A dual brand strategy is 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. Numerous systems are learning that they’re significantly more effective in presenting their products and services to the public when they do so in association with another brand.
A company may use dual branding when they want to increase the market share, saturating the market by filling all price and quality gaps and catering to brand switchers users who like to experiment with different brands, a dual brand strategy also may be applied when two companies want to differentiate products or services from the existing ones, and when both of them want to create a different target segment for each brand.
This strategy helps to create superior strategic positioning, increase revenues and reduce costs because shared costs can result in improved levels of return on investment, also in most of the cases dual branding enhanced recognition and reduced confusion of the costumers, and create opportunities to reach additional distribution points without the investment involved in independent operations, generating improved per unit volume. 2. What did Best Buy learn from its experience with dual-brand strategy in Canada?
The anti-global respond towards Best Buy by the Canadians, was one of the challenges Best Buy faced. Thanks that Future Shop, the biggest consumer electronics retailer in Canada, had been the destination for the Canadians for years, also attaching them emotionally and even with patriotic loyalty towards the brand. After operations started and Best Buy was at full speed, they realized that the Canadians were global agnostic consumers judging both Future Shop and Best Buy with the same criteria.
Best Buy also learned that establishing a retail store next to a Future Shop would be the favorite destination for their target costumers, electronic enthusiast from the ages raging for 15 to 39. This competition was proven successful with the revenue for the first year, with a gain on sales of $30 million for Best Buy and $38 million for Future Shop. 3. How does the Best Buy situation in China differ from its situation in Canada? The buying situation differs in Canada from china, by several reasons.
Best Buy Company had an entry strategy for each country, but the environment in china didn’t was as they were expecting. The Chinese were not familiar to the concept of credit, as in United States and Canada, this fact made the paying system more complex than what they were expecting. Also the consumer behavior in china was very different than in Canada. In china the saving rates per family were much higher than in Canada and Usa. Families were accustomed to save a considerable amount of money for other future issues rather than in electronic products as in Canada and Usa, which are higher consumer societies.
The situation for new entrants was very complex in china; acquisition of cities took much longer than in developed countries. Starting a new business in china was not a rapid process. Making relationships between channels was a slow process, because manufacturers, distributors, and other actors preferred to negotiate with people who they knew before, in china personal relationships are quite important in businesses. Some factors that influenced this process were government, channels, and income.
Purchasing habits were not the same, and some cities had lower incomes than in other cities were the company was positioned, so sales would be lower. Thanks to the cultural differences, the Chinese had different answers to messages than in other countries. For the Chinese, having preferences for a brand didn’t mean that they would be loyal, they took prices as a priority rather than the brand name. Best Buy had to invest in in point of sales promotion and also in merchandising techniques because they the Chinese changed a lot their final buying decision. . Does a dual-brand strategy provide Best Buy with a core competitive advantage as it expands into new global markets? Something very important that Best Buy has, is their previous experiences thru their years in the business and their big purchase made in Canada, which opens up their eyes to have a clearer vision of what rout they should take, but the most important thing to have into account is that not all the markets work the same way, because of many circumstances like culture, oral, politics or behaviors that may not allow them to have the same strategy all around the world. In their way to expansion they should take care first on analyzing the behavior of its target market, what are the pros and cons, and most importantly is making the question: Is this market suitable for a dual-brand strategy?
But definitely having a dual-brand determines a competitive advantage, as it was explained latter not in all markets, but it certainly is a good decision, mostly because the other brand you are investing in already has a market share that makes the job way more easy for the firm, because they wouldn’t have to spend too much money in promotion and collocation, but the principal advantages and disadvantages for a dual-brand strategy are this: ADVANTAGES| DISADVANTAGES| Increase the market share * Saturating the market by filling all price and quality gaps. * Catering to brand switchers users who like to experiment with different brands. * Keeping the firm managers on their toes by generating internal competition. | * Brand cannibalization. * Difficult to manage two different brands, due to splitting in spend. * Possibility of blurring brand identity in the eyes of the consumer. * Duplication of roles of the corporate. |
Going all the way to china is quite risky for Best Buy, but for a company to succeed and survive needs to expand, and a dual-brand strategy is not a bad choice to start with. BIBLIOGRAPHY http://www. slideshare. net/idealajay/dual-branding http://www. holmeslofstrom. com/z_pdf/articles/franchise_operations/The%20Dual%20Branding. pdf http://prezi. com/caazpf19abys/best-buy-and-dual-branding-strategy/ Best Buy Inc. – Dual Branding in China, Niraj Dawar; Ramasastry Chandrasekhar ——————————————– [ 1 ]. http://www. slideshare. net/idealajay/dual-branding