Best Buy

THE AMERICAN UNIVERSITY
ITY IN CAIRO
SCHOOL OF BUSINESS
MBA PROGRAM
Best Buy Inc.: Dual Branding in

China
“ grab & go “
Kareem A. El Fouly
800-09-1578
Best Buy, the story of failure and success to super no
normal growth and international expansion, the
marketing team and corporate management of Best Buy, should a great deal of maturity and
understanding
tanding to both their markets and customers. Moreover, from being a small retail store for audio
components, then evolution
olution with the mar
market
ket to audio and video components and again proving the
maturity and market awareness to expanding to being The Retail Store for electronic components.
Best Buy’s strategy was customer driven focusing on a specific target segment that are aged, 15 – 39,
males, highly educated, aboveve average income, Techno Savvy. From this target segment and from
outside to inside, Best Buy has launched its SOP to harmonize the company with each other and serve
the target segment the best way. SOPs, starting from the inventory management, transaction
processing, customer relations,, store administration, product
uct sales and merchandising.
SOPs helped a lot in serving the customers better, ensure consistency and enforcing discipline across the
network of stores. Moreover,er, the market res
researches that took place to enhance customer
ustomer satisfaction
increase the visits rate and the time spent per visit, this research was outputted with a project called
Centricity.
Centricity project consisted of four elements:
1. Identifying customers generating the most revenu

revenue
2. Segmenting these customers
3. Realigning the store to meet the needs of these customers
4. Empowering the store sales staff to steer these customers towards products that would
encourage them to achieve the target of more visits and more time spent per visit.
visit
Another market research output, Personal Shopping Assistant ((PSA), it is a sample of tailoring per store
depending to the geographical are characteristics.
Best Buy, in USA, for sure wasn’t the one and only retail store for the electroni
electronics,
cs, competition was tough
and that what pushed Best Buy to always look for a competitive edge over the competitors, that was
when Best buy acquired Geek Squad for making maintenance and services for the electronic
components for the customers, this was a real competitive edge over other ordinary retail stores.
After being the number one retail store for electronic components and the best seller of PCs, Best Buy
was looking for more expansion and coverage, that was when they decided to go international
internationa and the
very logic decision to go Canada due to the commonality of the targeted segment in both USA & Canada.
Canada, no real market drivers and leaders, as the market was fragmented and had many brands and
the market leader only had 15% market share
share,, The management of Best buy decided to acquire Future
Shop, the market leader in Canada.
From the acquisition of a brand to the decision of making a dual branding in Canada, there were points
to be considered:
• The already built brand name “ Future Shop “

• The unaided brand awareness among the Canadian market
• The market fragmentation and the low market share of for the leaders in the market
The decision of the dual branding came as well with constraints to be considered:
• Brand Cannibalization
• Management of two different brands and duplication of roles in the same company
However, the dual brand was a very successful decision to be taken in such case for the following points:
points
• Different target segments of the two brands

• Keeping the customers way of buying and the environment they were used to in Future Shop
• Grabbing higher market share with the new brand focusing on other segments
After the huge success

uccess in Canada and the booming and growth strategy Best Buy was tackling they
looked for further growth in the international markets and the market of China was a attracting and
attention grabber with the huge GDP of the Country. However, the compe
competition
tition in China is very tough
and prices and margins were very
ery low as well as the penetration in a mature market is very hard.
From this point, Best Buy bought Five Star Stores, the third largest retail chain in China.
China
SWOT Analysis Best Buy in China:
Strength:
• Five Stars already have very good awareness

• Third highest market share of Five Stars
• Technically competent
Weaknesses:
• High prices and margins

• Best Buy is not a well
ell known brand ( Brand Awareness )
Opportunities:
• Booming Market
• Huge Population
• Techno Savvy population
• Growing markets in 3rd tier cities
Threats:
• National pride of the Chinese population towards their brands

• Price oriented customer
• Local Competitors with higher market share and awareness
From the above SWOT analysis, the management of Best Buy was considering the same strategy they
implemented in Canada “ Dual Brand “, which made a big success, barring in mind the high costs and
time to be wasted for the legalization of new companies in China. Best Buy would go with the Five Stars
brand along with legalizing the Best Buy one and make the same as Canada by targeting different
segments through both brands.
Moreover, cannibalization of the brand Best Buy on Five Stars wouldn’t be huge due to the different
segments and buying behavior.
Best Buy should put in to consideration

consideration,, to make use of the opportunities and transfer it in to strengths,
the tier 3 cities needs for the electronic devices & technologies, Best Buy should expand with the Five
stars brand in the tier 3 cities and start with the Best Buy brand in the Tier 1 & 2 cities to develop the
awareness and grab market share from other competitors.
Best Buy
uy should transfer their knowhow in selling and shop design to china along with selling the
localized brands and technologies, work in the tier 3 cities with smaller and easier to access retail stores.
Moreover, Best Buy should localize and change their sales incentives to adapt with the market in China.
A great opportunity for success and booming where Dual Branding might be the answer. The flexibility
of the strategy implemented
mplemented by Best Buy is their key of success, being focused to their customers and
the adaptation of their stores and SOPs to serve the customers is their best edge.

Best Buy

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THE AMERICAN UNIVERSITY

Best Buy Inc.: Dual Branding in

Centricity project consisted of four elements:

1. Identifying customers generating the most revenu

• The already built brand name “ Future Shop “

• Different target segments of the two brands

After the huge success

SWOT Analysis Best Buy in China:

• Five Stars already have very good awareness

• High prices and margins

• National pride of the Chinese population towards their brands

Best Buy should put in to consideration

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