Business: Retailing and Low Price Guarantee
Business: Retailing and Low Price Guarantee BY Vbplaya25 Go to www. bestbuy. com, click on the Investor relations section (i. e. , Four Our Investors). and explore Best Buys latest annual reports and 10-K (SEC) filings to see If you can identify the key elements of Bust Buys strategy. Provide an overview of Best Buy and use the framework provided in Figure 1. 1 to help identify the key elements of Best Buys strategy. One of the key element of Best Buys success Is Its competitive advantage. Competltlve advantage as stated by Thompson et al. 2012) Is the “ablllty to meet ustomers needs more effectively, with products or services that customers value more highly, or more efficiently, at lower cost; (p. 6). Best Buy has always taken an innovative approach to retailing. The company Is aware of the types of customers that It drew, by creating their Customer Centricity model. The model consisted of five customer groups, each was given a name of its own. The companys employees were given extensive training and was taught how to specifically handle each different customer segment, while merchandise, promotions and even entire stores were hanged to target each market segment.
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This Is known as best-cost rovider strategy which is to “offer the lowest prices for differentiated goods that at least match the features and performance of higher priced rival brands” (Thompson et. al, 2012, p. 9). The price match is a salvo aimed directly at companies such as Amazon. com. Walmart. com and Target-com. The company Is the only retailer to offer a low price guarantee in addition to having a full range of the latest and greatest devices and services, a sales team dedicated to providing knowledgeable advice and full support for the life of the product.
With the low price guarantee, their customers will have the best of both worlds then they shop online or In their retail stores. Also: What Makes a Strategy a Winner? 1 OF3 distinguish a winning strategy from a losing or mediocre strategy: a. How well does the strategy fit the company’s situation? Best Buy are losing their customers to internet retailers like Amazon. At first the low price guarantee was planned to match the price of internet retailers like Amazon over the holidays.
The strategy over the holiday season was to draw customers away rom shopping purely online. This was something that would appeal to many consumers, especially those who prefer a traditional shopping experience. The low price guarantee strategy was later made permanent to keep up with online retailers. Best Buy saw price matching would inevitably draw in more customers. Why would a customers order something online if they can purchase the same products for the same price at Best Buy? Is the strategy helping the company achieve a sustainable competitive advantage?
Yes and no. The price matching policy falls shorts in one aspect. Best Buy will not match a better price if a customer find it after their purchase. Unlike Target’s policy they let customers come back for a price adjustment if they find a lower price within seven days of purchase, Best Buy in the other had does not. Retroactive adjustments will only be offered if Best Buy itself offers a lower price within 15 days. The policy specifically excludes post purchases price match requests to competitor’s prices.
Best buy clearly states “showrooming” which targets shoppers who are using their martphones to find better prices on products they see on its shelves and whom might otherwise leave the store to buy them online retailers such as Amazon. com. But Best Buys list of qualifying competitors, including 19 websites in price matching policy. So even if a customer can’t count on their deals being the best tomorrow, they will have a better chance at Best Buy of getting the best price today. Is the strategy resulting in better company performance?
The price matching policy was made permanent in March of 2013, so it is hard to say ow the company is doing within a few short months in regard to this pricing policy. Best Buy business model is particularly vulnerable to online shopping. The easy availability of technology and electronics products online has already led to the downfall of competitors like Circuit City and CompUSA. Most products available at Best Buy are easily available from other retailers, and while some consumers may need hands on assistance in making purchases, many do not and will take their business elsewhere if they can find a better deal.