burberry - ceo case analysis

Burberry Case StudyInternational Fashion AcademyLuxury Brand ManagementStrategic Marketing

Case Objectives: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?

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 made upon her arrival at Burberry. To what extent have these changes exacerbated or mitigated Burberry’s risk profile?

3. 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?

4. Brand extension: Was it a good idea for Burberry to launch ‘Brit’, the new perfume line? what other product categories should Burberry be entering?

Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015

Contents:

• History of Burberry Brand

• Brand Positioning

• Bravo’s Strategic Changes

• Defining the Target Customer

• Remaining Competitive

• Brand Extensions


1856: Thomas Burberry founds Burberry in Hampshire, England as an outerwear company 1891: Burberry opens its first store in Haymarket 1914: Burberry is commissioned by Great Britain to redesign officers coats, thus creating the "trench coat”

1920s: The Burberry “check” is developed for the lining of coats 2006: Burberry begins online sales first

2010: Burberry launches its cosmetics line Burberry Beauty 2015: Burberry operates three brands, sold in Burberry stores, franchises, and department stores worldwide:

• Burberry Prorsum – fashion, styled

• Burberry London – tailored, suiting

• Burberry Brit – casual, weekend wear

Faces of Burberry:

History of Burberry:


Market Positioning:• Burberry is positioned as an accessible luxury brand, between mid-level brands

(ex. Polo and Coach) and high-end brands (ex. Armani and Gucci)• It is also positioned as a functional and wearable brand• Burberry offers its classic products and also fashion-forward items• The brand heritage and diverse product mix catering to a large target group

provides a sustainable advantage

Price

Product Mix

Prèt-a-Porter

Price

Product Mix

Accessories


• Took control of licensing issues, design, production and distribution• Liscensed products more than doubled in total sales

• 2000- 30.8 Million Pounds• 2003- 58.3 Million Pounds

• Updated Product line• Cut the number of product stock-keeping units from 100,000 to

24,00• Result: keep products up to date

• Streamlined into three collections: • Womenswear- 450-500 styles each season

• Sporty, Function, Protection AND style• Menswear – 330-350 per season• Accessories

• Soft & Hard offerings• “Accessories are a piece of the dream” • Higher margins than fashion because more secure purchase,

available to target and aspirational consumer

Bravo’s Changes: Overview


• Increased prices for positioning• Revenue increase:

• 2000- 47%• 2005- 56%

• Added Prorsum label• Debut at Fashion Week 1998

• Invested in marketing and hiring industry leaders• Launched flagship stores to display new fashion items for the market

Bravo’s Changes: Overview


Brand Name:Bravo began her tenure with a clear rebranding strategy starting with a new name that brought focus and new attention to the brand.

Plaid Management:To prevent oversaturation of the market, Bravo and her team worked to manage the use of plaid in all fashion and accessories trying to limit the risk of counterfeit by setting clear guidelines and standards for its use.

Bravo’s Changes: Rebranding


Bravo reigned in licensing in weak areas and extended herself in others. In what seemed to be a shift towards control, licensing deals caused the Burberry check to flood the market which showed the aspirational success of a luxury brand but also potentially alienated the target market.

Reward:• Removed licenses with little

control over quality and distribution

• Purchased distributors• Re-established relationships

with quality manufacturers

Risk:• Too many items on the market at

varying price levels• May have over extended use of the

Burberry check

Bravo’s Changes: Restrictive Licensing


• Risk: 10 million pound investment in the re-launching of the brand. Hired notable photographer Mario Testino.

• Reward: Use of socialite Stella Tenant and supermodel Kate Moss revitalized the image of the brand, lowering the age demographic and created an edgier and higher end look for the consumer to identify with.

Bravo’s Changes: Marketing Investment


Bravo decreased risks by taking control of the brand name, quality and distribution and directing the public perception through focused advertising campaigns and high end fashion designs.

Though it could be argued that she over licensed to brand in some respects, she successfully positioned the brand in the high end luxury market while still keeping it accessible to aspirational consumers.

Bravo’s Changes: Results


• A man or woman seeking functional luxury• A customer preferring classic style• Partial to accessibly priced products• Has access to disposable income• Cross-Generational market• Product mix includes “continuity” items and “fashion”

items providing mass appeal • Large amount of aspiration purchases

Burberry’s Target Customer:

• Brand awareness among non-target market can add to brand equity, though it reduces exclusivity

• To avoid devaluation of brand, anti-counterfeiting operations are critical, as is a more limited use of the plaid tartan design

• If Burberry wants to profit off of consumers outside of its current target market, it can expand its entry-level product line

Non-Target Market Brand Awareness:


Social Class:

Executives

Professionals

Professional Support

Clerical, Service, & Blue Collar

Part-Time & Unemployed

$200,000 >

$100,000

$72,500

$50,000

$32,000

$25,000

$20,000

$15,000 <

*Primary Target Group$70,000 USD +


VALS Framework Segmentation:

Ideals Achievement Self-Expression

Believers Strivers

Thinkers

Makers

High ResourceHigh Innovation

Low ResourceLow Innovation

Achievers: • High resources• Motivated by achievement• Enjoy showing off success• Preference for established brands

Strivers: for accessories• Lower-Resources• Highly Style-Conscious • Desire to Emulate Achievement

Achievers Experiencers

Survivors

InnovatorsInnovators:• High-Income• High Self-Esteem• Materialistically Indulgent• “Finer things in Life”


ConsumerConditioning:

Primary Reference Group Secondary Reference Group Shopping Displays

Television

Style Icons

Childhood Peers Childhood PeersChildhood Travels

Adult Travels Historic Appreciation Style Icons


Marketing Mix:

PRODUCT PLACEPRICE

PROMOTIO

N

Capturing the Target Market


Product:

Womenswear Menswear Childrenswear Cosmetics

Accessories


Place:

Mono-Brand Boutiques Multi-Brand Stores Online Portal


Price:

Accessories:

Menswear:Womenswear: Childrenswear:

Cosmetics:

$95 - $4,300 USD $167 - $2,900 USD $79 - $289 USD

$22 - $125 USD $150 - $3,040 USD


Promotion:Magazines: Social Media: Digital Content:

TV Commercials: Concert Sponsorships:Billboards:

Promotion:


Prorsum, Burberry’s award winning label is the key to Burberry staying relevant in the luxury market. Their ability to enter into high fashion keeps the brand interesting to the target luxury consumer and aspirational to other consumers.

Staying Competitive:


Plaid management and restrictive licensing is also key to the survival of the brand.

Although estimates of 25% of revenue comes from items with the plaid, popularity among non target consumers such as hip hop artists detracts the core target.

Bravos goal of decreasing the visibility of the check in the future is important to avoid over saturation and alienating the core consumer.



Keeping the story alive through the use of British icons (ex: celebrities, models, public figures) in marketing will help keep the brand relevant in the luxury market and keep it noticeable in the media.

Romeo Beckham – Childrenswear 2014


Eddie Redmayne and Cara Delevingne S/S 2012

Cara Delevingne and Kate Moss, My Burberry 2014


Fragrances are a key gateway item for luxury brands. The launch of Burberry Brit was another way for Bravo to reach a younger demographic and open doors to new consumers.

Price: $94 USDPromotion: Use of younger models and playful campaignsDistribution: Brand stores, Department Stores, Beauty stores

Brand Extension: Burberry Brit


The goal of becoming “like Chanel No.5” was over reaching as it does not have the historical status. Chanel No. 5 also has different demographics than the Burberry Brit goal of:

“30s, English, Charismatic”

This is the right demographic for the re-launch of the brand, but wrong competitor expectations.

*Next steps would include launching men’s fragrances and expanding the Burberry Brit line to include complimentary items for gifts

Brand Extension: Burberry Brit


Homegoods: In staying with the heritage of the brand, offering traditional home items such as textiles, china and decor in the Burberry brand would continue to reach the target market and open more gift offerings.

Target Customer Home Purchase

Future Brand Extensions

Extended Target Home Purchase or Gift Items


Bespoke Luxury is a growing trend in the industry and offering personalized products such as monograms and other goods would continue to reach the sophisticated luxury consumer.

Monogramed Poncho Runway AW 14/15

Future Brand Extensions

Monogramed Poncho popularity amongst celebrities



FIN


Works Cited:Davis, Scott. "Burberry's Blurred Lines: The Integrated Customer Experience." Forbes, 27 Mar. 2014. Web. 6 Jan. 2015. <Burberry's Blurred Lines: The Integrated Customer Experience>.

Goldfingle, Gemma. "Analysis: Burberry's Brand Revitalisation Continues in Bid to Attract New Customers." RetailWeek, 14 Sept. 2012. Web. 7 Jan. 2015. <http://www.retail-week.com/analysis-burberrys-brand- revitalisation-continues-in-bid-to-attract-new-customers/5040531.article>.

"Annual Report 2013/14." Burberry PLC. Web. 6 Jan. 2015. <http://www.burberryplc.com/investor_relations/ annual_reports/annual-report-2013-14>.

Schlesinger, Fay. "According to Burberry's New Shopper System, Are You Brit, London or Prorsum?" Daily Mail UK, 18 Nov. 2009. Web. 5 Jan. 2015. <http://www.dailymail.co.uk/femail/article-1228672/According-Burberrys- new-shopper-class-Brit-London-Prorsum.html>.

burberry - ceo case analysis

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