School of Business Administration
International Business Department.
Best Buy Case and Product Analysis.
Case Guide Solution
Juan David Legarda.
Luis Javier Villa.
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:
-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...
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