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JB Hi-Fi

Case Study

By Brigitta Sattler

General history of the business

JB Hi-Fi was established in Keilor East, a Melbourne suburb by John Barbuto in 1973. In 1983 Barbuto sold the business to Richard Bouris, David Rodd, & Peter Caserta, who expanded JB Hi-Fi into a chain of ten stores in Melbourne and Sydney.Richard Bouris, David Rodd, & Peter Caserta sold the majority of their holding to private equity. JB Hi-Fi specialised in Hi-Fi equipment but in 1991 when the sales of vinyl records dropped the company stopped them selling them altogether and just stocked CDs, they were one of Australia's first music retailers to do so.

Business history, name, slogan, logo and locations

Business name:

JB Hi-Fi, the JB stands for John Barbuto the businesses founder.

Slogan:

The JB Hi-Fi slogan is "Always Cheapest prices".

Logo:

Locations:

Target market

Target market, Business structure and CEO/director/proprietor

JB Hi-Fi's stock is directed towards the mass market. It has a huge product mix of electronics, home applicances, DVDs, CDs, Blu-rays, fitness trackers and mobile phones.

  • Videogames and consoles are targeted at gamers between the ages of 13 to 35.
  • Home appliances and electronic goods such as flat screen TVs, computers, digital cameras etc are targeted towards people from 25 to 70+.
  • The student market who purchase BYOD, mobile phones, printers and iPods.
  • Parents and children have access to educational and entertainment DVDs, CDs and in-car entertainment devices.

The majority of JB Hi-Fi customers are between the ages of 18 and 38.

Business structure:

JB Hi-Fi is a public company meaning it is listed on the stock exchange

CEO/director/proprietor:

CEO: Richard Murray

Director: Greg Richards, Richard Uechtritz, Beth Laughton, Wai Tang, Richard Murray, Stephen Goddard, Mark Powell

Proprietor: No Proprietor

Description of products/services sold

JB Hi-Fi is an electronics specialty store, all JB Hi-Fi stores stock DVDs, CDs, Blu-rays, videogames and electronics while some larger stores also stock home appliances.

JB provides 'JB solutions for business', this service provides IT harware and software, liscensing, telecommunication network, insurance and either onsite or remote IT experts.

Difficulties/Challenges faced by the business

JB Hi-Fi acquired The Good Guys in 2016. They are going to run the two business separately which means maintaining two brands, support networks, cultures and management teams. Many of The Good Guy stores were joint ventures with owners running the stores. These will be stop in the next 12 months and everyone will have a single CEO who will run all the stores.JB prides itself on being the first to introduce new technology into their stores. This can be a problem when technology and tastes change so dramatically. The selfie stick was the hottest item and then was banded at sporting and concert events, making it quickly an undesirable item which means JB has to get rid of their excess stock quickly. Navigation systems became obsolete when smart phones and google maps became an everyday item.

The increase in the value of the Australian dollar makes importing goods more expensive which may lead to less sales if prices are increased or a fall profits if prices are maintained.

Main competitors

  • JB Hi-Fi's main competitors are Target, Big W, K mart, Harvey Norman, Myer and David Jones. All of these stores stock DVDs, CDs, Blu-rays, videogames and consoles, electronics and home appliances.
  • They also face competition from online stores like Amazon and Kogan.
  • To a small extent they face competition from Sanity.
  • Streaming companies like Nietflix, Stan , Foxtel and iTunes are a threat to sales of CDs and DVDs.

How the business markets its products

JB use a range of strategies to market their business and products:

  • Personal selling mainly takes place in store by proactive and knowledgable staff members. This is especially useful for older, less tech savy customers.
  • They advertise in print media (newspapers), radio and television. Mass media is expensive but enables high brand recognition in a competitive market.
  • Catalogues are placed at the shop front for all stores and also placed in both free community papers and commercial newspapers to access the mass market.
  • They also have a social media presence to engage with their target market and younger customers, using facebook and Instragram.

Annual turnover

In 2016, sales reached $ 3.95 billion, and increase in 8.3% since 2012. Net profit after tax was up 11.5% to $ 152.2 million, earnings per share was up 11.5% to 153.8 cent per share. They have 194 stores in either major shopping centres or homemaker type centres. The current share price is $ 25.37

Any other points of interest:

-One share currently in JB Hi-Fi is 25.37 Australian dollars.

-JB has diversity policy when it comes to hireing employees.

-JB has a 'smarter choice' program to advise customers on the energy efficiency of products.

- In 2010 JB lanched 'Cartridges 4 planet ark'.

Based on your research, explain why this business is successful

JB Hi-Fi has become one of Australia’s largest home entertainment retailers. This has been achieved mainly through the company’s ability to change with the times. JB has continually adapted its product mix by following trends in consumer taste and demand. JB started out as a retailer selling cheap music and quality Hi Fi products to a company that has led the way with fitness products (Fitbits etc) and mobile phone, which now lead their sales. In recent times, JB has moved into the small and large home appliance market and has established JB Hi-Fi Home stores. The purchase of Good Guys last year will give JB a greater share of the home appliance market share.

JB has a separate website for governments, business and the education sector. It is called the ‘Solutions for Business’ and offers professional advice, goods and services and ongoing maintenance. With more schools pushing towards the Bring Your Own Device model, this has provided JB with another opportunity to increase profits.

JB has a strong brand recognition that allows the business to distinguish itself from its competitors. It also hires staff who are young with excellent technical knowledge. By providing staff with the ability to be themselves and recognising that good staff are a key to increasing market share, JB has been able to lower its staff turn over rates. To keep customers happy, they ensure that they have the right number of people working at the busiest times of the day.

JB knows that most consumers are focused on price. It has marketed itself on price competitiveness and therefore has lower margins on each individual sale and relies on a large volume of sales to maximise profits. In 2006, JB established its online store to complete with overseas retailers and stay ahead of its Australian competitors. Online sales have grown by 36% and now account for 3% of total sales.

(SWOT) analysis

In relation to promoting this business, explain how you could do things differently?

There is very little advertising for its ‘Solutions for Business’ products and services. Domayne seems to be the company that you associate with BYOD products and Telstra for company services and equipment. JB Hi-Fi needs to promote this aspect of their business better. This could be achieved through print media, radio and TV. JB could also target universities with discounts on computers, software and maintenance for students and educators.

JB have employ knowledgeable staff and they could promote this through radio and TV commercials. Make JB the go to place for older customers who have little knowledge of new technology and may be apprehensive about buying these types of products.

JB sponsors and supports the development of music and musical talents through the Kool Skools program. This community service is not advertised. Woolworths actively promotes its earn and learn promotion and JB could promote its program through print media, radio, TV and on its own website.

JB main business activities are promoted well. They use catalogues, radio, TV, online and occasionally newspapers to advertise their goods and special promotions. They could expand their presents on social media sites such as facebook and snapcat to reach the mass market cheaply.

Bibliography

“JB Hi-Fi | Australia's Largest Home Entertainment Retailer.” 

JB Hi-Fi | Australia's Largest Home Entertainment Retailer, www.jbhifi.com.au/

“JB Hi Fi Ltd.” 

JBH - Stock Quote for JB Hi Fi Ltd - MSN Money, www.msn.com/en-us/money/stockdetails?symbol=AU%3AJBH.

“JB Hi-Fi.” 

Wikipedia, Wikimedia Foundation, 9 Aug. 2017, en.wikipedia.org/wiki/JB_Hi-Fi.

Magyer, Joe. ‘Can JB Hi-Fi succeed where Dick Smith failed?’. Financial Review, February 17, 2016.

http://www.afr.com/personal-finance/can-jb-hifi-succeed-where-dick-smith-failed-20160215-gmuhj7

Bartholomeusz, Stephen. ‘Making sense of JB Hi-Fi’s standout successs’. The Australian, August 10, 2015

http://www.theaustralian.com.au/business/business-spectator/making-sense-of-jb-hifis-standout-success/news-story/636cc8f4bd335e13cbc2b818873983d1

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