Best Buy & Database Analysis (2009)

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Selecting a new retail location for Best Buy, based on statistical analysis using SPSS and Census data (database marketing course).

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Best Buy & Database Analysis (2009)

  1. 1. Presented by Evan Zaletel Gray Bigler Alex Knecht Jesse Kedy
  2. 2. Best Buy Profile Specialty retailer: consumer electronics, home‐office  products, entertainment software, appliances &  related services  Competition: other electronics stores, mass‐merchants,  home improvement stores Store development program Primarily in existing markets •Presence: 23 stores in VA •Goal: increase market share (18%)
  3. 3. Main Issue & Goals • Expanding Market Share • Reaching Under-served Markets • Strategic Locations (i.e. major intersections) • 2007 Expansion Goals – 90 New Stores in U.S. & Canada – Leveraging Existing Infrastructure
  4. 4. Problem with Initial Regressions Reg. IV’s Problems PSport;  Multicollinearity (M40‐49 &  #1 F40‐49)  M40‐49; F40‐49 PSport; Income Adjusted R Square too low  #2 (0.943) M40‐49;  PSport; Income; Mobile; Adjusted R Square (0.949);  #3 Mobile Beta (‐0.086) M40‐49 PSport; Income;  Adjusted R Square (0.950);  #4 Housevalue PSport Beta (0.072) M40‐49;
  5. 5. Regression # 5 No Multicollinearity Problems!
  6. 6. Regression # 5 95.2% of the variance in the  number of electronics and  appliance stores is explained by  the variation in the IVs. All IVs are significant.
  7. 7. Interpretation of IVs Coefficients a Unstandardized Coefficients M40‐49: As number of males 40‐49  Model B Std. Error 1 (Constant) increases by 1000, the number of  417.055 102.058 Number of males 40 electronics stores goes up by 2. .002 .000 to 49 years of age Median household .000 .000 income in 1999 Income: As median household  Median value of incomes increases by $10,000, the  owner-occupied 8.14E-005 .000 housing units number of electronics stores  Median year structure -.211 .052 increases by 2 (0.0002) built Yearbuilt: As the median age of a  Housevalue: As the median value  structure decreases by 10 years (i.e. the  of owner occupied housing units  newer the structure), the number of  increases by $100,000, the  electronics stores decreases by 2  number of electronics stores  increases by 8. 
  8. 8. Summary:  Regressions & Disregarded Variables Electronics PSport, M40‐49,  Multicolinearity NA 1 F40‐49 (Males & Females) Electronics PSport, M40‐49,  Removed Females 0.943  2 Income  (Males=main target) (Prefer > 95% ) Electronics PSport, M40‐49,  Added Mobile (least  0.949 3 Income, Mobile important IV) Electronics PSport, M40‐49,  Replaced Mobile 0.95 4 Income,  (least important IV) Housevalue Electronics Housevalue,  Replaced PSport 0.952 5 M40‐49, Income, Final Answer! (least important IV) Yearbuilt
  9. 9. Sorting Procedure Retail Potential Calculated by comparing expected number of electronics stores in a  county to actual number of electronic stores in a county •Saved from regression as ‘unstandardized residuals’ •Result shows to what extent stores are “missing” •more negative = higher potential for a new store •Sorted counties by retail potential •Seeking greatest retail potential while  fulfilling other criteria
  10. 10. Top 10 Counties in Virginia  by Retail Potential 1. Augusta County         2. Portsmouth City  3. Chesterfield County 4. Bedford County       5. Prince William County 6. Hampton City 7. Roanoke County       8. Richmond City         9. Clifton Forge City   10.Norfolk City
  11. 11. Selecting a County Six Main Criteria 1. Retail Potential:  At least 5 less stores than expected All 10 counties qualified 2. Population (sufficient size):  Above 100,000 3. Income (sufficient means):  Above $45,000
  12. 12. Selecting a County (cont) 4. PElectronics (demand):  between 2% and 4% To demonstrate a market exists for electronics in that county 5. PSport (Music/ DVD demand):  between 4% and 7% To demonstrate a market exists for music/DVDs in that county 6. PMales:  at least 48 percent Best Buy stores tend to target males more than females
  13. 13. Selecting a County (cont) Tabulated criteria to evaluate based on multiple factors Augusta ‐9.84006 1 5,696 $43,045 65,615 Portsmouth city  ‐9.38079 7 6,737 $33,742 100,565 Chesterfield ‐8.40461 36 22,262 $58,537 259,903 Bedford ‐8.1322 2 5,281 $43,136 60,371 Prince William ‐7.84942 38 22,726 $65,960 280,813 Hampton city ‐7.22696 17 11,203 $39,532 146,437 Roanoke ‐6.80851 7 6,955 $47,689 85,778 Richmond city         ‐6.34982 28 13,620 $31,121 197,790 Clifton Forge city   ‐5.90242 0 279 $26,090 4,289 Norfolk city        ‐5.65534 30 14,603 $31,815 234,403
  14. 14. Selecting a County (cont) And the Winner is… Chesterfield county Only county to satisfy all requirements 4.67% 50.29% 0.47% $110,900 1977 Augusta 4.41% 48.31% 2.37% $81,300 1961 Portsmouth city  6.18% 48.71% 3.84% $120,500 1982 Chesterfield 4.35% 49.87% 2.17% $127,000 1982 Bedford 7.76% 49.88% 4.15% $149,600 1983 Prince William 6.42% 49.56% 3.31% $91,100 1969 Hampton city 4.46% 47.26% 3.47% $118,100 1974 Roanoke 7.31% 46.55% 2.76% $87,300 1955 Richmond city         0% 44.11% 0% $52,800 1939 Clifton Forge city   6.43% 51.12% 3.27% $88,400 1959 Norfolk city       
  15. 15. Selected County: Chesterfield
  16. 16. Refining the Selection Based on Tract‐Level Census Data: Criteria ‐ Males/ 100 females (>= 85) ‐ Median Household Income (>= $49K) ‐ Median Value, Owner‐Occupied Housing Units (>=  $90K)  ‐ Persons per square mile (>= 1,250)
  17. 17. Males per 100 Females, Tract Level Eliminating tracts based on each criterion
  18. 18. Males per 100 Females, Tract Level
  19. 19. Median Household Income, Tract Level
  20. 20. Median Household Income, Tract Level
  21. 21. Median Value of Owner‐Occupied  Housing Units, Tract Level
  22. 22. Median Value of Owner‐Occupied  Housing Units, Tract Level
  23. 23. Persons Per Square Mile, Tract Level
  24. 24. Persons Per Square Mile, Tract Level
  25. 25. Two Possible  Existing Best  Locations Buy Store  Locations… And the  Winner is…
  26. 26. Census Track 1009.15 Males/ 100 Females: 86–93 Males per 100 Females  Median Household Income: $52,167  Adjacent to highest income area Median Value, Owner‐Occupied Housing: $102,800  Adjacent to highest value area Persons Per Square Mile: 1,976–2,976  Adjacent to large, underserved area Median Age: M: 37.8 years | F: 41.1 years Average Household Size: 2.36 people
  27. 27. Approximate 12 min  drive from nearest BB 
  28. 28. Limitations
  29. 29. Any Questions?

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