Cipcommunity

Burberry Case

Burberry Case

Burberry-Case Write up Andre Costa – student 894, Class TB, Marketing in a Dynamic World 19-09-2011 Burberry represents nowadays one of the most successful fashion brands across the world. Founded in 1856, the company’s expansion and growth was the result of an accurate management planning and a recent winner marketing strategy that will be explored below in this article. The focus on this case study is based on the challenge of repositioning in the market the brand Burberry, which by the middle of the 90’s was losing distinctiveness due to the lack of consistency and cohesive vision that it takes to be positioned as a luxury goods retailer.

When Rose Marie Bravo entered as chief executive in 1997, Burberry was then facing structural and strategic issues that needed to be approached adequately. It is of great relevance to mention Bravo’s background prior to Burberry: 25 years of experience in the industry and recognized talent within the executives in the retail and fashion trend meant the demanded experience and skills brought aboard in order to embrace the challenge of repositioning the brand as one of the luxury greats.

Prior to Rose Marie Bravo’s entrance as chief executive, although the brand represented a profitable business in the past years, it was now attached to an older costumer base due to its conservative looking. At that time, the quality of the earnings was therefore decreasing and the brand was being alienated from its greatness and personality in the luxury goods market over time. By that time Burberry was concentrated on a narrow base of product line, selling umbrellas and outerwear, which proved to be an unsuccessful strategy.

In addition, other weakness that needed to be addressed was clear for the company: the great dependence on the distribution and licensing agreements. When Rose Marie Bravo arrived in the company in 1997, to hold the front-line of the top management, her envisioned goal was to convert Burberry’s image from the tired and oldfashioned outwear manufacturer into a new fresh luxury lifestyle brand. The challenge was then to maintain Burberry prestige as a symbol of luxury and durability, and make the brand great also from a global perspective.

The trench coat Burberry’s core product and the check pattern of camel, black, red and white plaid design that became a registered trademark, both represented the pinnacle of the market positioning of Burberry as a luxurious and durable brand. In addition, Bravo’s challenge was also about maintaining the customer loyalty and extending simultaneously Burberry’s customer base, with a younger and wealthier consumer targets insight. This had to be done without compromising customer burnout.

The needed repositioning took place through the introduction of a new product line and trough reinventing the role of the check pattern, which started to appear visible less often in the new products in the market. The line product extension and simultaneous updating of the traditional products represented a key factor allowing the brand to unlock in the market a niche in the middle of vanguard fashion and classic fashion. When repositioning the brand to this new place, Bravo kept the concern to maintain a consistent look across products in order to generate a strong affirmed position in the market as the luxury functional goods company.

The new marketing plan allowed Burberry to overcome one “Achilles’ heel” referred before, the distribution. Bravo and his team adopted measures in order to exercise closer control over the value chain of the non-licensed products and conceded licences to partners with expertise skills to design, manufacture and distribute – under Burberry’s name – products outside company’s core skills. This way Burberry’s product quality got improved allowing the alignment of the business strategy with the recovery of the excellence that a luxurious brand demands.

Distribution was also restructured through renegotiating contracts, bringing new distributors aboard and ending contracts with some others. In addition, creating companyowned stores with the flagship concept insight – displaying the full product range, showcasing the vision, and serving like testing ground for new designs – turned to be a very clever marketing implementation from Bravo’s team. These flagship stores work simultaneously as communication bridges towards the costumers to transmit the vision of the company, and as a booster for restoring Burberry’s strong identity.

Especially if we lean on the locations elected: Barcelona, London and New York, which are cities where cutting-edge fashion is more expressive, the installation of this showcases in those locations permits a softer integration of this so used classic brand in the ultimate fashion segment. This way the communication of what the new position of Burberry is (the niche referred before) turned to be faster and clearer. The product line was updated dividing the products into two new categories: continuity and fashion oriented.

Continuity products are expected to have a longer life cycle over the years while the fashion oriented ones tend to be available in the market for shorter periods of time as they are trend sensitive and they enter/leave the market whenever the collections are new or old. This new product portfolio satisfies then the cross-generational new concept of the brand. In addition, there were introduced three primary collections: menswear, womenswear and accessories and the brand switched name from Burberry’s to Burberry.

In this context the advertising efforts to promote the new Burberry brand image proved to be successful, since the campaign could communicate both classical and fashion oriented sides of the new line of products. It is also very positive the fact that if we compare Burberry’s advertising efforts in percentage of the sales with its direct competitors, it is visible that Burberry’s efforts are the lowest (only 3% of the sales), which reveals that the new marketing positioning of the brand was well-thought – when taking in consideration the positive business results achieved afterwards.

However, the campaign started under Bravo’s supervisory to relaunch the brand identity proved to be so successful that Burberry even reached a level of popularity that lead to some inconsistencies such as the entrance in consumer markets which didn’t corresponded exactly to the target desired (urban youth and hip-hop musicians). This effect can bring undesired consequences for the brand in the future in terms of its long term sustainability.

These kind of new brand users are not desired from a loyalty and identity point of view, because since they don’t represent the functional luxurious concept of the brand, they tend to distort the brand image over the years which may lead to the loss of Burberry’s core customers who don’t feel identified with this costumers lifestyle and behaviours at all (especially when referring to the traditional old man costumer). On the other side, reaching a younger public can also be perceived as a positive sign for the brand.

It means that the new marketing mix was successful on conquering a young customer base which matches the new business strategy of extending the product portfolio. Therefore Burberry’s new competitive position will be sustainable over the long term only in case a balance can be maintained between these two contradictory effects over the years. This can be achieved, for instance, with the creation of an urban wear product line for these new temporary fashion users, separating then product lines within collections according to the nature of the consumer (loyal core costumers vs. ounger urban customer base). The new business strategy concerns were not only to about attracting younger consumers and retaining the traditional ones, were also about building a stronger customer base of opulent consumers – the introduction of the label Prorsum, in the context of the brand portfolio expansion, also revealed to be a successful marketing action to attract these consumers from upper-classes in order to recover back the individuality and distinctiveness of the brand Burberry.

In this context, introducing Brit, as the new perfume line distributed under the name of Burberry also reveals great potential on making the brand grow in the long run, since it represents an accessory which is not linked to any specific customer base. Therefore it contributes to strengthen the brand identity as a whole – if we think that customers who feel comfortable with the fragrance and are simultaneously attracted to the product design (which includes the trademarked check pattern) may purchase other items from the same brand, creating a cross generational brand loyalty.

Regarding the check pattern, with the new marketing mix it continued to be present consistently over the product line accessories as a form of merchandising. Historically it has always represented a high volume of sales for the brand over the years, although with the new brand portfolio introduced under the Bravo’s management the apparel goods that represent the largest sales volume are the ones which have no check visible at all (40%) and the ones where this pattern is subtly used (40%).

Nevertheless, it is reasonable to think that the brand in the long term will lose identity if the check starts to disappear from Burberry’s products. Mainly because the core costumer base which is loyal to the brand appreciates this design and takes pleasure from exposing the pattern as a kind of opulence for consuming such a luxurious brand. So apparently there are no relevant motivations that may conduct the company to a less prolific use of the check in its products, unless it starts to result in sales breakdown.

On one hand, if the less prolific use of the classic check in the apparel products can explain the reason why the brand could be now distributed to a younger customer base, on the other hand, from long term sustainability point of view of the brand, the continuous use of the check pattern will always please the loyal customers and will keep the brand alive across all costumer’s minds, meaning a secure high volume of sales over the years.

Therefore there is no apparent reason to consider the abandon of the classic pattern. Likewise, comparing to its direct competitors trademarks, it is generally known that Burberry’s check represents the same vending power in the market as for instance “LV” logo and Louis Vitton traditional pattern represent for Louis Vitton brand.

So uncovering this trademark in its product line would push back the company to a disadvantage position towards the competitors in the same industry. Comparing to its direct competitors, other top luxury brands, for instance Lous Vittton and Prada are brands which are more focused in the accessories market, and if we lean on the apparel market it can be noticed that these brands are not even positioned among the top 10 luxury brands.

Burberry new product line revealed then to be successful positioning the brand in both apparel and acessories markets – it is also positioned among the top 10 luxury brands in the acessories market, between Polo Ralph Lauran and Versace brands for instance. It is also of important relevance for the brand to enforce wholesale marketing promotion over specific areas like Asia, where the wholesale network of Burberry got weaker from year 2001 to 2003.

A solution would be to exercise more control over the distribution in this area, renegotiating distribution contracts. Additionally, it could be considered the installation of a new flagship concept store over Asia, located at Hong-Kong for instance. Burberry’s competitive positioning will be sustainable over the long term if the various concerns exposed above are addressed in the correct way in the future in order to overcome the inconsistencies that may arise with the new business approach.