Best Buy failed in its expansion to China, capturing less than 1% of the market. It tried to compete on quality and service rather than price, as Chinese consumers prioritize low prices over service. Additionally, Best Buy's prices were higher than locals, it focused on large flagship stores instead of many smaller outlets, and it faced strong competition from established Chinese electronics brands and retailers. To succeed in China, foreign retailers need to localize their offerings, formats, and locations to better serve price-sensitive Chinese consumers.

1. The MEMOof Failure in China

2. The MEMO

4. Nationaly they acount for 19% of the national market

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

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

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.

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.