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Best Buy A user’s m anual to the B ig Picture

Best Buy A user’s m anual to the B ig Picture. Sukriti Batra - Harry Hantman - Taisia Karaseva - Arthi Kumar - Keegan Ng - Jacqueline Shea. Navigating the user’s manual. Current Big Picture. Required Changes. Ideal Big Picture. Implementation Strategies. Agenda.

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Best Buy A user’s m anual to the B ig Picture

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  1. Best BuyA user’s manual to the Big Picture SukritiBatra - Harry Hantman- Taisia Karaseva - Arthi Kumar - Keegan Ng - Jacqueline Shea

  2. Navigating the user’s manual Current Big Picture Required Changes Ideal Big Picture Implementation Strategies Agenda

  3. Current Big Picture Current BPChanges Ideal BP Implementation

  4. Current Big Picture: business objective • Fundamental entity: Best Buy USA • Core competence: efficiency & depth of supply chain • Goal: reduce costs & store size to keep prices competitive Current BPChanges Ideal BP Implementation

  5. Current Big Picture: MO & SOV • Retention/steal share • Loyalty, customer service, market research A/SS A/SD R/SS R/SD Current BPChanges Ideal BP Implementation

  6. Current Big Picture Current BPChanges Ideal BP Implementation

  7. Current Big Picture: segmentation • Angels versus Devils (20%) • Seeks discounts Buys high-margin goods at full price  Current BPChanges Ideal BP Implementation

  8. Current Big Picture: targeting Jill: suburban soccer mom Age: 38 Home: Boston Interests: her family, philanthropy, reading, classic theatre, shopping Barry: wealthy professional guy with a passion for technology Age: 45 Home: Chicago Interests: golf, movies, travel, and reading Buzz: young technology buff Age: 23 Home: Columbus Interests: video games, movies, TV shows, amusement parks Current BPChanges Ideal BP Implementation

  9. Current Big Picture: positioning • “Making technology work for you” • Hard to find Current BPChanges Ideal BP Implementation

  10. Current Big Picture Current BPChanges Ideal BP Implementation

  11. Current Big Picture: 4Ps • Product • Price: online dynamic, competitive • Place: 1,162 stores, online • Promotion: print, TV, RewardZone www.ibisworld.com Current BPChanges Ideal BP Implementation

  12. Financial performance is tanking BBY has declined 52% from a year ago, closing at $12.47 (11/26/12 Close) Current BPChanges Ideal BP Implementation

  13. What isn’t working Current BPChanges Ideal BP Implementation

  14. Revised Big Picture: business objective • Core competence: understanding of technology • Strategic asset: customer service • Customer-oriented goal • ex) sales dollars per visitor per month Current BP Changes Ideal BPImplementation

  15. Revised Big Picture: segmentation Current BP Changes Ideal BPImplementation

  16. Revised Big Picture: segmentation Dynamic Variable: Customer Service Current BP Changes Ideal BPImplementation

  17. Revised Big Picture: segmentation • Additional segments Showroomers(behavioral) Business Buyers (demographic) Current BP Changes Ideal BPImplementation

  18. Revised Big Picture: targeting Gary: business owner Age: 50 Home: Miami Interests: TheWall Street Journal, tennis, finding quality products, country clubs Michael: showroomer Age: 25 Home: Minneapolis Interests: couponing, Angry Birds, blogging, whitewater rafting Current BP Changes Ideal BPImplementation

  19. Revised Big Picture: price • Expanded dynamic pricing model Current BP Changes Ideal BPImplementation

  20. Revised Big Picture: place • Increased points of sale • Replacing Big Box stores with mini stores • In-store experience Current BP Changes Ideal BPImplementation

  21. Revised Big Picture: promotion • Ads focused on dynamic variable Current BP Changes Ideal BPImplementation

  22. Current ad • Variety • Price • Imitable • Unsustainable Current BP Changes Ideal BPImplementation

  23. Price is perceived to be uncompetitive Current BP Changes Ideal BPImplementation

  24. Service is perceived highly Current BP Changes Ideal BPImplementation

  25. Change promotion: stress service • Service as dynamic variable • Integral part of electronics purchase • Service as product Current BP Changes Ideal BPImplementation

  26. Proposed ad • Stress service • Note some product variety • Highlight slogan Current BP Changes Ideal BPImplementation 27

  27. Change promotion: stress service • Decreased showroom • Decreased ad spending $49.75m • Update ads less frequently • Price cushion premium 5% reduction in ad expenses Current BP Changes Ideal BPImplementation

  28. Change place: enter the most helpful shopping environment • Utilize current staff more efficiently • New sales training focusing on customer needs • Beyond Angels&Devils • Create new smartphone-enhanced shopping experience • Best Buy without the line (or shipping costs) • Customer assistant when you need it • In-store price-matching on select (profitable) items Current BP Changes Ideal BPImplementation

  29. Enhanced STP:new segments & targeting • Two new focused segments: • Smartphone buyers (showroomers) • Business buyers Current BP Changes Ideal BPImplementation

  30. Focus on smartphone buyers • Utilize in-store phone-shoppers as 1st users & Evangelists of new mobile shopping experience • Long run: free staff to assist less-tech-savvy customers Current BP Changes Ideal BPImplementation

  31. Price is the greatest factor in showrooming Current BP Changes Ideal BPImplementation

  32. Focus on business buyers 2.0 • Newly designed business buyer online presence • Segmented by industry & business size • Buy online or via mobile • Business buyer-focused in-store training • On-site specialists assist large-size-of-wallet buyers Current BP Changes Ideal BPImplementation

  33. Big Picture recap Current BP – Required Changes – Ideal BP Implementation Strategies • Stress service in promotion • Focus on & address showroomer & business segments Key: Monitor industry & customers to keep marketing strategy effective Closing Remarks

  34. Works Cited • Boyle, Matthew. "FORTUNE: Best Buy's Giant Gamble." CNNMoney. Cable News Network, 29 <http://money.cnn.com/magazines/fortune/fortune_archive/2006/04/03/8373034/index.htm>. • “Best Buy Competitors Gained Ground This Year”. Jan 5 2012. <http://www.retrevo.com/content/bestbuy- competitors-gained-ground> • Best Buy Website. Accessed November 2012. http://www.bestbuy.com/ • "Best Buy: Embracing the Angels and Ditching the Demons." N.p., n.d. Web. <http://www.studentsbaraza.com/uploads/9/7/3/0/9730120/customer_driven_marketing_startegy.pdf>.M ar. 2006. Web. 18 Nov. 2012. • Best Buy 2012 Form 10-K. <http://www.sec.gov/Archives/edgar/data/764478/000076447812000035/bby- 201210k.htm> • Dignan, Larry. "Best Buy Feels Amazon Squeeze, to Close 50 Big-box Stores." CNET News. CBS Interactive, 29 Mar. 2012. Web. 17 Nov. 2012. <http://news.cnet.com/8301-1001_3-57406388-92/best-buy-feels- amazon-squeeze-to-close-50-big-box-stores/?part=rss>. • Elberse, Anita; John T. Gourville, Das Narayandas.  “Angels and Devils: Best Buy's New Customer Approach”. Harvard Business Review. Harvard Business School. 23 Sept. 2012. Web. 17 Nov. 2012. “The Importance of Being Analytical”. Brandweek. July 2006. Accessed via Kresge: Proquest. <http://hbr.org/product/angels-and-devils-best-buy-s-new-customer-approach/an/506007-PDF-ENG> • “Global Computer and Electronics Retail”. Marketline. May 2012. Accessed via Kresge. • “Innovators” Advertisement. Best Buy 2012. First Played during the 2012 Superbowl. <http://www.youtube.com/watch?v=2p4dvkhbsCU> • "Internet Pricing Becoming Volatile." .com. Bloomberg Businessweek, 5 Sept. 2012. Web. 18 Nov.2012.<http://buswk.co/TaddnM>. • Perez, Sarah. "ComScore U.S. Internet Report: YoY, Pinterest Up 4000 %, Amazon Up 30%, Android Top Smartphone & More." TechCrunch RSS. N.p., 14 June 2012. Web. 26 Nov. 2012. <http://techcrunch.com/2012/06/14/comscore-us-internet-report-yoy-pinterest-up-4000-amazon-up-30- android-top-smartphone-more/>. • Ritholtz, Barry. "Lucky Us: Toilet Paper Priced Like Airline Tickets?" The Big Picture. N.p., 05 Sept. 2012. Web. 26 Nov. 2012. <http://www.ritholtz.com/blog/2012/09/lucky-us-toilet-paper-priced-like-airline-tickets/>.Ritson, Mark. "Mark • Ritsonon branding: Every brand must learn to exorcise its Devils." Marketing 17 Nov. 2004:25. Business Insights: Essentials. Web. 17 Nov. 2012. • <http://bi.galegroup.com.libproxy.bus.umich.edu/essentials/article/GALE%7CA124773459/02daf7d4f78e debe5d9668c6bcb613f6?u=umich_rbw> • “TV and Video in the United States.” Marketline. July 2012. Accessed via Kresge.

  35. Visit/purchase disconnect • Only 27 of the 38 respondents who last went to Best Buy between a month and a year ago made a purchase • 48% of respondents last bought from Best Buy more than a year ago

  36. Comparative financials Company 10-K forms

  37. 5-box positioning statement

  38. Price perceptions http://www.retrevo.com/content/bestbuy-competitors-gained-ground

  39. Same-store sales http://seekingalpha.com/article/1028941-strange-case-of-best-buy-dilemma-of-investing-and-avoiding

  40. Profit margins http://ycharts.com/companies/BBY/chart#series=type%3Acompany%2Cid%3ABBY%2Ccalc%3Aprofit_margin&format=real&recessions=false&zoom=5&startDate=&endDate=

  41. Geek Squad Tech Support • Support for up to three computing or tablet devices • Support options • Internet security software • Virus and spyware removal(Regular price without Tech Support — $199.99) • System tune-ups(Regular price without Tech Support — $99.99) • Operating system installation and software repair(Regular price without Tech Support — $29.99–$129.99) • Hardware installation • Password resets(Regular price without Tech Support — $29.99) • Printer help • On-demand access to thousands of how-to videos online • In-home support option • 15% discount on further Geek Squad services $199 yearly membership http://www.bestbuy.com/site/Computers-Promotions/Geek-Squad-Tech-Support/pcmcat235500050002.c?id=pcmcat235500050002

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