Archives for February 2021

Best Buy is a successful, multinational retailer, but have you ever wondered how the company got its name? A name is an essential part of any brand, having the power to make or break the company. In the case of Best Buy, the name contributed to the company’s ability to grow and flourish into the household name it is today.

About Best Buy

Best Buy is a multinational supplier of electronics based in Minnesota, USA. It currently operates in the USA, Canada, and Mexico, as well as the Chinese market as part of Five Star. The company has experienced significant success over the past 55 years and remains a strong player in the consumer electronics space. It has 125,000 employees, 1,600 stores throughout North America, and an annual revenue of over $40 million. 

The beginning of Best Buy

Founded in 1966, Best Buy was initially called ‘Sound of Music’ like the iconic movie. It began as a single store in Minnesota that specialized in the sale of high fidelity stereos. The store was opened by Richard Schultz, who took out a second mortgage on his home to personally finance the store, and a business partner. The risk paid off and by 1967 Sound of Music expanded rapidly with the acquisition of Bergo Company and Kencraft Hi-Fi Company. Incredibly, the company made $1 million in revenue. 

In 1969, the company had increased to a collection of three stores and its financial success meant that Richard Schultz had the means to buy out his business partner. The company continued to grow over the following years, reaching a total of 9 stores across Minnesota by 1978.

How Best Buy got its name

In 1983, the company underwent a rebranding exercise and the Sound of Music chain was given the new name of ‘Best Buy Company Inc.’ Before this strategic change, the company had one clear audience: 15 to 18-year-old males. The rebrand and decision to expand its product range to include VCR machines and other household appliances meant that Best Buy was able to expand its target market. 

The company also adopting a business model that focused on low price and high volume. It wasn’t long before Best Buy established a strong reputation as a provider of affordable electronic products. 

While several strategic decisions contributed to the company’s ongoing success, the name change facilitated this progression. Had the organization retained the Sound of Music name and brand, it would have faced significant challenges as it tried to appeal to a broader market. Changing the name of the company as part of the rebranding exercise provided clarity for consumers and helped the brand to solidify their new direction.

The Journey of Best Buy

After the rebranding, Best Buy went from strength to strength. It became a public company in 1985 and was on the New York Stock Exchange by 1987. In 1992, the company hit an exceptional milestone, making $1 billion in annual revenue.

The company continued to expand over the next decade, with various acquisitions. They began operating across the USA and even entered international markets as a reputable supplier of electronic goods. 

Today, they remain a hugely successful retailer operating in a number of international markets. With the number of people working from home rapidly increasing, Best Buy has experienced spikes in sales. The future appears bright for the longstanding company and it certainly doesn’t appear to be slowing down anytime soon.
There’s no denying Best Buy has had some serious triumphs since its inception, however we can question whether it would have experienced the same level of success had it not rebranded in the 1980s. While it is impossible to know the answer, it is not unthinkable to assume its ability to transition to a wider audience so seamlessly was strongly supported by the name change. It sure does demonstrate the importance of choosing the right company name!

Without a doubt, one of the major benefits of technology is its ability to make our life much easier. We’ve gone from horses pulling carts, to cars and airplanes. But besides transportation and communication, nothing personifies convenience like credit cards.

Just a century ago, if you liked something at a store and wanted to get it, you’d need to either have a stack of cash, or a pile of coins—No kidding, that’s how it actually happened. We can’t even imagine how stressful life must’ve been for anyone planning a shopping spree before the introduction of Visa cards.

Visa: The King of Credit Cards

Visa Inc. is an American global financial service corporation that pioneered the widespread use of cash access programs and services like credit, debit, and prepaid cards.

Since the ‘50s, Visa has led the world towards faster and safer electronic payment methods. The company currently stands as the leading card-based payment organization, second only to China’s UnionPay.

In 2019, Visa Inc., a leader in its industry, had over 1.14 billion Visa cards in circulation around the world, customers used these cards in over 142 billion transactions that generated an amazing $2 trillion. And MasterCard, one of its closest competitors, only brought in $910 billion that year.

To understand how Visa became the King of credit cards, we need to revisit and discover what triggered the emergence of Visa cards.

Visa In The Beginning

Back in the ‘20s, the financial sector was experiencing a major shift, and it was all because of the introduction of several card payment systems by independent bodies.

Although major oil companies, hotel chains, department stores, and gas stations had used payment methods like the air travel card, charge coins, and charga plates, there was a problem.

What problem? For one, every business had created a payment system customers could only use in their store and nowhere else. This resulted in customers having to carry multiple cards whenever they needed to patronize multiple stores.

There was a need for a central card that could handle all transactions, irrespective of the business. Organizations like Diners Club, Carte Blanche, and American Express all tried to solve this problem, but none of them could successfully establish a robust system.

But it all changed in 1958 when the Bank of America made a powerful entrance with the BankAmericard, an effective system that revolutionized the sector and provided the much-needed boost the industry needed to grow to where it stands today.

So, why haven’t you heard of BankAmericard today? That’s because in 1976 both the local and international division of BankAmericard changed their names to Visa USA, and Visa International.

Why did this happen? Let’s take a look.

Why Is Visa Called Visa?

Understand that introducing BankAmericard to the credit card debacle by the Bank of America, a major US bank, went a long way to restore the faith of customers and merchants in the system. It assured them that their financial transactions were safe and guaranteed.

And it was this assurance that prompted customers to embrace the system completely. But it didn’t end here because the Bank of America took it a step further by distributing free BankAmericard to both customers and merchants.

This way customers were certain that their store supported BankAmericards, and merchants were sure their customers had BankAmericards.

The plan was a success, and by the end of the decade, BankAmericard had distributed over 100 million credit cards to the American population. But to achieve this success internationally, BankAmericard had to make strategic alliances with notable banks in Canada, France, Japan, UK, Spain, and several other nations.

And like you must’ve guessed, the alliance process wasn’t perfect. There were occasional overlaps in the system. Overlaps that had Dee Hock—a manager at the National Bank of  Commerce—brought in to resolve the issue.

Dee Hock convinced the Bank of America to allow BankAmericard to go independent. Hock became the first president and CEO of the National BankAmericard Inc., and in 1974, the NBI was restructured. 

It became the International BankAmericard Company (IBANCO) a multinational member corporation that had the sole duty of organizing the international BankAmericard program.

And it was under this premise that Dee Hock picked Visa as the new name of the company. According to Dee Hock, Visa was chosen because it was short, easy to recognize and understand in multiple languages, not to mention that it gave customers the perception of access.

Although Dee chose Visa, a powerful financial brand name, he wasn’t quick to divest the brand from its past. The new brand maintained the original blue, white, and gold flag of BankAmericard.

Visa worked perfectly and supported the growth and success of the company as a leading electronic funds transfer facilitator in the world.