Strategic Responses of Companies to Market Competition

Flashcards cover key strategic decisions by eBay, consumer motives for premium purchases, Best Buy’s multifaceted response to Amazon, the role and impact of Geek Squad, logistics improvements, and the strategic partnership with Amazon Fire TV.

What percentage of equity did eBay acquire in EachNet.com to form a close partnership?

30% equity stake

Why might consumers choose a Mercedes-Benz that costs three to four times more than a Hyundai?

To signal success and ‘show up,’ fulfilling status-oriented motives rather than functional needs

What marketplace trend forced many offline electronics retailers out of business between 2010 and 2012?

Amazon’s lowest-price strategy and brutal price competition

Which U.S. electronics retailer reinvented itself as an experiential shopping destination in response to Amazon?

Best Buy

Name two in-store changes Best Buy implemented to create an experiential environment.

(1) Recruited brand experts to demonstrate devices; (2) Built shop-in-shops similar to Apple Stores

By what percentage did Best Buy shorten delivery time when it turned stores into mini-distribution hubs?

Delivery time was shortened by 33%

Why could Best Buy still not match Amazon even after improving logistics?

Amazon’s faster shipping and robot-based operations remained superior

What customer-service program did Best Buy emphasize to differentiate itself from Amazon?

Geek Squad

Roughly how many Geek Squad employees visit customers across the U.S. each day?

About 20,000 visits per day

Besides repairs, what free service does Geek Squad offer for up to 90 minutes?

Consulting on brand choice, product design, and how to use smart devices

What portion of Best Buy’s total sales did Geek Squad account for in 2017?

26% of total sales

How did Best Buy’s compensation model for Geek Squad differ from typical retail pay structures?

They used an annual salary system instead of hourly wages to reduce pressure to maximize billable hours

Which TV brands did Best Buy begin selling in April 2018 that feature Amazon’s Fire TV OS and Alexa?

Toshiba and Best Buy’s own Insignia brand

How did the announcement of Best Buy partnering with Amazon for Fire TV sets affect Best Buy’s stock price?

The stock price rose by approximately 4%

What lesson does Best Buy’s collaboration with Amazon illustrate regarding competitive strategy?

Companies may ‘sleep with the enemy’—partnering with competitors—when it strengthens customer relationships and sales