Best Buy Uncovers Angels in the Market Case Study

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Best Buy Uncovers Angels in the Market

Case Summary:

Best Buy specializes in a variety of products that focus on making life easier and more fun for consumers, by educating customers on the features and benefits of technology and entertainment products. While Best Buy has 1,200 retail stores across the United States it operates in a highly competitive market. To cope with this competitive market Best Buy specializes in collecting data from its stores to discover what its customers want and need. The company developed a database that incorporates information into a system that allows them to use marketing data to develop a complete picture of its customers. Best buy uses segmentation analysis to track consumer purchase histories to study its customers which helps the company identify new customer segments, better understand existing customers, to target promotions more precisely, and to identify key locations for expansion. The company has with the help of Larry Selden a consultant from Columbia University Graduate Schools of Business determine what they call “devil” customers and “angel” customers. The angels were customers who purchases high tickets items without waiting for markdowns or rebates, and the devils applied for rebates and then return the products back only to buy them back again at returned merchandise discounts. Best Buy has categorized its angel customers into five segments, the small business customer, the young entertainment enthusiast, the affluent professional, the busy suburban mom, and the tech savvy family man. Best Buy’s new “customer-centric” operating model focuses on these five key segments. They launched this model in 67 of its stores to analyze the market and narrow its focus on one or two of these groups. Company executives believe that this model offers customers a richer in-store experience with better shopping assistance and also provides more of the goods and services that customers want. The model also helps employees to identify and recognize unique sets of customers that can help them build offerings and experiences to meet their needs. To bring in more angel customers Best Buy has a series of processes that cater to enhancing the shopping experience of its angel customers and other processes to discourage its devil customers. The company has already implemented this model in 85 stores and plans to convert all of its U.S. stores within three years. Those stores that have already converted have reported favorable results. Best Buy believes that the customer centered platform is the way to go and expects to perform well.

Key Marketing Issues

Marketing Research: The systematic design, collection interpretation, and reporting of information to help marketers solve specific marketing problems or take advantage of marketing opportunities.

Conclusive Research: Research designed to verify insights through objective procedures and to help marketers in making decisions.

Descriptive Research: Research conducted to clarify the characteristics of certain phenomena to solve a particular problem. Best Buy used its research to discover what kind of consumers purchased the companies products.

Primary Data: Data observed and recorded or collected directly from respondents. Best buy used data collected directly from its consumers through segmentation analysis.

Secondary Data: Data compiled both inside and outside the organizations used to divide a market into segments. With the help of consultant Best Buy used gathered information via different sources to categorize “angel” customers into five segments.

Personal Case Analysis

Best Buy has taken the time to get to know its customers in a way that has allowed them to better understand the needs and wants of their customers. By doing so the company has successfully created a model that caters to the kind of customers they target and discourage “devil” customers from costing the company any loss. Best Buy used information...
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