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Marketing Plan

Eunice

Marketing Plan

I. EXECUTIVE SUMMARY

Best Buy Co., Inc. is a consumer electronics conglomerate that specifically deals in retail. The American multinational firm has its offices strategically set in Richfield, Minnesota, and was established in 1966 by Wheeler James and Schulze Richard as a specialty store known as Sound of Music. The company was rebranded to Best Buy in 1983 with an emphasis on electronics.

Best Buy is a business that primarily operates in the U.S. and other North American territories, including Mexico and Canada. Also, the company was previously present in the Chinese market until 2011, when the brand merged with Five Star. Besides, the company was also present in the European market until 2012. Some of Best Buy’s subsidiaries include Pacific Sales, Magnolia Audio Video, and Geek Squad. The firm also operates the Insignia and Best Buy Mobile brands in Northern America.

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Best Buy mainly deals with consumer electronics and several other related items, such as video cameras, mobile phones, music, video games, car stereos, digital cameras, and software. Apart from home applies (such as refrigerators, dryers, and washing machines), the company also provides accidental services, warranty services, and computer repair services. The company also offers an online community platform for its subscribers, in which customers can share product experiences, ask questions, and receive answers. In its U.S. market, Best Buy sells cell phones primarily from Sprint Corporation, AT& Mobility, and Verizon Wireless, while in Canada, it sells products from carriers such as Telus Mobility, Sprint Wireless, Bell Mobility (including their fighter brands), and items from smaller competing firms, such as SaskTel.

As of 29 Oct 2016, with nearly 1,026 Best Buy stores, 28 independent Pacific stores, and 331 independent Best Buy Mobile stores in the U.S., the company has been considered one of the dominant forces in consumer electronic products. Some of Best Buy’s direct competitors include Dell, Costco, Gamestop, Apple Retain Stores, Amazon, and Wal-Mart.

In recent years, Best Buy has been seeking opportunities to expand to new territories in America, China, and Europe. The company has also been slowly transitioning to online retail by providing shipping services to its clients overseas. Also, the company has been seeking to diversify its product portfolio by providing customers with a wide range of options.

The company’s strategy seeks to achieve its growth targets by improving service and delighting customers.

II. ENVIRONMENTAL ANALYSIS

Best Buy was formed in 1966 as an audio sound store in Minnesota. In recent years, the company has branched out to offer a wide variety of products and has opened shops in different locations in the U.S. and across the globe, including China and Europe.

A. The Marketing Environment

  1. Competitive Forces. The consumer electronics industry is a highly competitive market, with an estimated market value of nearly 1 trillion USD. In the past few years, the industry has seen a rise in the number of players, with traditional companies, such as Wal-Mart, also incorporating electronic and home appliance products in their business models. Other major competitors include Dell, Costco, Gamestop, Apple Retail Stores, and Amazon.
  2. Economic Forces: with the coronavirus projected to slow down economic growth and cause huge unemployment rates in the U.S. and other parts of the world until 2021 or 2022, it is more likely that Best Buy expects to record a slump in sales and customer numbers. The reduced purchasing power of customers means that only a few will be able to afford the luxury consumer products offered by Best Buy.
  3. Socio-cultural Forces: With the coronavirus pandemic spreading across major global cities, including the U.S., Canada, and Mexico, it is expected that health restrictions, such as social distancing and lockdowns, are likely to reduce the number of clients attending Best Buy shops. However, similar to other online retail shops, the company expects to rely on its online marketing platform to deliver products to clients.
  4. Technological Forces. Best Buy is a technology-based company that has recently opted to delve into exclusive electronic products. To compete with other tech giants like Amazon, Dell, and Apple, the firm has diversified its portfolio to include cell phones, camera and camcorders, computers and tablets, TV and home theaters, appliances, movies and music, video games, audio, car electronics, and GPS, wearable technology, sustainable living, health fitness and personal care, sustainable living, as well as drones, toys & collectibles. In addition to home & office furniture, the firm also supplies smart home applies, as well as security & Wifi.

B. Target Markets

  1. Current Targeting

Best Buy’s primary target market includes all consumer electronic products for consumers with a stable income. The company also has products for every type of consumer, from video games for children to health & fitness wearable products for older adults.

  1. Brand Image and Positioning

Best Buy has positioned itself as a company that is focused on enriching and empowering people’s lives using technology. The company acknowledges that it can achieve this by evolving and expanding its brand, especially what it sells. What distinguishes Best Buy from other brands is that it strives to understand the unique needs of its consumers and attempts to incorporate technology to address these needs. The company’s mission statements read, “We’re a growth company focused on better solving the unmet needs of our customers – and we rely on our employees to solve those puzzles.”

  1. Pricing Policy

Best Buy uses the ‘Price Match Guarantee’ policy to subsidize prices for its clients. This policy states that an item/product qualifies for a price decrease if it is absent on the firm’s exclusion list, it is immediately present on the rival’s website or store, and if it matches or is identical to the rival’s product.

  1. Services and Benefits

Best Buy offers a range of services to its consumers. Firstly, it offers different support services, including customer services, free home consultation, check repair status, ‘do-it-yourself appliance & TV setup, and online chat services to assist consumers in familiarizing and using its products. Also, the firm provides ‘Installation, Setup & Repair’ services, including Apple-authorized repair, smart home services, computer & tablet services, cell phone services, appliance services, car electronics professional installation, as well as TV & home theater services. Besides, Best Buy offers ‘Protection & Support Plans,’ which include 24/7 membership plans, AppleCare Protection & AppleCare+, Geek Squad Protection, and Total Tech Support Membership to encourage customers to subscribe and join the company. All these services play an important role in increasing the usability of Best Buy products.

C. Marketing Objectives and Performance

Best Buy’s current marketing aim is to expand its market share by entering new markets in the U.S., Canada, Mexico, and other parts of the world, including its former markets, China and Europe. As of 29 Oct 2016, with nearly 1,026 Best Buy stores, 28 independent Pacific stores, and 331 independent Best Buy Mobile stores in the U.S., Best Buy has been dubbed one of the most dominant market players in terms of physical stores. However, in recent years, the company has targeted entering the online retail market, improving its services by increasing the use of technology, diversifying the range of products, and, most importantly, opening new stores. The whole idea is to increase the company’s revenue sources and improve its liquidity to be able to compete favorably with giant tech firms like Apple, Amazon, Dell, and so on. In 2019, the company was reported to employ nearly 125,000 people with total assets worth about $12.90 billion. In the same financial year, the company is reported to have netted an income of $1.46 billion, with revenues amounting to $42.88 billion.

III.       LOCAL INITIATIVES

A. Manhattan

The Best Buy store in Union Square, Manhattan, in New York City, is arguably one of the busiest and best sellers for the company. The company offers a range of services and products to its customers, including Black Friday Sales. Before the coronavirus pandemic, the store was open for 24 hours between Monday and Friday, with limitations on weekends only. However, in a bid to contain the spread of the virus and to conform to the health restrictions, the store opens at 10:00 AM and closes at 8:00 PM every day. Union Square’s Best Buy shop offers a broad range of products to its consumers, including computers & tablets (including laptops, tablets, monitors, and desktops) from renowned brands like Dell, Apple, and so on.

The shop also provides video games (such as Xbox One, PlayStation 4, Nintendo Switch), TV & home theaters (including Smart TVs, Blue-ray & DVD players, 4K Ultra HD TVs), and Cell phones (such as iPhones, Samsung Galaxy, unlocked phones). It also sells audio products (such as portable speakers, wireless headphones, normal headphones, and speakers), appliances (such as microwaves, dishwashers, washers & dryers, refrigerators), smart home devices, security & Wifi equipment (including smart lighting, voice assistant, security cameras & surveillance, smart switches & outlets), as well as cameras & camcorders (such as point & shoot cameras, digital SLR cameras, camera lenses, mirrorless cameras). Furthermore, the Best Buy store at Union Square sells wearable technology (including fitness & GPS watches, smartwatches &accessories, ad activity trackers & pedometers), health, fitness & beauty products (such as hair cure items, shavers, trimmers & groomers), home, garage & office products (such as vacuum cleaners & floor care items, household essentials, furniture & décor products), and drones, toys & collectibles (such as games, puzzles & cards, STEM & educational toys, drones & accessories).

IV. SWOT ANALYSIS

A. Strengths

  1. Strong brand identity and awareness.
  2. Huge footprint in North America (including the U.S., Mexico, and Canada) with nearly 1,731 stores
  3. Enjoys a good relationship with global tech brands, especially electronic and appliance manufacturers like Dell and Apple. For example, in 2015, Best Buy was the only other retailer besides Apple Store to sell Apple’s smartwatch.
  4. Successful integration into the e-commerce business. The company generated revenues of approximately $3.54 billion in its online business platform.
  5. Large revenue flows.
  6. The company is diverse and sells a broad range of products.

B. Weaknesses

  1. Fixed operating hours. Due to the coronavirus pandemic, Best Buy has restricted operational hours between 10:00 AM and 8:00 PM.
  2. Heavy dependence on physical shops rather than the booming online retail market.
  3. Overreliance on supplier credit, meaning that most of the items are not acquired by the shop but shipped by the manufacturer. However, after a certain period elapses, Best Buy might be forced to pay for these products.

C. Opportunities

  1. The consumer electronics market is growing day by day, including products such as video games and smartphones.
  2. New products released by brands such as Google, Samsung, and Apple often create free publicity and media attention for similar items on sale at Best Buy.
  3. The popularity of e-commerce is growing, meaning that Best Buy can tap into this new market platform to increase its sales.
  4. The liquidation of traditional competitors like Circuit City and Radio Shack presents an opportunity for Best Buy to thrive in the consumer electronics retail business.
  5. The increasing population of streaming video, video games, and other online electronic media platforms presents a perfect opportunity for Best Buy to increase its revenues.

D. Threats

  1. The rise of digital electronic media platforms (such as video games and movies), which are convenient and cheaper, is likely to reduce foot traffic to Best Buy’s physical shops.
  2. The rise of Netflix, Google Play, Apple iTunes, and other online media delivery channels are replacing physical stores.
  3. Discounting by huge firms like Walmart and Amazon is also likely to reduce customer traffic to Best Buy shops, as well as their revenues.

E. Matching Strengths to Opportunities/Converting Weaknesses and Threats.

  1. Best Buy has recently been expanding its online market platform as a means of shifting from overreliance on the seemingly outdated physical brick-and-mortar stores. Best Buy now has a fully operational online platform where clients can place their orders, and the company makes deliveries.

V. MARKETING STRATEGIES

A. Potential Strategic Options

  1. Increase online retail services but still maintain physical shops: Best Buy can shift from its overdependence on brick-and-mortar physical stores to online retail. The company can hire technology experts and intensify its online presence. Similar to Amazon, the firm can also subcontract national carriers, such as FedEx or Uber, to deliver its products to customers.
  2. Change its pricing model: Besides just transitioning into online retail, the company can also attempt to outsmart competitors by lowering its price products across the board. Today, large retail stores like Walmart and Amazon are relying on discounts to incentivize consumers, and this is a huge challenge to retailers like Best Buy.
  3. Do Away with Physical Stores: the firm can also opt to do away with physical stores and develop into a full online retail market, such as eBay, Alibaba, or Amazon. Since most of the products are acquired through credit from manufacturers, such as Apple, Best Buy can either opt to build or hire warehouses (which should be used to store the products) and then ship directly to customers upon request. This can cut operational costs significantly.

B. The Best Strategy

The best strategy, which arguably fits the company’s model and tradition, is to expand into online retail but maintain the physical stores, such as the one at Union Square. Maintaining physical stores is an advantage because it allows consumers to contact and connect with the firm’s products and staff members directly. This first-hand experience is critical to growing customer relations and loyalty. However, the firm must consider expanding its online marketing platform to reach out to a wide range of customers, including millennials who prefer online shopping.

C. Target Market(s)

Target Market 1:  Best Buy targets middle-income and high-income earners who can afford exclusive consumer electronic products, such as iPhones, smart televisions, and other high-end products.

Target Market 2:   Best Buy also targets millennials with a preference for online shopping.

D. Marketing Mix

  1. Product Mix. Best Buy is a company that offers a range of diverse consumer electronics and appliances. It deals with cell phones, cameras and camcorders, computers and tablets, TV and home theaters, appliances, movies and music, video games, audio, car electronics, GPS, wearable technology, sustainable living, health fitness and personal care, sustainable living, as well as drones, toys & collectibles. In addition to home & office furniture, the firm also supplies smart home applies, as well as security & WIFI equipment.
  2. Price. Best Buy’s prices vary depending on the store location. Besides, it uses the ‘Price Match Guarantee’ policy to subsidize prices for its clients. Under this policy, an item/product qualifies for a price decrease if it is absent on the firm’s exclusion list, it is immediately present on the rival’s website or store, and if it matches or is identical to the rival’s product.
  3. Distribution. Best Buy is a company that has nearly 1,800 stores spread across the U.S., Mexico, and Canada. One such store is located in Union Square, Manhattan. Previously, Best Buy had stores in China and major European stores, which were merged and closed, respectively. The company is presently busy expanding its stores in the U.S. and increasing its online retail market.
  4. Promotion. Taking advantage of the internet and social media boom, Best Buy has, in recent years, invested heavily in social media marketing, as well as blogs and other social networking tools, to create brand awareness and keep customers updated with the latest news, including product arrivals and price changes. Besides Facebook and Twitter, the firm uses Barry Judge Blog and other Best Buy Forums to share and interact with buyers, as well as educate them on how to use tech-related products. The firm also has created a ‘Best Buy Connect’ platform that allows low-ranked employees to have a say. The tool gathers blogs, feeds, and tweets from all other online marketing platforms.

VI. APPENDIX

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BEST BUY STORE AT UNION SQUARE IN MANHATTAN

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