Recently, the technology incorporation, Best Buy, has been experiencing major concerns regarding their high priced television sales. Selling these expensive televisions is said to be 20 percent of all of the company’s profits. Unfortunately, the sales for this category have gone down by double digit percent’s. Many people think that this is a result of the increasing gas prices and the extraordinarily high unemployment rate. Consumers are deciding to spend less money on overpriced, high tech televisions and more on mobile phones and broadband connection thanks to the recession. As a result of this shift of preference by consumers, Best Buy is deciding to focus more on selling mobile phones. These Best Buy mobile phones are starting to attract more buyers who do not want to spend their money on Best Buy’s televisions. So is Best Buy going to become a major cell phone supplier in place of televisions? Not exactly. In addition to loosing costumers from the recession, Best Buy has also been in a major competition with other similar stores like Target, Wal-Mart and even the online world of Amazon. Best Buy store sales decreased by 4 percent in December, right in the middle of the holiday season. On top of that statistic, the company also experienced a net income fall from 779 million to 651 million. These numbers show how Best Buy is experiencing major sales decreases. These decreases could easily be a result of the declining amount of expensive television buyers. So could shifting their focus to mobile phones help the company get their numbers back up? No one really knows for sure and there is definitely a bit of speculation, but time will only tell what will happen to this high technology incorporation in the future.
-Taryn Dandurand
I think that Best Buy attempting to sell mobile phones will fail. This is the same situation Block Buster has. Now that there is Netflix and Redbox, no one wants to by $4.00 movies. Block Buster then attempted to sell gaming products and TV’s, which ultimately put them into more debt, and now they are filling for bankruptcy. I think the same thing will happen to Best Buy if they do not lower their prices. Most people would rather buy a cheaper TV at Target or Wal-Mart, where there are consistently sales and deals consumers can get. Unless Best Buy does not have sales or lower their prices they will keep on having a problem selling their products. Also, people like convenience and if you have to buy a mobile phone from Best Buy, you then most likely have to go to yet another store to get your phone contract straightened out, so really there is no point for them to sell mobile phones. Since the economy is doing so poorly at the moment, I think you are right that that is why no one is buying TV’s or unnecessary items. The demand is not high enough for this product and the price is also to high.
ReplyDeleteBest Buy is not close to going into debt. They sell plenty of other things other than cell phones and TVs. The prices of the TVs that they sell are not very high compared to what some other suppliers sell their products at. As we all know, technology these days comes in and is out just as quickly. The TVs are being sold at a higher price than usual because of newer technology. The numbers for Best Buy will go up and down due to the economy but this is a company that has many new products and all at one place. TVs and mobile phones are not what defines the company and a slight drop in these sales are not too much to worry about.
ReplyDeleteI agree with the previous comment that the sales of phones won’t save Best Buy from decreasing sales. Personally, I would be very surprised if Best Buy could make it to be considered a phone-selling and phone service store instead of a store known for various electronics. If this refocusing idea were to succeed then it would take Best Buy more money to change their image from an electronics store to a mobile service store. Changing various signs and television slogans will cost Best Buy more money before these changes could take affect and bring in new customers. Best Buy’s simplest solution would be to lower the prices of their television sets.
ReplyDeleteWhen you think of Best Buy what do you think of? (ie. mainly phones, computers, tvs etc...) Should Best Buy shift their marketing focus?
ReplyDeleteThe fact that televisions aren't selling is not a suprise. The decrease In sales probably is a result of the economy as a whole rather than a reflection on the products of best buy. The issue with reverting to cell phones as ur main source of revenue is that it is much more convent (as far as mobile plans) to just go to the store of the carrier. The main reason why best buy is able to make so much money on these TVs is becouse they are cheaper than places that just sell televisions.
ReplyDeleteI think that in addition to the high gas prices due to the conflict in Libya, Best Buy is having a problem competing with the digital marketplace. Analisa makes a great point about online services being a problem for Best Buy. Services like Netflix which offer instant streams of movies and television online are taking a chunk out of the revenue Best Buy makes off of DVD sales. In an era where entertainment can be accessed instantly from your home, people don't feel the need to have to go to Best Buy and pick up a DVD. This brings up your point about high gas prices affecting peoples decisions. Not only is Best Buy being hurt by the high gas prices, its being hurt by the low digital prices online. So I would be reiterating a point already made, as well as agreeing with your first point about gas prices.
ReplyDeleteI feel that changing from pushing Tvs to mobile phones will hurt the company. With Tvs being 20% of the overall company sales, they should continue to be competative and continue pushing the sales of their big ticket item. By transitioning to mobile phones they are in effect chaning the market that Best Buy is mainly in. Not only will the be competing as a major Tv supplier they will have to compete agianst the major cell providers. Increasing competion is not somthing that will help a company, you want your product to be the best and have the best deal. You can almost never beat the direct prices providers offer.
ReplyDeleteBest Buy will experience a decline in profit if they focus mainly in selling mobile phones because consumers always want cheaper prices and high quality phones so Best Buy will face great competition with other mobile phone providers. Maybe selling mobile phones will help Best Buy’s profit if their focus is small than entirely because selling mobile phones will not replace the profit they would receive from selling televisions. I would suggest Best Buy to have discounts, promotions, and sales on their televisions to attract consumers since consumers like sales because they save money and get what they desire for a cheaper price. Just as the law of demand states that consumers will buy more of a good when the good’s price is lower. Therefore, Best Buy should definitely risk lowering the prices of their televisions to at least get more profit than they are getting these couple of past days and attract more consumers to their stores and buy other products along with televisions.
ReplyDeleteWith the economy in a recession, there has been a shift in the demand curve because less people are able to buy products that they previously could. Since there is less demand, with Best Buy selling its products at the same price, it will continue to lose money until the prices are closer to the new price of equilibrium. I do not see this as a risk, but as a necessary action to keep the company afloat. Companies who do not adapt in a changing market will not survive against competitors that do. Stores like Target and Walmart that are Best Buy's competitors are constantly offering sales and deals that are more appealing to customers in this economy. Consumers will always pick the better price.
ReplyDeleteI agree with you, Alix. I think that the future of Best Buy Inc. depends on their ability to reach the price of equilibrium. Their competitors are experiencing a rise in demand at their stores while Best Buy is experiencing a decrease in demand. I think that if Best Buy were to reach this equilibrium price then the demand for their goods would go up. I do not think Best Buy will go into debt but I do think their sales are suffering because of their high prices that are not as attractive to potential costumers as some of their competitors prices. This shift of focus into cell phones will probably not be successful because the competition in this market is even more hardcore than in the general technology market. The only way for Best Buy to have an increase in sales rather than a decrease is if they reduce their prices of televisions, which was previously their most widely sold item and focus more on making this area successful rather than trying to open up their business to a totally different market of cell phones. Best Buy needs to be smart about what tactic to use in order to get their sales to turn around, but I personally believe they can do it. They have been so successful in the past that there is no reason for them to not be back on top again.
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