Reference no: EM132224650

Introduction

When it was founded in 1966, the Best Buy company’s original focus was sales of home and car stereo systems at retail stores called “Sound of Music”, which expanded from a single-store operation located in St. Paul. Minnesota in 1971. By 1982, the company had expanded its range of product offerings to include home appliances and VCRs, and in the following three years, would change its name to Best Buy Co., introduce an electronics “superstore” format retail operation, and go public. The company’s new name stemmed from a promotion where a massively-promoted annual sale – the “Tornado” Sale (named after a tornado hit one of the company’s stores) – was billed as a “Best Buy” for consumers; eventually, the popular sale’s name was adopted as the company’s new brand image.

What were the keys to Best Buy’s success? What are the challenges it faces in today’s retail environment?

Key to best buy success:

· Its employees: they are happy looking guys and girls who are good with latest technology knowledge, kind and helpful

· Latest technology and gadgets: they have all kinds of options available at their store so that no one can feel that their product is not available.

· Price is matched with the e commerce retailers so that customer can test the product before buying and also at par price with e commerce retailers.

· Cut cost: they are able to turn around the table by cutting the cost because to being successful in the business one should know when to reduce cost of business since it contributes to topline performance of company.

· People can also order online thus it is no more brick and mortar store any more.

Challenges it faces today retail environment:

· There are huge challenges from e commerce player in the market.

· Price pressure from the e commerce player in this sector because they have huge money power to get customer by giving discount.

· Best Buy to focus on its cost side as well since in e commerce sector human cost is less but it is more in retail sector.

How else can Best Buy compete against retail competitors like Walmart and Costco as well as online competitors like Amazon.com?

As we know that best Buy faced very tough competition from Walmart, Costco and amazon.com etc. But best buy competes against retail competitors like Walmart and Costco as well as online competitors like amazon.com with the help of its’ own strengths which are as follow:

· Best Buy competes on the basis of quality services offered to the customers.

· Best Buy focuses on customers’ targeting a positioning, which makes it more competitive in compare to others.

· Best Buy provides delivery & installation by the very highly skilled & trained employees. Hence, we can say that skilled & trained employees make best buy more competitive.

· Best Buy offers good warranty & guarantee to the customers hence it makes customers more attractive towards this company.

· Best buy use advanced research & development to design its’ product & services which makes its’ products more attractive in compare to others.

· Best buy uses efficient sales tactics which also helps to compete against retail competitors etc.

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:

· Poor marketing plan

· Loss of consumer goodwill

· High level of costs

· Consumers targeted mostly mid age adults

Locations in major cities

Employees are not completely knowledgeable about every product the company has to offer

No customer benefits

Limited Suppliers

Recommendations

My recommendation is that they create a more engaging marketing plan, even if it requires to hire a new person for this. BestBuy has lost a lot of goodwill, and to recover it BestBuy should enhance the product features and more importantly, service. Cost reduction can be done, and also search for new ways which could be cheaper than other items. BestBuy should direct more advertising towards younger consumers, this would increase their market share. Using internet advertising on social media sites would help the company showcase the experience that the company can provide.

Competitors like Sam’s Club, Costco and Wal-Mart have the buying power to provide lower priced products but, fail to provide the total shopping experience that Best Buy does. Best Buy needs to take advantage of the warranty and repair services that they provide. Increasing their advertising for the geek squad is one example. Wal-Mart does offer a warranty but, it doesn’t apply till after the manufacturer warranty expires, so customer service will send you to the original manufacturer before Wal-Mart will step in. Even then after the manufacturer warranty expires they will exchange your item for a new one only if you have the original box it came in.