Best Buy in China


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Best Buy in China

  1. 1. The MEMOof<br />Failure in China<br />
  2. 2. The MEMO<br />
  3. 3. Introduction – What about Best Buy?<br />The <br />MEMO<br />Today…………<br /><ul><li>Is known as a speciality retailer or consumer electronic in the U.S.
  4. 4. Nationaly they acount for 19% of the national market
  5. 5. Also are operating in Mexico, Canada, China, Turkey & the United Kingdom</li></li></ul><li>Success……..<br />The <br />MEMO<br /><ul><li>2005 Ranked top ten most Generous Corporation (Look into it……develop this…… WHY?)</li></ul>If its Green, helping the poor or something like that then add. <br /><ul><li>2009 Became the primary electronic store online and in its warehouses</li></ul>- 2011 could add some numbers about sales in 2010/11 but that may be covered in another section…. Check with the furious 5 tomorrow..<br />
  6. 6. How is all started…………….<br />The <br />MEMO<br /><ul><li>1966 in minnisota two guys / started a store called “Sound of Music”
  7. 7. 1970 they hit the 1million Dollar mark in annual revenue
  8. 8. 1779 became the 1st suppliers of video and laser equipment :
  9. 9. Panosonic
  10. 10. Magnavox
  11. 11. Sony
  12. 12. Sharp
  13. 13. THEN……………</li></li></ul><li>1981 there was a Great tornado that hit the sound of music store.<br />With what is left of the store and merchandise, they decide to sell what was salvageable!!! <br />And PROMOTED the event on June 14th as………………..<br />
  14. 14. The <br />MEMO<br />The Failure – How was their lost?<br />-Captured less than 1% of the market trying to compete against the more agile and aggressive Gome and Suning.<br />-Stores similar to Best Buy in the way they deal such as Home Depot and Kingfisher have met similar dilemmas. Whereas price-sensitive stores where the lowest price is the one that dominates (i.e. Walmart and Tesco) have flourished. <br />
  15. 15. The <br />MEMO<br />Product<br />Behind the fiasco – 4Ps failure in a marketing sense<br />
  16. 16.
  17. 17.
  18. 18. The <br />MEMO<br />Price<br />Behind the fiasco – 4Ps failure in a marketing sense<br />The Best Buy model aims to please both suppliers and consumers by reducing the price competition between suppliers. <br />Best Buy tried too hard to educate consumers about high-end service value when lower price is typically the only value that motivates them to make quick decisions.<br />
  19. 19. Prices were higher than the Chinese preferred to pay as the middle-market is very price sensitive. <br />Prices vary widely depending on the brand name and product. <br /> Higher than that of local stores. <br />
  20. 20. The <br />MEMO<br />Place<br />Behind the fiasco – 4Ps failure in a marketing sense<br /><ul><li>9 Stores in China</li></ul>6 in Shanghai<br />1 in Hangzhou<br />1 in Suzhou<br />1 in Beijing<br /><ul><li>They place it in populated area
  21. 21. They open it near their competitors</li></li></ul><li>The <br />MEMO<br />Promotion<br />Behind the fiasco – 4Ps failure in a marketing sense<br /><ul><li>They differentiate itself from other Chinese store </li></li></ul><li>The <br />MEMO<br />Internal<br />Environment – What happened besides 4P?<br />
  22. 22. The <br />MEMO<br />
  23. 23. The <br />MEMO<br />
  24. 24. The <br />MEMO<br />
  25. 25. The <br />MEMO<br />
  26. 26. The <br />MEMO<br />
  27. 27. The <br />MEMO<br />External<br />Environment – What happened besides 4P?<br />
  28. 28. The <br />MEMO<br />WRAP UP!<br />1. Offered High-quality service and shopping experience when Chinese consumers only want lower prices, not service. <br />Chinese = Price, ≠service.<br />The conclusion<br />
  29. 29. The <br />MEMO<br />WRAP UP!<br />2. Chinese retailers electronics and other large-ticket items by leading brands, opposed to category. Supported by sales staff work for the manufacturers rather than for the retailer.<br />Leading brands (Chinese) vs Category (US)<br />Sales staff from Manufacturers (China) vs Retailer (US)<br />The conclusion<br />
  30. 30. The <br />MEMO<br />WRAP UP!<br />The conclusion<br />3. Trying to Compete on quality in a price sensitive market.<br />
  31. 31. The <br />MEMO<br />WRAP UP!<br />The conclusion<br />4. Best Buy seen as too expensive in China.<br />Why pay more for something you can get elsewhere? Consumers will only pay more if they are buying something they cannot get elsewhere.<br />
  32. 32. The <br />MEMO<br />WRAP UP!<br />The conclusion<br />5. Local retailers can undercut prices - they pay less in salaries, benefits, rent and electricity.<br />Piracy in China.<br />
  33. 33. The <br />MEMO<br />WRAP UP!<br />The conclusion<br />6. Made the mistake of focusing on building large flagship stores, rather than smaller, conveniently located retail outlets.<br />Traffic congestions and lack of parking mean consumers often prefer to shop closer to their homes.<br />
  34. 34. The <br />MEMO<br />WRAP UP!<br />The conclusion<br />Musts in China:<br />Foreign retailers need to localize their product selection, sales formats, and be smarter in their location choice in order to compete with emerging, brand savvy local players.<br />