Best Buy in China

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This is another presentation some colleagues and I did to ala

This is another presentation some colleagues and I did to ala

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Transcript

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