Bestbuy positioning in India's heart - Project Report

A
REPORT
ON
BEST BUY: POSITIONING
IN INDIA’S HEART
BY
RITESH KOTIAN
&
PUNAM ZADE
Donthanapally,
Shankarapalli Road Hyderabad- 501203.
Telangana

Table Of Contents
Sr.
No.
Topic Page
No.
1. Introduction: How it all started 1
2. Opportunities in Indian Market 3
3. Competitor Analysis: Secondary Research 6
4. Learnings from Primary Research 9
5. Finding the Sweet Spot for BestBuy 14
6. Brand Strategy: Positioning in India’s Heart 16
7. Methods of Outreach 18
8. Conclusion 20
9. References 21
10. Annexure 22

Bestbuy: Positioning in India’s Heart
Page | 1
Best Buy: Positioning in India’s Heart
“The purchase path thinking is broken”
- Scott Moore, VP Of Marketing, Best Buy
1. Introduction: How it all started
The Best Buy Company, Inc. was started by Richard M. Schulze and his partner in the
year 1966. The first store was named ‘Sound of Music’ and sold only home and car stereo
equipment. They met with success immediately as they could reach sales more than $160,000
in their first year itself. In 1970 Richard became the sole owner of the store as he bought out
the stakes of his partner. Till 1981, he was happy selling only his stereo equipment and with
the income it generated. But soon he realized that there was very little future ahead in this
market with the target audience decreasing day by day. In addition to the stereos he also began
selling appliances and VCR’s. Inspite of having little experience selling appliances, his store
could generate $9.5 million in revenue in the year 1982. This was a major success for such a
small store. That very year the store was renamed as Best Buy Co. Inc. to make the store more
appealing to the general audience. In 1984, the company changed into a superstore format and
opened another 7 stores in the Midwest region of the U.S. This immediately got the company
a hold over 40% of the local market. Now they decided to expand their services throughout the
Midwest region and by 1987 they had more than 25 stores.
Their sales had touched $240 million that year making it one of the well-known retailers
in the U.S. This instant success also propelled them into a heated competition with
heavyweights like Highland Superstores. Though their revenues touched close to $450 million
next year but their profit had decreased by 60%. This caused a huge worry for the company
and this is when they came up with a solution that has been described as the most innovative
idea to be ever implemented in retail industry. In 1989, the company went on to unveil the new
idea of ‘Concept II’ stores. The plan was to open large showrooms which would be well stocked
with electronics goods so that people could pick it directly from the shelves. This concept could
decrease the number of salespeople and attract more and more new customers to this new way
of shopping. The concept became a big hit with the customers and soon Best buy had recorded
its highest earning year in 1993 with total revenues touching the $1.5 billion mark. Their

Page | 2
competitor Highland superstores were forced to shut down their stores after the huge losses
they faced due to lack of sales.
`
Source: Brick and motor
Source: bestbuy.com homepage

Page | 3
2. Entering Indian Market
Indian consumer segment is broadly segregated into urban and rural markets, and is
attracting marketers from across the world. The sector comprises of a huge middle class,
relatively large affluent class and a small economically disadvantaged class, with spending
anticipated to more than double by 2025.
India hit ten-year high and stood first among the 63 nations surveyed in the global consumer
confidence index with a score of 136 points for the quarter ending December 2016. Further, in
the discretionary spending category, 70 per cent respondents from India indicated the next 12
months as being good to buy, thus ensuring once again that India leads the global top 10
countries for this parameter during the quarter.
Global corporations view India as one of the key markets from where future growth is likely
to emerge. The growth in India’s consumer market would be primarily driven by a favourable
population composition and increasing disposable incomes.
India’s robust economic growth and rising household incomes are expected to increase
consumer spending to US$ 4 trillion by 2025# . The maximum consumer spending is likely to
occur in food, housing, consumer durables, and transport and communication sectors.
Title: Size of consumer durables market
source: ibef.org

Page | 4
2.1 Market Size:
The growing purchasing power and rising influence of the social media have enabled
Indian consumers to splurge on good things. The Indian consumer sector has grown at an
annual rate of 5.7 per cent between FY2005 to FY 2015. India’s nominal year-on-year
expenditure growth of 12 per cent, which is more than double the global anticipated rate of 5
per cent, will lead to India becoming the third largest consumer market by 2025.
The Indian fast-moving consumer goods (FMCG) companies have performed better than their
multinational peers as the combined revenue of country's seven leading FMCG companies
stood at US$ 11.1 billion in FY 2015-16, as compared with US$ 9.4 billion revenue generated
by select seven Multinational Companies (MNCs).
Smartphone shipments rose to 109.1 million in January-December 2016 calendar year,
maintaining its healthy traction with 5.2 per cent YoY growth. It is estimated that smartphone
sales in India will grow about 15 per cent to 125 million in 2017††.
The number of online fashion shoppers in India is expected to double to 130-135 million by
2020, to be driven by growth of fashion industry in India and growing use of mobile for online
shopping.
2.2 Government Initiatives:
The Government of India has allowed 100 per cent Foreign Direct Investment (FDI) in online
retail of goods and services through the automatic route, thereby providing clarity on the
existing businesses of e-commerce companies operating in India.
With the demand for skilled labour growing among Indian industries, the government plans to
train 500 million people by 2022 and is also encouraging private players and entrepreneurs to
invest in the venture. Many governments, corporate and educational organisations are working
towards providing training and education to create a skilled workforce.
The Government of India has drafted a new Consumer Protection Bill with special emphasis
on setting up an extensive mechanism to ensure simple, speedy, accessible, affordable and
timely delivery of justice to consumers.

Page | 5
In the Union Budget 2017, the government has proposed to spend more on the rural side with
an aim to double the farmer’s income in five years; as well as the cut in income tax rate targeting
mainly the small tax payers, focus on affordable housing and infrastructure development will
provide multiple growth drivers for the consumer market industry.
2.3 Road Ahead:
Another major factor propelling the demand for food services in India is the growing youth
population, primarily in the country’s urban & suburban regions. India has a large base of
young consumers who form the majority of the workforce and, due to time constraints, barely
get time for cooking.
Online portals are expected to play a key role for companies trying to enter the hinterlands. The
Internet has contributed in a big way, facilitating a cheaper and more convenient means to
increase a company’s reach.
Mr Mark Mobius, Executive Chairman, Templeton EM, opined that the Goods and Services
Tax (GST) will lead to mergers and rise of world class consumer companies in India.
Exchange Rate Used:
INR 1 = US$ 0.0155 as of April 17, 2017.
INR 1 = GBP 0.012 as on February 9, 2017
References: Media reports, press releases, Press Information Bureau (PIB), Union Budget
2017-18, Boston Consulting Group.

Page | 6
3. Competitor Analysis
Secondary Research:
The major competitors which Best Buy will have in Indian market are:
3.1 Amazon India:
Amazon.com, Inc. is an American electronic commerce and cloud computing company
that was founded on July 5, 1994 by Jeff Bezos and is based in Seattle, Washington. The tech
giant is the largest Internet-based retailer in the world by total sales and market capitalization.
Amazon.com started as an online bookstore and later diversified to sell DVDs, Blu-rays, CDs,
video downloads/streaming, MP3 downloads/streaming, audiobook downloads/streaming,
software, video games, electronics, apparel, furniture, food, toys, and jewellery. The company
also produces consumer electronics—notably, Kindle e-readers, Fire tablets, Fire TV, and
Echo—and is the world's largest provider of cloud infrastructure services (IaaS and PaaS).
Amazon also sells certain low-end products like USB cables under its in-house brand
AmazonBasics.
Now let us look at the Segmentation, Targeting, Positioning, Core strengths, customer
associations and communication strategy:
3.2 Flipkart:
Flipkart is an electronic commerce company headquartered in Bangalore, Karnataka. It
was founded in October 2007 by Sachin Bansal and Binny Bansal (no relation). Flipkart
has launched its own product range under the name "DigiFlip" with products including
tablets, USBs, and laptop bags. As of April 2017, the company was valued at $11.6 billion.
Segmentation Avid internet users who want to shop
Targeting
Internet users relying on internet for shopping and other transactions from
Middle and Upper middle class.
Positioning
Global market place which facilitates shopping through customized user
shopping experience.
Core Strengths Trusted brand providing online auction and shopping opportunity
Customer Association Trusted Sellers, Quick Delivery
Communication
Strategy #AurDikhao

Page | 7
Segmentation People who want to shop online
Targeting Middle and upper-middle income online shoppers
Positioning India’s best online shopping store, online megastore.
Core Strengths Wide variety of products across many segments
Customer Association Online Megastore
Communication Strategy “Har wish Puri Hogi” “Big Billion Sale”
3.3 Paytm:
Paytm is an Indian electronic payment and e-commerce brand based out of Delhi NCR,
India. Launched in August 2010, it is the consumer brand of parent One97
Communications. The name is an acronym for "Pay Through Mobile."
Segmentation
People with smartphones looking for cashless payment
transactions
Targeting Tier I, Tier II cities young and middles aged people
Positioning India’s popular and most frequently used wallet service.
Core Strengths Online payment system with high acceptance to use
Customer Association Cashback, Deals.
Communication Strategy #PaytmKaro, Cashfree Nation
3.4 Croma:
Croma Retail is one stop destination for online shopping in India. Buy online all the
products that you need here. Shop online in India through Croma Retail. Cromā is an Indian
retail chain for consumer electronics and durables. It is the nation's first large format
specialist retail chain for consumer electronics and durables with successful expansion into
Croma Zip stores, Croma Kiosks and latest online vertical, www.croma.com.Tata Group
company Infiniti Retail runs Cromā stores in India. Infiniti Retail Ltd is a 100% subsidiary
of TATA Sons.

Page | 8
Segmentation People who shop in stores
Targeting People looking for diversified product range
Positioning Offline and online retail store
Core Strengths
Wide merchandise base, well-trained and knowledgeable staff to
offer personalised and sound advice to all its customers
Customer Association
Customer oriented staff, good Interiors, Brand with trust and
reliability
Communication Strategy 24*7 Croma

Page | 9
4. Learnings from Primary Research
4.1 Are customers brand conscious?
4.2 Mode of buying consumer electronics:

Page | 10
4.3 The country origin of the brand does not affect consumer behaviour
most of the times:
4.4 Most are price sensitive:

Page | 11
4.5 Sources of product information:
4.6 Brand Awareness:

Page | 12
4.7 Choosing the right marketing medium for Bestbuy:
4.8 Core Brand association of competitors:
Based on the primary research we have captured the core brand associations
for all our competitors:
0 5 10 15 20 25
Customer Reviews
Daily Deals/App Deals
Fast Delivery
Festive Offers
Not bought from this brand
Trusted Sellers
User-Friendly Website
Amazon Core Brand Associations

Page | 13
0 5 10 15 20
Customer Reviews
Fast Delivery
Festive Offers
Low on service support
Trusted Sellers
Flipkart Core Brand Associations
0 5 10 15 20 25
Customer Reviews
Fast Delivery
Festive Offers
Trusted Sellers
Croma Core Brand Associations
0 5 10 15 20
Customer Reviews
Fast Delivery
Festive Offers
Trusted Sellers
Paytm Core Brand Associations

Page | 14
5. Finding the Sweet Spot For BestBuy
4.1 Key Learnings from the research:
• Not about getting another e-commerce company to the market.
• Build a community of Brand Evangelists: An event in a strategic location and plan
an event that would appeal to influencers you would like to work with. You can start
small by doing something like inviting local influencers to your retail location or you
can go all out and plan an entire weekend that includes your brand but highlights your
influencers and their interests.
• The challenge of on versus many.
• Everyone thinks the same about the brand but identifies the offerings differently
• Lack of knowledge on unique brand propositions of what it offers.
4.2 SHIFT in FOCUS:
• From positioning from just an ecommerce brand to “Lowest Price” and “Best in after
sale service”.
• Building a community will help in the long run.
4.3 What is a community brand:
A brand community is a community formed based on attachment to a
product.
As we know emotions drive Indians, we use it to prosper.

Page | 15
4.4 Role of Community Brand:
• Connect
• Unite
• Support
• Preserve
4.5 The Result
• Belong
• Share
• Contribute
• Participate

Page | 16
6. Brand Strategy: Positioning in India’s Heart
Launch Year along with action Plan
➢ 2018 - Getting Approval by Government regulators.
➢ 2019 – Brick and Motor store will be launched in suburban areas and Tier-II cities.
➢ Initial Launch will be with campaigns posters.
Teaser Poster for “Brick and Motor” and “Online Campaign”
Promotional Strategy for Brick and Motor store:
• Offers
• Campaigns
• Feedback
Target Audience for Brick and Motor store:
• Baby Boomers
• Generation X

Page | 17
➢ 2021 – Online Presence launch
Promotional Strategy for the website:
• Search Engine Optimization
• Generate content for website and social media handles
• Affiliate Marketing
Target Audience:
• Generation Y
Message Strategy:
This kind of message strategy triggers the affective, cognitive and conative components
Will be used for “Print + Digital” Media

Page | 18
7. Methods Of Outreach
As marketers, we can learn how to implement success by observing two things. (Yup
I’ve just our career learning curve to two things, I feel bold today)
We observe other marketers implement tactics that simply don’t work. In fact when we see
ones that “just don’t seem right” like Mickey Mouse yelling “f***” at Disney World, we take
strict mental notes as to not find ourselves at the centre of that sort of #marketingfail.
We also observe campaigns, tactics, strategies and plans that make us sit back in our chairs
and say “I wish I did that for my company.” And we quietly hope our boss doesn’t get word
of that awesome strategy and hope they hired them not us…
Bottom line: we learn about marketing from what others test out for us. A good strategy is
comprised of what we observe in awful campaigns and in epic campaigns.
Few Of the outreach plans for Bestbuy:
Experiment with verticals:
Team up with a few social influencers or bloggers in a vertical you’ve never marketed
in and see if you can place your brand or your client’s brand in front of new consumers. Track
engagement and brand lift to see if this vertical is one that you should scale up a bit.
Organize an influencer event:
Try an influencer event. Pick a strategic location and plan an event that would appeal
to influencers you would like to work with. You can start small by doing something like
inviting local influencers to your retail location or you can go all out and plan an entire weekend
that includes your brand but highlights your influencers and their interests.
Write About a Time You Weren’t Your Best:
Write a blog post about a time when you or your brand wasn’t at your best. Authenticity
is sexy. When consumers can see your brand as human instead of a mere digital presence, they
can connect and relate. This means you don’t always have to be perfect, you just have to be
truthful and real. Own mistakes. Talk about a time your brand made a decision that you learned
from. If you can use this as a lesson for others—a strong connection can certainly develop.
Stop Campaigning:
Develop a strategy that can harness more than one digital shout out. Find a way to work
with social influencers on an ongoing basis. Whether it’s once a month or once a week for three
months—try working with less influencers and compensate them for multiple posts. The theory
behind this strategy is that ongoing mentions are more trusted and thus more effective because
a network trusts a brand mention when it occurs more than once.
Send “Just Because” gift:
Send “just because” gifts to your top influencers. Have passionate advocates or
influencers in your network that have given your brand some fantastic word of mouth

Page | 19
recommendations? Make a list of the top ten and send them “just because” gifts. Whether it’s
something from your brand or something that is personalized to their liking—this will show
your appreciation for their advocacy and keep your brand on the brain. Great way to foster
strong marketing relationships.

Page | 20
7. Conclusion
As we see, a brand strategy plays a crucial role for a new as well existing
business. It’s up to us how we leverage the communities around us for
increasing market share and being relevant to the needs of the masses.

Page | 21
8. References
• grouphigh.com
• Electronic Industries Association of India
• https://www.ibef.org/industry/indian-consumer-market.aspx

Page | 22
9. Annexure
• https://docs.google.com/forms/d/1OhSAweOWKf9HxxmrbqPDpBENto5vAG3zDsS6
TVbSGqg/edit
• https://docs.google.com/forms/d/1qAF08eVDtXCIHEltlWnFdZCwzT83KmqkPHA4
wEDo4ew/edit

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