Bargaining Power of Customers: Low because customers who purchase from Best Buy generally don't purchases 10 of the same product at a time. Products purchased at Best Buy are a smaller percentage of one's income, unlike purchasing a house or a car. Consumers do not control what products get produced and at one price.
Threat of Substitutions: Few substitutions because it depends on the product the consumer wants to purchase. Best Buy can be the best option for some products but for others, some people may find it cheaper to purchase from Amazon or eBay.
Bargaining Power of Suppliers: High because they only purchase from major manufacturers such as Sony, Toshiba, Samsung, LG, Panasonic, etc. Best Buy has no other choice but to purchase from these manufacturers.
Threats of New Entrants: Low even though there is a potential pool of entrants that is large because there is numerous online electronic retailers.
Rivalry: HIGH. Walmart is one of Best Buy's biggest rivalries because they also do price matches. Walmart is already known to have the lowest prices but if they don't, they will give you the difference on a gift card. Best Buy just lowers the price of the product and that is what you pay. Customers who want to purchase more advanced electronics or who are still unsure of what specific product they want might want to go to Best Buy because their team of experts may be more knowledgeable than the workers at Walmart.
Strategy & Focus
Industry-wide focused differentiation.
Switching Costs
Medium-High.
Depending on the customer, switching costs can range from medium to high. If a customer knows what they want, they can really purchase it anywhere because they don't need someone who is knowledgeable about the product. They can even order on websites such as Amazon.com.
Some things that Best Buy offers that keep their customers loyal and happy are: Blackjack protection, Rewards Zone card, Best Buy credit card, online shopping, and ordering online with in-store pick up.
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