Best Buy Uncovers Angels in the Market Case Study
Best Buy Uncovers Angels in the Market
Case Summary:
Best Buy specializes in a variety of products that focus on making life easier and more fun for consumers, by educating customers on the features and benefits of technology and entertainment products. While Best Buy has 1,200 retail stores across the United States it operates in a highly competitive market. To cope with this competitive market Best Buy specializes in collecting data from its stores to discover what its customers want and need. The company developed a database that incorporates information into a system that allows them to use marketing data to develop a complete picture of its customers. Best buy uses segmentation analysis to track consumer purchase histories to study its customers which helps the company identify new customer segments, better understand existing customers, to target promotions more precisely, and to identify key locations for expansion. The company has with the help of Larry Selden a consultant from Columbia University Graduate Schools of Business determine what they call “devil” customers and “angel” customers. The angels were customers who purchases high tickets items without waiting for markdowns or rebates, and the devils applied for rebates and then return the products back only to buy them back again at returned merchandise discounts. Best Buy has categorized its angel customers into five segments, the small business customer, the young entertainment enthusiast, the affluent professional, the busy suburban mom, and the tech savvy family man. Best Buy’s new “customer-centric” operating model focuses on these five key segments. They launched this model in 67 of its stores to analyze the market and narrow its focus on one or two of these groups. Company executives believe that this model offers customers a richer in-store experience with better shopping assistance and also provides more of the goods and services that customers want. The model also helps employees to
Case Summary:
Best Buy specializes in a variety of products that focus on making life easier and more fun for consumers, by educating customers on the features and benefits of technology and entertainment products. While Best Buy has 1,200 retail stores across the United States it operates in a highly competitive market. To cope with this competitive market Best Buy specializes in collecting data from its stores to discover what its customers want and need. The company developed a database that incorporates information into a system that allows them to use marketing data to develop a complete picture of its customers. Best buy uses segmentation analysis to track consumer purchase histories to study its customers which helps the company identify new customer segments, better understand existing customers, to target promotions more precisely, and to identify key locations for expansion. The company has with the help of Larry Selden a consultant from Columbia University Graduate Schools of Business determine what they call “devil” customers and “angel” customers. The angels were customers who purchases high tickets items without waiting for markdowns or rebates, and the devils applied for rebates and then return the products back only to buy them back again at returned merchandise discounts. Best Buy has categorized its angel customers into five segments, the small business customer, the young entertainment enthusiast, the affluent professional, the busy suburban mom, and the tech savvy family man. Best Buy’s new “customer-centric” operating model focuses on these five key segments. They launched this model in 67 of its stores to analyze the market and narrow its focus on one or two of these groups. Company executives believe that this model offers customers a richer in-store experience with better shopping assistance and also provides more of the goods and services that customers want. The model also helps employees to
Cited: FICO.com (2011) Best Buy plugs into the power of customer centricity. Retrieved on 1.19.11 from: http://www.fico.com/en/FIResourcesLibrary/Best_Buy_Success_2271CS_EN.pdf Gulati, R. (2010). Inside Best Buy’s Customer-Centric Strategy. Retrived on 1.20.11 from http://ranjaygulati.com/rg/images/inside-best-buys-customer-centric-strategy-hbr.pdf Stopper, B. (2007) Best Buy: customer-centric innovation. Allbusiness.com retrieved from 1.19.11 from: http://www.allbusiness.com/public-administration/administration-human/3896193-1.html