Radio Shack and Best Buy

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Introduction The case gives us a clear perspective on two electronic retailers and their business model along with their targeting strategies. Radio shack targets segments that are created by their family orientation while Best buy focuses on their products and the types of electronic technologies they offer. The second aspect is their marketing strategy with regards to how they connect to their target audience. Radio Shack focuses on offering their customers convenience, selection, and simplicity in their shopping experience by strategically locating their stores in major malls and strip centers, as well as stand-alone locations and each of these locations carry a wide variety and assortments of products. At the same time Best Buy aims at educating their customers on the latest technologies and offering the best on-store customer experience through their expertise. The other aspect is that Best Buy is gradually laying more focus on the services offered and say that revenues earned from services will be more significant in the near future. Question 1: Using Exhibit 2, construct strategic profit models for Radio Shack and Best Buy using data from the abbreviated income statements and balance sheets in Exhibit 1. RADIO SHACK STRATEGIC MODEL BEST BUY STRATEGIC MODEL Question 2: Explain, from a marketing perspective, why you would expect the following aspects to be different for Best Buy and Radio Shack * Gross margin percentage: The gross margin represents the percent of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold by a company. The higher the percentage, the more the company retains on each dollar of sales to service its other costs and obligations. The Gross margin percentage for Radio Shack in around 52% while for Best Buy it is around 24%. This aspect would

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