Best Buy Customer Centricity Case Study Analysis Rubric

Creating a Customer Centric Supply chain can be a tricky thing, especially since it’s a departure from the “tradition” supply chain model. While each business has its own operational needs, there are a few concepts that are relatively universal.

  • Predict Demand With Technology and Data

Data.

It’s everywhere, so much so that sometimes we are overloaded with it. The phrase “miss the forrest for the trees” comes to mind.

However, if you look at the right data, in the right way, you can glean critically important and actionable information for executives to leverage. In the case of predicting demand, technology gives today’s businesses an edge.

In order to do this kind of analysis, serious investment in your supply chain is required. Additionally, executives need to be quick enough in their decision making to respond in a timely manner.

  • Multiple Fulfillment Channels

“Omnichannel” seems to be the phrase de jour. However, it’s not without merit. Nowadays, customers have more options than ever when it comes to ordering food, goods, or services. These channels include mobile devices, online, in-store and more – they use whichever channel is most convenient at any given time.

A major characteristic of customer centric supply chains is taking omnichannel to the next level by having multiple channels for delivery. Some big retailers, for example, have the option to buy online and pick up in the store.

Quick delivery is an important factor within this omnichannel paradigm.

Why do people choose omnichannel ordering? Convenience and speed. As an extension of that, the delivery process has to provide the same experience. In addition, the experience itself should be a positive one – often times the delivery experience itself is just as important as the product that is being delivered.

  • Non-Sales Activities Pushed Back Up the Supply Chain

One good example of a company creating a customer centric supply chain is Best Buy. The company reinvented its supply chain to meet the demands of the modern age. One of their most important changes was taking non-sales activities back up the supply chain; essentially, the manager of the supply chain becomes the one that controls all the flow of goods and information.

In Best-Buy’s case, they implemented a system in which store shipments were placed based on the layouts of a particular location, this increase efficiency and decreased the time it took for goods to get delivered.

In the omnichannel age, forecasting is extremely important. But, its not just forecasting in the way it has been done previously – disparate forecasting for different locations – it needs to be centralized.

With technology, creating this kind of forecast can be accomplished, but investment is required. However, technology is not the only thing that requires investment – process is equally as important. Doing a full, top-down assessment of the current forecasting strategy, what works and what doesn’t, and then implementing new industry standard processes that work in an omnichannel age is the best way to move forward.


Visibility has two aspects: Internal and External

Internally, businesses need to have full visibility over their own fleets, inventory, warehouse and drivers. On the customer end, consumers today want to have full visibility over their delivery – from when it leaves the warehouse, restaurant, or service center until it arrives to their house. The gold standard of this kind of visibility is a real-time map accessible through a mobile device.

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Positioning, Repositioning, Reverse Positioning Strategies Case Study


Case Title:

Segmentation of Stores in Best Buy: Is It Really Customer-centric?

Publication Year : 2006

Authors: Sanghamitra Bhattacharya & Aruna N

Industry: Retailing

Region:USA

Case Code: POS0027B

Teaching Note: Available

Structured Assignment: Available


OR



Since the late 1980s, Best Buy, the $30-billion-a-year company had ruled the US consumer In 2002, Best Buy adopted the angel-devil strategy to identify profitable and non-profitable customers. The company started preparing customer-profiles and collected data from each of its transactions and interactions across multiple brands, suppliers and third party suppliers to create customer profiles. In 2002, after studying the market, Best Buy segmented its store into five customer-centric categories. Each store catered to a specific product as characterised by the profile of the customers. The company trained its employees to focus on specific customers rather than on the product and also modified its supply chain to cater to the needs of the customers. Though the performance of the customer centric stores were better than the other Best Buy stores, a survey conducted by the company in 2005 reported that some of its customers were unhappy with the segmentation of stores. In addition to this, competitors like Wal-Mart, Circuit City and Radio Shack were gaining market share in Best Buy�s profitable areas (DVD & television, Home Theater equipments, computers and home appliances). To combat competition and to satisfy customers, Best Buy decided to merge its five segmented stores into three groups. Analysts opined that while segmentation was an expensive proportion for Best Buy, merging these stores would further drain Best Buy�s financial resources. But other analysts felt that, since Best Buy�s segmented stores performed well, managing cost would not be a major criterion for Best Buy. The company also planned to expand its business in China. Industry observers felt that Best Buy was juggling too much. Would Best Buy�s customer centricity live up to the customer expectation and help in maintaining its market position?

  • To understand how a customer-centric segmentation strategy was applied by Best Buy
  • To analyse how a segmentation strategy could be an effective competitive strategy for the retail industry
  • To understand the different methods of segmentation affected by Best Buy.

Customer Centricity, Market Research, Point of Sale, technology enabled, Gureilla advertising, Segmentation strategy, Angel and Devil customers, Marketing Strategies Case Study, Multiple brands, Competition, Merging, Customer Profilling, Customer electric market, Turnaround, Training of employees

  • Best Buy
  • Customer-Centricity in Best Buy
  • Challenges
  • Best Buy, the Best?

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