What should Best Buy do to survive?...part deux

I blogged recently about Best Buy's problems and what I think it should do (click here).

Best Buy has come up with a new branding, service and store layout strategy in June (explained here in an Ad Age article).  Their new tagline is "Making technology work for you". They will change store layouts to aid customer decision making using Central Knowledge Desks, and will move the Geek Squad to the front of the store.

I recently read a Fast Company article by David Brier, a brand identity expert, about Best Buy's branding (click here). Here are some excerpts of the article:

Best Buy, your culture is about unloading inventory, not helping the customer. Taking a page from Apple’s retail strategy by adding “Central Knowledge Desks” will not replace doing something real and authentic. My personal experiences unfortunately have not changed what is inbred into your culture.

But let’s get more fundamental: That slogan is not only tired, it is a death sentence that is bland, old, worn, uninspired and not reflective of a single strand of your customer’s aspirations. It reeks of “marketing speak” and “committee-itis.”

The strongest brands stand for something as well being opposed something else...

• Apple is opposed to technology that sets the rules and asks people to adapt; it champions technology that adapts to the needs of the people.
• Nike stands for athletic achievement and is opposed to sitting on your ass.
• Dyson stands for no loss of suction and is opposed to stagnant complacency, first making obsolete the old guards of vacuum cleaners and then doing the same with their own technological solutions.

.. Best Buy, what do you stand for? Also, what are you opposed to? Until you answer those questions, the likelihood of rising from the ashes is grim at best.

Only after answering those questions can you honestly determine what to sound like, what to look like, what your design aesthetic is, and why anyone should care.

And if the best you’ve got is “Making technology work for you,” then the likelihood anyone will care is very slim.

 I tend to agree with David that a brand needs to clearly communicate what it stands for and what it does not. It is one of the essentials of clear differentiation in the customers' minds.

So how should Best Buy differentiate itself (and communicate what it does and does not stand for)?

As I discussed in the previous post, I think services should be a key part of Best Buy's revival (and survival) strategy. I feel, they should be saying "We sell, install, maintain and replace (if broken) technology devices. We do not  just stock the devices and leave it up to you to figure out which product you need, and handle the shipping, unwrapping, installation, maintenance and replacement of the device (unlike our competitors)."

I think "Making technology work for you" does capture parts of this message (and in this sense I disagree with David's assessment). Maybe Best Buy can do better by reinforcing the full extent of the differentiation message in their commercials.

Let me know what you think.

Kraft's turnaround plan and new brand identity: Will it win against store brands?

At a CAGNY conference in Florida, Irene Rosenfeld, CEO of Kraft Foods, highlighted the progress made by Kraft against the turnaround plan announced by her in 2007. The turnaround plan is based on organizational changes, category re-framing using the 'growth diamond', sales initiatives, retailer collaboration, cost reduction and quality improvements.


Kraft also unveiled a new corporate logo and brand identity (click here for Brandweek article). Their new slogan is "Make today delicious,".

The new Kraft logo consists of an upward, red smile exploding into an array of seven "flavor bursts," each of which represents a different division. The new logo was designed by Nitro after interacting with many employees and consumers worldwide on questions as: "What do you look for in a food company?" "How do you engage with food generally?" and "What are the moments of that relationship that are important to you?". The findings resulted in a corporate logo that is "more contemporary, the colors are more vibrant and it has a life to it," CMO, Mary Beth West said.

Kraft has seen significant organic growth in H1'08 but most of it was from price increases. In Q4, it had a volume decrease of 5.2%. This was partly due to inventory reductions (especially at Walmart, which accounts for ~15% of sales). Kraft USA is experiencing significant unit volume declines in cheese, coffee, crackers, nuts and salad dressings.

I ask myself: Is Kraft losing its battle against store brands? Will its turnaround strategy and its rebranding bring success ?

I don't think the Q4 volume declines necessarily indicate loss of ground against store brands. Most of the volume declines experienced by Kraft are more than offset by pricing increases. In terms of dollar share, Kraft has lost less than 3 percentage points in most categories. Kraft continues to be the market leader in sub-categories accounting for around 70% of its sales. So long as Kraft manages its pricing such that it does not lose further significant share, Kraft will likely continue to experience healthy organic growth.

The focus on quality is also paying off for Kraft. 65% of surveyed customers preferring Kraft products to competitor products (as opposed to 44% in 2006).

Outside the US, Kraft is enjoying record sales growth in the Developing Markets (coffee, biscuits, chocolate, Tang) and margin expansion in Europe and the Developing Markets.

Going forward, the new branding appears more colorful and contemporary to me. I hope it allows Kraft Foods to better differentiate its products from store brands (by driving home the taste advantage).

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