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Best Buy differentiated itself by deploying a service-oriented strategy rather than a low-price model. How could the firm continue to offer innovative products and superior customer service while facing increased competition from large brick and mortar stores and financial stress due to the economic downturn?


Best Buy is the largest consumer electronics retailer in the US, accounting for 19% of the market. Globally, it operates around 4,000 stores in the US, Canada, Mexico, China, and Turkey. Its subsidiaries include Geek Squad, Magnolia Audio Video, Pacific Sales, and Future Shop. Best Buy distinguishes itself from competitors by deploying a differentiation strategy rather than a low-price strategy. In order to become a service-oriented firm, it changed the compensation structure for sales associates and applied a customer-centric operating model to provide end-to-end services. It also heavily invested in the training of sales professionals so they can better understand products and better assist customers. As a result, the company is widely recognized for its superior service. Best Buy still faces competition, however, from large brick and mortar stores like Wal-Mart, as well as e-commerce stores like Amazon. The economic downturn and technological advances (the frequent introduction of new products) have also put stress on its financial strength and the quality of its customer service. The key challenge for Best Buy is to determine the correct path to improve its differentiation strategy. The main question is: How can Best Buy continue to offer innovative products, top-notch employees, and superior customer service while facing increased competition, operational costs, and financial stress?


This case is written in a way that complex strategic decisions can easily be analyzed during limited classroom discussion time. Professors have commented that the case has worked well in their classrooms.

Case Study