Burberry Case Study - Essay Example

?Burberry Case Study Describe Burberry's market position in terms of strengths and weaknesses before Bravo took over. In your answer make appropriate references to how they stand versus their major competitors such as Polo, Coach, Armani, Gucci, etc. Make sure you include all of the relevant luxury brand competitors. Is this position sustainable? Strengths Quality products- the establishment of Burberry’s saw the company introduce quality products such as the trench coat. The trench coat was made of waterproof and breathable fabric material that made it durable and suitable for extreme conditions. Strong product brands- the Burberry trench coat had a strong presence in Britain. The coat became the British army’s official coat. The coat had a strong brand that was associated with safety under extreme conditions. In the 1920’s, Burberry’s was able to introduce a new product under the Burberry check pattern. The check pattern was very common among a large number of celebrities, politicians and designers. Its brands also symbolized both luxury and durability. Long business experience- Burberry’s was incorporated in 1856 and had been in operation for more than one century before Bravo took over in 1997. This had given the company vast experience in the consumer market for apparels and luxuries. The company was more experienced in business compared to its competitors such as Gucci and Armani which were founded in 1921 and 1975 respectively. Weaknesses Limited products- Burberry’s had very few products in the market. Its main products were umbrellas and outerwear. The company was left struggling to capture a significant market share while its competitors such Gucci and Polo dominated the market. Low levels of innovation- Burberry’s had kept its traditional products for a very long time without getting new ideas to improvements and make them were relevant to the market. The firm lost its market share to competing businesses such as Gucci and Polo because it was unable to introduce new products and stay relevant in the market. On the other hand, Polo and Gucci became household names because of their ability to introduce new products that were relevant in the market. Burberry’s position is sustainable because the company has vast business experience compared to its competitors. The company also has been producing quality products and strong brands that have for a long time been associated with safety, luxury and durability. Bravo needs to utilize these competitive advantages and improve on innovation so as to introduce a wide range of products that will enable the company stay relevant and remain competitive. 2. Prepare a positioning map to map Burberry's position vis a vis its competition prior to Bravo's hiring. Next, map Burberry's position vis a vis these same competitors after the marketing mix changes by Bravo took effect. Note: you may want to consider the fashion vs. accessory sides separately. Prior to Bravo’s hiring Quality Quality Gucci Coach Coach Gucci Burberry’s Burberry’s Fashion Accessories After changes on marketing mix Quality Quality Burberry’s Burberry’s Coach Gucci Gucci Coach Fashion Accessories 3. Bravo's team managed to elevate the overall status of Burberry by implementing changes in 3 high-priority areas: a. revitalization of the product line b. evolving brand associations c. overall brand stature. Describe in detail how Bravo's team managed to do this. Revitalization of the product line The first step in the revitalization of the product line was a reduction in the number of stock. This was aimed at eliminating products with outdated designs so as to create space for products with a consistent look. The company was able to redesign its traditional products to include a new range of products. The new product line was classified into two categories of continuity and fashion-oriented. Each of the categories consisted of three primary collections of products that included accessories, menswear and womenswear. Evolving brand associations Bravo’s team managed to introduce the use of prominent personalities in advertising its product brands. Bravo and his team hired an advertising team that was tasked with changing the reputation of Burberry’s brand by associating it with a modern look that was trend-conscious. The new brand association was planned into two phases. The first phase involved associating the brand with a model in an outdoor setting where it was raining. The second phase was a bit different and involved associating the brand with photographs of a model on motorcycles and in beaches where there were sweeping winds. In all the advertising campaigns, the model would wear Burberry trench coats and suits. The eventual brand association was that Burberry’s brands represented modern fashion. Overall brand stature Bravo’s team was determined to become the market leader in the market for luxury products. Burberry’s brands were losing their appeal and there was an urgent need for the new Chief Executive and his team to restore the brands. According to Bravo, they were involved in conducting a market survey aimed at identifying market gaps. These market gaps presented the unexploited market opportunities that needed Burberry’s attention. The team discovered that its competitors had ignored a number of consumer needs and wants. The team then evaluated on the possibility of the company taking a market position while at the same time staying true to its core customers. The team was able to identify a market niche between product labels in the market for accessories and apparel. The company eventually decided to focus on a specific price point and bracket that would see its target market have easy access to their brands. They differentiated the product brands by making them aspirational and functional. 4. Describe Burberry's customer base prior to Bravo. Describe Burberry's target customer segments after Bravo took over. Burberry's customer base prior to Bravo Prior to Bravo joining Burberry’s, the company’s target customer segment consisted of older customers. During this time period, the company was mainly producing the trench coat which was designed for extreme conditions. It was made of waterproof and breathable fabric. Other core products for the target market included umbrellas and outerwear. Burberry's target customer segments after Bravo took over After the take-over of Bravo, Burberry’s target customer segments consisted of the younger customers. The company also maintained its core customers as a potential target market. Bravo and her team had identified a market niche and positioned the company to target younger customers who were fashion conscious. This was achieved by the introduction of multiple brands and collections. 5. In Bravo's drive for a successful overall business model she made major changes in 3 areas: a. She introduced multiple brands (Prorsum, London, Blue & Black and Thomas Burberry) b. She introduced multpile collections (women's wear, men's wear, and accessories) c. She made changes in channels (wholesale and retail) and with licensees. Why did she do this and what role did each of these elements play in making the Burberry business model more successful. Introduction of multiple brands Bravo introduced multiple brands such as Prorsum, London, Blue & Black and Thomas Burberry because the company needed to reposition itself in the luxury market. Prior to the introduction of the brands, Burberry’s had a limited supply product brands which were mainly restricted to specific countries. For instance, the Thomas Burberry line was only available in Spain. Bravo and his team were making sure that the company was able to achieve a significant share in the luxury market. The brands enabled the company create a strong presence in the market for high end luxuries. Initially, Burberry’s traditional brands mainly served the low end market and it was time Bravo and his team introduced a brand that would serve the high end market. The whole idea behind the introduction of multiple brands was to ensure that the company was able to serve both the high end and low end markets strengthening its position in the market. The introduction of multiple brands was significant in making the company’s business model more successful because Burberry was able to introduce brands that could capture the high end market. The high end market is fashion conscious and has the advantage of generating high levels of revenues. Consumers in the high end market are able to pay for higher product prices. Introduction of multiple collections The introduction of multiple collections was aimed at introducing a new range of products under the image of the company. This was to ensure that the company served all of its market segments effectively. Accessories were introduced so that they could complement the two collections of menswear and womenswear. They also served as entry points for new potential customers because they had a wide range of price points. Burberry introduced more than 300 apparel styles every season for both the menswear and womenswear collections. This was to ensure that collections remained relevant in the market for womenswear and menswear. Multiple collections were significant in making the Burberry business model more successful because it widened the company’s market share hence improving its revenues. Burberry was able to introduce more than 400 and 300 apparel styles each season for the womenswear and menswear respectively. This was a huge success for the business because it ensured that Burberry remained relevant in the fashion market. Accessories had higher margins compared to apparels hence they ensured higher profits for the business. Changes in channels of distribution Bravo made changes in the channels of distribution so that Burberry could eliminate parallel trading and have a tighter control in the distribution of its products. The company was losing control over its licensees hence compromising the quality of its products. This change was part of the strategy by the company to ensure that the quality of its non-licensed products was not compromised. Burberry had the capacity to design, source, manufacture and distribute non-licensed products hence there was need to review its older licensing agreements. The company decided to buy some distributors, drop some and even renegotiate its agreements with others. The changes in the channels of distribution were helpful in making the Burberry business model successful because the company was able to deliver products that had uniform qualities across its different markets. The company focused on making sure that the quality and distribution of products was never compromised. A tighter control over distribution channels ensured that the business eliminated parallel trading by supplying its products to authorized distributors only. 6. Should Burberry be aggressively transitioning to a more restrained use of the check? Burberry should be aggressively transitioning to a more restrained use of the check because it has a conspicuous appearance among its products. The use of check is evident in a variety of products such as socks, scarves, shoes, hats, umbrellas, bikinis, pants and others. The use of the check has generating a lot of revenues for the company and has strengthened its brand image. Accessories record the highest number of sales levels and the company has in the past derived about 25 percent of its revenues from prominent check products. Despite the success of the company’s check products, Burberry is facing a number of challenges associated with the use of the check. The main challenge is that the company has in recent times received negative publicity that has tainted the image of check products. Football hooligans started to adopt the distinctive check and most of the Burberry customers have started associating the check with bad people. They assume that Burberry is worn by bad people and this has damaged its image. A more restrained use of the check would spark demand for Burberry products and also restore the company’s image. Customers will begin ‘hunting’ for the check pattern under the linings of apparels. It will also ensure that the check is less associated with hooligans because it will have a limited presence in the market. 7. How could Burberry's popularity among non-target customers affect the image of their brand? Specifically, what should Burberry do to combat the devastating effect the Chavs are having on its image? Note: Google "Chavs and Burberry" to find out more about this group of hooligans and how they have completely destroyed Burberry's image in Great Britain. Effect of Burberry’s popularity among non-target on brand image The popularity of Burberry’s brand among non-target has the effect of demeaning the image of the brands among core customers. Core customers may feel alienated when non-target customers are spotted wearing Burberry’s brands. Some of the non-target customers who have been associated with Burberry’s brands include the urban youth and hip-hop musicians. The company’s core customers include old customers. Old customers have built a strong and loyal customer base and making them feel alienated would result in the company losing a significant market share. The Chavs have managed to destroy Burberry’s brand image by creating a negative publicity. The social group has been associated with bad behavior and most of the members of the group have adopted the check as their fashion style. The check image is prominent among football hooligans and this has resulted in most of Burberry’s customers shunning the products because of its association with bad people. The social group has also subjected Burberry’s brand image to tabloid jokes. This is a demeaning act to Burberry’s brand image. Combating the devastating effect the Chavs have on Burberry's image Despite the negative publicity on Burberry’s brand image, the company still has an opportunity to redeem the image. One of the best approaches to combat the destruction of the company’s brand image is to develop a unique trademark and secure product rights. This would ensure that those involved in the destruction of the company’s brand face legal sanctions. This may at least make them refrain from destroying the company’s image for fear of getting arrested and fined. On the other hand, a unique trademark will ensure that the company differentiates its brand from counterfeit products hence protecting its brand image. Read More