Best Buy is an American-based multinational company situated in Richfield, Minnesota. It deals in consumer electronics. Richard.M.Schulze and James Wheeler were the pioneers of Best Buy. Back in 1996, the company functioned as an audio specialty store which was known as ‘Sound of Music. Subsequently, in 1983, it was rebranded as ‘Best Buy’. The company sells a variety of consumer electronic appliances like software, video games, mobile phones, music, digital cameras, video cameras, car stereos, etc. Apart from these, it also provides home appliances which include refrigerators, washing machines, and dryers. The services that Best Buy provides include delivery, design, installation, repair, set-up, memberships, technical support, and warranty-related services. Best Buy has three subsidiaries – Geek Squad, Pacific Sales & Magnolia Audio Video. The company operates across domestic and international borders with a total of 1159 stores.
Company’s Vision and Mission Statement:
The vision statement of Best Buy emphasizes how technology can make people’s life fun and easy that will eventually help them become the best version of themselves. The mission of Best Buy states that their company is a growth company, which focuses on serving the unmet consumer needs and they depend on their employees to solve such puzzles. The company’s main focus is consumer satisfaction. They price their goods keeping in mind the affordability factor of the consumers. Besides this, the company values their customers and makes sure that they are treated with the utmost respect.
Target Market of Best Buy:
Best Buy is one of the world-famous multinational companies dealing in consumer electronics. It caters to millions of consumers daily. The reason behind this success is that the company was effective in targeting the right consumers and providing them with the best buying experience. On research, the company found out some facts which eventually helped them in deciding their target market. Some of the important facts that were discovered are as follows:
1. The most valuable segment of the market is the college-going crowd within 18 to 24 years of age.
2. It was also found that college-goers usually spend more than 200 million annually.
3. The mindset of these people allows them to explore and try out new brands. The majority of them end up being loyal customers of the brand for a lifetime.
4. The college population makes benefit-driven buying decisions as they respond to the advertisements differently unlike the other people.
On learning the above facts, the company focused on the millennial generation and since then, they have become a major part of their market segment. The simple understanding behind this is that the people of the age group 18 to 35 prefer to be updated with the latest tech gear like mobile phones and computers than those of the older generation. Also another added advantage of having the millennial as the target market is that, once they are fully satisfied with the product they tend to become the loyal customers of the brand. They have the long-term potential to positively impact the business of the company.
Marketing Strategy of Best Buy:
Once the business has decided the target market, conducting the right marketing campaigns and making well-intentioned collaborations is very essential. A marketing strategy is a business plan which focuses on reaching out to probable customers and eventually turning them into potential buyers of their products and services. The success of any company depends on the way they showcase their products in the eyes of the public. The product will be a big hit if the company markets it excellently. Once the marketing is successful the business can easily position itself in the market and achieve the set business goals.
Let’s discuss in brief the marketing plan and the business model of Best Buy:
The marketing strategy of Best Busy is based on the marketing mix model which includes 4P’s – Product, Price, Place, and Promotion.
1. Product Mix:
Best Buy limits its product portfolio to 6 categories, unlike the other retail stores in the United States. The company’s main focus is on consumer electronics. The following is the product mix of Best Buy. Best Buy sells all its products under a brand house of 8 products. Dynex, Rocketfish, Insignia, Modal, Platinum, Init, Pacific Sales, and Magnolia home theatre are the companies that form the product portfolio of Best Buy.
- Consumer electronics – PC laptops, Smartwatches, Air pods, DSLR, Microsoft surface, and home theatres.
- Entertainment- Music, Movies, Streaming media, Gaming hardware, and accessories.
- Home appliances- Refrigerators, Freezers, Microwaves, Washing machines, Ovens, etc.
- Services- Delivery, Installation, Design, Warranty, Consultation, etc.
- Computing and mobile phones- Smartphones, Tablets, I pads, Bluetooth devices, etc.
- Snacks- Food, Beverages, etc.
2. Place Mix:
The most vital factor of the marketing mix is the ‘place’ where the company sells its products and services. Choosing an appropriate location for the company will increase its chances of reaching out to maximum buyers. The place is also related to the distribution channel the company employs to sell its product and services. The marketing strategy of the company should focus on making the right product available at the right place and at the right time.
The key location of Best Buy in the U.S. has about 1400 stores and around 200 stores in Mexico and Canada. The exterior of these stores is light brown colored and is designed in a way such that it seems like a blue box is emerging from the structure. The company has located its stores in prime locations to attract high traffic. It offers its customers the best buying experience. Best Buy also offers an online shopping facility to its customers so that they can shop conveniently. This also helps them in reaching out to more people. Besides, it also provides a ‘pick up from store’ option to its buyers.
3. Price Mix:
In simple terms, price means the total value that the customer is bound to pay to avail of the benefits of the product and services. Determining the price for the product is a vital decision that is taken by the company as this will directly impact the profitability of the business. Price should be decided in such a way that apart from covering all the costs of production it also generates some revenue for the business. Price is often considered a tool of competition.
The pricing mix of Best Buy is designed keeping in mind the affordability factor of the target audience. The prices of the products sold by Best Buy are usually 10 to 15% less than its competitors. The company strives to match the value of the product to the expectations of its target market.
4. Promotion Mix:
The diverse marketing tools a business uses to reach out to a broader audience is known as promotion. The main motive behind these promotional strategies is to create, maintain and increase the demand for the products and services offered by the company. The integration of personal selling, advertising, public relations, and sales promotion is known as the Promotional mix.
The promotional strategy of Best Buy includes social media marketing via Facebook, Twitter, and Instagram. In addition to this, the company also uses signs and flyers to promote its products. The crucial role in increasing the sales figure of the company is played by ‘word of mouth’.
The business model of Best Buy is primarily focused on consumer satisfaction and helping them to the best of their abilities. This has paved the way for them to be at the top of the retail stores in the United States. It was also named ‘The Company of the Year’ by Forbes magazine in the year 2004. The company also contributed to social causes like the protection of the environment by introducing the recycling campaign in 2009 and also attempted to combat child pornography. From this, it is clear that apart from being profit-oriented the company places equal importance on the well-being of society.