Best Buy's $10 Million Hit Over Blu-ray Shows Master PR

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CNBC.com

Break out the spandex, the high waisted pants with big belts and the big jewelry--but keep the spiral perms please. Not since the betamax-vhs battles of the 1980s have the tech and entertainment wars over video format been this heated.

I'll leave the debate over the virtues of Blu-ray vs. HD DVD to my media and tech colleagues--see links below. But today, we see my retail world getting involved.

Best Buy is voluntarily taking a $10 million hit in order to soothe relations with customers who recently purchased an HD DVD system, a now-defunct technology. The consumer electronics giant is sending out $50 gift certificates to about 200,000 customers who purchased systems before February 23rd. Customers can also trade in their systems at www.bestbuytradein.com.

Competitor Circuit City will also let consumers return their systems for store credit. No word from Wal-Mart , Target and other big box stores that have dipped their ties into the entertainment retail area of late.

Why take on the cost of 'making good' when the consumer environment is this tough? This is a smart marketing and public relations move that Best Buy hopes will win it some traction with customers. The gift certificates are traffic drivers and are also timed to arrive in the beginning of May which coincides with when the tax rebate checks will be in the mail. Shoppers may then have some extra cash to add onto those gift certificates. This gesture will win Best Buy more than it costs them.

A $50 gift certificate to make up for the loss of a $400 piece of technology (or at least just partial usage of) doesn't go that far for customers. It will win good will though and help drive sales of accessories and peripheral products though--a plus for Best Buy--and be another strike against struggling competitor Circuit City.

Best Buy has mastered the public relations game of raising the profile of all of their marketing campaigns. 'Mindshare' becomes marketshare.

Questions? Comments? retaildetail@cnbc.com