Marketing Best Buy Case
Marketing Best Buy Case
Dual branding – the association of two or more already well recognized trademarks in a synergistic retail setting designed to benefit each – is one of the fastest growing areas in franchising. Dual Branding has become a rage in the marketing arena, with companies realizing that isolation is not after all the best policy. Dual Branding is quite beneficial such that:
Many line extensions capitalize on a partner’s brand equity. Brand extension success rates are maximized in the new market when co-branded with the reputed brand that has established in that market. Co-branding may help usage extension.
Image reinforcement may take place due to co-branding. Loyalty programs increasingly include co-branding arrangements. The corporations are sharing the cost of loyalty programs; hence, the promotional costs to the companies are coming down. Co-branding signals a trade marketing operation.
Capitalizing on the synergies among a number of brands is yet another advantage of co-branding. (blog, 2007)
There are some disadvantages such as: -Brand Cannibalization -Difficult to manage two different brands, due to splitting in Ad spend. -Possibility of blurring brand identity in the eyes of the consumer. -Duplication of roles of the corporates. (Kumar, 2012)
Some examples of dual branding are: Toyota and Lexus. The Toyota brand will introduce Safety Connect on select Toyota models, helping to bring its drivers an added peace of mind. Lexus will introduce Lexus Enform with Safety Connect, a service built on the foundation of valuable safety and security services with the added layer of more convenience-oriented features and specialized advanced technologies. (Group, 2010)
Best Buy and Future Shop. Best Buy Co. is the largest consumer electronics retailer in Canada. It just happens that most of its sales are coming from its Future Shop business. A couple of years back, when it acquired Future Shop for $377 million, it was assumed the parent company would re-brand the 91 stores it purchased under the Best Buy banner, reports the Pioneer Press. Instead, Best Buy decided to forego conventional wisdom and operate the two competing divisions separately and in at least one case, putting stores directly across the street from one another. (Anderson, 2003)
What did Best Buy learn from its experience with dual brand strategy in Canada? Even though it was a new experience for the Best Buy International team to implement a dual- brand strategy it was the perfect opportunity to implement such strategy due to the situation in the Canadian market. In Canada, there was only one big player which was Future shop with only had 15% share; therefore they knew there was a space for a second major player. The most important thing they learned is to be aware that markets often have different ways of being approached. In this case, they learned it from the dual-brand strategy they used because both stores; Best Buy and Future Shop offered different consumer experiences.
Best Buy is characterized by “higher propensity towards self- service; non-commissioned sales staff; greater assortment of ready- made electronics packages; wider aisles and more interactive displays; higher ratio of female customers, seeking to integrate products into their lifestyles; customers with higher incomes and higher levels of education”. Meanwhile Future shop wants to show “commissioned sales staff guiding the customer by providing customized, trusted and personalized approach; tech savvy, early adopters looking for the best deal; customer base more diverse”. What they learned is that consumers behave differently, therefore implementing dual- brand strategy in Canada is a good way to increase profit (almost double profit in only a year) but it is also important to keep in mind that not all markets behave the same way, so it is best to study them first before implementing any strategy.
How does the Best Buy situation in China differ from its situation in Canada?
The costumers and the market were totally different, for example in Canada they had one big competitor which end up being part of the best buy family even though they keep the name of “future shop”, at the end in Canada both companies handle very good the market because both were profitable. In china the costumers were not easy to convince to buy stuff in general and also when they buy the profit margins were too low, and if this wasn’t difficult enough, best but had to deal with a competence of 4 more companies that in total just shore 20% of the market, being the only foreign company making them lose some market segment. One of the main information that Best Buy found was that the Chinese consumers care more about the characteristics of the product rather than the brand, so in order to deal with this new preferences they decide to distributed different their first local in Shanghai, the products were assorted by categories, not by brands. (Miller)
Does a dual-brand strategy provide Best Buy with a core competitive advantage as it expands into new global markets?
We believe it does, because when they buy an existing company, they start learning from another approach, an inner vision about the local market they are about to invest in, then they end up being a more profitable alliance because when Best Buy enters in the market it start stealing costumers for all the companies, even the one who has an alliance with, and it end up with a bigger market share, the proportion depends of how successful is the entrance strategy. It also helps the image of the local brand in order to support the other in the early days, later when both are profitable they can manage the prices easier in order to avoid cannibalization. (Miller)
ATTRIBUTES. “A remarkably slim design that still makes room for a larger display and a faster chip. Ultrafast wireless that doesn’t sacrifice battery life. And all-new headphones designed to sound great and fit comfortably. So much went into this iPhone.” “Thin, sleek, and very capable. It’s hard to believe a phone so thin could offer so many features: a larger display, a faster chip, the latest wireless technology, an 8MP iSight camera, and more. All in a beautiful aluminum body designed and made with an unprecedented level of precision. iPhone 5 measures a mere 7.6 millimeters thin and weighs just 112 grams.1That’s 18 percent thinner and 20 percent lighter than iPhone 4S. The only way to achieve a design like this is by relentlessly considering (and reconsidering) every single detail — including the details you don’t see.”
More beautiful maps. Elements in Maps are vector based, so graphics and text are incredibly detailed and panning is smooth. Use the tilt and rotate gestures to view an area, and Maps keeps the names of streets and places where they belong.
Turn-by-turn navigation. When approaching a turn, Maps speaks the directions, so you can watch the road. Follow along with 3D views: Signs and arrows make it easy to see where you’re headed. And if traffic’s bad, Maps offers alternative routes.
Traffic info. Maps uses real-time traffic conditions to calculate your ETA. It is easy to get details about incidents that are causing traffic jams, so people can tell if there’s a major accident ahead or just a temporary slowdown.
Flyover. See the world from a whole new perspective with photo-realistic and interactive 3D views of select major metro areas. Explore like never before as you zoom, pan, and rotate around a city and its landmarks.
Video calls on tap. FaceTime works right out of the box — no need to set up a special account or screen name. And using it is as easy as it gets.
Better call clarity. Built-in microphones work together to provide clearer sound and reduce background noise. (group A. )
“It may be apple season (with a small “a”) in many parts of the Northern Hemisphere, but globally it’s Apple season (with a capital “A”). That’s because today Apple will announce the new iPhone 5 in advance of its launch. And like every other Apple launch in recent memory there will be a flood of pre-orders and lines of eager consumers outside Apple stores as soon as it goes on sale. Why is that? Because unlike most companies, Apple actually launches its products.”
We’re experiencing this right now with the launch of the new iPhone 5, as we have with the launch of most Apple products over the last decade. It’s not just the product or the price or place or the promotion that is causing the sensation. But it the skillful way in which all four of these elements are orchestrated in the launch strategy that makes the offer seamless and irresistible. By investing in building brand equity before the launch Apple doesn’t start from a position of consumer inertia. They do the heavy lifting in advance of launch date which makes take off seem so effortless. In fact, they make it look so easy we forget it’s marketing and simply accept it as a law of nature: Apple products sell. But this phenomenon is not unique to Apple. It’s available to any marketer whether you are selling pharmaceuticals or farm equipment.
The key is early planning especially when online networking (a.k.a. social media) is part of your launch strategy.” (Duffy, 2012) The huge promise of the Apple brand, of course presents Apple with an enormous challenge to live up to. The innovative, beautifully-designed, highly ergonomic, and technology-leading products which Apple delivers are not only designed to match the brand promise, but are fundamental to keeping it. The recent emphasis on the iPhone 5’s manufacturing build quality and design standards reflect this importance. Apple fully understands that all aspects of the customer experience are important and that all brand touch-points must reinforce the Apple brand. Apple has expanded and improved its distribution capabilities by opening its own retail stores in key cities around the world in up-market, quality shopping venues.
Apple provides Apple Mac-expert retail floor staff to selected resellers’ stores (such as Australian department store David Jones); it has entered into strategic alliances with other companies to co-brand or distribute Apple’s products and services (for example, HP who was selling a co-branded form of iPod and pre-loading iTunes onto consumer PCs and laptops in the mid-2000s – though in retrospect this may now just have been a stepping-stone). Apple has also increased the accessibility of iPods through various resellers that do not currently carry Apple Macintosh systems, and has increased the reach of its online stores.
From a brand architecture viewpoint, the company maintains a “monolithic” brand identity – everything being associated with the Apple name, even when investing strongly in the Apple iPod and Apple iTunes products. Apple’s current line-up of product families includes not just the iPod and iTunes, but iMac, iBook, iLife, iWork, iPhone, iPad, and now iCloud. However, even though marketing investments around iPod are substantial, Apple has not established an “i” brand. While the “i” prefix is used only for consumer products, it is not used for a large number of Apple’s consumer products (eg Mac mini, MacBook, Apple TV, Airport Extreme, Safari, QuickTime, and Mighty Mouse). (group, 2013)
When we see the packaging we already know what the content is going to be and what company produces it, it has a picture and the name of the phone at the very front and on the side respectively and also the apple that represents the company on another side of it. The first impression when we look at the packaging of the iphone 5 is how practical, modern, cute and easy to carry is. This small box comes in black or white, it is covered with a thin, see-through plastic bag. It is very small; it can almost fit in our pockets. The secondary packaging, the one inside the cardboard box is made of plastic, to protect the contents inside: the charger, the usb cable and the headphones. The labels are also inside the box; it brings a manual with all the instructions, very reliable and easy to understand. The labeling presents all the information of the product, from where it was made, assembled and it shows how to use the product and the steps to follow before turning it on. (Group B. i., 2013)
Since Apple has become such important and recognized brand, known for its reliable and good quality products, we can not only say apple has standardized their products to clients but we can also say the client has standardized to apple, in this case to the iphone 5. Clients in many countries have adopted the iphone 5 and it is due to the many functions it offers, one basic function in order to be adopted by consumers is changing the language of the phone. But one thing that makes apple very special is its apps. From the phone you can download applications that are very useful wherever you are. For example ‘Maps’, if you are here in Colombia, it will be useful but it will also be useful if you are in China. Anyone can download any app they want, and apple offers a lot of apps that are useful, some more than others, depending on the country.