Competitive Brand

Strategy Analysis

Richa Gupta
210014058
MKTG 6550 X
Brand Management

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External Analysis:

Corporation: Best Buy is North America's largest specialty retailer of consumer

electronics (video and audio equipment), home office equipment (computers, support

services, networking hardware), entertainment software (video games, computer

software, CDs and DVDs) and major and minor household appliancesi. They operate

website, store and services under variety of Brand names. In Canada they have Websites

and Stores under Best Buy and Future shop and services under Geek Squad.

Competition: Competition is not limited to specialty retailers like the Source and Future

Shop (owned by Best Buy). Most big furniture retailers like Brick, Leon’s and Ashley

Furniture store carry a decent assortment of consumer electronics and major and minor

home appliances. Department stores like the Bay and Sears carry a line of consumer

electronics, entertainment software and major and minor appliances for their customers.

Mass merchants like Wal-Mart, Costco, Superstore, Zellers are not far behind either they

carry products in almost all the categories that are less complex to sell, install and

operate. Stores like Staples and Office Depot carry assortment of home and office

equipment. Brand retailers like Sony and Apple have their own stores. Some other brands

like Dell sell through their own website. In mobile phone business Best buy faces

competition from Rogers, Bell, TELUS, Wind, Fido, Virgin and other new telecom

providers. Last but not the least Amazon and other smaller web stores carry most of the

assortment too. These were the big name competitors but the market is full of smaller

competitors.

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Customer: Customers can be segmented in the following categories based on their needs:

small business customers; "suburban soccer moms" who tended to purchase CDs, DVDs

and other items to entertain their families; affluent, non-price-conscious professionals;

price-sensitive family men; and young men interested in the latest technologyii. As is

obvious these segments would have very different shopping habits, some of these

segments would be very independent whereas others would need assistance while

shopping for electronics. Some would be innovators that stand in line to buy the first

copy and some would wait till technology is cheap enough to afford. It is certainly not an

easy task to satisfy all the customers.

Product: Best Buy carries depth and breadth in all the consumer electronic categories.

Due to its unique position it has also started to influence suppliers to deliver products and

technology that meets its consumer’s needs. Other than products Best Buy also has Geek

Squad that services computers and offers installation services.

Price: Best Buy is not the cheapest for all categories at all times however due to its brand

presence it does get special service/packages from the suppliers that allows it to offer

unique product packages to customers.

Place: Best Buy has a “click-and-mortar” presence. This gives customer a choice to

research online before coming to the store to check the product physically or buy online.

Best Buy stores in Canada are usually 32,500sq ft in size. It has 58 Best Buy Stores and

139 Future Shop stores.iii

Promotion: Best buy uses different medias to promote its brand name, from TV

advertising to Twitter. It mails out a weekly flyer and also gives a price match guarantee

that allows a customer to get the lowest price advertised by the competitor.

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Industry Trend:

Even though Best buy is the largest consumer electronics retailer alive in North America

after the closure of circuit city in 2009, electronics retailing can be a brutally tough

business, littered with failures that were unable to survive thin profit margins, ever-falling

prices, feast-and-famine product cycles and, more recently, major price pressure from

Internet retailersiv

Internal Analysis:

Best Buy’s Vision is to make life fun and easy for consumers. Their Strategy is to treat

customers as unique individuals, engaging and energizing their employees to serve them,

and meeting their needs with end-to-end solutions, while maximizing overall

profitability.vBest Buy’s strength is its focus on customer centricity and its employees

that are willing to answer anything electronics. vi

Best Buy has gone to the extent of creating test format stores for different segments to

study the needs of the consumer. It incorporates the learning from the test stores to all its

stores in order to service the customer better. It has also started to influence the suppliers

to develop innovative products that service its customer better.

Instead of competing on price Best Buy competes on service and value that it provides.

Its strategy is based on the belief that there will always be customers who need advise

when it comes to technology. Best Buy differentiates itself by focusing on enhancing the

service level through educated and friendly employees and customer centric store layout

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in the store along with offering a broader and deeper assortment backed by the price

match guarantee.

Discussion:

When I first saw Best Buy logo years ago I remember relating it to best buy - in terms of

money, probably the place to buy cheapest electronics. To my surprise it never was and

probably will never be the cheapest. Best Buys strategy to be customer centric and

innovative will help it maintain its identity of best buy- in terms of product and service.

Best Buy is by far the biggest electronics retailer in the world. It controls 3.2% viiof the

world market for computer and electronics. This industry is very fragmented and for one

retailer to have this much share is substantial.

Best Buys brand awareness supported by vast physical presence online and in-store

format makes it a leader in this category. In an effort to offer better customer service and

maintain its position in the market Best Buy is trying to go hyperlocal, asking on-the-

ground employees to spot fresh customer groupsviii.

One thing that differentiates Best Buy, at least in Canada is its sales staff. Since sales

staff is not on commission they don’t force or pressure you to buy something. They are

able to give unbiased opinion since their remuneration is not linked to that particular sale.

Best Buy’s strategy to compete on service instead of price and adaptability to changing

market conditions has helped it survive one of the worst years for retail. Hopefully this

strategy would allow it to maintain its position as a market leader and expand its

operations around the world.

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Best Buy’s Brand Identity

Brand Essence:

Provides best buys in consumer electronics

Core Identity:

Leader: Sole survivor and leader in consumer electronic retail.

Service quality: Knowledgeable staff provides good advice and makes it easy for

customers to choose.

Innovation: Influencing suppliers to Invest in innovative products and technology that

would help satisfy unmet needs of the end consumer.

Value for Money: Provides value through comparable price, service and assortment.

Extended Identity:

Comfortable shopping atmosphere

Value Proposition:

Functional Benefits: Offers a broad assortment of products at comparable price.

Emotional Benefit: Ease of shopping, builds confidence

Self-expressive Benefit: Getting the best buy

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Relationship:

We are here to answer your questions and help make technology easy to understand.

Appendix:

SWOT Analysisix

Strength Weaknesses

• Strong market presence provides • Concentrated supplier base

competitive advantage • Constrained credit availability
• Growth through inorganic route • Product recalls

Opportunities Threats

• Expanding presence • Economic slowdown in the US and

• Positive outlook for private label key international markets
products • Excessive dependence on
• Growing online sales Accenture for
• information technology and human
resource
• operations
• Quality issues with products
manufactured
• in China

References:

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i
Vault Company profile:
ii
Vault Company profile:
iii
Best Buy annual Report 2009
iv
http://topics.nytimes.com/top/news/business/companies/best_buy_company/index.html

v
Best Buy annual Report 2009
vi
http://barryjudge.com/business-week-article-on-best-buy-strategy
vii
Datamonitor-Global Computer and Electronics retail, march 2009
viii
AT BEST BUY, MARKETING GOES MICRO; Returning military? Polish speakers? No niche is too small for local
stores to identify and target,Jena McGregor. Business Week. New York: May 26, 2008.
ix
Datamonitor- Best Buy Inc.,August 2009