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Marketing Plan: Best Buy Universe OS Smartphone
April 18, 2011
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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 buy-back program, trade-in 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 sales-based 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
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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.
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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
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plan. The knowledge and talents used in the development of the product can affect the quality,
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
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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
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 up-to-date 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
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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.
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 market-share 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 mobile-only 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
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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.
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
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messaging and song downloading, and is growing the fastest (Lev-Ram, 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.
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 employees. 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 re-distributor. 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.
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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
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
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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:
Full one-year warranty with option to purchase an extended two-year 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 Wi-Fi 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 two-year contract
Option of upgrading at 18 months
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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
The average consumer spends $76 for a new phone while Smartphones 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 long-term 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 24-month
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
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
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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, -
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 62-65% (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
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minds of the consumer. Improving the consumer’s opinion of the Universe OS Smartphone
ultimately increases the value of the phone.
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
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
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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 mobile-only 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
Smartphone through the main stores, the website, and the latest Best Buy mobile-only 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 mail-in-rebate with-in
store purchase, while the website will offer a $200 instant-rebate phone with a two-year 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 one-year warranty, which
can be supported by the in-store service through Geek Squad Smartphone Division.
Sales promotion schedule
Sales promotion is defined as “Short-term 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
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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
Use heavy sales Reduce to take Increase to Reduce to minimal
promotion to advantage of encourage brand level.
entice trial. heavy consumer switching.
Advertising plan
As stated by McNamara (2011), “The three main areas in an advertising plan are
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
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
Smartphones as possible by creating a need throughout diverse groups of consumers.
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Second, the advertising goal is to establish a Smartphone OS brand for Best Buy. This
brand-building 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 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 Smartphones sold
and how many are pre-ordered 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 break-even 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.
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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
high-level product and service information to reporters, news agencies and blogs.
The information will consist of company background, employment status and
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 like-publications will be approached first. Post global communication,
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