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. The company is enjoying the leadership in the market because of its highest market share. One of the Best Buy's main competitive strategies has been to emphasize on 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. Recently they also opened stores in new international market like China and Europe. 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 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 priority by understanding customer’s problems, their challenges, and finding out the way to solve them. Some of the basic elements and priorities are listed below:
§ 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 where the customers can really feel they are connected to the devices with comfort and luxury.
§ International Growth: By entering into different joint venture programs 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.
Beside these key elements, building relationships with customers with each brand, avoiding complexity and being cost effective operations can also be considered as the other crucial elements of Best Buy’s strategies. In addition to this, the success of the Best Buy depends on the ability to offer huge selection of branded products to its customers. Therefore, creating satisfactory and stable supplier relation is also the other important element of its strategies.
Best Buy’s growth strategy includes expanding its business by opening stores both in existing markets and in new markets (international market). 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. Not only this, but also lack of information regarding local customer preferences and seasonal differences in the market posses’ great risk to the Best Buy successful implementation of its growth strategy and should consider and address as a strategic elements to minimize its negative consequences. In addition, because they just enter into new markets which definitely bring more competition with new and existing competitors or with existing competitors in a large volume. Another important element of the Best buy’s strategy is diversification of the company’s revenues and earnings by entering new market segment addressing unique needs of its customers. It captures emerging markets’ opportunities and defends against external threats to the company’s business with range of best product and with additional value added services which stand out in the competitive market providing competitive edge to the Best Buy. In addition to this, strengthening competitiveness via strategic alliances and collaborative partnership especially in international market is another vital element of the company’s strategy.
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. A cultural difference in some markets into which Best Buy is expanding 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.
Finally, customer satisfaction is the biggest competitive advantage that Best Buy is struggling to achieve. To achieve this competitive advantage, firstly, they have to explore the real problems and needs 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.
References
Best Buy. Investors Relations. Retrieved on January 16, 2010 from http://phx.corporate-ir.net/phoenix.zhtml?c=83192&p=IROL-IRhome
Investopedia. Competitive Advantage. Retrieved on January 17, 2010 from http://www.investopedia.com/terms/c/competitive_advantage.asp
Thompson, A.A., Strickland, A.J. & J.E. Gamble (2010) Crafting and Executing Strategy: The Quest for Competitive Advantage 17th edition. New York, McGraw-Hill Irwin
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