Launching Best Buy in Russia

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Table of Contents

Overview of the Marketing Research Plan
Overview of Best Buy
Activities
Budget

The process of launching a new product or service requires careful planning. The planning process starts with identifying important research questions. This paper deals with the strategy for gathering the information needed to determine the viability of launching Best Buy in the Russian Market.

Overview of the Marketing Research Plan

This plan presents the market research approaches needed to determine whether it is viable to launch Best Buy in the Russian market.

Goal of the Plan

The goal of the plan is to identify the most effective market research approaches that can help to determine the viability of launching Best Buy in the Russian market.

Deliverables

The three main deliverables of the plan are as follows. First, the plan identifies the specific market research requirements that should precede the launch of Best Buy in Russia. The launch of Best Buy in Russia will present many complex issues. The first step in demystifying the issues is identifying the correct research questions.

The second deliverable of this plan is the development of a data acquisition strategy to help in answering the pertinent questions. This involves making decisions regarding the best strategies to use from the pool of market research methods available to researchers. The third deliverable is the financial plan for the entire process. The process of market research must fit within the available budgetary resources.

Overview of Best Buy

Best Buy is an American consumer electronics chain with operations in various countries. Best Buy operates many retail shops under various brand names. Currently, the company does not have any business activities in Russia. However, it has several subsidiaries that do business in various parts of the world. It also has several subsidiaries in the US that handle various business ventures.

Reasons for Best Buy’s Success in the US

Best Buy’s success in the US and in its overseas branches came from the consumer culture of the western world. Best Buy became successful in the US because of the society’s appetite for consumer electronics. This success gave Best Buy the experience it currently relies on to run its overseas operations.

Unique Product Value in the Marketplace

Best Buy provides its customers with a wide variety of consumer electronics. This is the brand’s unique selling point. The company is a dedicated electronics retailer. It has a wide variety of consumer electronic products in its stores. Its shops appeal to consumers who want a variety of options when shopping for electronic products.

Target Market

Best Buy’s target market in Russia is the middle and upper classes. The following assessment describes the target market in more detail.

Demographic Profile

Russia is a very large country. The socioeconomic conditions of its people vary from region to region. The country has a sizeable number of people who fall in the middle and upper classes. This is the target market for Best Buy because they have a high purchasing power.

In addition, the products sold by Best Buy appeal to people who are looking for convenience in their lives. The store also targets people who may be budget conscious, but are willing to pay a premium for high quality items.

Psychographic Profile

The Russian middle and upper classes have a comparable consumer culture to their counterparts in the US. Material possessions contribute towards the social status of individuals in Russia just like in the US. This situation arose because of Russia’s communist history.

It was not possible to own property during the years of communist rule. The communists frowned upon private ownership of property. When communism fell, Russians became materialistic just like other people around the world.

Channels of Distribution

Best Buy’s main distribution channel is its retail stores. In recent years, its online portal has become an active part of its distribution strategy. It also sells its products via several subsidiaries.

Critical Success Factors in International Markets

The critical success factors in international markets include a good understanding of the local business environment, long-term commitment, and the ability to adapt to change in the business environment.

Activities

This section contains the activities necessary for conducting market research in Russia. It has two main parts. The first part deals with secondary research. It relies on data collected by other researchers that have relevance to the company’s needs. The second part is primary research. In this case, the market researchers will collect fresh data to meet the specific research objectives of a company.

Secondary Research

Preliminary Country Screening

It is vital for Best Buy to conduct preliminary country screening to determine Russia’s viability as an investment destination. The three main issues that the company needs to address are as follows. First, the company needs to evaluate the political situation in Russia and the impact of opening new branches in the country.

Russia is still politically turbulent since the fall of communism. The USSR split into a number of independent states. This makes it important for foreign companies, especially American companies, to evaluate the political situation in the country. Such an evaluation will help Best Buy to identify the best way to relate to the political establishment in the Russia.

Secondly, the company must evaluate the macroeconomic situation in Russia because the country is very diverse. The macroeconomic conditions in the country differ from region to region. A survey of the macroeconomic environment of the country will give the company the information it needs to develop a countrywide marketing strategy.

The third area that the company needs to assess during the preliminary country screening is the social environment of the country. The main issues the company needs to study include how the Russians view American companies, and how corruption affects business in Russia. In addition, the company needs to assess the social impact of the legal system in Russia to foreign-owned businesses.

Country Report

The final report arising from the exercise described in the section above will contain the following issues.

Specific Questions for Determination

The first section will answer the following questions. First, what is the nature of Russian politics and how does it influence business in the country? Secondly, is Russia a suitable investment destination for large-scale retailers? Thirdly, what social concerns should American companies have regarding the Russian Market?

Quantifiable Information Indicating Important Attitudes and Interests

The quantifiable information of interest includes the cost of licenses, market entry costs, the country’s corruption indices, the tax regime, and laws governing the repatriation of profits.

Primary Research

There is need to carry out primary research in order to improve the quality of information available for making market entry decisions. In this regard, the company needs to use different methods to gather the data needed to handle specific aspects of its market entry strategy.

Product Testing

The company needs to find out how well the Russian market will receive Best Buy. The company must determine whether Best Buy’s business model is compatible with the consumer culture in Russia. It also needs to know whether the Russian market will accept and accommodate an American company. The tolerance of this market to Best Buy’s entry will play a role in branding decisions.

Brand Awareness

Best Buy used its dominant position in the US to portray itself internationally as a strong company. During its overseas expansion, it was easy for the company to leverage on its brand name because many people in Europe and South America were already aware of the company’s existence.

This may not be the case in Russia. This is because of the competitive rivalry between Russia and America. Best Buy will need to build brand awareness in Russia in order to compete effectively.

Buyer Behavior Research

The company must also conduct buyer behavior research to determine the compatibility of Best Buy’s business model to the consumer culture in Russia. This process should help to identify effective sales and marketing strategies for the Russian market.

Branding

Best Buy must identify the best branding approach for its business in Russia. Best Buy may need to check whether its current brand elements will appeal to the Russian market, or whether it needs to develop a new branding philosophy for its operations in Russia.

This component will also help the company to determine whether it should use a different name in Russia. There is a chance that Best Buy’s American identity may hinder its market entry efforts in Russia.

Advertising Effectiveness

Best Buy thrives in many of its overseas markets because of its ability to advertise effectively. Therefore, the company needs to determine whether its current advertising philosophy is compatible with the Russian market, or whether the market needs unique advertising approaches. It is dangerous to assume that the Russian market will respond positively to current advertising approaches.

Channel Performance and Coverage Studies

Finally, the company must carry out a geographical survey to find out how to design its distribution channels. Russia is a large country with different terrains and extreme weather. In this regard, it is pivotal for the company to find out how best to distribute products in this environment.

The retail store model is not new to Russia. The company can use this model as its primary distribution channel. However, the company must develop an effective supply chain to ensure adequate stocking of each of its stores.

Budget

The following table shows the resources, timelines, and projected costs of conducting market research in Russia.

Activity	Tasks	Timeline	Projected Cost ($)

Secondary Research
Preliminary Country Screening	Professional Data Search	2 weeks	5000
Developing Country Report	Professional Data Search	2 weeks	5000

Primary Research
Product Testing	Web-Based Survey	1 month	5000
Brand Awareness	Web-Based Survey	1 month	5000
Buyer Behavior Research	Focus Group	1 month	7500
Branding
Advertising Effectiveness
Channel Performance and Coverage Studies	Personal Visit	2 months	20000
Total			47500

Table 1: Summary of activities timeline, and projected cost of market research activities

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