BestBuy case study

In pursuit of the new poser, the club was making efforts further struggling to shift their focus on selling operation from selling products to clients (product-out approach) to addressing customer needs (market-in approach) while still leverage its scale of measurement merit in merchandising. Before customer- eccentricity model, Busty was a merchandiser driven participation. Merchant organization primarily had responsibilities for debauching, pricing, assorting, and managing Inventory planning (Ala, 2006, p. 0). With knowledgeability of customer-eccentricity model, Segment organizations were newly formed around key target customer segments to better Inform the merchant teams and store organizations of the customer needs. Although the new model ask the triplet functions to work in harmony, the company was ending it vexed to align different perspectives and goals of the three organizations due to a lack of lucidity on which functions was the true owner of customer insight (Ala, 2006, p. 2-13). Eventu entirely(a)y, the company put itself getting stuck into focus on everything dodge being unable to effectively leverage Its scale power to optimize the merchandising strategy (Ala, 2006, p. 14). In line of battle to remain hawkish in the market, future challenge for the company afterward the introduction of customer- eccentricity model was to find a new g everywherenance structure (I. E. Introduction ofIntegrated employment teams) that enables alignment of the three organizations to focus resource and scale merit of the company on profitable key customer segments. In sustaining competitive advantage in increasingly competitive consumer electronics market, surmount subvert should continue to employ customer-foc practised solutions with multi- channel gross sales strategy by supplement living store and distribution network, and online sales platform. Nation-wide store network is ace of the biggest competitive advantages of scoop up bargain.T hese stores should be fully leveraged to provide customers tit conspicuous in-store experience (touch products and comp ar them to other models) as well as separate end-to-end solutions by knowledgeable sales force and technical lag (e. G. Geek Squad). In the course, Best subvert should further evolve its selling strategy to much rigorously narrow down in-store target customer segments to those who look for higher-end products with more fictitious character end-to-end operates. This would help put the company In differentiated market positioning among the competitors (e. . Wall-Mart) and help avoid wasteful scale/power game to make profits with efficient example of resources (Figure 1). While continuing to crystallize the in-store operations, Best deprave should also be committed to continue investments in online sales platform, not only to thrive access to customer segments which are not covered In the stores efficiently, but also to defend erosion of In-store sales for m other online retailers in such cases where customers come in to stores, experience 1 OFF ultimately set on-line from one of those competitors. Briggs, 2013) Owning strong network of physical stores, strategically located distribution centers and online sales platform, Best procure is well positioned to pursue unique new market offerings that average synergies amidst the two sales channels and distribution networks. For example, Best debauch has launched ship from stores service in 2013 that utilizes existing stores as mint-wareho use of goods and services to improve the speed of pitch shot. While Amazon continues to body-build warehouses nationwide to improve the time for deliveries, Best debauch has Just leveraged existing cornerstones of stores and distribution centers.As a result, Best Buys average total days to delivery became shorter than Amazon (Stella Service, 2014). In another example, Best Buy can address incorporating a system in TTS online sales platform, wit h which customers are able to nurse Geek Squad services for products they purchased on the website. As in these examples, Best Buy has many opportunities to differentiate itself from the competitors by offering customer- focused solutions leverage its multi-channel sales strategy (Figure 1).In conclusion, if Best Buy can make all these can happen with engaged and customer-focused employees, the level of customer-eccentricity is hard to be imitated by the competitors like Amazon and Wall-Mart. Levels toward strategic use of IT In 2005 Best Buys use of IT was Level 2 offensive. In customer-eccentricity model, one of the key competitive advantages was its brick-and mortar stores where major(ip)ity of sales were generated. To gear up for on-line sales, Best Buy remodeled its website in 2004 (Dickinson, 2004).In distribution system, Best Buy bar-coded and scanned all inventory for track purpose, and used a computerized inventory replenishment program for managing inventory level at eac h store (Best Buy Annual Report, 2005, p. 7). Furthermore, in order to obtain better and reliable information, Best Buy initiated a three-year put up to revamp its IT system (Cottrell, 2006). Geek Square, computer purport service in the stores and at home, expanded its service to network installation and server victuals (Ala, 2006, p. ). Best Buy applied IT system in order to qualify some selected stores to customer-eccentricity operating model. However, its adoption was easy to be imitated by competitors and its competitive advantage was short-term. It was neither strategic enough and nor embedded into the core business. The war-ridden Forces Framework Out of quin forces, Best Buy faced 4 threats industry competitors, substitutes, suppliers and buyers. Threat of probable entrants was not particularly observed.Industry competitors-High Best Buys place rivalry was Circuit City, followed by Wall-Mart and Target, big-box retailers, and DELL, direct on-line computer maker as sh own in Exhibit AAA (Ala, 2006, p. 18). Substitutes-High E- commerce electronic retailers such as Amazon and e-Bay were growing threats to Best Buy. Their use of IT was essential to perish their core business. They provided customers with more detailed product information on a timely manner and offered the discount price.Suppliers-Medium Both bargaining power of suppliers and its five major suppliers accounted for nearly 33% of the total merchandise offered. Best Buy did not usually have presbyopicsighted-term written contracts with these major suppliers (Best Buy Annual Report, 2005, p. 8). On the other hand, products were not differentiated in general, and change by reversal cost was not very high. Since Best Buy owned large number of stores, its bargaining power towards suppliers was influential. As a result, threat of suppliers was medium. Buyers-High negociate power of buyers increased in a great deal.Cost-sensitive buyers could research and buy products at cheaper price o n-line. Because consumer electronics became commoditized, prices were more or less the same unheeding of whether these were old on line or stores. In other words, duty period cost for buyers was very low. Potential entrants-Low Consumer electronics market was saturated where there were major competitors such as Circuit City, Wall-Mart, and Amazon. While buyers gained increasing bargaining power, potential entrants were hesitate to enter the market.Three strategy models in the context of IT Best Buys three strategies were consistent and strongly supported Best Buys transformation to customer-eccentricity model. Best Buys business strategy was to bring technology and consumers together in a retail environment that focuses on educating consumers on the features and benefits of technology and entertainment products, while maximizing overall profitability (Best Buy Annual Report, 2005, p. 2). This clear direction was set for the following reasons. First, there was a growing fear of los ing competitive advantage over rivalries.Secondly, customer put more emphasis on customer service and support instead of technical aspect of the product (Ala, 2006, p. 3). Lastly, the statistics showed that one trine of customers left the stores with dissatisfaction (Citric, 2006). Clearly one style fits all approach no longer irked. IS business strategy was to build loyalty with profitable segments customers and leverage the companys existing assets (Ala, 2006, p. 4). To provide shopping assistance to customers, Best Buy required better information system on pricing, technical aspect of products, and availability.In customer-eccentricity model, it was essential to understand unique needs of customers and behavior accurately and quickly. Best Buy also required information system to share their experience with customers among all stores. IT strategy was to give employees flexibility when interacting with customers. First, through reporting system, daily ice-skating rink talk helped communicate the sales goal every morning between department supervisors and sales staff (Ala, 2006, p. 9). Secondly, in order to maintain quality service at store, on- line training was introduced to share the best practice.Third, the use of price optimization software helped the stores to make rational pricing conclusion (Wolf, Bibb, p. 20). Finally, Best Buy re-engineered the global supply chain and technological infrastructure such as RIFF tag. According to Wolf (AAA, p. 20), Best Buy invested $200 million in infrastructure, including a new point-of-sale (POS) yester that provides more precise customer data and analytics. traditional IT in order to attribute with customers. Best Buy has been actively using social media such as Twitter, Backbone, Blob, and other platforms.However, it is not recommended that Best Buy develops further its social media strategy because no additional values have been created to generate profits. Best Buys massive engagement in social media has be en well acknowledged. Unlike other companies, Best Buy has multiple Twitter pages, including Best Buy Deals and Best Buy Mexico, to cover different segment of customers. Internally Best Buy has some(prenominal) forums to hare information among employees, which energies the organization as a whole (Bulls, 2010).However, the long tail, as one of the advantages of social media, may adversely affect its customer-eccentricity model. Because the long tail phenomenon contributes to accessing greater audience, Best Buy must understand and lose it broader customers needs. A few challenges have been observed in interacting with customers on Backbone. Technology-related issues are difficult to explain. Also Best Buy cannot control the feeds on Backbone. Customers mark complains about their bad experiences at stores. Monitoring and responding to such posts are costly.