CASE ANALYSIS BEST BUY INC – DUAL BRANDING IN CHINA
Q1. What is Best Buy’s competitive advantages in US? Best Buy’s competitive advantages in US includes: customer centricity, the SOP system and Geek Squad. Best Buy implements a concept called centricity. Best Buy identifies customers generating most revenue and segment these customers then realigning the stores to meet the needs of these customers. Its market researchers will analyze a lot of sales and demographic data to determine a particular location should tailor to which group of people in what kind of format. Centricity enhances a always consumer- friendly environment and helps in providing better end user experience. Best Buy established a standard operating platform (SOP), which included procedures for inventory management, transaction processing, customer relations, store administration, products sales and merchandising. SOP helps ensure consistence and enforce discipline across the network of stores. When Best Buy spotted the trend that digital devices and home networks were growing in complexity and technical services to homes and small businesses is necessary while many of its competitors did not provide service back-up for their CE sales. Best Buy acquired a Geek Squad, which is specializing in repairing and installing PCs and staffed the stores by newly techies. Best Buy can provide backup service for its customers which is an advantage over its competitors. All in all, Best Buy’s distinct competitive advantage is that it focuses on the need of customers and always tries its best to provide the most required service for the customers. Q2. Why is Best Buy’s dual branding is successful in Canada? Firstly, Canada’s market was fragmented with the leader Future Shop having 15% of market share. There was room for a second brand. Secondly, the Future Shop and Best Buy are both well established brand with high brand awareness and their positioning was totally different. Future Shop provides trusted, personalized customer service while Best Buy allows customers to shop on
their own or with the help of a no-pressure product specialist if desired. They provide different kind of service experience. Thirdly, the customer bases of Best Buy and Future Shop were different. Canadian customers viewed the two brands distinct, not interchangeable. Thus, they won’t eat each others’ earning. Q3. Analyze the failure of Best Buy store in China market. What is competitive advantage of Best Buy in China? Best Buy’s competitive advantage is in China is its brand image and standard SOP system. Best Buy was famous for its customer centricity and its ability to provide a superior service to customers. Best Buy already accumulates a lot of market experience and customer base in US and Canada and has established very good reputation. Chinese customers are looking forward to enjoying its superior service. And its standard operating platform (SOP) can be implemented in China’s store which would be in a market leading place. Do you think their marketing strategies deliver their competitive advantage effectively? I don’t think Best Buy’s marketing strategy deliver their competitive advantage effectively in China. Best Buy’s competitive advantage is its customer centricity. However, it failed to meet the requirement of Chinese customers. Chinese customers are price-sensitive and more attracted by functional features and discount instead of brand imagery. Salespersons are very important in China as they will influence the customers’ purchase decision greatly. However, Best Buy failed in tailoring its marketing strategy to Chinese market. And because of the high cost of distribution channel, product prices in Best Buy are not attractive for Chinese customers. Because of the reasons above, Best Buy lose its customers in China. Q4. What kind of benefits can Five Star provide to Chinese consumers? Do you think is this good enough to compete with other...