Best Buy Marketing Strategy
The business operations of block and mortar retailers for example circuit city are being crippled today because of tight competition from online retail stores. One of the reasons behind the success of online retail stores is that they have lower operational costs and they do not need a physical location. Savings on rent and associated expenses is therefore passed down to clients in form of low prices.
Even so, many online stores didn’t have the ability to showcase their products. As a result, many clients do not enter brick and mortal stores and find out more on the products they wish to purchase. Once clients confirmed their usability, they purchased the products online. Given such consideration, the incoming CEO employed the cons of the business model as a growth opportunity.
First of all, he transformed the store into a showroom for the company’s online store. Customers could not purchase products online and pick up the commodities in store. This needed consolidation of inventory and supply chain of physical and online stores thus, saving the company additional costs incurred because of excessive inventory capacity.
Additionally, the new CEO revamped supply chain to be one of the more efficient and it led to costs savings (Vascellaro, 2013). The CEO also overhauled the store for best buy to one up to date and more enhanced. The refurbished website as a result managed to challenge other online sites on its overall view, ease the experience of users and enhanced transactions.
The matching of its rivals online was also expanded to purchase from mobile phones. This strategy later on came to be known as Omnichannel. In general, it was a combination of online and mobile sales strategies. It also refers to the linkage of online, in store and mobile sales. Since the invention of the strategy, Best Buy has made more than 200 changes to its present online store (Bogenrief, 2013).
The firm also institutes in March 2013, a Low Price Guarantee. This strategy was aimed at matching the prices of all local retailers and designated online retailers. Therefore, the company was in a position to expand its competitive advantage over relevant competitors thus enabling the firm to gain market share.
Besides the aforementioned strategies to its supply chain, the company reduced more than 4000 positions and slashed its operational costs saving the company more than $ 390 million. Having overhauled its operative proficiencies and enhanced revenue capacity, the new CEO also settled for a strategy that would gain the ideal traction from company sales. Physical stores had more capacity in relevance to floor space. Therefore, the company borrowed JC penny store within a store concept.
Best buy also signed a contract with Samsung, which was to open ‘‘Samsung Experience Shops’’ within Best Buy stores (Mattera, 2013; Pride & Ferrel, 2013).
Best buy is following up on a pricing strategy combined with excellent customer service as well as product selection strategies. The nine weeks ending 5th of January 2014, results include an increase of 23.5 percent in United States online sales. Additionally, the sales increased by 0.1percent. Even so, the effect of low pricing strategy was felt on overall store sales that shrunk by about 0.9percent utilized for the market.
Company sales from domestic and international operations also shrunk by 1.4percent and 8 percent respectively, while operational costs reduced by $785 million. The company is also betting on the changes to increase the company’s market share in the industry (Business Wire, 2014; Kotler & Keller, 2012).
Bogenrief, M. (July 30, 2013). Best Buy Is Pulling Off An Incredible Turnaround. Business Insider. Online resource. Retrieved on 8th march 2014 from http://www.businessinsider.com/how-best-buy-is-turning-things-around-2013-7
Business Wire (2014). Bestbuy announces Holiday sales results. Business Wire. Online resource. Retrieved on 8th march 2014 from http://www.businesswire.com/news/home/20140116005416/en/Buy-Announces-Holiday-Revenue-Results#.UxprFj-SzvU
Kotler, P., & Keller, K. L. (2012). Marketing management. Harlow: Pearson Education.
Mattera, S. (April 6, 2013). Best Buy’s New Strategy Is a Game Changer. Motley Fool. Online resource. Retrieved on 8th march 2014 from http://beta.fool.com/sammattera/2013/04/06/best-buys-new-strategy-is-a-game-changer/29209/
Pride, W. M., & Ferrell, O. C. (2013). Foundations of marketing. Australia: South-Western, Cengage Learning.
Silverstein, B. (August 21, 2013). Best Buy Shows Signs of Life as Turnaround Strategy Kicks In. Brand revival. Online resource. Retrieved on 8th march 2014 from http://www.brandchannel.com/home/post/2013/08/21/Best-Buy-Turnaround-082113.aspx
Vascellaro, F. (November 6, 2013). New CEO Single-Handedly Turning Best Buy Around. CBS. Online resource. Retrieved on 8th march 2014 from http://minnesota.cbslocal.com/2013/11/06/new-ceo-single-handedly-turning-best-buy-around/