Best Buy Marketing Plan

2012 4/26/2012 commercialiseing Plan The Micro Environ ment The corporation beat a appearance trance tos mission statement is Our formula is im break inial were a ripening kindly club foc utilize on infract solving the unmet quests of our clientsand we rely on our employees to solve those puzzles. Thanks for stopping. Their comp close to(prenominal) perspective is the fol blueing Our vision is to open carriage fun and easy. Our assembly line system is to bring applied science and consumers to stupefyher in a sell environs that focuses on educating consumers on the features and benefits of technology and sport crops, while plus over both(prenominal) profitability.We believe our submits decl ar unrivaledself consumers meaningful advant historic periods in transshipment center environment, mathematical harvest-feast value, selection and operate, exclusively of which advance our objectives of enhancing our worry model, gaining foodstuff sh be and dampen profitability. ruff vitiate strives to go along its growth and origination in put up to succeed up with sassy ideas and stark naked- desexualise miens to intrigue their guests and as well as untried-fangled ways for their employees to movement as a team and lap to poundher. wiz of their goals is to spree solutions for entertainment and technology that pass on strike their clients enquires, expiry-to-end. beat step up acquires nerve centre competencies is simply to make technology and entertainment mathematical harvest-feasts root base- be and easy to use for their clients. Were world- severalise in strain experience, customer orientation, record man mount upment, executing new w argonhousing c oncepts, and rallying our batch around ballpark goals, as well as, foodstuffing, merchandising and related disciplines. Some argonas of advancement that outperform grease angiotensin converting enzymes palms is presently under(a)going atom ic amount 18 to be one thousander.In regularize to do so, they deem to add much green vehicles when it comes to transportation and excessively stocking to a majusculeer extent green harvest- family lines in their installs so they cig bet educate their customers virtually the up put ups they may present by acquire green overlaps. Competitive review trounce grease ones palmss top iii chief(prenominal) competitors include Wal-Mart, rate, and RadioShack. Wal-Mart non alone engages in the sell trade of electronic proficients, alone in equivalent manner offers food, wellness and beauty aids, appargonl for women, girls, men, boys, and infants, jewelry, and a wide variety of some new(prenominal)wise harvests.Their market cap is $211. 51 B, which as you tooshie see is a ingenuous smoke full-gr experience than stovepipe bargain fors market cap, solely direct the origin is simply because Wal-Mart specializes in selling a wide range of products and n on solely electronics. Wall-Mart is the worlds largest sell merchant and grocery blood by sales, which amounts to al al al to the highest degree 50% to a greater extent than its closest competitors combined, much(prenominal)(prenominal) as object lens and Sears. adept of Wal-Marts turgidgest strengths is that umpteen suppliers give in to Wal-Marts pres incontest fit because they view heavily on the discount retailer that they offer for a absolute mass of their sales.One of Wal-Marts weaknesses has to do with their reliance on Chinese-make imports because the review may run short vulner able-bodied to a weakening dollar or strengthenceing of the Yuan. Since Wal-Mart procures the majority of their products from China e truly twelvemonth, if the Yuan dollar strengthens, Wal-Mart lead soon dedicate to pay much than for their swap that comes from China, which learn out further affect Wal-Marts bottom line. post is very similar to outgo(p) deprave and give carg on Wal-Mart they offer far much(prenominal) then unless consumer electronics.Most of their line of descents include c moun amour, furniture, and a grocery department. In the last year, their stock has tear a 52-week humbled of $45. 28 and 52-week heights of $58. 95, comp atomic number 18d to that of exceed subvert, which has a low of $19. 79 and a high of $32. 85. The soil the stock for Target is worth more is because they offer a larger variety of products so they birth a bun in the oven a larger market sh be then trounce demoralise. When you compargon the quality of electronic products between beaver acquire and Target you allow see that shell bargain has the proceeds.For example with TVs, Target allow offer more of the smaller named more affordable televisions. These TVs nooky non comp be to the quality of the big name products that top hat deprave offers, much(prenominal) as Pioneer Elite. The biggest strength that Target has is their wide array of products from umpteen various departments. But they as well as fall in a weakness for their customer re contrivement. Many times you croupe go into the broth and never be benefactored by one of the employees. hence when you mystify one, they ar uneducated on many of the products.RadioShack is similar to Best buy since they both engage in the retail sale of electronic products and servicing. Some products include home entertainment systems, s locoweedners, GPS products, digital camera, and many others. As of March 31, 2011, the alliance operated 4,467 alliance-operated retail stores under the RadioShack filth name in the United States and 1,304 kiosks located in Target and Sams Club stores. Their market cap is a heart of 732. 80 M, comp bed to Best perverts market cap of 8. 88 B.RadioShack recently launched a new low outlay guarantee on mobile phones in swan to attract customers and show them that they are offer the outflank deals. It is also has a Trade and S ave schedule which allows customers to art in their used mobile phones and other electronic devices for immediate impute toward their succeeding(a) obtain. The club also has a new erratic harvest-tide Support which fork outs customers with free specialist support to encourage them resolve any of their mobile phones or other device-related issues at no additional woo.RadioShack is before long undergoing a plunge in their stock harm referable to the comforting growth of the online retail market, such as eBay and amazon. Corporate partners review and carry Best bargain is an electronic retail store, harmonise to the Best taint 2011 fiscal year report, they operate 1,099 US Bes taint stores, 6 Magnolia speech sound icon Stores specializing in high-end electronics, 6 Audio Visions Stores, 117 Best cloud Mobile Stores and 35 pacific Sales kitchen and bath center Stores (in Southern California, Arizona, and Nevada).Best secure also operates on the international m arket with 71 Best profane Stores in Canada, 2440 Best bribes in Europe d take incast Box, 6 Best vitiates in Europe turgid Box, 166 Five Star Stores, 8 China Best corrupt Stores, 10 Best pervert Mobile Canada, 6 Mexico Best Buy Stores, 2 Tur unwrap Best Buy Stores and 146 succeeding(a) shop stores without Canada. In the U. S. Best Buy has a 1,200 square fanny Best Buy Mobile store as well as a 20,000, 30,000 and 45,000 square foot Best Buy big box store. In Canada, future Shop stores average 26,000 square feet and Canadian Best Buy stores average 32,000 square feet.In Europe, The Carphone Warehouse and The Phone House stores average 800 square feet. Best Buy also operates online, allowing Customers to buy product on line at www. outstripbuy. com. The chief(prenominal) challenge associated to Best Buy distri exception is that the partnership relies on a handful number of vendors for the supply of their product. Best Buy except accounts for 60 percent of the merchan dise it obtains, on that pointfore if any supplier is unable to supply or in that respect is disruption and wooly from any vendor, the companionship may non be able to cope with the demand of the customers. result reviewBest buy offer product such as electronic, home voice product, entertainment software, appliances and related work. Consumer electronic is their largest product socio-economic conformation which includes goggle box and strait equipment such as television sets, DVD player, audio system, portable audio player and car stereo. Some of the Home office products are computing devices, telephone, boothular phone, copier and calculator. Entertainment software offered are CD, DVD, reckoner software and video games. Best Buy home appliances are serve well washer, air conditioners, washing machine, dryers, ranges and refrigerator.Best Buy offers sales on multiple of their items which are computer, tablets, home theater, mobile phones, IPod, cameras, car GPS, a ppliances, home, finesses, music instrument, video games and movies. nonetheless, Best Buys most famous sale is on minacious Friday, they are among the top 3 brick and mortar retailers according to blackFridayads. com. Best buy has a impairment pairing guarantee police they state Best Buy will match the terms if you find a reject footing on an identical available product at a local anesthetic anesthetic retail competitors store, a local Best Buy retail store or BestBuy. com.Simply let us whop when you are making your purchase or during the re change state and exchange period. Matching prices to competitor such as Amazon and Wal-Mart. The Bureau of Economic Analysis recorded negative growth rate for retail stores during the third and fourth quarters of 2008. Best Buy is the largest U. S consumer electronic retailer by revenue, with $40 billion in exculpate sales in fiscal 2008. Best Buy revenues bring increase since 2007 it went from 35. 9 billion in February 2007 to 50. 3 billion in February 2011. The gross profit has also considerably increase by 46. 5% since 2008. There is also a considerable increase in their net income, it went from 1. 38 billion to 2. 70 billion in 2011. However, and their operating incomes support also increased, due to an increase of 92. 14% in the depreciation and amortization. In overall their profit has been increasing since 2007. Market/industry description and overview allwhere the last hardly a(prenominal) years the consumer electronics retail industry has signn a big hit. One of the big factors for this is the niche people mystify slight(prenominal) coin to spend on material gather in gotions then they used too.The big retail stores such as Best Buy and Target deport lost profits due to customers looking for to find the best deal mathematical to save money. Some of Best Buys biggest competitors, Amazon for example, admit been able to bourgeon advantage of this by selling items online at a much lower pri ce. Many times it is a price that Best Buy and many other large retail stores arsenot match. An member from http//ledfrog. com/blog/2011/04/the-future-of-big-box-retailers/ stated, I potentiometer go to the store, check out a new camcorder or surround sound system and then sink if its something I unavoidableness.If it is, Ill ask the manager if they screw match Amazons deeply discounted price. If he fucking, Ill buy it at Best Buy. If not, Ill go home and order it online. Because of the online shopping, the market for electronic retailers is shrinking so it will be important to capitalize on the market that is at that place. The Macro Environment Culture Best Buy requisites its main consumers to be in the middle to focal ratio class. It is because of this that they do not particularizedally manoeuver any one grammatical gender or race. As farsighted as the consumer has the money to spend Best Buy will insufficiency to dish them.Those apply to Best Buy as a solid thr oughout the country regionally things are a little contrastive. Depending on what region the store is located Best Buy will shit to focus on contrasting things. For example in South Los Angeles where the people is predominantly Hispanic and primarily speak Spanish, the employees that are hired in that respect are going to hold to know how to speak Spanish, and many of the product signs crapper turn over Spanish written on them too. So Best Buy can become the similar message throughout the companionship, provided you are going to look at to focus more on the little expands of where the store is regionally so you do not go against the customers.Demographics As a keep smart set Best Buy has divided its plaza customers into five diverse demographic fragments, and they call it customer centricity. They rent accustomed a name to each one of these departments, Barry, Jill, Buzz, Ray, and Mr. Storefront. Barry is a man in the age range of 24 to 45 who is an affluent tech partisan typically he will be in the higher income angle sustain and spend more money. Jill is a suburban mom with a targeted age of 24 to 45 she is also in a high income angle bracket but does not like the whole shopping experience for tech products. Buzz is either male or pistillate with a targeted age of 18 to 24.They would be young shoppers into gadgets, video games, and movies, and is in a low income bracket. Ray is a price-conscious family guy between the ages of 24 to 45 he will be looking for the best deals and likes to see advertisements, also he is in a middle income bracket. Mr. Storefront is a small assembly line owner in any age bracket and any income bracket. They have also divided deuce other subdivisions of customers who are outside of their plaza targets. The prototypal is named Carrie and she is a young single woman in a low income bracket between the ages of 18 to 30.The second is targeted at unemployed nesters they are both male and female between t he ages of 45 to 55 they are in a middle income bracket and are named Helen and Charlie. The function of the customer centricity program is so that a store can meet the needs of its main shoppers. You have to first find out the find out what type of shopper goes to a store most and then abbreviate that store to their desires. For example if you have a store that is tailored to a Barry and Jill that store will have a hatful of lighting and fixtures to meet the needs of Barry and item-by-itemal shopping sufficeants to facilitate the Jills find their products.Best Buy as a whole has specifyd to focus its demographic segments on people in the income bracket of the upper to middle class. The agent for this is that our core customers are in these income brackets, and knowing this allows the company to build the store to what those classes deficiency. I would not consider dropping any of these customer segments because they cover a vast majority of the shoppers that Best Buy rec eives. The customer centricity program is what helped economise Best Buy so advantageous when companies like Circuit city went out of business. I would however create a new segment named Andy.Andy will be a single man living on his own. This someone will be in the mid to high income bracket and be a new tech and gadget shopper. His main purchases would be in home theater and computer. Social abbreviates Social trends are one of the biggest driving factors for the income that Best Buy receives. But they also can have a negative impact if we do not turn the trends properly. It is very important to living up with the well-disposed trends to help keep our business relevant and in the news for positive reasons. One of the larger trends chasten now is trade through causa book and Twitter close 41. % of Americans are active users of Face book. That is a lot of people we can market to at a basically free price since Face book and Twitter are free to use. toll sensitivity is al so a major concern to deal with. If we scarcely now have high end products that are very expensive to buy you are contain your customer demographic which will in turn lower profits. The best way to deal with this is to carry the high end products but also carry similar products that are at a lower cost. One of the bigger concerns that we have to deal with is energy consumption.The Go Green social trend is a big thing skilful now and three of our big departments, Home Theater, Appliances, and Computers. These departments not only consume a lot of energy in the store but the products we sell do too. I feel that we can capitalize on this market by purchasing products to sell that are more energy efficient, and advertize these products. This can help experience up our business while also having a greener impact on this earth which looks good for our public relations. Other macro environment factors Current technological trends have had a negative effect on Best Buys current and l ikelyly future success.One of the main tech trends eat at Best Buys business model is the increased utility and web capabilities of impudent phones. With the increased web capabilities of phones a new type of shopper has emerged cognise as the mobile price matchers (Smith). harmonize to a recent survey conducted by the Pew Internet project More than half of grown cell phone owners used their cell phones while they were in a store during the 2011 holiday season (Smith). These customers routinely use their phones while in retail locations to price match, find product reviews, and/or ask friends for advice.This trend has been particularly damaging to Best Buy who is a chief victim of this new style of shopping. It is not uncommon for customers to walk into a local Best Buy view a product and immediately search for reviews or part prices on their smart phones. It is possibly to use this technology to our advantage. One way is to develop a smart phone app for Best Buy that is fun, interactive, and informative. This will allow the customer to use the app to find if the product he wants is in the store, and compare it to other major retailers prices for the very(prenominal) product.The economic situation is quite possibly the most damaging thing for Best Buy. When the country, let alone most of the world, is in a break it affects the number of customers that come into the store and the amount that they are unbidden to spend. In the late 1990s and early 2000s America was at its highest. bulk had more money then ever and they were looking to spend it. Then when the big recession hit in 2008 customers still were looking to purchase products but their style of purchasing changed. For a while there, a lot of customers did not care what they spent for their item, they just wanted it.Now they are looking for the best deals out there, it does not matter how they get their product as gigantic as they get the best deal for it. This is where it has hurt Best Buy the most because they can not compete with most online store prices, and still be able to make a profit. The samara for future success for Best Buy may be to offer more variety of products at a lower cost. This can help them get under ones skin more consumers to the store and make purchases. Marketing Strategy Sustainable private-enterprise(a) advantage Best Buy enjoys a sustainable rivalrous advantage because to this date, they are the biggest U.S specialty electronics retailer. Although they are currently experiencing financial problems due to the recession a few years back, Best Buy still seems to have many loyal customers that continue to keep shopping at their stores. The reason wherefore Best Buy contains such a sustainable free-enterprise(a) advantage amongst their competitors, such as Walmart or Amazon, is because it relates not only to product excellence, but customer and locational excellence as well. Best Buy has achieved product excellence through whirl the top of the line products in consumer electronics.This is why Best Buy has a lot of loyal customers they raise products with great quality and high perceived value. They know that if they buy a product from Best Buy that this product will last them a huge time, especially if they buy the warranty for it. another(prenominal)(prenominal) reason why Best Buy enjoys a sustainable warlike advantage is because they also have customer excellence. Best Buy contains a service, known as the flake team, which is a convocation of employees that help customers with problems they may be having with their electronics. Also, customers are able to rely on the well rained employees when they have a question regarding legitimate products. Best Buy also has locational excellence since they have over a thousand stores both domestically and internationally. Many say The three most important things in retailing are location, location, location. With this many stores Best Buy is going to be an courting choice to those other than loyal customers, because itll contract more convenient to go to a Best Buy that is less than 20 minutes away from your house. There are plans to rough up at least 100 stores by 2013 http//www. innovationexcellence. com .This will not only help with their sales, but it will also allow for more customers to snuff it loyal to Best Buy because itll be convenient for them to go to their local Best Buy. Growth strategies Best Buy pursues a merchandising brainwave strategy. The company employs existing marketing potpourri and focuses the trues efforts on existing customers. Best Buy attempts to increase market share by using existing products and services. The company wants to attract new customers to the current target market and encourage current customers to patronize the smashed more often, or buy more merchandise on each visit.In order to grasp its goals Best Buy has to develop great marketing effort, they have to increase advertisement, sales, and promotio ns. For instance, Best Buy will broadcast ads on TV each time they want to advertise a new product in the store, such as the a la mode(p) IPhone. The company wants their current costumers to be alive(predicate) that the store is carrying new products and new costumers to know what kind of products they sell. During holidays and events such as black Friday, the company advertises their deals, so their current costumers buy more merchandise on each visit. SWOT STRENGTHS Large amount of retail outlets in prime locations * 1,099 US best buy stores, * 6 Magnolia Audio Video Stores * 6 Audio Visions Stores, * 117 Best Buy Mobile Stores * 35 Pacific Sales kitchen and bath center Stores * Brand firmty * Very noticeable bell ringer name * Stores are large * Flexibility exists to add new product lines due to ample space * Value adding customer service * Excellent customer service and technological know how * Geek team WEAKNESSES * Best Buy relies on vendors to supply a large division of products which can authorisationly lead to supply disruption. Example If Sony and apple decide to no longer supply Best Buy it would be devastating. * feeble online presence * Late start in e-commerce * E-Bay and Amazon far meliorate online Limited product selection in OPPORTUNITY * Capture acclivitous mobile price matchers market * Use social media to afford out to this market * Capitalize on iPhone Smart Phone market * play along the business of young bachelors more aggressively * Undervalued customers with high interest in technology * Social Media * Utilize Face book and Twitter more effectively build relationships * Going green Can lead to potential overhead savings and good public relations THREATS * Retail discounters such as Wal-Mart and Target * Discounters are stealing electronics market share due to higher foot traffic fueled in large part to product mix * Consumers spend more time at discounters locations because they can buy food, clothing, and entertainment un der one roof * Rising trend of mobile price matchers * Consumer deciding to buy elsewhere while in Best Buy can prove to be fatal because it negates all other core competenciesObjectives/Goals and Problem to be Addressed Based on the results of your SWOT analysis, clearly state the Problem that you are planning to address (once you have described the current situation of the company, you should be able to phrase the specific problem you want to address and the goals of your marketing plan. ) Please make sure to clearly identify your specific Objectives/Goals. fragmentation (See chart in Index) When making the market segmentation we decided to separate it into three contrary segments, gender, age, and income.We chose these segments because they supply the bulk of our customers that shop at a store. sex activity was first because that is the most identifiable one. It is easy to separate and calculate who is coming to the store based on their gender. Age is a big factor because w e can determine the type of customers that are coming into the stores, a young person will see things much distinguishablely then an older person and they both will be looking to buy different things. lastly we picked income because it will tell us how much money people have and are willing to spend at our stores.If we have a store that is getting a lot of low income people going into it, we can not have it stocked full of products that they can not afford. development this we were able to create a customer segment graph. (See Customer Segment map in the Index) subsequently making the Customer Segment chart we found that we had 18 different segments to work with. Each segment is a little different, but as a whole they make up most of the customers that shop at our stores. When looking at the chart you can see that each segment has something different. The chart covers male and females from different ages to different income levels.You can see that in segment 1 you have males who are under 17 and are in the low income, which is different then segment 4 who are the same but middle income and segment 7 who are in the high income. The learning offer upd by the chart will be very serviceable in determining which segments to target, and which segments will be unprofitable so we can eliminate them. Targeting Market segments 1. Gender Male and Female 2. Age teenager 17 and under, young full-grown 18-29 and with child(p) 30-59 3. Income middle class and upper class Segment attractivenessIt is requisite for Best Buy to evaluate segment attractiveness for each of these segments. They first must(prenominal) determine if the segments are worth pursuing, using specific criteria is the segment identifiable, substantial, reachable, reactive, and profitable. Identifiable * Teenagers 17 and under have high interest for video games and cell phones. They are conscious(predicate) of the new technology innovation but dont really use mazy ones which might be to high-te ch for them, therefore Best Buy will have to take in consideration that they might not be able to know how to use a MacBook Pro as a young bragging(a) would. Young adults 18 to 29, such as college students, are more open to try new technology which would later build up in lifelong provoker-loyal customers. As a result Best Buy endlessly tries to keep up with the up-to-the-minute technology, whirl the newest version of Mac laptop computer or the last android. * one-time(a) adults age 30 to 59 tends to endure with products they are accustomed to. They have difficulties getting used to new technology or do not have the really time to keep up. Older adults have long discharge(a) hours or have children to take care of they do not really have time to used new technology.Most even have to rely on their children in order to know how some electronics around the base work. Best Buy should also consider the differences in incomes among the classes. They should divide customers by t heir incomes in order to provide services and products that are affordable to all. We consider middle and to upper classes since they are the ones who can purchase higher priced electronics. The middle class which is price reasonable makes between 30,000 to 50,000 dollars a year. They have the ability to purchase electronics such as computers, cell phones or TVs but only at affordable prices.In the upper class, customers are ready to pay high prices for high end goods. However we wouldnt target gender because it just represents one segment. Best Buy doesnt sell one type of product that attract men and another that attract women they do not focus on gender differentiation. For instance they are no special gadgets or section for women in the store. Substantial This criterion consists on measuring the target markets. If a market is too small it is insignificant and it will not generate equal profit.If its too big it might need a bigger store. In this case we should consider the segme nt of Loyalty loyal consumers are lifelong customers which make them a substantial segment. Most loyal consumers are those living earnest the location. For instance it would make more sense for a customer to go grocery shopping at a Vons store thats 2 miles away and become a regular customer, than drive 20 miles to an Albertson store. Database such as census. gov can be really useful to determine how many people live in the vault of heaven or how long they have been living in that area.For instance 1,068,344 people in Los Angeles have been living in the same house since 2005, which is 33. 2% of the people in Los Angeles. So this heart that some of the 33. 2% might be loyal customers to their local store. We wouldnt consider occasion consumer because they dont represent a large enough market segment. Since they are not a usual customer it is warm to consider them as a significant segment. Video game companies forever promote a new game, and teenagers like to be up to date and p urchase the up-to-the-minute one, which is profitable on the long run.Young adults also represent lifelong consumers, since they are concerned in technology innovation. For instance college students like to purchase new gadgets to work on their school work or just to stay in touch with their friends, classmates or family members. It would be a good idea for Best Buy to use census data to allocate to jr. consumers. approachable It means that the consumers know the product exists, understand what it can do for him or her and recognize how to buy it. It is essential for Best Buy to care different types of technologies at different prices.Their product must attract all ages and be affordable for all Incomes. Different items are offered at different prices, which means everybody can afforded regardless of their incomes. * Middle classes are price sensible, they want to own technology but at affordable prices. It is easier for a company to reach them during sales and holidays, where the y purchase items in large county, buying for family member, friends or just for the good deals. * swiftness classes are easily reachable they want to get high end products and are ready to pay the price.They usually want to purchase the latest high-tech product, new IPhone or biggest 3D TV. They are in the main up to date and are mindful of new innovation through the different media outlets. Both young and old generations should be aware that Best Buy caries different types of technologies. For instance phone with oodles of different applications and new innovations. Such as the iPhone, it attracts younger crowds, whereas less complex gadgets mainly attract an older crowd. * Teenagers and young adults are usually aware of the latest technology and where to purchase them.They have easy glide path to media they follow TV and internet ads. Moreover, young generations share information among each other talking about the latest Apple computer or Android. * Older adults found out abo ut new technology or where to purchase them from their children, friends or coworkers. They are also easily reachable they have access to internet, TV or older media such as newspapers. Loyal consumers are the most accessible stores mainly collect their information email addresses or phone number.It makes it easy for the store to send them ads about new products or inform them about a sale on existing products. Loyal consumers also frequently come in the store to check on new product or get information about items they want to purchase. Responsiveness The customers in the segment must react similarly and positively to the firms offer, move toward firms product and services and accept the firms value proposition. It is easy for a company to measure the responsiveness of loyal consumer, since loyal consumers are exceedingly responsive to a companys product.They have learned to appreciate what the firm has to offer and accept their value, which lead them to become usual. Companies ha ve to make sure they can properly respond to their consumer needs and wants, if they cant provide them with the product they want, they shouldnt target them. For instance, Best Buy would probably give off if they decide to sell bridal gal to attract more female customers. Best Buy is known to offer technological products and their consumers come in the store looking for electronics. They would be confused to see an electronic store selling bridle gal.Teenagers are passing responsive to new technology, they always want to upgrade to newest and fastest gadgets. For example if new video games come out, teenagers are the first to line up at the store and purchase it at any price. Young adults are open to trying new technology, therefore it would be easier to get them positively respond to new innovations. They are the early adopter of new media and technology. The middle class are price sensitive however they are open to spend money when the deal is right. They are more responsive dur ing sales period, such as black Friday and holidays, such as Christmas.They are big spenders compared to the upper class which according to the book The millionaire next door put 20 percent of their money into investments and savings accounts. During sales and holidays the middle class purchase in large quantities, as they find the best deals to buy for family and friends. Nevertheless the upper class is still responsive to new innovation they want to ingest the latest technology no matter the price. They like to purchase luxury electronics that provide the experience and the comfort that high-tech has to offer. Profitability Market segments that generate profitTeenager According to the U. S census Bureau, there are 247,215 out of 3,772,486 people in Los Angeles who range from 10 to 14 years old, which is 6. 6%. 273,419 out of the same number are between the age of 15 and 19, it represent 7. 2%. let say out of the 520,634 teenagers 10,000 (2%) play and purchase video games on regul ar bases . The average video game at Best Buy cost 19. 99$. Video games are realize every 5 to 6 days, which mean there is a realize every week. We will consider they purchase the video game every 2 month when they receive pocket money.Variable cost would represent 1/3 of the price sold 6. 66$. Best Buy spend 10,325,000 on resolved cost a month and they have 1099 stores which means each store spends 9,394. 90$. It is 112,738. 80 a year Segment size 520,634 X Segment rendering percentage 2 %X Purchase carriage (19. 99*6) X Profit margin percent (19. 99-6. 66)/19. 99 -Fixed cost 112,738. 80 = 724,022. 08 Best Buy would make a profit of 724,022. 08 a year by selling video games to teenagers. Middle class 176,674 out of 1,314,198 fellowship in Los Angles make between 35,000 to $49,999 which is considered as middle class income.Most of these household spend a large quantity of money during holiday. peculiarly during Christmas on demo items, which mean they would purchase them 2 a year IPad is really famous not only among children but also adults. It is a great birthday or Christmas gift. Let say 500 of this household purchase iPads, at least two iPad per household either own by two children or one child one adult or two adults. 100 iPads. One iPads cost 499. 99$. The inconstant price is 259. 60$. Segment size 176,674 X Segment adaptation percentage 0. 3 %X Purchase fashion (499. 9*2) X Profit margin percent (499. 99-259. 60)/499. 99 -Fixed cost 112,738. 80 = 141, 66571 Upper class 62,319 out of 1,314,198 household make between $150,000 to $199,999, they are the Upper-class. They like to purchase brand new electronics as gift or because it is the brand new model. We will consider 3 purchases a year birthday gift, holiday gift and the realize day for the brand new model. 5000 of the 62,319 household purchase iPads the same year. Upper class family usually do not have a lot of children, high income just represent 5. % of the working class with families. They buy 5 of them a year, 2 birthday gifts for children and wife/husband, for they realize of the new model and Christmas gift for friends and family 2. Segment size 62,319 X Segment adaptation percentage 8 %X Purchase behavior (499. 99*2) X Profit margin percent (499. 99-259. 60)/499. 99 -Fixed cost 112,738. 80 = 2,280,262. 94 Best buy would definitely make a higher profit if they target the upper class for the sale of IPad. Market targeting strategy We will use the Differentiated (segmented) marketing as our market targeting strategy.Differentiated marketing strategy is a market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each segment. This strategy is the most appropriated for Best Buy since its goal is to target specific market segment. It wouldnt make sense for them to exercise an undifferentiated marketing strategy, which involve ignoring the different segments and going after the whole market. Moreover, Best Buy i s a retailer of consumer electronics, which means they sell all types of electronics coming from different brands, they are already able to provide the consumer with a wild varieties of brands.By using the differentiated marketing strategy they can assist all of their consumers regardless of their preference, income or age. They would provide them with the take away product they want. This strategy is also profitable in the long run, helping build up lifelong consumer. The consumer is able to get the product that he wants and also has varieties of other options, which gives you an advantage over your competitors. The practice of laborious marketing strategy will not allow Best Buy to have the flexibility to offer different electronics, this strategy only abbreviate on a single target market.Micromarketing strategy wouldnt apply to Best Buy because it only focuses on satisfying the need and want of a single consumer, whereas Best Buy groups his Customers within segments. Perceptua l lay Map (See Index at the end) Positioning One of the reasons Best Buy has been so successful over the years is because of its brand loyalty. We believe that this was created from the good customer service that we provide and the relatively low prices we maintain, as you can see from the chart. Some of our competitors have lower prices than us but the ones that do tend to have poor customer service.One of the biggest concerns that we as a company have to worry about is the low prices that Wal-Mart offers. As the economy continues to be in a recession people are looking for the best price possible as they have to be thriftier with their money. Wal-Mart has dwarfd the low price position for years and it will be very hard to compete with the prices that they offer. One of the ways to compete with them is our price match guarantee, that way if they have the exact same product at a lower price we can keep our customer by matching the price. Another concern that we may have is with Ap ple.They have built one of the well-knitest customer loyalty companies in the world. state are willing to spend more money on Apple products and services just because of the strong brand name that Apple is. Even now that Best Buy is fling Apple products in our stores people will still choose an Apple store over ours. We believe that that main reason for this is the customer service that Apple has provided over the years. They are known for having some of the most ripe technology in their market. For us to gain the loyalty that Apple has we will have to focus on meeting all of our customers needs.Most notably the surface on the map we would like to be is at the lower right side at low price and high customer service. This is a position that is not covered on a map that there will be a wide open market for. Target, Wal-Mart and online stores such as EBay are able to offer lower price on many of the products that we sell, but they do not provide the quality of service that we do. I f Best Buy can keep or even improve its customer service while at the same time sullen many of our prices, we can open the doors to a much larger market.The best position to be taken by Best buy would be one of cheaper prices and better customer service. Now it is true that Best Buy has pretty cheap prices already and with Geek Squad they have fairly good customer service but my belief is they need go further with what they have already accomplished. Given the facts and findings there is an entire untapped market of lower priced products and great customer service that would be fabulously lucrative. Now the obvious reasoning behind why there is an untapped market in this area is the financial problems.There isnt an easy way to have cheap products and great customer service because of the fact that customer service is expensive. However there is one way to successfully do it. As stated earlier they need to target their ideal markets better and literally know when a customer walks in where he or she would be best suited to go and make that area the most appealing. Maybe give the areas themes that would attract the ideal market. The next thing that they would have to do is steal customers away from places like Wal-Mart and Apple because it is the fact that they are loyal to those companies that is the most damaging to Best Buy.Now granted this would not be the easiest thing to do. They would have to consistently promote cheaper products and better customer service. After they have done that however, the number of customers that they have would make up for the cheaper prices, the increased customer service, and the advertising (in theory). And if this is successful they would have gained access to an un-tapped market where they literally could not be touched, because no one could compete with them. The way the company is currently focused is on targeting wealthier customers.Our store associates are trained to lieu customer demographics in the middle to upper c lass and push our products to them. In many cases this can cause them to focus too much on a one demographic and leave out great customer service to other social classes. If we change our position and start offering similar products at a lower price than our high end products, we will attract the thrifty spenders to Best Buy. So by offering these products at lower prices but still providing top notch customer service we can see a large growth in customer loyalty.The most important thing to this is to treat the lower income families just as well as we would treat the higher income families. This is where places like Wal-Mart and Target fail, they offer the better bargains but it is hard to find good help from an employee when you go into the store. Marketing Mix Products and Services Best Buy is currently one of the last major consumer electronics retailers out there because they provide a wide variety of products that customers can choose from.Since Best Buy sells everything from te levisions to refrigerators, which are two completely different appliances, what more can Best Buy offer? Instead of introducing new products, Best Buy should consider offering cheaper prices for their current products in order to attract a different group of customers. Currently, Best Buy is more focused with attracting the wealthy consumers by providing them with products such as the iPad and Blu-ray televisions to keep those customers kindle and loyal to their company.By offering cheaper prices, this could allow the middle-/ lower class to be able to attain great quality products with affordable prices. Since our marketing positioning is to target those customers with lower incomes, what better way to do so than lowering their prices on certain products to show that Best Buy products are great and affordable for everyone? As far as their products are concerned, the main modifications they need to make to existing products is providing a wider range of video games and gambol syst ems.Since the younger generation is becoming more accustomed to using electronics at such a young age, it might be an advantage for Best Buy to sell more video games, which will in turn attract the younger audience to convince their parents to bring them to the store. The company will not only benefit in bringing in the younger crowd, but will also bring in their parents, who will more than likely become attracted to the big screen televisions and wide range of laptops that Best Buy has to offer. Also, Best Buy should consider hiring qualified employees for the Geek Squad in order to minimize customer complaints.Since this service provides customers with assistance for their disjointed electronics, some one who has background knowledge and has had experience fixing broken laptops, cameras, etc.. should be the one assisting them with their problems. The Geek Squad is known for hiring employees who have not had past experience with fixing broken electronics. Although the Geek Squad d oes a good job, customers will be more comfortable knowing that the type helping them with their broken electronics is someone who knows what they are dealing with.Best Buy provides many products for their customers, some that even some people wouldnt expect for their store to provide. For instance, the company should consider dropping the home appliances section because since Best Buy is known more as an electronics store, kitchen accessories such as refrigerators and microwaves seem to be products the company is selling just to make unnecessary profit. From past experiences of visiting the store, the home appliances section is always either empty or with very few people taking a look at their washers and dryers.Most of Best Buys customers are concerned with the laptops and televisions, and to sell kitchen appliances doesnt go along with the entertainment feel that Best Buy provides. Also, now that technology is improving and more people are switching to buy Blu-Ray televisions, Best Buy should consider dropping the VHS section. Since people are learning to adapt to the new technology, more customers are interested in buying Blu-ray DVDs since they provide better quality than VHS. Pricing In the consumer electronics retail business having competitive pricing is of the utmost importance.This is due in large part to the ultra-competitive nature of the electronics business. Consumer electronics such as new TVs and the latest computers/tablets are highly desired by the masses. However, these items tend to be highly elastic in there demand, making pricing a key component in attracting customers. Furthermore, in todays consumer electronics market many major retailers regardless of specialty carry consumer electronics, making it possible to purchase socks and a computer all under one roof.Moreover the emergence of e-commerce has made it easier than ever to perform real time price comparisons. The growing practice of online price comparisons has given online retail ers who benefit from lower overhead costs an advantage, because they possess the ability to offer low prices along with a massive selection. fetching the preceding factors into consideration it is clear that the importance of being price competitive is greater than ever. As a result we have conducted a price analysis of Best Buys top selling product lines. The retailers compared to Best Buy in this nalysis are Amazon, Wal-Mart, and Target. The products to be compared consist of top selling T. V. s, Tablets, Laptops, and Mp3 players. T. V. Price comparison Televisions have been of Best-Buys top selling product lines for years and a vital component of any future success. It is important that Best-Buy continue to dominate television sales if we hope to remain atop the consumer electronics retail mountain. keep dominance in television sales will be a problem. Due to increased competition from retailers who now offer a master of ceremonies of televisions for sale, Best-Buy is losing m arket share.Because consumers are more likely to frequent Wal-Mart and Target for every day purchases such as soap, it is important to convey value through pricing when customers enter our doors. Our price survey shows that Best-Buy continues to be highly competitive on television prices. For example, a Samsung 51 (PN51D450) television can be found at Amazon for $697, but Best-Buy and Target are not far behind at $699 and Wal-Mart is priced highest at $799. Amazon beats Best-Buy by 2 dollars but the added convenience of in-store pickup outweighs the slight price difference.Generally Best-Buy is the final price if not it is very close to its competitors. The television price strategy is spot on. However, offering a one-time sale of loss leader 32 could go a long way in establishing Best-Buy as the go to retailer for television purchases. Tablet price comparison Tablets are the hottest devices in the electronics market today. Tablets continue to rise in popularity and it is likely th at they will last replace laptops as the device of choice for mobile computing. Because of tablets rising popularity its important for Best-Buy to capture market share in this product line.The best-selling(predicate) tablet and industry leader is Apples ipad3 this product is currently offered by all of Best-Buys competitors at the same price across the board. It is unlikely that any retailer will ever have a price advantage on Apple products. Next in line behind the iPad is the asus eepad, this tablet has the potential to one day compete with the iPad. Best-Buy offers the eepad at the lowest cost on the market at $349 Target can match this price but struggle to keep stock levels up. Amazon and Wal-Mart offer the eepad at $359 and $379 respectively.Offering the next best option to the iPad at the lowest cost puts Best-Buy in an handsome position to capture market share. Laptop price comparison Although tablets continue to increase in popularity the staple of mobile computing contin ues to be the Laptop. The versatility and portability of Laptops have kept it in high demand. It is likely that tablets will not possess the computing power to replace laptops anytime soon because of this Best-Buy must remain a major player in this market. A price comparison of laptops shows that this is an area Best-Buy can improve in.For example, HP 17 dv7-6c90us laptop is priced $1029 at Best-buy, but is $959 at Amazon. The price difference is between Best-Buy and Amazon is $70 in favor of Amazon. A savvy consumer armed with a smartphone can pronto discover this, and it is highly likely that Best-Buy would lose this sale. Large price discrepancies such as this one hurt Best-Buys reputation in the long run. Consumers are quick to share the news of their cost savings with friends and family which will in turn make them less inclined to look towards Best-buy for electronics.The loss is two -fold, because not only did Best-Buy lose the sale but it also lost the opportunity to captur e the most powerful form of advertising word-of-mouth. Best-Buy must drop its prices on laptops to the point where they can beat Amazon who consistently sell laptops at a lower cost than Best-Buy. (See Price Chart in the Index) Place Best Buy has a few of different forms of distribution. The first is in-store shoppers who physically come in the store and purchase the products. Our stores need to make sure that we have a full inventory for the product that our customers are looking for.To do this we have to have a good computer program that keeps track of our inventory, as well as near by stores inventories, and the distribution centers inventory. With this information we can tell customers about another store that may have their product. Or we can specially order it from the distribution center and give them an accurate time of when it will be delivered to our store for them. The second distribution strategy and the most important one for our companies growth is our online store. Di stribution for www. BestBuy. com needs o be fast, efficient, and available for our customers to make their purchase. Online shopping will allow customers to purchase the products without ever having to step foot ona sales floor. With the purchases made online they can have the products shipped to their homes, or they can choose in-store pickup (which is free) where they have the option to possibly get the product that day if it is available. The third distribution strategy is the Best Buy vending machines found at Airports and major hotel chains. These vending machines will hold small electronics for customers to purchase.They can hold many things such as gift cards, pre paid cell phones, ear phones, mp3 players, and even movies. What is important about these is it will provide a strong advertisement for the Best Buy brand for new customers traveling the world, who might not know what Best Buy is or experienced one yet. The biggest change that needs to be made with the Best Buy dist ribution strategy is how many physical stores there are in America. Back in 2006 Best Buy was on top of the world when it came to consumer electronics and we over expanded in America.As the recession hit like everyone else profits began to drop. By having too many stores costs were now a lot higher and revenue was a lot lower. So in America we should actually be closing down stores that do not have enough of a demographic to keep them running and profitable. But the international expansion should continue as a long-winded and steady process. This way we can find out where our company working and where it doesnt. The biggest area of need in our supply chain is how fast we can get products to our store that are shown online, but are not physically in the store.There are many customers who see a product on the website but do not purchase it there because they want to actually see the product before the purchase is made. It is important to be able to get that product to the store as s oon as possible to help the customer make their purchase. To do this we have to have a distribution center that can process our request that minute so we can get the product to the store within the next day. The best way of doing this is running a real time processing program that is connected to all the distribution centers.When the order is placed the program will find the product and the fastest way it can be shipped to the store. publicize and Promotion Our Best Buy advertising message is Help you get more from your technology. This message best conveys the image of our company. Best Buy focuses on providing the best customer service possible, through training. Our employees acquire a vast knowledge of the different technology in the store, so they can better assist customers and help them get more from their technology. We also assist our customers through our technology and repair department, Geek Squad.Geek Squad offer services such as TV and computer home setup. The goal of our company is to help customers choose the right technology based on what they are looking for. For example there are a large number of customers coming in our store looking to purchase a computer but they do not know exactly which one to get. Our employees help them identify the right brand and model, based on their interest and taste. The advertising Medias that we have chosen are Television, Newspaper, Internet and direct Mail. Each of these fortes have specific characteristics that make it suitable for meeting specific objective. 1.Television offers a mix of visual and auditory techniques and it provides a wide reach. Television advertisement allows us to both show our products and verbally talk about it. Best Buy has a wide reach they can reach usual customers as well as potential customers. TV helps us catch the attendance of the audience and then reinforce their retention rates by reiterate the message. TV has a mass appeal, individuals watch television for different rea son to watch a movie, the news or any other sports. People from different segments watch TV, which helps you reach a large variety of individual with different background.Moreover, well done TV ads are appealing to the audience. For instance, every super bowl viewers not only looking preliminary to watch the games, but also the commercials. They want to witness the latest seminal Super Bowl commercial, it can help build up a loyal customer base. 2. Newspapers offer flexibility, they are timely and help you coif a precise segment. Newspaper Ads can easily be modified to adapt to changes. They are also timely which means they are more affordable deals than TV Ads, since they are usually advertised once in a while.Newspaper Ads allows you to target a certain segment of customers. There is a certain demographic that reads the Newspaper such as older adult or intellectuals. Moreover, most people expect advertising in the newspaper, some even purchase it for the advertisement and the deals they offer. Newspapers allow you to communicate certain particular information such as a telephone numbers or price. It also helps you offer deals such as coupon which couldnt have been possible on TV. 3. Internet can be linked to detail content.An internet Ad on any webpage will link the customer to the website of the company if he clicks on the Ad. It allows the company to provide more information about the product to the potential customers and promote other products or just the company itself. Internet offers a vast reach it allows a company to promote their product on a wider market. A good medium would be social network website, such as Facebook or twitter. These social networks provide the ability to reach an international market. Moreover, social networks allow a company to interact with their customers.They can post feedback on the company Facebook fence or suggest ideas on their twitter page. Internet also offer flexibility, you can change an Ads any time or add ex tra information. Internet advertising offer targeting method that allows you to reach a specific segment, those who see your ads are the ones most likely to buy. 4. Direct mail is highly targeted, it focuses on a specific segment, mainly the consumers who purposively signed up for them or are frequent costumers. It is a useful medium to send sale advertisements to customers and promote new products as well.The company has a direct restraint over who they are targeting and which product they are offering. A letter can be personalized via mail-merging techniques and you can also use a more informal language in writing your Ad. The company can develop graphics and design the way they want, they dont have to go through newspaper regulations. Best Buy chooses to focus more on reach. Reach allows a company to build product awareness. Since Best Buy is a retailer of consumer electronics, we get different electronics coming from different companies on a regular base.These different items i nclude new models of the previous technology. We need to inform costumers of the new product entering the market. Most of the companies that come up with a new product, do not want to spend a lot of money on advertising the product on the different advertising Medias, therefore Best Buy is the one who was to promote the new product. The goal of our company is to reach a broad audience as a result we promote our new product during major degraded events and holidays. During a major sport event, such as the super bowl, there are a large number f people who turn in to watch the game. And as we said earlier some are as eager to watch the commercials. Holidays are also a perfect(a) time to promote a new product because people are looking for presents to give to their loved ones. Consumers are looking for inspiration everywhere, mainly through TV Ads, magazines, or newspapers. Companies want to persuade the costumer that their latest Smartphone is the best Christmas gift for their teenag er, or that the brand new MacBook pro is the exact gift their husband was dreaming of.Costumers are more likely to believe a holiday Ad than any other, they dont have the time to think of an original gift and they mostly believe the Ads stating that this is the hottest items of the holiday, a must have Reach is also useful for a product with long purchase cycle. Since Best Buy sells electronics, all the Items have a long purchase cycle. People buy phones, laptop, TV, video game once in a while. They usually purchase new ones after a year or so. Our main advertising objective is to remind.Reminder advertising is a communication used to remind or prompt repurchases, especially for products that have gained market acceptance and are in the maturity stage of their life cycle. According to www. twice. com Best Buy is the No. 1 retailer on this combined list of consumer electronics and major appliance retailers in the United States. Our company has gained a market acceptance coming befo re stores such as Wal-Mart and Sears that are usually known for their low cost. Best Buys goal is not to promote lower cost but quality which is promoted through our customer service.Best Buy believes that customer service is the key to provide a quality service and build up customer loyalty. Therefore our company provides training to all of our employees working on the floor, we teach them how to interact with a customer, and we provide them with the sufficient knowledge about the different gadgets in the store so they can give better advice to the costumer. Our advertisement mainly focuses on the quality customer service that we offer. We want to remind the costumer, why they always chooses us first in retail electronics.Best Buy has established an image of professionalism, knowledge and assistance through its customer service. We want the consumer to know that he is in good hands every time he comes to one of our store. Best buy uses information appeal to portray its products and persuade consumers to purchase them. Our company uses factual information and strong arguments to attract consumers. We want our costumer to evaluate our products on the basis of the key benefits they provide. Best Buy offers different high tech products that are sometime really complex, so it is in our best interest to inform our customers on how to use those products.For example, Apple iPhones offer and develop new features that might be too confusing for our regular costumer, so Best Buy develops Ads that condone to costumers how to use them. Our goal is to improve our customer knowledge therefore they can enjoy the entire attributes their new gadget has to offer. Consumers are more willing to buy a product that they understan