Business Strategy

Competitive Strategy: Differentiation Industry - Wide

A marketing strategy in which a company differentiate concentrates its resources on entering or expanding in a narrow market or industry segment. A focus strategy is usually employed where the company knows its segment and has products to competitively satisfy its needs. Bed Bath & Beyond strategy is to be the customer's first choice and to achieve this objective they work on excellent customer service, an extensive breadth and depth of assortments, everyday low prices, introduction of new merchandising offerings and development. Bed Bath & Beyond monitors market prices on all of its items to make small adjustments and uses its 20% coupons to its advantage. Bed Bath & Beyond highly values its company culture and product assortment throughout all of its stores. The company is continually making changes to the products it offers in order to keep up with the newest design trends, market conditions, and consumer interests. Bed Bath & Beyond is also expanding its product line to include a food and beverage merchandise section in many of its stores to better serve its customers' cravings.

Porter's Five Forces

The Five Force Model was Named after Michael E. Porter, this model identifies and analyzes 5 competitive forces that shape every industry, and helps determine an industry's weaknesses and strengths.

Bargaining Power of Customers -The presence of powerful buyers reduces the profit potential in an industry. Buyers increase competition within an industry by forcing down prices, bargaining for improved quality or more services, and playing competitors against each other. For Bed Bath & Beyond, the bargaining power of customers would be considered medium. Customers don't really have much of a say with the prices since the prices are negotiated with vendors. If products do not sell, contracts will not be renewed with vendors.

Threats of Substitutions - This occurs when companies within one industry are forced to compete with industries producing substitute products or services. Threat of substitutes determines the intensity of competition in an industry. The threat for substitutions at Bed Bath & Beyond is high. Customers can also find products at competitors such as Amazon, Target & Walmart.

Bargaining Power of Supplier -The presence of powerful suppliers reduces the profit potential in an industry. Suppliers increase competition within an industry by threatening to raise prices or reduce the quality of goods and services. The power of the suppliers would be low at Bed Bath & Beyond because they work with over 5,000 suppliers/ vendors with no long term contracts. Most of the the products can easily be replaced.

Threats of New Entrants -This refers to the threat new competitors pose to existing competitors in an industry. Bed Bath & Beyond has a low threat of new entrants. Majority of companies that have came about to sell similar products were all shut down after a few years due to BB&B domination in the bedding industry. Companies such as Linens n' Things are a great example of failed entrants.

Rivalry - The intensity of rival among competitors in an industry refers to the extent to which firms within an industry put pressure on one another and limit each other's profit potential. As mentioned previously, Bed Bath & Beyond is not the only available place to purchase home merchandises. There are multiple options such as Amazon.com, Target, and Walmart to get similar products making there be some type of competition, but Bed Bath & Beyond tends to have better quality and prices overall therefore making the rivalry medium.

Value Chain

A Value chain is a network of value-creating activities.

Inbound logistic:

Bed Bath & Beyond receive their products from vendors that they have business relationships with. Although they do not keep long term contracts with the suppliers or vendors, they work with over 5,000 different vendors that can replace any product if they needed to.

Operations/ Manufacturing:

The products from different brands are sold by the vendors to Bed Bath & Beyond. They buy the products that will help them add more value to their company and provide profit.

Outbound Logistics:

The products that are sent by the vendors are collected and are then organized and put into the store shelves. They are placed by different categories and items so that the customer can find what they are looking for easier.

Sales and Marketing:

They market themselves with their 20%off coupon that they provide to costumers. Bed Bath & Beyond stay up to date with the latest trends and also provide new and unique brands to their customers. Bed Bath & Beyond is one of the few companies that do not participate in sales. Thy also do not believe in advertisement and focus on sending print and email copies of their 20%  coupon, which by the way never expire.

Customer service:

Bed Bath & Beyond is big on having excellent customer service. The allow returns to be made at any store nationwide and even if a customer doesn’t have the receipt with them it can be done if the purchase was made in the last 365 days at the store. Bed Bath & Beyond aim to offer the best prices every day, but they also provide price match customers just have to ask.