Corporate Case Study: Musicland uses PR to strike a chord with customers

In order to reinvent itself under its new ownership, Musicland has put PR at the center of its companywide strategy to bolster its visibility and to enter other entertainment areas.

In order to reinvent itself under its new ownership, Musicland has put PR at the center of its companywide strategy to bolster its visibility and to enter other entertainment areas.

A year ago, Musicland's situation epitomized the troubles facing the music retail industry. Within two years of being purchased by Best Buy, the Minnetonka, MN-based company was once again on the selling block, debt-saddled and bleeding hundreds of thousands of dollars. But under new ownership, Musicland has risen to the opportunity to reinvent itself anew. Musicland's parent company is now Sun Capital Partners. Not only has the struggling company rebuilt most departments - including PR - from scratch, it is also rethinking its core business. "People thought we were dead a year ago," says Laurie Bauer, director of PR and communications. "While we won't disclose the numbers, it's been a turnaround success story." Part of the company's strategy is to expand beyond music and movies, and to introduce new product lines that fit under the general bill of entertainment, such as mobile phones. With brick-and-mortar music retailers losing ground to online vendors and peer-to-peer file-sharing software, Musicland's executives realized that the business could not stake its future on CDs. "We're looking at opportunities to extend past our core product category," says Tod Dalberg, director of event marketing and in-store network. "The business of CDs has been diluted by the big box stores and downloads." Bauer notes that while music remains the "foundation" of the business, entertainment is the future for the company. "Music overall in the industry has declined year over year," she says. "It's important to us, but we must diversify." PR taking a front seat PR is at the center of the company's new strategy. Bauer notes that she is the only director at Musicland to report directly to the CEO, who scrapped plans to have the PR department fall under human resources. "We have our fingers in all areas of the company," she says. Such a task is not always easy when a three-person staff undertakes all PR responsibilities. "You have to do everything when you're a small team," she adds. PR will factor prominently into the launch of the new entertainment categories, with high-profile publicity events planned. The PR group, for instance, is working on a campaign to introduce its new wireless division. "The wireless device has really become an entertainment device," Bauer says. Musicland's first venture into the mobile-phone market is through an exclusive American Idol licensing deal. American Idol judge Simon Cowell will serve as the official spokesman for the phone, which will feature themed photos, text messages, and ring tones. Beyond wireless, Musicland will also sell other, non-music products from popular entertainment artists. The company this month organized an LA event with Jessica Simpson, selling her line of beauty supplies. Musicland will also carry the Dessert Beauty line. While most PR work is handled in-house, agencies are called in to pitch the media and to help with larger efforts. For the American Idol cell-phone launch, Musicland works with agency Sunshine Consultants. "They have the connections with all the entertainment press," Bauer says. "We didn't just throw out a press release and wait for [the media] to call us." The company also works closely with Axiom Marketing Communications and occasionally turns to Edelman's Los Angeles office for strategic planning on an as-needed basis. Beyond marketing events, the PR team oversees corporate communications, community relations, employee events, and donations for Musicland's Sam Goody, Suncoast Motion Picture Co., and Media Play business units. It also works indirectly with the retail communications team, an internal group that is largely responsible for communications among the company's 904 retail stores. For media relations, the goal now is to be reporters' go-to company. "We want to be the ones they come to no matter what the story is," Bauer says. And that goal has meant putting themselves inside stories that might not have had an apparent entertainment angle. For the back-to-school season, for instance, Musicland promoted its "Rivals" program - where emerging artists perform at high school football games - to try to break through the usual clutter of shopping articles. "Back to school is about apparel and school supplies - a tough area for us to tie into and tell our stories," Bauer said. "['Rivals' is] really a clever program." Building credibility also means being accessible to reporters. "We're very media friendly," says Donna Beadle, senior communications specialist. "We don't close our doors; we don't do everything from the corporate headquarters." To reach media on a local level, Musicland media trained managers at Sam Goody stores to serve as spokespeople. (Sam Goody is Musicland's largest division.) "They're the face to the customers," Bauer says. "Musicland is a corporate name; it doesn't have a lot of brand recognition." Musicland, meanwhile, hasn't tried to group the three business units under a single corporate image. "There are really three different audiences," Bauer says. "We do a lot of events individually for those stores." Increasing retail presence The PR team is also working to shake what was largely a low-key period for the company. Much of the PR work over the past year has focused on building more visibility. "There really wasn't a lot of PR done for the last three years," Bauer says. "We've been a quiet company." "There wasn't a communications team to go to before," adds Susan Osacho, communications specialist. The PR team has moved with impressive speed to begin building a presence in the music retail industry. Within months of coming on-board, Musicland's PR team had already launched its first PR campaign. The "Sam Goody's Bad Gift Boycott" was born after only a month of planning. It led to an immediate surge of media attention. On December 26 last year, the company invited customers to bring their holiday gift disasters to Sam Goody Central, a public rotunda at Minneapolis's Mall of America, and draw for a gift card valued up to $500. To find out the value of their card, customers had to visit a Sam Goody store. A similar promotion also ran online. "Our demographic [12- to 24-year-olds interested in entertainment] is the hardest to shop for - and probably gets the worst gifts," Beadle says. "It was a great spin on the return story." The promotion generated more than 21 million media impressions and a 6% increase in sales nationwide. "What it really does is position us as an alternative place to buy gifts," Dalberg says. "We feel our advantage as a specialty retailer allows us to do" more specialized promotions. Although Best Buy managed Musicland as a separate business, the current Musicland PR team is actually drawn from its former parent company. Bauer and Beadle both joined Musicland from Best Buy. But working on Best Buy's award-winning staff might have prepared Musicland's PR team for its new role. As Musicland cuts costs to get back on its feet, the biggest challenge for the PR department has been working within budget constraints. The PR budget is less than $1 million, Bauer notes. Dalberg says that PR is "obviously a huge component" of the marketing mix. "Laurie's team has done an amazing job of getting the local, regional, and national media," he says. "Every event we do, we tie in with all our marketing channels." The PR department, for instance, will work with suppliers on their marketing promotions. "A two-for-one won't do something for us," Beadle says. "We need to have something spectacular." The PR team has faced its share of growing pains, but expresses a good deal of optimism about the future. "There's no place to go but up," Bauer says. PR contacts Director of PR and communications Laurie Bauer Senior communications specialist Donna Beadle Communications specialist Susan Osacho Director of event marketing and in-store network Tod Dalberg Agencies Sunshine Consultants, Axiom Marketing Communications, Edelman

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