市场定位失败分析及其重新定位.doc

Analysis of Best Buy’s positioning and repositioning

The failure of Positioning
Best Buy is one of the biggest retailer enterprises in the world. What Best Buy’s differences in China with other appliance retailers is that it insists on high-end route and focus on particular customers, forming different competition with its competitors.
Accurate market positioning will bring highest return on investment; however, while Best Buy still remains its leading level in this field, they failed to pick up the market share in China because of its unsuitable market positioning.
1. Brand Image positioning
In the field of home appliance, most of the retailers straggle to get more market shares based on the competitive prices owing to the convergence of the products. To different with them, Best Buy try to setting up the enterprise image as high-end products in China and believe that “big brand should do big things”. They maintain the purchasing conditions and solutions but not prices.
This brand image positioning can only attract small part of customers who is paying more attention to the quality of service. And more consumers just took a wait and see attitude.
2. Characteristic Service positioning
Experiential marketing is their most proud characteristic services. Best Buy take a lot attention on it and try to create more comfortable and warmer atmosphere. They have open special shops only for customers to experience their products but not for selling.
In fact, it dose really attract a lot of consumers but they just experience the products, then most of them don’t choose to buy it. They are willing to buy the same-standard product in Suning and Gome which is cheaper. It sounds like that the price of Best Buy is too high to be accepted by customers.

Here are the mainly reasons for its positioning failure:
1. High price
In the opinion of the American marketing gurus Ai Rees, who is “the father of positioning”, the retailer’s success, is mainly based on the following elements: price and convenience. The retailer
Can advocate hit low price, and can also mark up the price if the areas will bring convenience to customers.
Best Buy got success in the United States is based on the same reason: low price. On the contrary, the management want to build strong brand retailers and rely on consumers’ loyalty to drive the sales.
The positioning proved to be little effective, because what the consumer really need is the producers brand but not the retailer brand. Since there are so many other retailers just like Suning and Gome, who has same product with lower price, there is no wonder consumers will give up Best buy.
2. Powerful competitors
Before Best Buy entering China, there are several popular appliance retailers. While the management of Best Buy try to seize more market shares by using the experience and replacing the service at a discount, Gome and Suning have pulled up their products to the consumers’ home, they keep to open more than 100 shops a year, at the same time, they did a large acquisition and became more powerful on this field in China. After that, conditions for Best Buy are likely to become harder.
3. Lacking of advertising
Although Best Buy is famous in America, the influence to Chinese consumers is smaller than other retailers. They did not pay more attention to the advertising, when Gome and Suning put a lot of money on product advertising, they didn’t take any action. They find it is not smart to spend ￥300,000 on newspaper ads print on 20 pieces for the cities of 19 million people.

This caused the decrease of its profits. And the earnings are far lower than expected. Even worse, they closed all the branches in China under the pressure of enormous loss.

Market segmentation
1、Management objectives of Best Buy
Through purchasing the equity of 75% of Wuxing Electric Company in 184 million dollars in 2006, Best Buy entered the electric concatenating market in China. That is to say, Best Buy joined the fierce war of home appliances retailing industry with Gomo and Suning at the same time, and it also became the third following the two. And in December of the year, the first shop of Best Buy appeared in Xujiahui of Shanghai. With the excellent debut and eminent background, Best Buy plan to expand the home appliances industry market in China with several years.
2、Geographic location
As a variable demand for the domestic appliance, market is divided into east, south central, north, southwest, northwest and northeast seven major areas. In depth, combined with geographic and demographic factors to the national market is divided into the primary market, secondary market, three markets, four markets. Specific coverage is Primary Market: sub-provincial level cities. Secondary market: municipal. Three markets: the county level. Four markets: the township.
3. Consumer behavior
With the development of economic, the income level and educational level of people have developed. Their requirement of home appliances becomes more and more individual and intelligent compared with the traditional one. It was shown that there were huge potential in consumer market of high-end home appliances in China.
According their predilection and particular behavior and value, we divided the people in mid and high level into four types which are Distinguished, Enjoyment, Label and Financial. Those people in different type have different views and demands of lifestyle.
(1) Distinguished type - pursuit of natural, quiet
Most of these people are entrepreneurs, celebrities, or business careers, who are middle-aged including some stationed in the Mainland of Hong Kong, Macao, and Taiwan compatriots, returned overseas Chinese and so on. They focus on life, nature, quality, safety and environmental protection, which have less attention on price-sensitive, fashion. Relatively speaking, they would rather get consumer identity and recognition, and look forward to winning more recognition and acclaim.
(2) Enjoyment - service-oriented, detail
Many of these people for all types of high-level business leaders, returned overseas Chinese, foreigners and so on. Relatively they are more concerned about the service, and pay more attention to details, and they are not very price-sensitive in the fashion. But in general, the values ​​of these groups in all elements of the requirements are above the average, fully embodies the pursuit of quality of life in these people's values. In the consumer orientation, such people prefer those who can effectively improve the quality of life in products, and these consumers are willing to spend more money.
（3）Label -- focusing on identity Mostly
It is for senior leadership and private industry. They are price - sensitive, tend to purchase cheap merchandise. They focus on embodiment of identity and wealth status,and pay more focus on consumer behavior in the values of elements show the identity, the pursuit of comfortable living. In terms of consumer oriented, they tend to brand consumption,so most people like luxury product. More young people also like fashion and trendy things.
(4) Financial -- attaching importance to price and service
Such people are mostly middle - level employees and owners of private enterprises, they don’t have recognition of the identity, they are more rational and pursuit of product quality, enjoy the pursuit of more services than on brand. But because of the price sensitive, they often have a "psychological pricing ", if the price is higher than the budget, they will doubt.

Target consumers
Therefore, we came to the conclusion consumers who buy Best buy household appliances in China belong to label and finance type ,middle class and above whose main revenue are more than $10,000 with middle age, living in the city, focusing on product quality and service, price sensitive and family responsible.
1. Size and potential of the target consumer group
According to the survey about 1.3 billion people in the nation, high-end operators about 120 million people in China, of which about 80 million individual owners of industrial and commercial units, nearly 40 million SMEs. This constitutes the main body of China's middle and high-end consumer groups, which some people grasp about 80 of the country's wealth. With China's rapid economic development, high-end people as the Chinese community in the middle of the force, was growing. Improvement of the education level, young generation are more prone to quality of service, pursue of comfort and quality of life. This part of the population is also growing.Target consumer groups are enormous potential.
2. The Feasibility Analysis of Target Market
(1)The power of Best Buy: Best Buy is the largest retailer of CE in the world, entering the Chinese market and getting localized. It seems to be difficult to recover the cost in short-term after reducing its price, but in long term, it’s useful to get along well with customers. On the other side, the financial strength could deal with the loss in short-term.
(2)Production: Service of high quality, experiential marketing and professional shopping guider are the pivotal methods and the biggest advantages of Best Buy.
(3) Marketing: The home appliances retailing industry was the most mature and the first opened industry. And the traditional home appliances retailing market become saturated gradually. In 2006, Gomo had already achieved the average share of market at 25% of the midland market. But many retailers in China rent the shop to manufacturers, and gain a lot. The price war between those manufacturers results in a noisy market and bad atmosphere. But, make a general survey of the sales model of Gomo and Suning, there is no enterprise hold the high-end sales model based on Experiential Marketing and servicing. Thus, there’s a big vacancy of comfortable atmosphere, experiencing service and professional guiding in Chinese market.
(4) Rivals: In 2006, Gomo acquired Yolo. In 2007, Suning acquired Dazhong Electronic. According to the data of Chinese electrical appliances market research group, the turnover of home appliances would reach 10,000 million yuan this year of the whole country. According to the relevant information, the sales from January to September of Gomo reached 30,319 million yuan, and it was still the largest enterprise of home appliances retailing industry at home. On the other hand, the turnover of Suning was 28,040 million yuan, it became the second largest one. Those data shows that it was Gomo and Suning that occupied the most of the home appliances retailing market, obviously, the duopoly era of the market began. But because Best Buy entered Chinese market so late, it can only expanding the market with particular service.

Reposition
1、 The middle and high-grade market
The target market should be the middle and high-grade market. Because even the customers in the first-tier city are still in the lagging consumption conception and those people consist of the major parts of the whole consumers.
2、 Localization service
A、Experiential marketing
Best Buy is the biggest electrical and electronic retailing store in the world. However it lost the big market shares in China, so one of the important changes is finding a way which can be accepted by consumers quickly, that is the localization service
The most creative service of Best Buy is experiential marketing, which means there are no longer traditional departments, but shelves. They use the supermarket mode to selling appliances, with the professional bias-free shopping guide team. In a world, costumers in there have more independent choice.
B、Low price policy
In China, retailing stores often gain the market by price policy, especially the lower one, because of the Chinese consumers’ philosophy. They are want good quality with competitive price, if the products are the same, they prefer the cheaper one. So Best Buy should adjust their price into lower to adapt the market and attract more consumers.
C、After-service
After-service is another essential factor for service. We’d better improve the following items:
·help to install and debug the product
·offer free delivery services
·offer the supply of components
·offer the maintenance services
·guarantees for repair, replacement, and compensation
·telephone consultation and line-consultation
Through these services, Best Buy can maintain the image in the consumers’ mind.