MKT 421 Week 5 Learning Team Assignment Marketing Plan Final Paper and Presentation
MKT 421 Week 5 Learning Team Assignment Marketing Plan Final Paper and Presentation
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MARKETING PLAN: BEST BUY – UNIVERSE OS SMARTPHONE 1 Marketing Plan: Best Buy – Universe OS Smartphone Team MKT/421 Instructor April 18, 2011 MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 2 Marketing Plan: Best Buy – Universe OS Smartphone Organizational Overview In 1966 Richard Schulze opened his first store, which was called the Sound of Music. In 1983 the company became known as Best Buy and by 1985 it was a publicly traded company. This came about with a vision of “People, Technology. And the pursuit of happiness” (Best Buy, 2008, p. 1), which is the mission of Best Buy. The employee’s concentrate his or her energy on the customers, vendors, and shareholders because the success of Best Buy depends on the people. The products and services provide the latest in technological advances and the pursuit of happiness is shared within and throughout the company. The goal is to provide the products and services to meet the customers, shareholders, and even employee’s needs (Best Buy, 2008). The company began its operation in St. Paul, Minnesota, back in 1966. By 2002, Best Buy had expanded to Canada with the acquisition of Future Shop. Today the company has locations in Mexico, China, and nine European countries with a product line to match. Though the store started out as an audio component systems retailer, it has grown to include many products and services. Products range from video equipment, computers, cell phones and cell providers, office furniture, and appliances. Services range from excellent customer service, The Geek Squad, the buyback program, tradein center, appliance delivery, installation, and repair, service plans, and a recycling program (Best Buy, 2008). The Universe OS Smartphone Best Buy has had a historic presence in the sales of mobile phones however in the future Best Buy will switch from a salesbased company to a services and a producer of such phones. Best Buy will be introducing a new Smartphone. The Research and Development team has released the new specifications for the phone so that the marketing team can develop a strategy MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 3 to make the sales of the new phones a success. The operating system (OS) is one of the most important aspects of a new phone. This defines the users experience with applications and functionality but is not associated with ergonomics or mechanics. Best Buy has developed a new operating system, “Universe OS”, which will not only be standard on the new flagship phone but also sold to other phone and tablet PC manufacturers. The new operating system incorporates many of the same features as the competitor products such as touch sensitivity and ease of use but offers other features not common with other OS’s. Some of the new features are native office applications such as Open Office, RDP (remote desktop) and offers monitoring and control features for IT professionals. Best Buy has improved on the historical design and operating system of Smartphone’s. Phone esthetics includes a basic candy bar design with a touch screen keyboard function for ease of use. The new phone offers many of the same features as other phones on the market but has improved upon the strength and durability of the device with a new magnesium frame, which is almost indestructible. Housed on the new frame will be a new skin and touch screen dubbed “Chameleon.” Chameleon technology changes the color or hue of the device, depending on the user’s skin temperature much in the same way as a mood ring works. The touch screen made of Gorilla Glass, first developed by Corning is almost indestructible. Best Buy has also determined that it is time to enter the service carrier market. As a service carrier Best Buy will not only carry contracts and provide services for the Universe line but also for other manufacturers such as Motorola, Blackberry, and Samsung. This new business plan will directly compete with other carriers including Verizon, ATT, and Sprint. Unlike other carriers Best Buy will offer data packages at a significantly cheaper rate and for those moving from other carriers Best Buy will offer an additional 10% off monthly charges. MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 4 SWOTT Analysis (Internal/External) In analyzing the internal resources and external environment is the SWOTT analysis of the new Universe OS. The strengths of the Smartphone are the reputation establish from 45 years in business, brand awareness and customer loyalty, quality, existing operations globally with the potential for growth in the cell phone market. From the first store opening in 1966 providing audio components until today providing the latest technology advancements in electronics and other products, the company has built a strong brand name with consumers. The quality and prices of the products along with the dedicated service through the 45 years in business establish the reputation and create customer loyalty of many consumers and the quality of the Universe Smartphone because of the strength and durability of the device with the chameleon technology. Other factors assisting in building the reputation and customer loyalty is the recognitions and awards from many organizations, such as the United States Environment Protection Agency for several recognitions, Fortune for Most Admired Companies, and Ethisphere for 2009 World’s most Ethical Companies (Best Buy, 2010, p. 60). These strengths that the company has earned through years of providing products and services with operations in the United States and internationally, along with the ability of growth in the cell phone market will assist in the success of the Universe OS Smartphone. The weaknesses that could threaten the Universe OS Smartphone are the capital to implement this plan, inexperience, and other competitors introducing a similar model. The success of the marketing plan depends on the available capital, the experience of developing a Smartphone, and another competitor introducing a model with similar features. The economy can affect the availability of capital to produce a new product because of the costs of researching, development of the product, promotions, distribution channels, and other factors in the marketing plan. The knowledge and talents used in the development of the product can affect the quality, MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 5 and lack of experience in developing the Universe OS Smartphone can affect the ability to compete in the market. Another competitor introducing the development of a Smartphone with similar technology at a lower price can affect the market growth of the Universe OS Smartphone by substituting one product for another. The opportunities are partnerships, demand of technology advances, and the expansion and potential growth in the mobile phone industry. Best Buy will partner with organizational buyers to distribute the Universe OS Smartphone from the manufacturer to the retailers. This will increase revenue and growth in the mobile phone industry because of the expansion of entering the Smartphone market, along with the company’s channels used in selling to the target market. To stay connected in the professional and personal environment, consumers demand the latest technology and quality in products which are versatile, and functions that satisfy their needs. With the durability of the magnesium frame, the gorilla glass, the native office applications, and the sleek design, plus the device’s ability to change colors from the user’s body temperature, are advantages to current mobile phones on the market. Introducing the Universe OS Smartphone will provide Best Buy the opportunity of growth and expanding into the Smartphone industry with updated technology and satisfying the consumer’s needs with the latest features and applications. Possible threats to the Universe OS Smartphone are increased competition, shift in consumer needs, and economic climate. The Smartphone is easy to make and many companies are entering the market, which increases the competition in the industry and requires unique features, advanced technology, and prices which are competitive with other Smartphone’s on the market, along with competitors in a certain radius of the stores. The consumer’s needs and preferences shift with the change of company’s products because of upgrades in features, applications, prices, and other factors. The economic climate and ability of consumers to spend MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 6 money can affect the sales of the Universe OS Smartphone, so timing of its introduction can threaten the success of the new product. Trends that could affect the sales of the product are the consumer’s needs in mobility in a swift business environment with uptodate technology, design, and applications. The growth of wireless products is a continuing trend with the need of technological advancement and the ability of communicating in various forms. The design is another important factor in the new trends. Unique and sleek styling for the device is demanded in the mobile phone industry, and the Universe OS Smartphone has chameleon technology, which changes colors depending on body temperature. Other features in design include the candy bar design, the durability of the magnesium frame and gorilla glass, and other features and services. The office applications and the options to integrate and access servers and data centers are available on the Universe OS Smartphone, and additional applications can be downloaded to the phone at no or low cost, provide the Smartphone with a longer life, which decreases costs to consumers. Marketing Research (Consumer/Industrial Analysis) In order for this product line to be successful, Best Buy must be able to provide this product across a large demographic. The company will create many target markets on the basis of income, age, and geographic area. In most geographical areas, age, and income levels are synonymous with each other. Younger age groups have the most limited income, and the largest desires to stay connected, and have the most technical devices. Older age groups have more disposable income, less desire to stay connected, a fear of technology. Best Buy will need to provide services that appeal to all age groups and income levels. The marketing team will be instrumental in the communication to the consumer on the variety of plans available and how those plans can fit any budget. MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 7 Geographical considerations must be met in determining how and where to market the new Universe OS Smartphone. Best Buy currently has locations throughout the United States, Puerto Rico, and Mexico (BBY Solutions, Inc., 2011). The marketing team would need to determine if it would be more beneficial to launch their product in the United States only, and expand its service globally, or simply to launch a global campaign to begin with. The research team would need to conduct research in each country to determine which would be most effective. Similar devices have been around long enough to gather data on how many users there are who use similar products, along with what the users’ most and least favorite features are. Best Buy can use this information to determine which applications to enhance, and which applications are most popular. Segmentation (Criteria/Target markets) Best Buy will be able to approach the geographic, demographic, psychographic, and behavioral segmentation market with the Universe OS Smartphone. Despite marketshare gains, Best Buy still has only about six percent of the mobile phone market for the United States, Canada, and Mexico (Russolillo, 2011). The phones will first be offered in the United States, Canada, and Mexico. Research will be conducted to determine where it will be most effective to expand location at the various countries in which business will be conducted. Best Buy will continue to open more mobileonly stores that will help to meet the needs of consumers in various counties or states by providing a quick, convenient location, just around the corner. The demographic variable will be easy enough to cover considering the product has so many features that will appeal to all. As discussed previously, the “Chameleon” technology changes colors with the skin’s temperature. Next, the candy bar design with the touch screen keyboard makes the phone light weight and easy to use. The magnesium frame with Gorilla glass makes the phone virtually indestructible, which makes the phone attractive to a variety of ages. MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 8 With the availability of Open Office, RDP (remote desktop) and server and data center monitoring and control, Best Buy is also sure to reach the professional business person. The psychographic and behavioral variables will be covered by providing a “Universal” Smartphone. Applications are virtually endless so a customer will be able to customize his or her phone, to include applications for work, home, and play. The features of the Universe OS Smartphone will meet the needs of all social classes no matter their lifestyle or personality. By providing excellent customer service, convenience, and quality no matter the consumer’s user status or use, Best Buy will be able to attract the consumers from all walks of life. The initial break out for the Universe OS Smartphone will be just as the name suggests, “Universal.” Any age group or vocation will want to use the smartphone. Music, games, texting, or the social networking on the personal side of the phone, or any vocation for the GPS, document sharing, word processing, and business aspects. The phone has been specifically designed so it can be customized by each person who purchases it. The hardware will be the same for each phone, which enables mass production, but the customization software creates a sense of individuality, making the target market virtually endless. Teens and young adults, age 13 to 25, have grown up in a mobile environment. This is the next logical step in development for this group of individuals. This age group has the most limited disposable income and is most needed to grow the Best Buy brand. Strategic pricing contracts and sales promotions allow this target group to purchase the Universe OS Smartphone and a plan that is affordable to them. The 13 to 25 age group places much importance on text messaging and song downloading, and is growing the fastest (LevRam, 2007). With no fear of technology, this market will discover and suggest new ways to use the Universe Smartphone, and give ideas for the next version. MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 9 Parents or others, ages 25 to 45 will be part of the business, social, and personal target. The Universe OS Smartphone apps are virtually endless, and this target group will have no problems finding applications to fit their needs like streaming video or music, or banking apps to check their balances on the go. Finally, businesses and business people of any age can purchase the Universe line for their employee’s. Many businesses will use tracking apps for locating merchandise, and employees will have GPS systems available on their work phones allowing them to streamline deliveries, and stay organized by the ability to keep track of meeting notes and presentations. Because of the individuality of the Universe OS Smartphone, the target market is large and will include anyone that currently owns a mobile phone. This versatility allows a Smartphone to be marketed to a person, or too many people in a business environment. Differentiation and positioning Best Buy will become both a carrier of the Smartphone, and a redistributor. The market for phones is diverse and though some manufacturers chose to be exclusive, this will not be the case for Best Buy and the Universe line of phones that they produce. Best Buy will have groups of organizational buyers such as school districts, hospitals, and large organizations, which leverage technology to improve productivity. Other organizational buyers will purchase the phones directly from the manufacturing company and sell them to retailers such as ATT, Verizon, and various online retailers. The Universe line of phones will be sold to consumers as well as organizations of various sizes as a business tool. Organizational buyers such as school districts, hospitals, and large organizations will be targeted by the marketing department of Best Buy to educate them on how to use the Universe operating system and how the hardware package can enhance business processes. This will include site visits and sales calls to target organizations, at which point, the MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 10 Best Buy team will work with organizational leadership and IT departments to educate them on how the phone will improve business processes. Today’s buyers and technology users desire devices which will enhance and improve work flow. Some organizational buyers, such as those in health care and auto industries in, which Best Buy will target, will be at the administrative and management levels. These types of professionals typically use Smartphone’s to schedule their day, write emails and make necessary calls. Stage of the product life cycle According to Perreault, Cannon, and McCarthy (2009), a product life cycle consists of four phases: market introduction, market growth, market maturity, and sales decline. Although the Smartphone market is in the market growth phase, the Universe OS Smartphone is currently in the market introduction phase of the product life cycle. Best Buy has the prototype, and is nearly ready to launch the marketing campaign virally, but it has not yet been introduced to the public. Consumers do not yet know about the Universe OS Smartphone, and although it is a superior product compared to its competitors, people do not know that they need or want it yet. Smartphone competitive landscape is fierce, and the market for the product is crowded with competitors such as the iPhone, DROID Eris, Palm Pre, and Blackberry Storm. However, the marketing scheme for the Universe OS Smartphone is anticipated to be very successful in educating consumers about the new Smartphone, and helping consumers to come to the conclusion that the Universe OS Smartphone is the best choice for their business or family. The Best Buy product is superior in its service, pricing, data, and quality. Product and service The Universe OS Smartphone will include the following features and selections of service contracts all supported by Geek Squad’s Smartphone division: Product features: MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 11 Full oneyear warranty with option to purchase an extended twoyear warranty Flagship phone – candy bar design Magnesium frame with a Gorilla Glass screen Full screen keyboard Chameleon technology Long battery life 4G Wireless Blue tooth and WiFi Capability Large disk storage capacity Alerts for usage on phone and data plans Office applications Open Office, RDP (remote desktop) Variety of application downloads (may require a small fee) Option of integrating with all laptops that feature VM Ware application Option to access to server and data center monitoring and control Service features: Standard twoyear contract Option of upgrading at 18 months Cell phone plans ranging from $19.99 to $59.99 per month Data plans ranging from $9.99 to $49.99 per month Family share plans to cover both cell phone and data plan usage Price MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 12 The average consumer spends $76 for a new phone while Smartphone’s typically cost $199 (PC World). Most distributors such as Best Buy offer options, such as buying a phone new without a contract at full price, while also allowing a discounted phone with a new or renewed contract. For the Universe line of phones offered by Best Buy, the company will stay with this model and offer new phones without a contract for $599, or a new phone with a two year contract for $299. The profit for Best Buy will not be in the sale of the phone itself, but rather in the contracts created by its users. These are longterm contracts that average two years at an average of $75 a month, or one thousand eight hundred dollars over the life of a two year contract (Chan, 2009). Best Buy will market the available data packages to the same extent as it does the phone. For Best Buy, the phone will be the avenue in which the customer will commit to a 24month data plan. Unlike other carriers of cell phones and data packages, Best Buy will offer significant discounts when customers switch from another carrier and phone to the Universe line of devices. When a consumer brings in an existing contract with another carrier and the phone purchased through that carrier Best Buy will offer a 10% discount on a new phone and data plan upon exchange. Positioning and Differentiation Strategies In order for Best buy to differentiate its self from the rest of the Smartphone market it will work on two differences. First, it will be an American made product, and second, the design of the phone will be sleek yet durable. Positioning the product is just as important as making the product unique. Best Buy will effectively position the Universe OS Smartphone on shelves at all Best Buy stores in the service market. The cell phone or smart phone has quickly become a basic need for many consumers in the world today. Consumers want something that can be dropped, brushed off, and used again, MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 13 especially considering the cost of a Smartphone. Apple iPod touch is a good example of an expensive product in which the screen can easily break if dropped, sat on, or mishandled. A protective case can help to prevent unfortunate breaks, but if a product is designed to be “tough” from the start, and no additional bulky cases or accessories are needed, the customer’s perceived value of the Universe OS Smartphone will increase making the phone better than its competitors. The production costs for the Universe OS Smartphone will be similar to the costs for Apple’s iPhone: total materials $172.46, manufacturing costs 6.50, grand total of $178.96 (Xing, 2011). In contrast to Apple, the Universe OS Smartphone will be manufactured in the United States. It has been suggested that Apple manufactures its iPhone in China to maximize its profit margins of 6265% (Xing, 2011). If Apple chose to manufacture the phone in the United States the company would still make a profit margin of over 50%, and it would likely be considered socially responsible by consumers. Best Buy’s choice to manufacture in the United States at a less profitable ratio will be a selling point to consumers who place a high level of social responsibility on businesses. The markup for the universal will be 50%+ with the suggested selling price $599. This gives Best Buy the chance to increase the perceived value of the phone. Producing the phone in the USA and using durable materials to encase it will make the phone more desirable in the minds of the consumer. Improving the consumer’s opinion of the Universe OS Smartphone ultimately increases the value of the phone. Pace The pace of the life cycle of the Universe OS Smartphone will move more quickly through the introductory stage and market growth because of the technology advancements in the operating system, the chameleon enhancement, and the durability in using a magnesium frame and gorilla glass. According to Perreault, Cannon, and McCarthy (2009), “the greater the MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 14 comparative advantage of a new product over those already on the market, the more rapidly its sales will grow” (p. 265) with the new features available in the Universe OS Smartphone this will provide the advantage. The Universe will enter the market maturity a short time after the growth stage because it will become outdated from the introduction of newer, more advanced technology in the Smartphone industry as compared to others currently on the market. The price strategy used for the Universe OS Smartphone will be another factor in the length of time it is in the market maturity stage before eventually going into the final stage of sales decline because of outdated technology. The product life cycle of a Universe OS Smartphone will move quickly through all stages of the product life cycle because it will be affected by the rapid changes in technology in the Smartphone industry to satisfy the consumer’s needs in the rapid changing world of globalization in the business environment. Strategic marketing One of the most important strategies in marketing the new phone will be to begin creating a “buzz” around the world. Best Buy will begin with viral videos posted on YouTube and advance to more formal television commercials. In order for this to be effective the viral videos must begin six months prior to launch. Then three months prior to launch, Best Buy will begin a full television commercial campaign as well as the introduction through Best Buys website. Best Buy will kick off the campaign just in time for the after Thanksgiving sales and the holiday buying season. This will ensure that Best Buy will maximize the purchasing power of consumers who are already in the stores or visiting the website. Another marketing strategy Best Buy will continue is the placement of more mobileonly store locations throughout the United States and abroad, which provides the consumer with a quick, convenient location, just around the corner. Best Buy will handle the promotional strategy for the organization through various promotions and other features of the organization. Best Buy will promote the Universe OS MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 15 Smartphone through the main stores, the website, and the latest Best Buy mobileonly stores, which will provide convenience and excellent customer service for the consumer. To promote the new product, Best Buy will offer discounts on cell phone and data plans when the consumer switches from his or her current carrier. The new phones will offer a $100 mailinrebate within store purchase, while the website will offer a $200 instantrebate phone with a twoyear service contract. The family plan will offer a “Buy One get One Free” phone option with an additional discount on family data plans. All phones and plans will come with a oneyear warranty, which can be supported by the instore service through Geek Squad Smartphone Division. Sales promotion schedule Sales promotion is defined as “Shortterm incentives to encourage the purchase or sale of a product or service” (Armstrong & Kotler, 2009, p. 351). The sales promotion schedule coincides with the product life cycle. In the beginning of the product life cycle, sales promotion needs to be heavy. Most of the marketing dollars must be spent in this phase of the product life cycle. During the growth portion of the cycle, the sales promotion can be reduced. Marketing is not needed as much in this phase because there is a high demand for the product already. At the maturity phase, sales promotion must increase. This encourages consumers who have a similar product to switch brands to the Universe OS Smartphone. During the decline phase, marketing dollars invested in the product are wasted. Sales promotion funds should be reduced to a minimal level. Instead, Best Buy would be better off investing in a newer, more technologically advanced product. According to Kotler and Keller (2006), the Sales promotion schedule should flow as follows: Introduction Growth Maturity Decline MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 16 Use heavy sales Reduce to take Increase to Reduce to minimal promotion to advantage of encourage brand level. entice trial. heavy consumer switching. demand. Advertising plan As stated by McNamara (2011), “The three main areas in an advertising plan are typically: 1) What do we want to accomplish? What our objectives or goals are? 2) How will we reach those goals? What will we do, and what will it cost, to achieve our objectives? 3) How do we measure results? How do we determine whether we have accomplished our objectives?” First, the objective of Best Buy is to sell, and provide service for as many Universe OS Smartphone’s as possible by creating a need throughout diverse groups of consumers. Second, the advertising goal is to establish a Smartphone OS brand for Best Buy. This brandbuilding advertising must be launched at the introduction portion of the product life cycle. The advertising plan must promote Best Buy not simply as a retailer, but as a high quality brand and service provider. Costs for the introductory phase will be expensive, and Best Buy needs to invest a substantial amount of their marketing dollars in this phase of advertisement. In 2009, Apple spent $501 million in marketing dollars, which is less than most other large companies MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 17 marketing similar products (Fortune, 2011). Best Buy has plans to spend slightly less than Apple did, by using social media such as Facebook, Twitter, and YouTube, which is virtually free. Finally, Best Buy will measure results by the amount of Universe OS Smartphone’s sold and how many are preordered before they are available to the public. If the phones are so appealing that consumers are proactive about getting them before they have seen them, the advertising plan will have been effective. Best Buy’s plan is to hit the breakeven point within a year. This is another way to measure advertising effectiveness. Public relations opportunities for the product or service The way the public and organizations feel about a product and the company that builds and sells that product can be key to the success of said product or service. Many organizations have suffered from bad PR (public relations), which usually influence sales and can even do lasting damage to a company’s financial stability. Many public relations mistakes could be avoided if there were more focus on proper timing, language, hype, and a good PR plan. Best Buy has an opportunity to create good public relations concerning the release of the new line of Universe phones. Best Buy will adhere to the following steps to identify and implement a high profile public relations plan. Timing: Timing is critical in the development of a good PR plan. Best Buy plans to release its new line of phones and services for the upcoming holiday season. To give enough lead time for other PR opportunities, Best Buy will begin giving highlevel product and service information to reporters, news agencies and blogs. The information will consist of company background, employment status and MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 18 how these factors will help the consumer. For this portion of the PR plan the focus will be on the company and not necessarily on the product itself. Best Buy will give descriptive comments on how the company helps communities, boosts employment, and is helpful and knowledgeable. The Story: Best Buy’s story is not just about the company, but about the products and services it sells. Making product news worthy is important to a healthy PR plan. Best Buy will focus on what developmental steps were undertaken to provide the consumer with such a high quality product. At this point in the PR scheme the product itself is less important than the value and benefit with which it provides the consumer. Defining Media and PR Distribution: Once the timing has been determined and the company and product information has been developed, it is time to define the venues for the communication. The audience that Best Buy will target for its PR campaign is as important as the information itself. Best Buy is targeting the global marketplace, and therefore will need to focus communication for that purpose. National news agencies and publications such as the Wall Street Journal and foreign likepublications will be approached first. Post global communication, regional news agencies and publications will be targeted if the information does not trickle down to the regional level. Press Release: Press releases are an excellent form of PR. They tend to be short and to the point. Best Buy will begin buy developing “catch phrases”, which identify the product and allow the media to begin identifying the product with the company. These initial press releases will be short and to the point mostly MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 19 involving statistics showing the current market and other information news agencies can use in various publications and news clips. Media Kit: Followup press releases and stories with media kits can help with PR. These show the various news agencies and targeted audiences that the company, and its product and services, are soon to be released. The media kit will include all prior press releases, product information, and follow up data with the benefits the product will have on consumers and both local and global markets. Media kits will have actual products so that the target media can handle and remark on the product. Other Opportunities: News agencies and other media are not the only ways to develop good PR. Educating the staff also is a good way to show the consumer that the company is knowledgeable and competent. Many goods and services are released without proper communication to staff. When a consumer enters a store, and the staff cannot to speak to products or services it creates a level of distrust and suspicion. Good PR is good communication. Ensuring the workers are aware of all the benefits of the product, and the information Best Buy has already distributed will benefit local PR. Channel management and distribution Historically Best Buy has worked with distributers and manufacturers to transport products from various locations to warehouses and stores. Best Buy will need to have distribution processes and channel management for delivery to more than a 1,000 stores across United States and Puerto Rico and successfully move Smartphone’s to resellers (Best Buy). MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 20 Best Buy will not only be a direct only distributor but will also use channel partners such as Verizon, ATT, and Sprint to expand its consumer base. Historically various cell phone providers and contract holders sell competitors products. Best Buy will be able to monitor sales from various secondary vendors and track performance and trending of sales. The key to sales metrics will be a collaborative exchange of information between the distribution warehouses, sales teams, and retail stores. Best Buy has also implemented the Radio Frequency Identification (RFID) system. Radio Frequency Identification uses a small transmitter, which receivers read to allow tracking of various materials and products. Bonsor (2011), “RFID tags are intelligent bar codes that can talk to a networked system to track every product” (How RFID Works, para. 1). RFID allows products to be tracked from its creation to the end user. Using the RFID technology Best Buy will be able to track realtime distribution of products and make necessary adjustments to inventory both internally and externally to retailers. Though Best Buy will sell “Universe” phones to retail stores, Best Buy stores will be offered early release dates. Early release will allow Best Buy to solidify its place in the cell phone market without direct competition from other carriers. Budget With the release of the Universe OS Smartphone a marketing budget plan must be set. Because Best Buy is breaking into an existing market where the competition is fierce the budget plan must be large, about 3.44 million or about 5% of the estimated sales for the presales marketing budget. This is based on selling 200 thousand phones during the initial release. A new marketing budget will be produced once the initial release numbers are in. This will most likely result in a decrease of 2% to 2.5% of the marking budget along with a change in the type of marketing. MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 21 Marketing Budget Plan (up to release) Last updated: 4/15/2011 Based on 200,000 sales 85% at $299 w/ plan 15% at $599 / 68.8 million Total Personnel Salaries, wages $1,140,000 Training 360,000 Personnel Total $1,176,000 Market Research Primary research $200,000 Secondary research 250,000 Library management 68,000 Market Research Total $518,000 Marketing Communications Branding $150,000 Advertising 300,000 Websites 70,000 Events 125,000 Channels $645,000 Channels Distribution $500,000 Placement 170,000 Over Budget Expense 441,000 Channels Total $670,000 Total Budget $3,440,000 MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 22 Quantifiable elements Evaluating and monitoring the elements of the marketing plan will help to adjust expenses and target areas where interest is high for the initial release. Tracking the Universes prerelease website, monitoring blogs and the “buzz” about the phone helps to have enough phones in the areas where interest is high. After the release, Best Buy will monitor the sales both full price ($599) and the with contract price ($299). After sales have been, made tracking the sales of applications from the mobile app store will allow Best Buy to track usage on the phones. Finally, data usage will be tracked, including services such as phone service, texting, and Internet. Tracking the “buzz” and interpreting what consumers are saying about the Universe OS Smartphone and other phones released by competitors will enable Best Buy to make proactive improvements based on what the consumer’s want, before the Universe becomes the problem topic. Based on its tracking strategy, Best Buy will also be able to target better areas with high interest in the product, so a store in DeKalb, a collage town, with an area that has very high interest in the phone will have a more robust stock. MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 23 Tracking the sales of the phone seems simple, but it includes full price phones, with contract phones and the contracts themselves. Considerations must be made like what service the full price buyer is using and how Best Buy can get them on their own service contract. Best Buy can determine which contract was purchased, and if those consumers are using the contract to its fullest potential to get the best deal for their money. Application and data usage will be tracked to see what the Universe OS Smartphone is experiencing in usage. Because the Universe is customizable, this point is a keystone in future marketing. Tracking this will determine if the apps work correctly with the software, and if the customers happy with them. Each of these tracking elements will supply data allowing Best Buy to control the effectiveness of the marketing plan. If it is discovered that consumers are underutilizing the Universe, marketing plans could change from selling to informing. Plans could be made to teach customers about what the Universe OS Smartphone is capable of. References Armstrong, G., & Kotler, P. (2009). Marketing. An Introduction, Ninth Edition. Retrieved from https://ecampus.phoenix.edu/content/eBookLibrary2/content/TOC.aspx? assetdataid=f839 MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 24 26c34e7c43bb892e5c578de17cb4&assetmetaid=a4539bd215f74c40b3e6 e29692e4ddbc. BBY Solutions, Inc... (2011). Best Buy. Retrieved from http://www.bestbuy.com/site/olspage.jsp?type=category&id=cat12090 Best Buy. (2008). Investor Relations Frequently Ask Questions. Retrieved from http://phx.corporateir.net/phoenix.zhtml?c=83192&p=irolfaq Best Buy. (2010). Sustainability Report. Retrieved from http://www.bby.com/cmn/files/Best Buy2010SustainabilityReport.pdf Bonsor, K. (2011). HowStuffWorks, Inc. . A Discovery Company. Retrieved from http://electronics.howstuffworks.com/gadgets/hightechgadgets/rfid.htm Chan, C. (2009, October 29). Total Cost of Ownership for Motorola DROID on Verizon [Msg. 1]. Message posted to http://www.androidcentral.com/totalcostownershipmotorola droidverizon Fortune. (2011). . Retrieved from http://tech.fortune.cnn.com/2009/10/28/apples2009ad budgethalfabillion/ Kotler, P. and Keller K.L., Marketing Management, 12th ed. (Upper Saddle River, N.J.: Prentice Hall, 2006), p. 332. PC World, We’re holding On to Our Cell Phones Longer than Ever. Retrieved from: http://www.pcworld.com/article/206100/study_were_holding_on_to_our_cell_phones_lo nger_than_ever.html Perreault, W. D., Cannon, J. P., & McCarthy, E. J., Jr. (2009). Basic marketing: A marketing strategy planning approach (17th ed.). New York, NY: McGraw Hill. Russolillo, S. (2011, March 24). 2nd UPDATE: Best Buy 4Q Above Views But Challenges Persist. Morningstar. Retrieved from http://www.morningstar.com/newsview1/DJ 201103241201DOWJONESDJONLINE000423_univ.xml.shtml Xing, Y. (2011, April 9). How the iPhone widens the U.S. Trade Deficit with China. Message posted to http://wallstreetpit.com/70362howtheiphonewidenstheustradedeficit withchina (2010, August 28). Get Your Pesos Ready, the iPhone 4 is Available in Mexico [Msg. 1]. MARKETING PLAN: BEST BUY – UNIVERSE SMARTPHONE 25 Message posted to http://www.iphonedownloadblog.com/2010/08/28/getyourpesos readytheiphone4isavailableinmexico/
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