A case study analysis for seminar in marketing class.

1. Presented By: Ajit Kunwar
Presented to: Prof. Jae Wun Cho

2. INTRODUCTION
 Specialty Retail Industry
 More specifically the electronic retail industry
 Buys electronics from manufacturers and sells them to
consumers
 Established in 1996 by Dick Schulze and Gary Smoliak
 Was called sound of music until1983
 By 1969 it expanded in five more locations

3.  By 1978 it operated nine stores of around 5000 sq. feet
 In 1981, a tornado hit Best Buy’s outlet, he held the
tornado sale on parking lot
 This prompted Schulz to change his strategic direction
from service to discounted name brands
 In 1983 Schulz decided to venture into superstores and
renamed the company “Best Buy

4. DIFFERENT CONCEPT PERIODS
 Concept I: 1983-1988
Household appliances , VCRs and personal computers
were added to expand line,
Public offerings
Best buy margin fell sharply
Conducted research: found customer felt pressured by
sales person

5.  Concept II: 1989-1994
Ground breaking “grab-and-go” store format 1989
Sales space was created, inventory were displayed with
basic information labels
Commissioned sales staff were replaced by salaried
specialist
By 1994 it operated 151 stores, generated 3 billion in
revenue

6.  Concept III: 1995-2002
Explosive growth and wide product line caused company
to loose control
1997 first quarterly loss as public company
Slowed down its expansion between 15 to 20 stores a year
Rationalized inventory and introduced standard operating
platform in every stores
BestBuy.com was lunched in 2000, for new growth
opportunities
Also made number of acquisitions( Magnolia, Greek
Squad and Music land)

7.  Concept IV: Customer Centricity: 2002-2009
Feb 2002 Schulze step down as CEO and replaced by
Brad Anderson
Get more out of current stores and sell more to current
stores
Lunch locality card
Store associates were empowered to make the changes
“Win-in-the home” and expanded Geek Squad
Imitated by Wall mart, target, dell

8. INTERNATIONALIZATION
 In may 2006 best buy purchased majority stake in Jiangsu
Five Star Appliance co, in China
 134 stores in 7 provinces
 By 2009 five flag ships were opened
 Expanded its Canadian presence
 Joint ventured with Carphone Warehouse (CPW) of Uk

9. CRISIS
 End of 2012, Best Buy found itself in challenging
situation
 Stock price fell to $24.70 from $53.86
 Losing market share to both discounters and online
retailers (wall mart and Amazon)
 Amazon released price check and encouraged customers
to compare price
 Management issue: CEO resigned after investigation into
his personal conduct
 Schulze stepped down from chairman

10.  Reduction in new store openings
 Job cut, demotion of senior associates
 International operation were called off
 Stores were downsized by 10%

11. TARGET MARKET
 Ages 16-35 primary target market
 Specific sections
18-24 because 40% of them are in college
Small business
Middle class families

12. Best Buy’s Marketing Mix
 Product
Newest Product
Variety of Products
 Price
Balanced lower price
Medium low prices with superior service
Online sales

13.  Place
Convenient retail locations
Online
 Promotion
Social Media, TV, printed Ads

14. THE TURNAROUND SO FAR
 CEO Hubert Joly took over in 2012
 Slashed cost, lowered price to be competitive
 Drove rapid online sales growth by shipping directly out
of it’s stores
 Sold off both its European and Chinese businesses
 The company had been picking of the market share
 Increased price competitiveness, while hurting profits in
the short terms

15. RENEW BLUE: BEST BUY’S
TURNAROUND STRATEGY
 To improve financial position; lunched strategic plan
called “renew blue”
 Plan mainly focused on
Strengthening relationship with vendors
Revamping stores
Increasing store sales
Eliminating unnecessary cost
Ramping up Best Buy’s online business

16. WHAT HAS THEY DONE SO FAR
 Tied with mobile shopping app Curbside
 Store with in store concept: rent out space to popular
brands
 Partnered with Samsung and Microsoft to open 1400
Samsung and 400 Microsoft stores
 Reduced costs by $350 million in 2014 by closing
underperforming stores, shrinking its workforce and
making supply chain efficient

18.  Focus on online sales by enhancing its search engine and
improving inventory availability and providing better
home delivery, improving the visual appeal as well as its
content and product price information
 Ship-from-store approach: to address inventory issues
associated with online sales at its distribution centers

19. My Suggestions
 In store expertise
Hire more experts who can answer customer’s questions
 Revamp Geek Squad
Lower the price or offer for free
Lunch in store and online lessons how to use complicated
electronics products
 Expand target market to older generations

20. Discussions Questions
 What will be your SWOT analysis for Best Buy?
 What are your opinion for closing international operation,
is there anyway they could have done to save it?
 Do you want to add any comments on my marketing mix
analysis?
 What would be your suggestions for Best Buy?