CORPORATE CASE STUDY: Best Buy focuses PR to remain consumers' best bet

As competition in the technology and electronics retail markets heats up, Best Buy is able to stay in the forefront with the help of separate corporate and consumer PR units.

As competition in the technology and electronics retail markets heats up, Best Buy is able to stay in the forefront with the help of separate corporate and consumer PR units.

Consumers are expected to spend a record $101 billion on consumer electronics this year, according to the Consumer Electronics Association. And the odds are pretty good that many of those consumers will buy their flat-screen TVs, MP3 players, and digital cameras at Best Buy. The Richfield, MN, company is clearly the industry leader. A recent Forbes article singing the company's praises pointed out that with 750 stores in North America, the company has a 16 percent share of the market. Best Buy reported in January that revenue for December was $4.64 billion, up 19% from December 2002's sales of $3.89 billion. One of its closest competitors, Circuit City, reported its December sales were $1.71 billion, down almost 2% from the $1.74 billion in sales in December 2002. The Forbes article points out that when Best Buy opened its first superstore in 1984, Circuit City was nearly 40 times larger than Best Buy. Importance of PR Best Buy finally surpassed Circuit City in 1995, a time when the internet and digital technology finally began to move from the domain of geeks and into the lives of the masses. And Best Buy has focused on its brand and image, with PR helping drive home that it's the best bet for consumers and their technology needs. "PR is really valued by Best Buy," asserts Susan Hoff, SVP and CCO. "A lot of companies don't know how PR can drive customers into their stores. But we focus on communications for our customers, our employees, and everyone else in our community, so they know what Best Buy is all about." "PR does things that other media can't do," adds EVP and CMO Mike Linton. "We're a big partnership company. The other companies we work with and partner with create news, and PR is one of the best ways to deliver that news." The best example of this is Best Buy's recent partnership with the Rolling Stones. In an exclusive agreement, Best Buy sold "Four Flicks," a four-DVD set featuring more than five hours of music and more than 50 songs, including many never previously released live. The collection garnered heavy media attention from both the consumer press, which marveled at the treasure trove for music fans, and business media, which were equally impressed at Best Buy's ability to secure such an exclusive deal, leading many to wonder how this would reshape the music retail landscape. While the DVD set didn't come out until November, Best Buy enjoyed a few months of heavy press coverage. So far, the set has sold about 310,000 copies in North America, making it one of the best selling music DVDs ever. "That was all PR," explains Lisa Hawks, director of consumer PR. "This was a unique opportunity to generate interest, and before the advertising and direct mail and online advertising started, PR was there to reinforce our brand position as a market maker." Best Buy recently reorganized its communications team in order to have separate corporate and consumer PR divisions. The company has grown so quickly that it found it needed to communicate with business-centric audiences beyond consumers. The timing for such a split was apt. Best Buy found itself on the defensive over "Four Flicks," as many other retailers cried foul over the exclusive deal, and many music stores boycotted the band and refused to sell their music. "We worked closely with the Rolling Stones and their PR team, and watched the comments being made," says Susan Busch, director of corporate PR. "We did anticipate this, so we had the right people ready to come out and address these issues. We weren't necessarily sure what those complaints might be or where they might come from. But we did anticipate it upsetting some people, and we were ready for that." The corporate side As Best Buy has matured, so has the company's need for corporate PR. The Wall Street Journal, Forbes, and Fortune have become just as important as USA Today or Entertainment Tonight. And its story as a burgeoning brand has become just as important a business story as any of the consumer technology brands inside the store. "We're not just a bunch of stores," says Busch. "We're a great company with a great story to tell and PR is helping us do that. What's important to me is the story about our sustained growth and how we are the leader in our market, and showcasing the executives who have made that happen." But just because corporate PR has a life of its own, that doesn't mean that consumer and corporate aren't tuned in to what the other is doing. Both sides are very in synch. Both teams sit next to each other, allowing for constant collaboration and cooperation. The PR team of about seven people also works closely with its PR agency, Weber Shandwick. While Busch is busy focusing on the business side, Hawks finds herself focusing on what the brand means not to investors but to techno-geeks and techno-phobes alike. The consumer brand has to resonate with the media and consumers who are looking for insight and trends. Hawks says that she wants to give the media stories they might not normally find, and, therefore, she focuses heavily on consumer technology trends and on tying them to events and holidays, such as the Super Bowl or Valentine's Day. "For the Super Bowl, we developed an electronic press kit about what sports fans want in the way of consumer electronics," says Hawks, adding that such an angle can lead to stories on trends in home theaters, with insights from Best Buy. Best Buy also is focused on the big picture with its customers and what it can offer other than just low prices and a wide selection. Through its corporate and consumer PR, Best Buy ultimately wants to reach the consumer as a brand that offers not just gadgets, but an entire buying experience. "As the commoditization of products is happening faster, and technology becomes more readily available, it can also become more confusing for consumers," says Hawks. "We want to be known as more than just a place to buy consumer electronics. We also talk about our knowledgeable sales staff and the services we offer. We offer a complete experience that can help educate consumers. We want them to see us as a place where they can come to find advice and information." That's a prudent move because even as Best Buy continues to best rivals like Circuit City, competition is heating up elsewhere. It's no mere coincidence that consumers are gobbling up more consumer gadgets as prices drop faster and lower. And the low-cost leader, Wal-Mart, might prove to be a daunting rival. Wal-Mart's share of the electronics market has risen from 6.9% in 1996 to a current 11%, according to Forbes. In that article, Best Buy CEO Bradbury Anderson admits that if the firm does nothing, "Wal-Mart will surpass us by the simple fact they are adding more stores than we are each year." Best Buy also faces competition from websites like Amazon.com, which offer competitive prices and customer reviews. And thanks to the likes of MP3 music sites, such as iTunes and Rhapsody, music fans can download albums for as little as $10 in a just few minutes. So for Best Buy to remain consumers' best bet, it will continue to focus on the big picture, from its success as an industry leader and trendsetter, to special products and services. And whether that audience is on Wall Street, or down the block from the nearest store, or within Best Buy itself, speaking with one voice is crucial to its success. "Whether it's government relations, or members of the community, or our own community, we need to speak with one clear voice to move all our objectives forward with all our audiences," says Hoff. ----- PR contacts SVP and CCO Susan Hoff Director of consumer PR Lisa Hawks Director of corporate PR Susan Busch VP of investor relations Jennifer Driscoll PR agency Weber Shandwick

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