RUNNING HEAD: KEY ELEMENTS OF BEST BUY STRATEGY
Best Buy is a specialty retailer of consumer electronics, home office products, entertainment software, appliances and related services. They operate two reportable segments: Domestic and International. The Domestic segment is comprised of all store, call center and online operations, including Best Buy, Best Buy Mobile, Geek Squad, Magnolia Audio Video, Napster, Pacific Sales and Speakeasy operations located within the U.S. and its territories. U.S. Best Buy stores offer a wide variety of consumer electronics, home office products, entertainment software, appliances and related services, operating thousands of stores in almost all states. Best Buy Mobile offers a wide selection of mobile phones, accessories and services through 38 stand-alone stores located in 12 states as well as in all U.S. Best Buy stores at the end of fiscal 2009. The company is enjoying the leadership in the market because of its highest share. One of Best Buy's main competitive strategies has been to emphasize services, something it has done better in the past than any national electronics retailer.
Best Buy, a leading discount mass merchandiser of consumer electronics and music products, uses value-based pricing strategy for quality brands and products. Best Buy seeks to expand business in existing markets in order to attain a greater overall market share and recently they also open stores in new international market like China and European markets. They focus on best-selling lines and consumer trends, all presented in large, spacious stores with attractive merchandise displays, and on an increasingly important web-site. Their strategy is to move toward the more upscale discount specialty merchandisers or “category killers,” rather than the previous low-end mass merchandiser channel.
Some of the major elements of future growth plans and strategy of the Best Buy revolves around four business priorities in fiscal 2010 which can navigate the current economic conditions to put it in the strongest possible position to take advantage of economic recovery in long-term. In the heart of their strategy, customer is always the first priorities by understanding customer’s problems and challenges and finding out the way to solve them. Some of the basic elements and priorities are:
§ Grow Market Share (Local Growth): Which provides opportunities for customer’s acquisitions and connecting and creating relations with each and every customer.
§ Connected Digital Services (Solutions): Using best buy mobile
§ International Growth: By entering into different joint venture program in Europe, Asian market especially China and other international market.
§ Efficient and Effective Enterprise: Redeploying resources in such a way that it maximizes the returns.
Besides these, building relationships with customers with each brand, avoiding complexity and being cost effective operations can also be consider as the elements of Best Buy strategies. In addition to this, the success of the Best Buy depends on the ability to offer huge selection of branded product to its customers. Therefore, creating satisfactory and stable supplier relation is also one of the elements of its strategies.
Best Buy growth strategy includes expanding its business by opening stores both in existing markets and in new markets. The risks associated with entering a new international market like China includes difficulties in attracting customers where there is a lack of customer familiarity with Best Buy brands, lack of familiarity with local customer preferences, seasonal differences in the market. In addition, because they just enter into new markets which definitely bring more competition with new and existing competitors or with existing competitors with a large. Therefore, all these are the elements they have to address in order to get desired return and for successful execution of the strategies. Another important element of the Best buy strategy is diversify the company’s revenues and earnings by entering new market segment addressing unique needs of its customers. They capture emerging markets opportunities and defend against external threats to the company’s business with range of best product with additional value added services which stands out in the competitive market. In addition to this, another key elements is to strengthen competitiveness via strategic alliances and collaborative partnership especially in international market.
Some of the Best Buy growth strategy includes expansion via new business ventures, strategic alliances and acquisitions. But the information they can obtain about a potential growth opportunity is the key element for the success of those strategies. Cultural differences in some markets into which they expanding their business is another critical element to be consider. One of the major strategies that Best buy applies is customer centricity in which they call their three core philosophies: inviting employees to contribute their unique ideas and experiences in service of customers; treating customers uniquely and honoring their differences; and meeting customers’ unique needs. Therefore, the customer satisfaction is the biggest competitive advantage Best Buy is struggling to achieve. To achieve this competitive advantage they first explore the real problems and need of the customers and match with whatever possible solution they have which they can offer to their customers to address those problems and needs. And finally, they try to discover the best unique way to deliver those offerings to their customer considering customer satisfaction as biggest weapons to gain the maximum market share and achieve customer satisfaction.