BEST BUY
Content
BEST BUY
Presented by: Abhishek Sood Pallavi Ghai Saranya Shukla Suraj Anand Tanveer hassan
Company Overview
“Grab and Go”– New Logo1989 Sound of Music 1967- St. Paul, MN Best Buy Becomes company name - 1983 Global Expansion - Asia, Europe, Mexico, Turkey 2003-present Fortune 500 Top Co Customer #56 - $45 Billion Centricity 2009 Implemented - 2003
“Best Buy” Sale @ SOM tornado hit 9 Stores -1981
2nd Largest Consumer Electronics Retailer - 1993 Public Offering - $33.6M 12 Stores - 1986
Best Buy Mobile stores & Geek Squad to Europe 2003 CEO Dunn replaces retiring Anderson 2009 Fortune names Best Buy Top 10 performing stock, 2000
Vision & Strategy
• To make life fun easy for consumers • Believes that’s its stores offer consumers meaningful advantages in atmosphere, product value, product selection, and customer service • Best has four strategic initiatives: Customer Centricity Efficient enterprise Win with service Win in entertainment
Company Overview (Consumer Driven)
• “We believe that focusing on customers' needs generates growth opportunities” • “At Best Buy, we aspire to be a responsible, values-driven global corporation – we believe that's what you expect” • “And we believe in customer centricity - the idea is that a customer isn't just looking for a product, but a solution or experience that improves her life” • Ranked highest in customer satisfaction among national and multiregional from 2009 report by J.D. Power and Association.
Product “Solution Based”
(Customer Centricity)
Implementation
Strengths •Introduced in 12 labs to 32 pilots to 110 stores nationwide. •Scientific method used of creating hypothesis ,testing it and analyzing the results. •The result of this approach is innovation. •It aimed to improve the customer satisfaction and loyalty leading to increase in profits.
Weakness • Creation of SOP resulted in confusion in practices and procedures (atleast during transition period) • The new processes were stated to takr five times more time. • Tests done only on selected geographic region i.e. stores in California.
Difference between customer centric and simple service
• Customer centric strategy concentrates on only a few sub segments instead of the old concept of ‘everything to everyone’ or ‘one style fits all’. • It encourages the employees to think and behave as owners and engage with customers to meet their unique needs. • The idea behind customer centricity is to become customer’s ‘smart friend’ and provide a complete solution.
Competitive Analysis
•Out of Business •CEO blamed demise on “poor macroeconomic conditions” •Unknowledgeable sales staff •“Late to the game with Firedog customer service business, didn’t resonate with customers as well as Best Buy’s Geek Squad” •Unfortunate position Mid-level player
Competitive Analysis
•Top retailer in the country •Lost leaders in drive traffic •Convenience & wide range of products in one store •17% margins in CE (Mid player) •Quality and service •General merchandise •Lack of flexibility
Dell
•Customized products •Reliability, Service and Support •Customers can’t go to retailers for custom-built products •Huge global brand •Customer Relationship Management and IT support business strategy •Addition of new categories to business may hurt brand •May need to reconsider free shipping to customers
Sources: Spolsky, Joel (2009), Kavilanz, Parifa (2009), Cuizon, Gwendolyn (2009) and www.marketingteacher.com
SWOT Analysis
Strengths
Heavily driven customer satisfaction/customer service based Innovation Valued, trained, rewarded workforce Volume purchases No of stores
Weaknesses
Customer Centricity model fragmented by individual store locations •Devil Customers •”Turf battles” /Lack of synchronization between business units •The selling, general and administrative costs were higher in the converted stores, resulting is lower operating income
•
Opportunities
Centricity; max profit in high-end products and solutions •Solution based to increase sales of products and services.
•
Threats
Competitors like Target, Wal mart, &Circuit City.
•
Keeping up with rapidly changing products and customer interest
•
Customer-centric Segmentation
• Barry: Affluent, time-starved males looking for the highest quality product and services. • BBFB: Small business owners with one to nine employees looking for technical solutions to meet their business needs. • Ray: Family men who spend a disproportionate amount of their income on technology and entertainment solutions. • Buzz: Males in their 20s looking for the latest entertainment for themselves and their buddies. • Jill: Stay at home moms with two or more children. She’s looking to enrich her children’s educational and social development.
Problem Definition
Implementation of Customer-Centricity caused internal organizational conflicts and it increased operating expenses, which led to a loss of the overall brand image and fragmentation. The organization had lost focus during the implementation process resulting in the overall goal of providing an outstanding customer experience.
Alternatives Evaluation – cont’d
C.
Abandonment of Customer Centricity to SOP “common” Best Buy (“Big Box”) customer experience Shift channels of distribution from primarily offline retail “brick & mortar” to more online channels for cost efficiencies
D.
Alternatives Evaluation
A. Continue to convert all stores to Customer Centricity; allow time for concept to mature
B.
Create a hybrid; continue with Customer Centricity; group personas/segments to market level instead of individual store (e.g. DMAs/cluster stores into local market)
Best Alternative Rationale
• Allow time for the concept to mature; continue to convert all stores
– Heritage of valuing customer relationship – Prepares for future of industry and competition – Big Box “price” driven vs. Big Box “solution” – Connects to company values & retains talent/staff
– Localization and segment relate to closer community, customer, and retail experience
– Creates opportunity for new products and services for high profit margin sales
Implementation Plan
• Communicate internally and externally that customer centricity model is new mode of operation
• Create task force that reviews strengths/weaknesses of model; make changes based on recommendations • Slow down pace of store conversions • Devise actions for implementation plan • Calculate how new model is affecting sales per sq foot • Make adjusts to model as needed
Implementation Plan Time Schedule
• One year for implementation based on when store was converted • Modify the conversion process (slower pace) than the ones in initial conversion process • Benchmark in 3-6 month increments based on how stores were initially converted
Presented by: Abhishek Sood Pallavi Ghai Saranya Shukla Suraj Anand Tanveer hassan
Company Overview
“Grab and Go”– New Logo1989 Sound of Music 1967- St. Paul, MN Best Buy Becomes company name - 1983 Global Expansion - Asia, Europe, Mexico, Turkey 2003-present Fortune 500 Top Co Customer #56 - $45 Billion Centricity 2009 Implemented - 2003
“Best Buy” Sale @ SOM tornado hit 9 Stores -1981
2nd Largest Consumer Electronics Retailer - 1993 Public Offering - $33.6M 12 Stores - 1986
Best Buy Mobile stores & Geek Squad to Europe 2003 CEO Dunn replaces retiring Anderson 2009 Fortune names Best Buy Top 10 performing stock, 2000
Vision & Strategy
• To make life fun easy for consumers • Believes that’s its stores offer consumers meaningful advantages in atmosphere, product value, product selection, and customer service • Best has four strategic initiatives: Customer Centricity Efficient enterprise Win with service Win in entertainment
Company Overview (Consumer Driven)
• “We believe that focusing on customers' needs generates growth opportunities” • “At Best Buy, we aspire to be a responsible, values-driven global corporation – we believe that's what you expect” • “And we believe in customer centricity - the idea is that a customer isn't just looking for a product, but a solution or experience that improves her life” • Ranked highest in customer satisfaction among national and multiregional from 2009 report by J.D. Power and Association.
Product “Solution Based”
(Customer Centricity)
Implementation
Strengths •Introduced in 12 labs to 32 pilots to 110 stores nationwide. •Scientific method used of creating hypothesis ,testing it and analyzing the results. •The result of this approach is innovation. •It aimed to improve the customer satisfaction and loyalty leading to increase in profits.
Weakness • Creation of SOP resulted in confusion in practices and procedures (atleast during transition period) • The new processes were stated to takr five times more time. • Tests done only on selected geographic region i.e. stores in California.
Difference between customer centric and simple service
• Customer centric strategy concentrates on only a few sub segments instead of the old concept of ‘everything to everyone’ or ‘one style fits all’. • It encourages the employees to think and behave as owners and engage with customers to meet their unique needs. • The idea behind customer centricity is to become customer’s ‘smart friend’ and provide a complete solution.
Competitive Analysis
•Out of Business •CEO blamed demise on “poor macroeconomic conditions” •Unknowledgeable sales staff •“Late to the game with Firedog customer service business, didn’t resonate with customers as well as Best Buy’s Geek Squad” •Unfortunate position Mid-level player
Competitive Analysis
•Top retailer in the country •Lost leaders in drive traffic •Convenience & wide range of products in one store •17% margins in CE (Mid player) •Quality and service •General merchandise •Lack of flexibility
Dell
•Customized products •Reliability, Service and Support •Customers can’t go to retailers for custom-built products •Huge global brand •Customer Relationship Management and IT support business strategy •Addition of new categories to business may hurt brand •May need to reconsider free shipping to customers
Sources: Spolsky, Joel (2009), Kavilanz, Parifa (2009), Cuizon, Gwendolyn (2009) and www.marketingteacher.com
SWOT Analysis
Strengths
Heavily driven customer satisfaction/customer service based Innovation Valued, trained, rewarded workforce Volume purchases No of stores
Weaknesses
Customer Centricity model fragmented by individual store locations •Devil Customers •”Turf battles” /Lack of synchronization between business units •The selling, general and administrative costs were higher in the converted stores, resulting is lower operating income
•
Opportunities
Centricity; max profit in high-end products and solutions •Solution based to increase sales of products and services.
•
Threats
Competitors like Target, Wal mart, &Circuit City.
•
Keeping up with rapidly changing products and customer interest
•
Customer-centric Segmentation
• Barry: Affluent, time-starved males looking for the highest quality product and services. • BBFB: Small business owners with one to nine employees looking for technical solutions to meet their business needs. • Ray: Family men who spend a disproportionate amount of their income on technology and entertainment solutions. • Buzz: Males in their 20s looking for the latest entertainment for themselves and their buddies. • Jill: Stay at home moms with two or more children. She’s looking to enrich her children’s educational and social development.
Problem Definition
Implementation of Customer-Centricity caused internal organizational conflicts and it increased operating expenses, which led to a loss of the overall brand image and fragmentation. The organization had lost focus during the implementation process resulting in the overall goal of providing an outstanding customer experience.
Alternatives Evaluation – cont’d
C.
Abandonment of Customer Centricity to SOP “common” Best Buy (“Big Box”) customer experience Shift channels of distribution from primarily offline retail “brick & mortar” to more online channels for cost efficiencies
D.
Alternatives Evaluation
A. Continue to convert all stores to Customer Centricity; allow time for concept to mature
B.
Create a hybrid; continue with Customer Centricity; group personas/segments to market level instead of individual store (e.g. DMAs/cluster stores into local market)
Best Alternative Rationale
• Allow time for the concept to mature; continue to convert all stores
– Heritage of valuing customer relationship – Prepares for future of industry and competition – Big Box “price” driven vs. Big Box “solution” – Connects to company values & retains talent/staff
– Localization and segment relate to closer community, customer, and retail experience
– Creates opportunity for new products and services for high profit margin sales
Implementation Plan
• Communicate internally and externally that customer centricity model is new mode of operation
• Create task force that reviews strengths/weaknesses of model; make changes based on recommendations • Slow down pace of store conversions • Devise actions for implementation plan • Calculate how new model is affecting sales per sq foot • Make adjusts to model as needed
Implementation Plan Time Schedule
• One year for implementation based on when store was converted • Modify the conversion process (slower pace) than the ones in initial conversion process • Benchmark in 3-6 month increments based on how stores were initially converted
