August 27, 2014
Segmentation and Target Market Paper
Best Buy has been an electronics giant for many years. They have cornered the market in electronics, but they have out lasted many other electronic retailers such as Circuit City, Ultimate Electronics, and Wal-Mart. Although Wal-Mart is not seen as an electronic e-mail, but have given many different retailers a run for their money with very competitive prices. The main segment that Best Buy is looking at is teenagers. The up and coming electronics whizzes are the target for what Best Buy carries, but there is still a market for the Generation X as well.
With all the technology, Best Buy is trying to attract Generation Z. “Studies differ on the exact age range of Generation Z, but most agree they were born after 1990, which makes them the largest generational group in the U.S.” ("Millennials Are Old News — Here’s Everything You Should Know About Generation Z", 2014). This next generation coming up are the most technologically savvy generation because they have had computers from the beginning. They have grown up with computers, but then they have been introduced to tablets at an age where they can navigate them and their smart phones to do as much as they possibly can. They test the limit of their technology and upgrade when their devices will not do what they want it to do. This is what Best Buy is counting on because technology is every changing and every three months there is a better device, with more power at this generations fingertips.
The Generation Xers are also at a point in their lives where they are raising Generation Z. The Generation X people are building houses, buying cars for their teenage drivers and sending their children off to college. This is the second segment that Best Buy is focusing on. Consumers are more budget conscious and looking for the best price for the latest and greatest technology that will not break the bank. “Best Buy Co., Inc. (NYSE: BBY) is the world’s largest consumer electronics retailer, offering advice, service and convenience – all at competitive prices – to the consumers who visit its websites and stores more than 1.5 billion times each year.” ("About Best Buy", 2014).
Best Buy is going out of their way to cater to these segments with their “Renew Blue” initiative. Their stock rock bottomed at $11.53 a share, and they needed to renew their brand. Going listening to the customer, they took on a huge training plan and by doing this, they are able to help inform the customers and also ask for the sale. Best Buy’s biggest challenge is the internet. With so many different options out there, they have had to make sacrifices by price matching their competitors. When the customer started to come in and use Best Buy as a showroom for Amazon, this created a huge customer loss because the prices were so much different and sometimes better.
Now with the new outlook from Best Buy, they have decided that the segments are the way to go and they have trained their employees to understand the needs of the customers for each segment. They have started to expand their higher end merchandise such as their Magnolia Home Theater section, also they have brought in their Pacific Kitchen and Home appliances to entice customers who are willing to spend the money with them. This is where the Generation X are the market they are trying to reach. This market is established in their careers by now and they have the money to spend on the quality that Best Buy offers. Many people are building or remodeling their houses.
Best Buy wants to get the latest and greatest into the hands of as many people as possible. Their values are Learn from Challenge and Change, Respect, Humility, Integrity. With all the reorganization they have been doing, Best Buy is working hard to keep the customer with the challenge and change. Many people do…