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Burberry Market analysis

3448 words (14 pages) Essay in Marketing

12/06/17 Marketing Reference this

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The brand- Burberry founded in 1856 is a leading International brand for both men and women. This report aims to identify Burberry’s marketing position in order to make recommendations. I have done a Primary Research where I made a questionnaire over the internet and asked my friends in facebook to fill it in order for me understand what individuals of various age think of the brand Burberry.

Using both – the primary and secondary research methods, I have provided plenty information about the brand and ensure that the data is valid and reliable as possible, and will fully support my final set of recommendations.

THE OVERVIEW OF THE COMPANY

The core reason of the Burberry brand is to explore, protect and inspire. These three ethics are at the heart of the brand, its behaviour and culture as a company. The work of the Burberry Foundation and further progress in business responsibility demonstrates these values in practice (Burberry, 2003).

Thomas Burberry established Burberry in 1856 in Basingstoke; England when he opened a shop selling men’s outerwear. The reputation of the company was improved through Burberry’s development of “gabardine” – a material that was resistant to tearing which was weatherproof but was also breathable (Burberry, 2002). This new fabric was particularly suited to military needs and led Burberry to design an army officer’s raincoat which became an important element of the standard service uniform for British officers in the early 1900’s. Throughout the First World War, Burberry continued to produce the officer’s raincoat by adding functional dimensions such as straps, epaulettes and D-rings which is now named the “Trench coat”. As a result of its military associations, the brand also developed its distinctive pattern; the black, tan, and red pattern known as Haymarket check or the Burberry classic check which was first used as a lining for the Burberry trench coat in 1924. By 1967, the Burberry Check, which is now a registered trademark, was widely used on its own for items like scarves, luggage, umbrellas and other accessories (Burberry IPO Prospectus, 2002).

INTRODUCTION

A brand is typically much more than a product and is normally the name of a company, organisation or an individual (Jackson and Shaw, 2009). As an intangible idea, a brand is not confined to the physical limitations of products that become old-fashioned, worn-out or broken but can be reviewed and reshaped in the minds of the consumers. As Randall (1997) observes, “A brand then has an existence separate from an actual product or service: it has a life of its own.”

The option of a fashion brand is dependent upon the efficacy and appropriateness of the decisions of those dependable for its management. There are several examples of brands that have flourished and gone down accordingly of the business models that management have positioned in order to reach their strategic objectives. Gucci, the Italian luxury brand is one of the example. In the 1950’s the brand enjoyed success. It was the status brand of preference for Hollywood film stars and European royalty. However, a generation later the brand suffered a loss of prestige and the once profitable business made major losses.The adoption of a business plan which gave up management control over product development and distribution in favour of indiscriminate licensing agreements, damaged the credibility of Gucci as an exclusive and encouraging fashion brand (Jackson and Haird, 2003).

Likewise, the presentation of the British fashion brand Burberry over the same era has been determined mostly by the acceptance of business models which have been harmful to the company’s performance (Cowe, 1998). For example, for the financial year ending 31st March 1998, the brand saw its annual profits go down from £62m to £25m; leading the financial forecasters to explain it as “an outdated business with a fashion status of almost zero” (Finch and May, 1998). However, from 1997, at the start of a newly appointed chief executive, Rose Marie Bravo, Burberry has totally re-aligned its business model and has made significant improvements in its business performance. The expansion of the product portfolio includes a wider purchaser base and the adoption of a multi-brand positioning, reflects many of the developments that have occurred within other premium international fashion retail companies which include firms like, Ralph Lauren, Gucci and Prada (Moore and Fernie, 2004).

SECONDARY RESEARCH

Current Market Position:

Ever since the early 1920’s, Burberry has remained as a staple of both luxury and durability. The check theme has remained constant throughout the life of this brand and is a major fact in boosting 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 rarefied, 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”(Burberry 2002). With this frame of mind, as well as extensive market surveying, Bravo identified that this was how to fill up those missing gaps of the market. Burberry has consistently focused on “remaining true to their core brand values” and heritage to the Burberry brand (Fletcher, 2003).

The below figure, shows a brief descripition of what product items had the most sales in 2009/10.

The Burberry brand has broad consumer appeal. The business is balanced between non-apparel (36% of 2009/10 revenue), womenswear (35%), menswear (24%) and the smaller but an upcoming potential, childrenswear division (5%). Burberry is planning further growth in all areas of the business over the next few years.

Adapted from: http://annualreview2009-10.burberry.com/group_overview/index.html

INVESTIGATION

BRAND POSITIONING

Brand Positioning is clear and consistent according to Global Brands (2010), as Burberry is said to be falling under other luxury brands like Louis Vuitton, Gucci, Armani and Hermes.

Previously recognized, the Burberry brand trademark was a critical business benefit for the firm; and as such, the management team acknowledged the significance of a successful and well-organized brand management strategy. The first proposal was to update the picture of the brand by firstly changing the name from Burberry’s to Burberry. This modification was supported with the introduction of a new brand logo and fashionable packaging. In recognition of the crucial involvement that advertising plays in the growth of international fashion brand positioning, the brand has attempted to rebrand itself with advertisements in magazines such as Vogue, Gentlemen’s Quarterly, Esquire, Tatler and Harper’s Bazaar. The brand is recognized for using reputable Fashion photographers and British celebrities in its advertising including models like Kate Moss, Agyness Deyn and Lily Donaldson, singer George Craig, actress Rachel Weisz and actress Emma Watson, who is also said to be the face of Burberry’s 2009 Fall/Winter collection. The Fall/Winter campaign was flourishing and Emma Watson was then the cover model for the 2010 Spring/Summer campaign.

The challenge to re-position Burberry as a high fashion brand required the opening of a flagship store in central London. The management team chose New Bond Street which was critical since it placed Burberry near to the other leading luxury and fashion brands in London – such as Chanel, Versace, Gucci, Prada, YSL and Bulgari. The organization team also recognised the significance of a flagship store as an important means for attracting the attention of the international fashion press and that it would help Burberry get hold of greater editorial and other media coverage.

After the Brand positioning, the brand in terms of reliability, uniqueness, credibility and extension has gone higher and better. Talking in brief:

BRAND RELIABILITY:

Burberry today is believed to be one of the leading luxury brands of the world. It is a unique luxury brand with international appreciation. Buyers are likely to use brand names as signs of quality and value, which means they are reliable (Moorthy, 1985). Burberry has been very different with quality, as defined by the classicism, endurance and functionality that characterized its history as the outfitter of choice for the explorers and adventurers who pioneered aviation and arctic exploration (Dovaz, 1998). Burberry being more than 150 years old have maintained their quality and because of this, people can rely upon it. Therefore, they buy Burberry and moreover, they have the warranty.

BRAND UNIQUENESS:

The need for uniqueness in a particular brand is the must of an individual to express his/her uniqueness from other individuals, to be different (Fields, 1996). Burberry has made itself distinctive from other brands with the help of it’s pattern. Wherever a person sees a check print, they know that it is Burberry. Their check print plays the most important role and makes the brand unique from the other’s. Moreover, the brand being 150 years old, customers can rely upon it as they have survived so far.

BRAND CREDIBILITY:

Credibility is the believability of an entity’s purpose at a particular moment in time. The higher the credibility, the more convincing the company (Sobel, 1985). To attain the credibility for high quality, a company must develop a reputation for manufacturing and delivering quality goods(Bell, 1984). It usually takes many years before a reputation can be established. Credibility is thus dependent on the company’s reputation (Fitzgerald, 1988), which Burberry is well-known for.

BRAND EXTENSIONS:

A successful brand name can be used as a stage to start related new products. The benefits of brand extensions could be the influence of existing brand awareness and thus reducing the advertising expenditures, and also a lower risk from the perception of the purchaser.

See Appendix 1 for the suitable brand extensions that can improve the core brand (Pitta and Ktsanis, 1995).

BRAND EQUITY

A brand is a symbol or name used to recognize a particular product. The brand can add major value when it is well recognized and has positive relations in the mind of the consumer. This idea is referred to as brand equity (Hunt and Morgan, 1995). Brand equity is an intangible benefit that relies on the relations made by the shopper. In addition, brand equity increases from the confidence that customers place in one brand over another (Kamakura and Russell, 1991).

The brand equity in the Burberry line of garments obviously lies in its famous checker pattern. The Burberry check pattern was launched in the 1920s as a lining to its signature trench coat and thus became a registered trademark. Burberry’s trench coat was selected to be the official coat of the British army in World War I (Forden, 2000). Over the resulting years; celebrities, socialites, movie stars, politicians and explorers have followed the checker print. Therefore, the brand became a symbol of both luxury and superiority (Heller, 1999).

MARKETING COMMUNICATIONS

Burberry has identified the significance of active marketing communications in the development of the lifestyle and an image that is capable of generating awareness among wholesale buyers, retail clients and the media (Matlock and Edmondson, 2002). In order to create and maintain a logical brand identity, all Burberry marketing activities are managed from London. Any local type of marketing communication and activity are determined by the path provided by the London marketing team. There are three important ways this brand has been marketed which are the following:

(1) Advertising.
(2) Fashion shows.
(3) Editorial placement.

See Appendix 2 to get a brief description on advertising, fashion shows and editorial placement.

Primary research

ANALYSIS OF QUESTIONNAIRE DATA

I decided to make an online survey as people could easily access it. My survey was based upon 13 simple questions where the responders had to choose an option from about 4 or 5 choices, and in some questions they could choose more than one option. I did this survey to get a clear picture of the brand (Burberry)’ s current position. I have also attached the questionnaire and responses I gathered in my appendix3, as it gives a clear image of what I have asked the respondents and to see what they have to say about it and how it all connects to my report.

Moreover, my last question to my respondents was “One word/statement that you think best describes Burberry”? Gathering the responses the respondents gave, I have processed them in to a map of key brand associations. This gives a clearer portrait of my findings and makes it easier to summarise into a critical appraisal.

RECOMMENDATIONS

The constrains I think that are taking place are the following:

1.The market and current trends are regularly changing.

2.High earning people shop everywhere, and lower income people cannot afford Burberry.

3.The status of Burberry must be managed in a way that places the base for long-term growth.

4.Burberry’s brand has a lot of competitors.

5.The brand’s sales rely mostly on the Burberry check. The marketing team must find a way to manage the meaning behind the check in a strategic way, which should create a consistent brand image.

These constrains could be covered by firstly, repositioning the brand. The aim of this decision is to attract younger generation, while still appealing to the current customer base. Updating the product line could be another option. This could be done by, digging out the outdated merchandise of the line and replacing them with a new line of products. I think that it would be most successful to develop a less-expensive line for children and young adults that would give them the nostalgic feeling. Keeping up with the trends and appealing to people of all ages could be the perfect way to saturate the brand. With this basis, the brand does not need to push away the loyal customers, because their line will remain stable with what they have responded to favourably all this while. In this industry, there is enough room not just to stretch the product line but also to develop many separate lines within a brand, like the Prorsum line of Burberry. If Burberry develops a technique to appeal to a broad customer base, they will be more successful.

Burberry can be mostly found in department stores, but their flagship stores are the actual place where they can propose the largest product line. I would suggest opening Burberry stores in more places, as the brand is now bought by a broader customer base than in the past. This may be tempting to some people, who would like more options when shopping the Burberry line. Today’s marketplace is all about finding the next big trend. Brand loyalty is harder to achieve and even harder to keep than in the 1920’s since there are so many options and anything can appear to be better than the next. Burberry needs to keep their brand at the peak of mind with their past, present and future customers. The only way to do this productively is by changing the product lines and choices for the consumer world.

I would also suggest to create Brand Awareness. This could be done by using advertisements in glossy fashion magazines. According to my questionnaire, I realised that respondents are not much aware of their beauty range. So I would suggest Burberry to advertise more upon their beauty line. This could be done by sending free samples to make-up artists so they can use it and be aware of the beauty collection too. Also these free samples could be sent to Burberry’s loyal customers. Moreover, Burberry could do free makeovers on various sort of events so people could be more aware of it. It is just a way of advertisement. Snacks and champagne could be served to make their brand image look more classy as Burberry is associated with the glamour world.

APPENDIX 1.

Brand Extension in terms of Product ranges:

Burberry has a multi-level brand strategy that includes different brand stages. Burberry Prorsum is the couture high fashion range that provides as the focus for fashion shows and editorial coverage. It is produced in limited quantities in order to gratify the demand for exclusivity among wealthy consumers, this collection is distributed through Burberry’s flagships stores and also prestigious department stores like Selfridges and Harrods in London.

The Burberry London line is the company’s ready-to-wear range which is presented in two collections for spring/summer & autumn/winter for both men and women. However, in order to appeal to warmer climates, and to attract the customers, the women’s wear spring/summer ranges now also includes swimwear, as well as complimentary accessories, like footwear, bags and towels for the beach. Similarly, the men’s collection has been extended to consist of swimwear, sportswear and a ski collection.

The Thomas Burberry range is one of three diffusion brands which is targeted towards the younger generation, 15-25 year old consumer group. The Burberry Black and Burberry Blue brands are the two other diffusion lines that are sold exclusively inside Japan. In 1996, a casual collection for younger women were introduced, whereas the later brand is targeted at the younger male and is embraced of tailored clothing and sportswear.

The Burberry brand also incorporates the company’s accessories range which with a sales value in 2008 of £58.3m, has appeared as a highly important part of their business (Haid, 2009). Handbags signify the largest accessories product group by turnover. Children’s wear, Shoes, fragrance, scarves, eyewear, and other leather goods are also included in the accessories group. As such, it is possible to classify the Burberry brand model in terms of a pyramid.

APPENDIX 2.

Advertising

Launched on a twice-yearly basis to agree with the release of the seasonal collections to their retail stockists and stores, the brand’s advertising campaigns are focused upon the leading fashion and lifestyle magazines. The manufacturing and media costs associated with the advertisements symbolize a major section of the firm’s advertising spending. With a particular and strong focus upon the British images, these advertisements draw heavily from the firm’s history and heritage. With an emphasis upon the trademarks and key products, the campaigns do not feature individual products, but instead presents a mix of products which present the overall brand image and thus demonstrates the scope of the product range.

In relation to advertising within the Japanese marketplace, both Sanyo and Mitsui manage their local advertising campaigns directly using the campaigns and images produced by the London marketing team. All advertising campaigns in Japan need a central marketing department approval.

Fashion shows

Burberry views fashion shows as an important factor in their marketing plan since these serve to emphasize the luxury status of the brand. In addition, the shows create and support the fashion reliability of the brand and produce international press coverage. The shows for both men and woman’s Burberry Prorsum are held twice, yearly in Milan. Milan because, it recognises the significance of the city as the global centre of luxury fashion and it also provides to maximise fashion media coverage internationally. The Burberry London line is publicized at London Fashion Week each season in the showrooms in London.

Editorial placement

In order to create brand awareness, and establish a luxury positioning, Burberry has adopted a public relations strategy aimed at the fashion and trade press. This scheme aims to make the most of world-wide editorial coverage and comment in support of the brand and to make sure of the regular product placement in the leading business, trade, fashion and newspaper publications. Moreover, each season the company provides a brochure containing the current collection focused on the customers and operates information in the website which contains information on the history of the business, descriptions of current advertising campaigns including the shareholder’s information. The core essentials of Burberry’s marketing communications model are presented in Figure 1.

Burberry’s approach to marketing communications highlights three key considerations. Firstly, it recognises the importance of advertising in the making of a luxury brand image and lifestyle association. Secondly, it is obvious that fashion shows and associated events are crucial to the realization of international media coverage. Finally, a media management scheme is crucial for the achievement of adequate editorial coverage and the growth of a reliable international brand summary and standing.

Figure 1: The Burberry marketing communications model

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