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Group: On Point

Shakir Akbari
Santosh Chandy
Jon Junaid
Nicole Stroh

Marketing 555
Summer Session II
Dr. Roger Baran
“Burberry: so delightfully British”. English elegance is said to be symbolized by one
brand more than any other, Burberry, and its trademarked check. The creator of
gabardine offers men, women and children a range of clothing and accessories that have
embodied a certain idea of luxury, of an English lifestyle, since 1865. Since the hiring of
Rose Marie Bravo as Burberry's CEO in 1997, the famous brand has based its image on
this concept in order to make the most of its heritage, after a time of uncertainty in the
face of newcomers to the fickle world of fashion.

Burberry was founded in 1856 when 21


year old Thomas Burberry, a former
apprentice to a country draper, opened
an outfitters shop in Basingstoke,
England. The Burberry check was
introduced as a lining to its trenchcoat in
1924, which was immortalized by
Humphrey Bogart in Casablanca and
Peter Sellers in The Pink Panther. Soon
the red, camel, black and white check
became synonymous with Burberry.
Burberry also played an important part
in adventure, producing specially designed garments for aviators and expitiditionists.

By 1997, a new management team led by Bravo began to revitalize the brand with new
design collections, new product ranges and a new advertising campaign. This team had
the challenge of maintaining the company and product image across a large customer
base, while entering new product categories and expanding distribution. With Bravo in
charge, the brand known for its heritage, history and craftsmanship has become one of the
most popular and desired luxury brands. Now it is worn not only by royals and
aristocrats, but by celebrities and rappers. The older customers started with the scarf and
trench coat and now their children and the other people see it as a status symbol. In spite
of a hostile economic climate, the company has maintained its core customers, and the
goal to gain new customers is being realized.

1. Compare Burberry’s market position relative to that of its competitors including


Polo, Coach, Armani, and Gucci. Is Burberry’s competitive position sustainable
over the long-term? Why or why not?

Since the early 1920s, well after the Burberry check was visible to the public, Burberry
has remained as a staple of both luxury and durability. This theme has remained
consistent throughout the life of the Burberry brand and is a main driver in propelling
Burberry into its current market position.
According to Bravo, “We focused on a particular price point and a particular bracket. We
knew we didn’t want to be cutting-edge fashion; that was too tough, too rarified, too
fickle, and too antithetical to Burberry. We also knew that we didn’t want to be just
classic because there were enough of those brands.” With this mindset, as well as
extensive market surveying, Bravo knew that this was how to fill those missing gaps of
the market. This niche resided “between labels such as Polo, Ralph Lauren, and Giorgio
Armani in apparel, and between Coach and Gucci in accessories.”

The Burberry Niche


Accessories Apparel
This competitive position for Burberry
is sustainable over the long term due to
several reasons. Not only due to its
particular price points, but Burberry’s
intensive consumer surveying is also
important. Burberry has consistently
focused on “remaining true to [their]
core brand values” and heritage to the
Burberry brand. The main question
posed in the Marketing Myopia is
“What business are you really in?”
It is said that the main way to ensure
growth for your company is to
concentrate on meeting customers’ needs rather than selling products. Burberry must
focus on meeting its customers needs to sustain its long term success and growth. Myth
21 seems to be relevant in the fashion industry: “There is no competitive substitute for our
companies product”. Believing that Burberry’s products have no rivals makes the
company vulnerable to dramatic innovations from others.

Perceptual mapping is a graphics technique used by marketers that attempts to visually


display the perceptions of customers or potential customers. Typically the position of a
product, product line, brand, or company is displayed relative to their competition. The
following perceptual or intuitive map is a visual display of Burberry and some
competetitors.2

1
Marketing Myopia
2
The necessary market research was not done to accurately depict the perceptual landscape, so a market
intuitive map was used.
Intuitive Perceptual Map of competing brands
Luxury

Durability

Affordability

Burberry’s market share in 2001 as rated against the top 100 luxury goods players was
5.2%, putting them in 4th place overall. This compares with 14.4% market share for
LVMH (1st), 9.1% for Polo Ralph Lauren (2nd), and 4.4% for the Gucci Group (5th).
Armani falls short with a smaller percentage (3.5%) of the market. Coach is far below
these and does not appear on the top 10. If you compare by the type of luxury good; in
accessories: Gucci is at 12%, Coach at 6%, Polo at 4%, and Burberry at 4%. And for
apparel considerations: Polo is at 9%, Burberry at 3%, Armani at 2%, and Gucci at 1%.

It is clear here that these distinctions occur based on the depth and width of each
company’s product line. Coach sells far more accessories (i.e. leather goods) than
clothing, and Polo sells far more clothing than accessories. Burberry is almost balanced,
and sells an equal amount of both, on their 2003 annual report Burberry shows almost
even income from womenswear (33.3%), menswear (27.4%), and accessories (28.6%).
For this reason, Burberry’s competitive position is sustainable, as they have a decent
demand for both accessories and apparel.

2. Because demand tends to be unpredictable in the world of fashion, the fashion


business is inherently risky. In this context, consider the various changes Bravo
has made since her arrival at Burberry. To what extent have these changes
exacerbated or mitigated Burberry’s risk profile?
Bravo’s changes, for the most part, have mitigated Burberry’s risk profile. According to
Bravo, “When [she] first started at Burberry, [her] goal was to make it great from a global
perspective.” Moreover, her goal was to “transform Burberry from a tired outerwear
manufacturer into a luxury lifestyle brand that was aspirational, stylish, and innovative.”
Her first initial step was to hire a dedicated team who had experience in the retail
environment, in order to make the Burberry brand succeed. Changing the name from
Burberry’s to Burberry, and introducing a new logo and packaging, keeps the brand fresh,
changing the name also helps to reshape the brand from a person’s name to a concept that
is more homogenous. The first major initiative was to first attract younger customers,
while “retaining Burberry’s core customer base”. The new strategy is to “associate the
brand with a more trend-conscious modern look” while staying “true to our heritage,”
says Bravo. This is a good strategy, aimed at ensuring future sales from retained
customers. By doing this, the risk of losing the sales from the emerging young affluent
buyers is diminished. After their market research discovered gaps (i.e. trendier market
segments) which Bravo felt could be filled, Burberry repositioned them selves to fill
these gaps with the help of their new collections.

The product line was reorganized and reduced to less then a quarter of what it was and
the product line was also updated with current fashions, including mini skirts and spike
heeled boots. This also mitigates risk of lost sales if done properly, as competitors who
appear more in line with current fashion, will not be able to steal away sales. To face
their trendy/classic dilemma all products have been categorized as either continuity items,
or fashion-oriented. By doing this Burberry can also make their operations
(manufacturing, promotion, and distribution) much more efficient – continuity items
don’t need to be promoted as much, can be run off in large batches and will have a steady
distribution, fashion items will be the very opposite.

Older licensing agreements that had been in place that churned out sub par products were
eliminated, Bravo did this to eliminate the risk of looking cheap, and diminishing the
brand’s reputation. Creative director Christopher Bailey says that “[unless we] speak with
a consistent voice, we run the risk of losing our brand credibility”.

Pricing, especially in the fashion


industry, is a complicated task.
Most firms hope would hope its
products demand are inelastic, thus
allowing higher prices with little
effect on demand. This curve
would represent the more wealthy
and less cost conscious segment.
Most firms demand curves
resemble the elastic demand curve,
as prices rise demand falls greatly. The raising of prices could be looked at in various
ways. As Burberry is a luxury good, raising the price changes their position so that the
items are more “exclusive” and in Bravo’s words “aspirational”, this is to focus on a price
point and further penetrate that market segment. These buyers, and core customers, are
not necessarily cost conscious, but they do care greatly about high-quality and fashion.
Another initiative handled by Bravo, was the introduction of Prorsum, which is its hand
tailored product line. This is a necessary move, to enter and compete with the higher end
fashion markets that they were previously not focused on. The brand earned an award
early in its stages, further propelling the image of Burberry as a luxury item.

The new advertising campaign, launched by Bravo, which included the hiring of an
industry giant, photographer, Mario Testino, and a world famous model, Kate Moss, is
one of Bravo’s greatest accomplishments. Almost everyone associates Kate Moss with
Burberry; this is an example of a great, consistent, advertising campaign. Coupling Kate
Moss with British aristocrat Stella Tenant is a great realization of their new strategy; Kate
Moss symbolizes their push toward the trendy, and Stella Tenant is a symbol of their
classic heritage.

Not only did Bravo need to execute a few “cosmetic changes” as well as determine a new
customer base, she also felt that the next step would be to determine what and how many
products could appeal to all consumers – both new and old alike. Therefore, new product
lines were created ranging from “bandanas to miniskirts to spike-heeled boots,” thus
birthing three new collections: womenswear, menswear and accessories. These changes
seemed to have improved Burberry’s financial position as revenues almost tripled from
2000 to 2003 – even through dismal market conditions in 2002.

3. Bravo’s team is currently juggling a lot of things, including multiple brands


(Prorsum, London, Blue and Black, Thomas Burberry), multiple collections
(womenswear, menswear, accessories), multiple channels (wholesale, retail) and
multiple licensees. What is the role of each of these elements in Burberry’s
overall business model?

Multiple Brands
Burberry created multiple brands (Prorsum, London, Blue and Black, Thomas Burberry)
as a way for each to appeal to certain characteristics of certain customers. This idea
supports Bravo’s goal of obtaining new customers while retaining old. For example,
Burberry London was offered as a lower-priced label designed to “appeal to a younger,
more fashion-conscious customer.” Blue and Black is sold in Japan, for younger
individuals, and is a foreign product that diversifies the product risk. Thomas Burberry is
similar in its purpose of diversification, but offered in Spain and Portugal.
Burberry’s Prorsum product line reinforces their positioning in the luxury market place.
It shows consumers that Burberry competes with the latest fashions, and represents the
highest end of luxury items. London is the core product line that is associated with
Burberry; the trench coat, and individual items (scarves/mufflers) that most consumers
purchase come from this line. Prorsum was used to show the Burberry brand as luxurious
and according to Bravo, the Prorsum introduction was created to “tell people that
something new was happening at Burberry. The idea was to introduce a high-profile,
high-end brand, and do it in a first-class way, by putting it in the best stores in the world.”

Multiple Collections
The intended role for Burberry’s collections (Womenswear, Menswear & Accessories)
was due to extensive consumer research to also help recruit a newer consumer. The only
way to do this was to update the product line to fit the fashion-desires of current and
potential customers, and a way for Burberry to give a
consistent look and feel across an array of products.
Not only did they maintain creating products that
were expected to have a lifespan of a number of
years, but they also created other “fashion-oriented
products…designed to be responsive to fashion
trends”, thus maintaining their flow with fashion
evolutions. Burberry’s continuity products (classic
trench, duffle coats, handbags and scarves) have
longer life cycles than that of its fashion oriented products. Care must be taken in
analyzing product life cycles. In terms of womenswear, menswear, and accessories, each
collection allows Burberry to compete with its major competition. A collection of
accessories allows Burberry to adequately compete with larger accessory players such as
Gucci and Coach.

Multiple Channels
Wholesale and retails operations allow their product mass exposure to customers. The
company had taken more control over its distribution by purchasing some distributors and
severing ties with others. It had 3162 wholesale stores, 434 department stores, and 2728
specialty stores.

Multiple Licensees
Throughout the 1970s, when Burberry was owned by GUS, the Burberry brand became
licensed on too broad of an array to maintain the true image and values of Burberry. With
this came overall turmoil when the pricing, designing, and quality of Burberry products
became skewed across numerous markets which then resulted in the brand having losing
much of “its exclusivity and the Far East [accounting] for a disproportionate 75% of
sales.” Due to this fact, Bravo determined and executed a plan where Burberry would
now exercise “control over everything from design to sourcing, manufacturing, and
distribution.” Ultimately, devising this licensing strategy allowed for the elimination of
price, design and quality inconsistencies. Multiple licensees allows Burberry to introduce
products in markets their competition has better hold of, and still share in some of the
profit.

These new “collections” and brands serve to further Burberry’s new strategy and to
mitigate risk of alienating core customers.

4. The case notes that Bravo’s team has managed to elevate the overall status of the
Burberry brand. How has it managed to accomplish this?

Bravo’s team has managed to elevate the overall status of the Burberry brand through a
complete overhaul of pricing, distribution, product, and promotion. After these multiple
product brands and lines were created, and new license ventures were ensued, that in
order for the company to move in a global, profitable direction, while keeping the core
values of the Burberry image alive, that prices needed to be raised to “reflect the brand’s
new positioning.” With this price overhaul, Burberry saw that by 2002, “gross margins
were now 56% compared with 47% in 2000.”

In terms of distribution, by 2002 Bravo and her team had managed to create world-wide
distribution of the Burberry product. According to the study, they had “3,162 wholesale
doors worldwide, including 434 department stores and 2,728 specialty stores,” not to
mention their more than “132 company-owned stores.” With this, the Burberry image
was not only globally mainstreamed, but also consistent in its image to consumers where
each store was “designed to display the full product range, showcase the vision, and act
as a testing ground for new concepts and designs.” Not only did Bravo’s team replenish
the overall pricing and distribution efforts of Burberry, but they also revamped new
product lines, and product brands, in order to fulfill their goal of acquiring and retaining
customers. Brands such as Prorsum, London, Blue and Black, Thomas Burberry were
created with the purpose of each brand appealing to the tastes and desires of particular
customers that Bravo found to be a niche within the current and potential customers of
Burberry. In addition to this, product lines such as Womenswear, Menswear and
Accessories were created to also appeal to the newer and current customer, while also
expanding the Burberry image across an array of products.

Lastly, Bravo’s team


challenged themselves in
finally devising a plan to
promote the Burberry image.
With the help of a famed
advertising team, the Burberry
campaign executed. The first
flight launched in 1998 and
featured Stella Tenant, a British
Aristocrat and ultimately told a
story that was able to convey
the brand values, tradition, and
heritage of the Burberry brand.
The following winter, in 1999,
the team was able to maintain
the “value” image of Burberry,
but also introduced model Kate
Moss into their ads to
simultaneously convey
Burberry’s more “modern,
fashion-oriented side.”

Ultimately, each challenge


remained focused on Bravo’s
original goal – to make Burberry a global brand, while maintaining the core values and
heritage of Burberry.

5. Should Burberry be aggressively transitioning to a


more restrained use of the check? What effect will
this decision have on the long-term sustainability
of the brand?

It seems it would not be in Burberry’s best interest to


aggressively transition to a more restrained use of the
check as it is its signature. Burberry’s current strategy of
check placement, placing the check on the inside of the
polo collar for example, is a well thought out strategic
decision. This placement allows immediate recognition of a Burberry product. It also
makes the item functional and able to blend in with other items in its consumers’
collections. Long term sustainability of the brand may decrease if the check is eliminated
altogether. A lack of brand recognition or brand confusion may result, as consumers
struggle to identify with products. The Burberry check has become a main identifier with
its products, similar to the Nike swoosh. There is major risk of alienating its classic
customers who see the Burberry check as not only a trademark pattern, but also as a
standard in quality. While Burberry can get away with removing the check in some
product lines, many customers may feel as though they are not getting their money’s
worth if the check is completely removed. Many consumers want to have immediate
identification and recognition of products. On the other hand, reducing the check’s
presence in the product line, making it a more subtle element of each product can
increase the brand’s sustainability, as consumers do not want to feel like they are
showing off what they are wearing, but they still like people to know and as importantly
they also want to be self assured.

There is said to be certain desirable qualities for a brand name and image3
 It should suggest something about the product’s benefits
 It should suggest the product or service category
 It should suggest concrete, “high imagery” qualities
 It should be easy to spell, pronounce, recognize, and remember
 It should be distinctive
 It should not carry poor meanings in other countries and languages

The Burberry brand name and check seems possess most of these qualities. However,
recently the Burberry name has received negative attention in parts of the U.K. as football
hooligans have taken to Burberry clothes. This phenomenon seems to be an isolated
incident in the U.K. only as the Burberry name is still highly recognizable due to its
trademarked check. Burberry should continue the use of its famous check and current
strategy.

3
Kotler Chapter 14
6. Describe Burberry’s customer base. Who is Burberry’s target customer? How
could Burberry’s popularity among non-target customers affect the brand? How
should Burberry respond to this popularity?
Singer Usher in Burberry
Based on Burberry’s pricing structure, product lines and
brands, an insight is gained in its customer’s base, First
and foremost, its customers are extremely fashion and
brand conscious. They are also consumers who are
willing to spend a large sum of change for a brand name
product. It seems that its new target customer is younger
and a little riskier in fashion, than its current customer
base who are older, more sophisticated and more brand
conscious than fashion conscious. Hip-Hop artists and
actors have been increasingly wearing the designs.

As discussed in class, English ‘Hooligans’ are examples


of “non-target customers”. This non-targeted group with
its negative image can potentially adversely affect brand image. Burberry’s popularity
among non-target customers is a double edged sword. It allows Burberry to capture
additional sales, and new segments of the market that it had not realized. Negatively, it
will alienate some core customers who do not want to share items with people in this
other group.

Recently, Burberry has earned a certain taboo status in bars and nightclubs throughout
Scotland and increasingly in England and Ireland as well. While it might appear the
company has no control over who wears its check, it can be viewed as a negative impact
of its new product strategy: “…efforts by Rose Marie Bravo, the brand's chief executive,
to make the label more accessible may be fuelling a Burberry backlash, as an increasing
number of bars, restaurants, and nightclubs across Scotland ban its designs”. Previously
aspirational as seen worn by Audrey Hepburn in Breakfast at Tiffany's, the brand has
evolved into an anarchic uniform adopted by football hooligan culture and other
troublemakers4. This ‘Tribal hijacking’ is said to be the moment when a brand becomes
the badge of belonging to a particular group that is not part of its target market. It would
appear to some that as Bravo’s attempts to popularize the brand and increase its base
clientele is beginning to erode a venerable market position and is ultimately having an
affect on the brand’s exclusivity among its most desirable customers.

This is not what Bravo had in mind when she was brought on from Saks Fifth Avenue to
resurrect the Burberry brand. At the time it was the uniform for only for Japanese
businessmen and the middle class, middle-aged fashion and brand conscious consumer.
A spokeswoman for Burberry insisted that its hooligan appeal was just a little local
difficulty: "We need to keep this in perspective. The UK is only 15% of Burberry's
worldwide sales.5" With this in mind, Burberry must continue with the current strategy
and remain steadfast in its check.

4
http://www.collaboratemarketing.com
5
http://www.collaboratemarketing.com
In order to combat these non-targeted groups from hiring spokes persons/models to wear
the Burberry brand that would make these ‘Hooligans’ not want to associate themselves
with the brand. Hiring models with a wide range of ethnicities, and/or creating images
and connections these ‘Hooligans’ do not want to associate with may help to combat this
problem as well. Burberry must maintain a positive image of the brand without seriously
offending any of their new or current customers. In extreme cases Burberry can issue
official press releases stating their position on whoever is wearing their product.

7. Should Burberry be launching Brit, the new perfume line? What other product
categories should Burberry be entering?

Burberry has been extremely successful in the many


challenges faced with repositioning the Brand and making
the Brand what it is today. One of these challenges was in
creating and extending new product lines to consumers.
Burberry, plain and simple, is a household brand name. It
appeals both to those customers who are regular everyday
Burberry customers, as well as those who strive to only
own one thing ‘Burberry’, or as quoted by Bravo as “one-
item aspirational check owners.” There have been many
examples of established fashion brands extending into
perfume lines. Burberry, with its well known and
respected brand, hopes to achieve the lasting impact and
mainstream acceptance like that of Channel No. 5.
Burberry holds an image of class, sophistication and
elegance. Brand management is an incredible task, and
Burberry seems to be extremely successful in this regard.
As Tucker states, “check management is a daily discipline.
Everyone in the world who deals with us falls in love with
it and wants to put it on everything.”

The launching of Brit could have a negative impact


however, and potentially diminish its brand image.
Burberry’s core competency is in its exceptional clothing
and accessories, not in fragrances, eyewear, timepieces, and childrenwear. Moving into
new product categories can lead to the same problem seen with the old licensing
agreements; there could be a disconnection between the product categories as well as a
high risk of inconsistent quality across the brand. To curb this problem, “Bravo and her
team reined in many of the older licensing agreements to curb inconsistencies in price,
design, and quality across markets”. Management at Burberry must be steadfast in
demanding and maintaining high expectations from these licensees who have the right to
design products such as fragrances. As seen in the Burberry Brit advertisement, there is a
strong visual appeal and linkage to its well-known classic design.
Burberry should strongly consider a stronger presence in the childrenswear market, as
there seems to be a large demand for children’s good in the luxury market. As younger
couples become more affluent, there is a need to purchase items for their children, in
similar quality and price that they purchase for themselves. Many of Burberry’s
competitors have children’s clothing lines, and it has been shown to make a good
compliment. Burberry can consider footwear in limited items, but like its competitors,
make footwear an accessory. Another item that would gain market ground would be
sport specific clothing. Instead of just golf wear, there can be more professional sailing
wear, or riding gear, or any other sport that its core customer engages in. There is a lot of
room in Burberry’s current product categories to grow, moving into new product
categories when its newer core products (fashion clothing) are still developing may lead
to the customer feeling left behind.

References
Levitt, T. (1975) “Marketing Myopia”, Harvard Business Review, Vol. 53 (5), Sept-Oct

Kotler, Philip. Marketing Management. 12th Ed. Prentice-Hall, 2005.

Moon, Youngme “Burberry”. HBS case # 9-504-048

Internet source: http://www.collaboratemarketing.com