Introduction
Best Buy is an international retailer dealing in electronics, computer products and mobile phone products. It also sells entertainment software, appliances and associated services. The company mainly conducts its business in North America, European countries and the Asian market. The headquarters are in Richfield, Minnesota. It has a workforce of about 170, 000 employees. It is among the leading specialty retailers in the United States.
The company vigorously markets the products to diverse markets through its dedicated employees. In order to achieve its profit targets, it ensures that the employees are motivated through appraisals leading to promotions in rank.
It also uses financial incentives and rewards to create appropriate working environment. These efforts are showing results as the company continues its expansion into the international markets. The company is gradually gaining bargaining power with its suppliers. This case study explores the marketing activities of the company.
Direct competitors
The retail market is increasingly competitive. Most of the existing and emerging retailers are venturing into the technology field to offer computing products so as to take advantage of the advancement in technology. In the last two decades, advancements in technology have presented many entrepreneurs with the opportunity to invest in different industries.
The electronic retail market is among various market divisions that many companies have invested in hence creating intensive competition. These include retail giants that initially did not deal in electronics or related services such as Wal-Mart. The opportunities in generating attractive revenues have seen these companies diversify into electronic, computing and mobile phone markets (Fitzgerald 65).
Discounters, online companies and mass dealers have intensified competition against Best Buy. Every company is striving to increase its market share. The overreliance on novel product development for compatibility with the current and emerging products further intensifies competition.
Commodities such as televisions and cameras are usually differentiated by price tag only. In this respect, retailers such as Target and Wal-Mart present Best Buy with cutthroat competition. When Best Buy decided to conduct its marketing and selling of products online, others took the cue and entered the e-commerce to sell products. In fact, Amazon is among Best Buy’s online selling competitors.
The retailer’s strategy
Over the years, the company has employed different strategies depending on the prevailing market conditions. Its flexibility to alter the strategies to take advantage of the market conditions has ensured its profitability and consequently its growth and survival. Among the most recent strategies employed by the company was the ‘space optimization’ strategy.
The company is gradually substituting 10 percent of its big box outlets formerly assigned to the physical media with additionally lucrative products. These include the company’s Samsung Experience shops and Windows stores (Lutz 1). Products that are on demand in the market tend to substitute the obsolete products attracting many clients.
The company’s Chief executive officer Hubert Joly developed a 5-point (Renew Blue) strategy to refurbish the brand. The company has reduced its workforce and vended stores in Europe. Besides, the company appears committed to the revival of the sales through the ‘omnichannel’ retailing strategy (Fitzgerald 65).
The strategy is aimed at reaching the consumers anywhere they are including the outlets, via the internet and phones. The use of technology is among the core parts of the strategy as it will reverse the expensive physical outlets into a competitive advantage. The company acknowledges that customers prefer to pay for the products online, but like picking the items themselves. Hence, this corporation added a ‘store pickup’ button to its virtual shop.
Target market and positioning
The company has a massive market. This is enabled by the wide-ranging penetration of the electronics market and dedicated marketing. The target market is composed of corporate owners and home users. It also targets offices and the general consumers. Essentially, the company targets technology-knowledgeable middle earners. The shift to online selling is targeted at the younger generations who are gradually being addicted to the use of the internet to meet their needs (Fitzgerald 65).
Retail mix
The company’s retail mix is composed of 6 components. These include value, place, advertising campaigns, stock and a variety of merchandise, excellence as well as the source of such merchandise.
Retailer’s strengths
Fundamentally, as the largest retailer in electronic specialty, the company is financially endowed. It leverages this strength by developing a customer-centric business model. This differentiates the company from its competitors. Furthermore, the company has effectively turned the good reputation and brand image it has to gain competitive advantage. Additionally, it offers its clients after-sales service and support its products thus differentiating itself from the competitors.
Weakness relative to competitors
Relative to its major competitors such as Wal-Mart and Target, the company records lower revenues. The competitors diversify into other products thus ensuring that revenues are high and can be ploughed back into electronics. While the competitors recorded increase in operating profit in 2012, Best Buy recorded 54 percent decrease. This has reduced the shareholders’ confidence thus hampering further plans to expand (Fitzgerald 66).
Logical growth opportunities
The company has the opportunity to further differentiate its products by introducing more private label that could warrant penetration into the market. That is, the company stands the chance to increase its range of exclusive products and private labels. The company may venture into the emerging markets in Africa where the demand for technological products is increasing.
Threats in the environment that may adversely affect its performance
The operational environment of the company outside the US is not certain. In fact, different countries have different regulations that may hamper the entry and operation of the company. In most African and Asian countries, the conditions are suitable and attractive as the leadership seeks to attract investors. In others such as Japan, India and China, the conditions outlined may significantly hamper the operation of the company in terms of regulations, taxes and related charges.
Performance and position in the marketplace
The company has been performing relatively well in the last decade. It has managed to attain a market position where a huge global consumer population is aware of its products and actually buys the products.
Prospects for the future
The demand for technological products in the contemporary market offers Best Buy a lifeline. The demand is increasing as consumers seek to digitize all the activities they undertake. The demand for mobile phones is on the rise with more than half of the global population using mobile phones.
The Y-generation is a potential target for the company as global economy improves. Individuals will have resources to spend on the products offered by the company. With the right marketing strategies, the company will continue to expand and gain competitive advantage over market rivals.
In future, for the company to provide strong financial returns, the company should venture into emerging markets and seek to increase its consumer base. Additionally, the company may seek to diversify to ensure that revenues lost in one product are effectively accounted for by the sale of another commodity.
Conclusion
Basically, effective marketing strategies have enabled Best Buy to gain competitive advantage in the electronic retail industry. The company has managed to expand its operations to different global markets with an increasing consumer base. Although the industry is highly competitive, the company has a promising future due to increase in demand for electronic products and advancement in technology.
Works Cited
Fitzgerald, Michael. “Best Buy Battles Back Online.” MIT Technology Review 117.1(2013): 65-66. Print.
Lutz, Ashley. Best Buy Made One Important Change that Saves its Business. 19 Nov. 2013.