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Case 2
Microsoft Retail Stores
Case Objectives
1) To highlight the use of distribution as a means of developing long-term competitive
advantage.
Problem Situation
This case outlines the development of Microsoft retail stores, discussing Microsoft’s reasons and
purpose for their creation. As the case explains, due to the growing popularity of the Apple
Teaching Suggestions
Like most people who use computers daily, students will undoubtedly be divided between the PC
and Apple users. This will work both as a plus and a minus in terms of engaging the students in
a discussion about Microsoft’s retail expansion. On the plus side, everyone will have opinions to
share about the way Apple or Microsoft products work. This can be helpful in terms of
precipitating a lively discussion. However, it may be hard for some students to rate the programs
of Apple and Microsoft objectively since they may not separate brand success with distribution
effectiveness.
Thus, this can be an opportunity to challenge students to disect the effectiveness of the marketing
strategies for Microsoft and Apple. A good way to do this may be to divide the students into PC
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Students should be encouraged to review Chapters 5 and 7 before proceeding with their case
analysis.
Case Discussion
Today as Apple products are enjoying growing popularity, Microsoft finds itself in the position
of having to defend its market share. To many, Microsoft’s opening of its own retail stores
However, despite the apparent similarities, there are also significant differences which might
make the launch less important to Microsoft in the long run”
• Microsoft management stated purpose of creating retail stores was largely to, “create
deeper engagement with consumers and continue to learn firsthand about what they want
Consequently, Microsoft faces the challenge of marketing both its software and showcasing the
products of independent hardware manufacturers. This is a challenge that Apple avoids since it
controls both hardware and software. In addition, Microsoft’s retail store plans may create
conflict with existing retail partners like Best Buy Co., on whom Microsoft is heavily dependent
upon to market its products. However, if the number of Microsoft stores remains small,