Bestbuy Case Study
Bestbuy Case Study
Customer centricity refers to the orientation of a company to the needs and behaviours of its customers, rather than internal drivers. There are three steps for customer centricity, customer segementation, store strategy, and store operating model. Costumer segentation consist of profitability, demographics and behaviors, and create value propositions to enhance costumer satisfaction. Store strategy answers the following questions, who lives nears local stores, who shops at the store, and what are the local competitors. Lastly, store-operating model define the deliver to chosen store strategy, create and build mentality against the new strategy.
Brad Anderson should go through the wall for costumer centricity because it’s the only strategy that differentiates other strategies from competitors. Andersons mentality was to defy what conventional status quo by having non-commissioned associates sell high-end electronics, to selling computers in a retail which said had very little to no profit making. Anderson and his marketing team came up with five profitable segments for Best Buy to try to understand why some consumers act the why they do. The five customer segments are the family man, the focused active younger male, the affluent professional, the suburban mom, and the small business customer. Each market segment have the potential market size that ranges from 9-to-59 billion.
After the marketing team gathers the information, they came up with a preferred store layout and product assortment within the store. Service was also important since Best Buy has a non-commissioned staff. Thirty-two test lab stores where chosen to have this new customer centricity strategy and shown positive results quickly. Anderson although had tough resistance from top management, few others such as Ron Boire bought into the new strategy. As the VP and general merchandising manager, and former president of Sony, he saw that customer centricity could be a core- competency for Best Buy as Wal-Mart core competency is logistic and information management.
With the new culture of Best Buy that involves in great customer service, strategic placement of product to comply with the five markets segments created by the marketing team at Best Buy, and ultimately controlling cost, and investment spending, Anderson has enough reason to stick with customer centricity that traditional strategies.
Changes in this industry happened instantaneously. Many of the key changes that effect Best Buy and other competitors in the same industry space is economy, emerging, and obsolete consumer technology, and the e-commerce, e-tailing boom that includes the music business.
Since the economy has been unstable, consumer purchasing of electronics has been fluctuating. Higher interest rates, and