model, Segment organizations were newly formed around key target customer segments to better inform the merchant teams and store organizations of the customer needs. Although the new model required the three functions to work in harmony, the company was finding it difficult to align different perspectives and goals of the three organizations due to a lack of clarity on which functions was the true owner of customer insight (Lal, 2006, p.12-13). Eventually, the company found itself getting stuck into “focus on everything strategy” being unable to effectively leverage its scale power to optimize the merchandising strategy (Lal, 2006, p.14). In order to remain competitive in the market, future challenge for the company after the introduction of customer-centricity model was to find a new governance structure (i.e. introduction of integrated business teams) that enables alignment of the three organizations to focus resource and scale merit of the company on profitable key customer segments.

In sustaining competitive advantage in increasingly competitive consumer electronics market, Best Buy should continue to pursue customer-focused solutions with multi-channel sales strategy by leveraging existing store and distribution network, and online sales platform. Nation-wide store network is one of the biggest competitive advantages of Best Buy. These stores should be fully leveraged to provide customers with tangible in-store experience (touch products and compare them to other models) as well as differentiated end-to-end solutions by knowledgeable sales force and technical staff (e.g. Geek Squad). In the course, Best Buy should further evolve its marketing strategy to more rigorously narrow down in-store target customer segments to those who look for higher-end products with more quality end-to-end services. This would help put the company in differentiated market positioning among the competitors (e.g. Wal-Mart) and help avoid inefficient scale/power game to make profits with efficient use of resources (Figure 1). While continuing to crystalize the in-store operations, Best Buy should also be committed to continue investments in online sales platform, not only to expand access to customer segments which are not covered in the stores efficiently, but also to defend erosion of in-store sales form other online retailers in such cases where customers come in to stores, experience products, then match the price on their smart phones with other on-line retailers and eventually order on-line from one of those competitors. (Briggs, 2013) Owning strong network of physical stores, strategically located distribution centers and online sales platform, Best Buy is well positioned to pursue unique new market offerings that leverage synergies between the two sales channels and distribution networks. For example, Best Buy has launched “ship from stores” service in 2013 that utilizes existing stores as “mini-warehouse” to improve the speed of delivery. While Amazon continues to build warehouses...

References: Best Buy (2005). Annual Report. Retrieved from Mergent Online database.
Best Buy (2014). Annual Report. Retrieved from Mergent Online database.
Briggs, B. (2013, February 19) Best Buy aims to quash ‘showrooming’ by matching web prices. Internet RETAILER. Retrieved from http://www.internetretailer.com/2013/02/19/best-buy-aims-quash-showrooming-matching-web-prices
Bullas, J
Cotrill, K. (2006, January 23) Best Buy’s Supply Chain Transformation. Harvard Business School Working Knowledge. Retrieved from http://hbswk.hbs.edu/
Dickinson, C., (2004, January 3) Virtucom Group helps big retailers set sites
Lal, R. et al., (2006, October 16) Best Buy Co., Inc.: Customer-Centricity. Harvard Business School Case, 9-506-055. Boston: Harvard Business School Publishing.
Thompson, M. (2010) How Best Buy Uses Social Media to Connect With Customers. StayOnSearch. Retrieved from http://www.stayonsearch.com/best-buy-using-social-media-to-connect-with-customers
Trefis Team
Willett, R. (2007, July 15). The Customer Is Your Business. CIO, 20 (19), 50-52
Wolf, A., (2005a, April 18) Best Buy Lays Out Its Best-Laid Plans
Wolf, A. (2005b, June 20) Best Buy Beginning Store-Tailored Assortments. TWICE: This Week in Consumer Electronics, 20 (13), 20.
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