Best Buy Unit VI Case Study

QUESTION

Instructions

Case studies are an important learning strategy in business classes as they provide an opportunity for you to critically analyze events that have taken place in real-life businesses. This develops your critical thinking and research skills as you research the competition and industry in which your business resides with an end goal of formulating a recommendation for the challenges faced by the company.
Select one of the three case studies listed below, which can be found in your textbook. Evaluate the case of your choice, and respond to each of the questions below using both theory and practical managerial thinking as well as supporting research.

Option 1: Southwest Airlines (pp. 490–491)

What is the product and service model of Southwest? Who is their primary target market, and how is Southwest positioned with this group?
What is the pricing strategy of Southwest compared to other airlines? Is this a differentiating factor?
What risks does Southwest Airlines face both from a macro and micro environmental standpoint?
Can Southwest continue to thrive as a low-cost airline when tough economic times hit or as other airlines mimic its business model?

Option 2: Amazon.com (pp. 522–523)

With respect to the distribution, why has Amazon succeeded when so many other companies have failed?
From a theoretical standpoint, what is Amazon’s pricing model? Why is this so effective? How does this compare to their competitors?
Discuss how Amazon has used differentiation and positioning as two key components in maintaining a competitive advantage.
Thinking about the changes in the macro and micro environment, what is next for Amazon? Where else can it grow?

Option 3: Best Buy (pp. 554–555)

What were the keys to Best Buy’s success? How have they differentiated themselves?
What pricing model has Best Buy adopted?
What are the challenges it faces in today’s retail environment from both a micro and macro environmental standpoint?
How else can Best Buy compete against retail competitors like Walmart and Costco as well as online competitors like Amazon.com?

In formatting your case analysis, do not use the question-and-answer format; instead, use an essay format with subheadings. Your APA-formatted case study should be a minimum of 500 words in length (not counting the title and reference pages). You are required to use a minimum of three peer-reviewed, academic sources that are no more than 5 years old (one may be your textbook). All sources used, including the textbook, must be referenced; paraphrased material must have accompanying in-text citations.

ANSWER

Unit VI Case Study: Best Buy

Introduction

In this paper, the various factors that contribute to the success of Best Buy are discussed. Insights into how the company has differentiated itself from competitors, the pricing model that the company uses, and the various challenges that the company faces today will also be provided. Recommendations will be provided on how the company and improve its competitiveness against competitors such as Costco, Amazon.com, and Walmart, as well as ensure that it safeguards its future.

Best Buy’s Success Factors

Quality customer service is one of Best Buy’s strengths (Sawhney, Goodman, & Keerthivasan, 2017). Customer service is a very important success factor for a business organization. Best Buy has a strong connection with its customers, a factor that enables the company to understand customer needs and effectively meet them. The company’s outlets are located in areas that are carefully selected based on population and other factors such as proximity to public parks. Also, the company ensures that attendants and employees become service providers and assistants to customers, rather than simply being cashiers or stockers. Besides having a quality, customer-oriented workforce and selecting appropriate locations, the company uses a market segmenting strategy to ensure that stores are stocked with what consumers within a given location need.

Best Buy has a very good understanding of its clientele, enabling the provision of goods that meet the specific needs of customers (Taylor & Hunter, 2015). Market segmentation helps the company understand the needs of its target market. Using knowledge of the market, the company can predict changes in the preferences and needs of customers in every region. A Best Buy outlet near a tourist attraction site can predict the inflow of tourists during spring or fall since tourists are the primary or target market. This way, the company can make changes in the types of goods provided and the quantities stocked, ensuring that customers are provided with what they need when they need it.

Differentiation from Competitors

Best Buy invests in training its employees to ensure that they know what they are selling, understand how different products work, and that they have the skills necessary to provide any needed assistance to customers. Understanding the importance of employee training is important in business and in safeguarding the future of a business. The purchase of the Geek Squad in 2004 was a strategic move that worked well for Best Buy (Kotler & Keller, 2016). The Geek Squad provides services in all Best Buy stores and provides around the clock telephone support (Sawhney et al., 2017). Customers of Best Buy are provided with the best store service and support, better than what any other retailer provides.

Pricing Model

Initially, Best Buy utilized competitive pricing to ensure competitiveness in the market and to capture the attention of the target market (Kotler & Keller, 2016). With the achievement of popularity and market share, the company introduced price matching as the primary pricing strategy. The company also uses an omnichannel approach in the determination of the appropriate pricing. A multichannel approach to pricing enables Best Buy to achieve competitiveness in pricing and business. It also promotes e-commerce business and its physical stores by offering quality goods at competitive prices.

Current Challenges and Dealing with Competition

Today, Best Buy faces a huge challenge competing with online retailers such as Amazon.com and Walmart. While the company has invested a lot in customer service and provision of quality goods, more focus should be placed on the provision of goods at lower prices, to effectively compete with companies such as Amazon.com (Wells & Ellsworth, 2016), and entering the online retail industry to compete with online retailers. The company should also consider entering strategic partnerships with some online retailers to pool resources and to acquire a larger market share.

References

Kotler, P., & Keller, K.L. (2016). Marketing management (15^thed.). Upper Saddle River, NJ: Pearson. Retrieved December 05, 2019, from https://online.vitalsource.com?#books/9781323591512

Sawhney, M., Goodman, P., & Keerthivasan, G. (2017). Best buy: Creating a winning customer experience in consumer electronics. Kellogg School of Management. https://www.kellogg.northwestern.edu/faculty/research/researchdetail?guid=67b4ddf7-bad7-11e7-9da1-0242ac140003

Taylor, S. A., & Hunter, G. L. (2015). Best Buy and Showrooming: A Critical Thinking Case Exercise Based upon Service Dominant Logic and Value Co-creation. Journal of Creating Value, 1(2), 256-274.

Wells, J. R., & Ellsworth, G. (2016). Reinventing Best Buy. https://www.hbs.edu/faculty/Pages/item.aspx?num=50946