Burberry Technology Audit
Strategic Fashion Marketin Plan Level 3 Winchester School of Arts Student ID- 24397741 BA (Hons) Fashion Marketing
Table of Contents 1.Technology Audit 1.1 Execcutive summary .............................................3 1.2.Brand Identity..........................................................4 1.3. Customer Profile.....................................................6 1.4.Burberry Technology ...........................................8 1.5. Marketing Mix.........................................................10 1.6. Competitors..............................................................14 1.7. Macro Environment.............................. ...............16 1.8. SWOT Analysis.........................................................18 1.9. Strategic Option......................................................19 2.Marketing Plan 2.1. Introduction.............................................................22 2.2. Visual Merchandising Strategy.......................23 2.3. VM Stragtegy plan................................................28 2.4. Target Customer....................................................29 2.5. Integrated Marketing Communication.....30 2.6. Timeline.....................................................................31 2.7. Budget........................................................................32 2.8. Finance Forecast....................................................33 2.9 Measuring the effectiveness..........................34
1.1 Execcutive summary
Burberry The Burberry is a global luxury brand which was established in 1856 in United Kingdom. It started by selling outerwear and supplied trench coats during the world war. Currently, Burberry operates with three sub-brands such as Burberry Prorsum, Burberry London and Burberry Brit. As the virtual trend focuses on future developments and human interactions within the digital age, it is a natural fit to design a range update for Burberry Prorsum. Burberry’s brand culture and strategy has a strong position in innovative product design associated with digital luxury. In 2013 Burberry ranked 1st in Digital IQ Score which shows that they are ahead of their competitors (Galloway, 2013). Throughout the constant evolution and innovative product design Burberry has maintained its strong identity by the well recognised trench coat, trademark check and Prorsum knight heritage icons. Those entities are part of the global appeal of Burberry, which crosses both age and gender. In addition, that they also make the brand more pure and keep it contemporary.
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1.2.Brand Identity
“A closely connected, creative thinking culture encourages cross-functional collaboration, intuition and a meritocratic ethos. United by open communication and a pure brand vision, and inspired by the Company’s core values – Protect, Explore and Inspire – compassionate global teams give back to their communities through the Burberry Foundation and socially responsible initiatives”. (Burberry Annual Report 2013/2014).
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Brand Onion Experimented with new digital venues
Confident
Aristocracy Product are available Offline and online
High Fashion and desirability Sophisticated
Fashion Conscious
Shows in catwalk
Timeless British HerriDistingtive tage Signature Luxury High Style Fashion Innovation Credibility Modern and Classic Individuality Original Tailoring Succesfull Functional High brand recognation
Worldwide
Sincerity
Powerful Classy
Engaging with customers with physical and digital channels.
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Bespoke experience
1.3. Customer Profile Generation Y and Z Burberry’s Target consumers are aged between 18 to 50 years old men and women. However, Angela Ahrendts (2011) said that 70% of Burberry consumers are under age of 30s. In addition, Statistic 2014 reported that age 15-34 years old people use internet more than other age group. Therefore, Burberry’s digital promotional strategies have effectively attached the tech-savvy generation Y and Z. The example of this will apply within the report on discussions around the Promotion Mix.
Chinese consumer China is the world’s fourth biggest luxury market where 25% of the luxuries spend was contributed by Chinese consumers in 2013. Moreover, Burberry reported (Burberry annual report 2013) that Asia Pacific segment generated 39% of retail and wholesale revenue which was higher than Europe, America aggregated together. Therefore Burberry is focused on engaging with Chinese consumers with using Chinese social media platforms such as Wechat, Weibo and Youku. In addition, the company established an official presence to take control of its brand image, online sales and conversation. (WGSN). In China they have a strong strategic focus on mobile and social. According to the McCune 2014 “China’s online population, at 618 million, is twelve-fold than the UK and double than the USA. There are now 302 million “e-shoppers” in China.” __________6__________
3.1 Pen Potrait Region: UK/ China n area City size: metropolita Age: 18-35. Income: ÂŁ 55,000+. Sex: female/Male ty or post graduate Education: universi professionals Occupation: creative innovator l creative, intellectualist, Personality: cultura career driven woman Attitudes: a positive odern yet traditional Economy-minded, m g married young independents, youn Family life cycle: g ys it Brand loyalty: stron and search before she bu t uc od pr e th d un Fo e: has Readiness to purc online d Location: in-store an al luxury quality, on-trend, practic d: te an w ts efi n Be : Spending attitude ends her/his money mor -A natural spender, who sp benefit her/his e on products that thinks good quality, style. -Value worth because of British clean, smart and -Women who appreciate timeless classic style.
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1.4.Burberry Technology “We use the technology to bring the brand to life in our stores. We have developed our stores to showcase our digital innovations”. Angela Ahrendts.
“Digital is part of the language every day now, the way we think, and the way we connect with customers. Carole Fairweather.
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Consumerism has been heavily influenced by technology over the years, this has in turn impacted upon the as well. Digital IQ reported that European and American consumers tend to do their consumer research on the luxury items they want to buy online in advance of buying the items, 67% and 50% respectively. Hence, if the company has a good brand image and strong online influence this will lead to increased sales. Burberry is implementing a market development strategy through future expansion plan targeted at Chinese consumers into China. These particular target consumers are tech-savvy hence; Burberry can exploit this opportunity through its advanced technological development projects targeted at these consumers. Furthermore, Burberry knows that technology as an important factor when approaching to younger generation segments. Burberry digital transformation success story has begun since 2006 when Angela Ahredts has been appointed as a Chief executive officer. She managed to triple its revenue since then. By that time Burberry was facing great competition with bigger French and Italian fashion companies, lacking to invest in marketing and advertising its products. Therefore, they had to revisit its strategy and target at more focused group i.e. Engaged with younger customers through digital tools (Ahrendts, 2012).
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1.5.Marketing Mix 4Ps The following part of the audit will examine the marketing mix of Burberry using the 4Ps model. This analysis of Burberry’s Marketing operations and their effectiveness on the target demographics examining the each activities within the 4Ps model which are promotion, product, price and place.
Promotion Promotion is a key method in advertising products. Traditionally the fashion industry has relied heavily upon advertising in fashion magazines and newspapers and this is still pivotal in the marketing campaigns success today. However, digital advertising has become a very popular tool to generate and deploy advertising campaigns. Burberry has successfully reached out to its target markets through innovative and at the beginning before the competitors followed suite, game changing campaigns. These are broken down into: Internet, mobile phones, PR events and visual merchandising.
Events Burberry were well known for their cutting edge livestreaming of their SS10 Collection - the first fashion show of its kind streamed to the world; and in their AW11 collection they streamed the show again but also promoted it via projecting the stream onto vast screens within the city of London. It far surpassed streaming however, in their flagship store in Beijing China they utilised holographic technology to showcase their campaigns.
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Internet Burberry’s official online store is one of the most successful websites currently operating in fashion industry. It designs and produces photographs which express the brand image and brand value. Burberry.com platform is active in 11 languages. The official website offer online live chat with customer service team. Furthermore, every products image is available to be shared with social media. When the customer shares product advertisement with its images or videos on social media websites, it shows a full description on the product. It is efficient way of marketing that it is word to mouth promotional tools in online. Burberry continues to invest and focus on infrastructure development in its creation and distribution of digital assets, advocating the spirit of innovation and excellence in its world-class creative and IT teams. With the increasing power of social networking Burberry positions itself as one of the leading luxury lifestyle brands online. For instance, the company has over 17 million fans, 2.1 million followers on Instagram and over 3.2 million Twitter followers. Its social pages are designed to share catwalk, campaign and behind the scenes content, as well as brand news, store openings and milestone events. Moreover, Burberry launched own social networking site Art of the trench and Bespoke. ( More about Bespoke and Art of Trench in Appendix3 ).
Mobile Phones Mobile phones allow marketers to deliver personalised,context and location based messages to a specific target audience (Sultan and Rohm 2005). In 2013 one in ten consumers say they use their smartphones or tablets devices to browse for or buy clothing online (Mintel 2012). Burberry kisses - Burberry collaborated with Google in 2013 and launched an application which lets people to send an integrative kiss to anyone anywhere in the world by kissing a mobile device. Wechat- Burberry collaborated with Wechat, which is designed to build brand awareness targeted at Chinese consumers for the abroad market expansion. Burberry followers on WeChat, a mobile-based social network that allows brands and media companies to send users photos, videos, text and audio messages, will be able to view its London Fashion Week AW14 Womenswear show and personalise pieces from the catwalk.
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Product
Categories: -Womenswear -Menswear -Children's wear -Fragrance & Beauty -Eyewear -Accessories
Burberry’s strategy strength is to stay true to the core product. Therefore, we are not going to designing high-tech wearable garment yet, using RFID tag to integrate with consumers (Burberry 2014). It is an embedded digital chips designed to be attached with the new seasons range of products. This chip activates short film about how the coat is being made from sketches to the finished good and also shows customer’s name being engraved on metal nameplates in lining of the product. Customers can scan the chip on the their smartphones, tablets to see the video and flagship store in London. The advantage of RFID, Burberry can monitor consumer behaviour and database through the RFID chips. It enables them to see the repeat sales and buying behaviour of the customers. However some customers may not like idea of RFID yet, they can remove the tags if they wish.
Values: -Heritage branding -High-quality -Seasonal collections -UK manufacturing.
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Place The company runs 206 mainline stores, 214 concessions within department stores, digital commerce and 49 outlets. Nowadays luxury customers expect a tremendous shopping experience that includes superb individual service with an immaculately presented and innovative selling environment. The Regent streets Burberry flagship store is known as digital space. The aim of the flagship store is to bring web experience to the high street which means customers engage with the same experience as they do at burberry.com. The technology includes interactive mirrors, full length screen wrap, recent tie-in with the weather channel, 500 speakers, 100 screens and also sales people wear iPads. Moreover, other technology innovation include the use of radio-frequency identification technology (RFID), which triggers related catwalk footage when some products are taken into a fitting room, or near a video screen. However all of these technologies are the same as the online shop, they need to differentiate with online store. The store need to interact more with customers and bring more customers to in store. Moreover, According to the author has visited in 3 stores in London which include, Flagship store regent street, Harrods and West Field stores. The author thinks that only the Flagship store is digital advanced, other two stores are not technology supported.(Recommend you delete this or stop calling yourself the author- think the conclusion needs more work though doesn’t make complete sense Im afraid) In conclusion, Burberry is doing well on online, the stores are not left behind either or haven’t differentiated by online store. Therefore, company need more integrate with customers in the store, engaging with new integractive technology .
Price Burberry invest large amounts of money on technology to support the digital strategy and growth. According to Parsons, R (2011) stated that Burberry spent 60% of its marketing budget on digital channels which is three times higher than average investment by most brands. However Burberry decrease the traditional promotion such as glossary magazine and use of social media to promote the products. The results, the company hailed “product innovation and high-impact marketing campaigns” revenue increased 29% in 2011. Revenue increased to £830m in the six months to 30 September, which pushed pre-tax profit up 26% to £162m.
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1.6. Competitors Here you can see the number of users on each social media website and their online activities available for the users of the well established four fashion brands including Burberry. Burberry’s potential competitors are at the high end market who are Chanel, Dior, Gucci and Louis Vuitton. The table on the right demonstrates the how the luxury brands use technology to engage customers more effectively and how brand differentiates itself from each other by using technology. Burberry is the first brand that digitally transformed its Luxury Brand. However most of the luxury brands started development in technology and competition has grown dramtically ever since. The competitors have implemented their strategies - in 2012 Burberry had 454,233 followers, Gucci had 119.492 - yet this year Gucci has more follower than Burberry in 2013. Also other luxury brands have started to involve more technology in store. For example, Chanel flagship store in Milan now has changing room can allow the customer to take a “selfie” and share with social media websites. It is not only luxury brand, high street brand such as Top shop and H&M have also opened hi-tech stores.
Social media Fashion show In-store
Live stream
2.1m-Instagram 17.7m-Facebook 3.27m-Twitter
1.Live stream 2.Holographic technology 3. Collaborate with Apple 4. Social Media 5. 3D online stream of Runway Shows
1.Interactive mirror 2. Full length screen wrap, 3. Speakers 4. Screens 5. I Pads
1.Burberry kiss 2.Art of trench 3.Bespoke 4,Messengers
2.2m-Instagram 14m-Facebook 5.68m-Twitter
1.Live stream 2.Social Media
1.Screens 2. Interactive window display 3. Selfie in changing room 4. Mini I Pads
1.Chanel Mobile beauty 2.Mobile app
1.9m-Instagram 14.5m-Facebook 5,19m- Twitter
1.Live stream 2.Social Media
1.Screens
1.Dior Magazine 2.Mobile app
2.6m-Instagram 14.7m-Facebook 1.26m-Twitter
1.Live stream 2.Social Media
1.Screens 2. Virtual Catalogue 3. Kid’s Videowall
Eyeweb Mobile app The digital flagship Spotify music hub Stoppable Video
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(+) In-store technology
Positioning Map The positioning map indicates less social followers to more social followers on the x-axis and less in-store technology to more instore technology on the y-axis.
(-) Social Media followers
(+) Social Media followers
In conclusion, fashion brands are heavily influenced by technological advances and the competition amongst companies in high end fashion industry is increasing. Almost all of the companies are heavily involved with social media and online stores. Therefore, the technology and digital aspects have become crucial for their success over the other companies and therefore need to be more innovative and differentiate themselves from the others.
(-) In-store technology
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1.7. Macro Environment
We live in a world built on technology and we are using more and more technical devices. Kelly,K stated that technology is the 7th Kingdom of life. Therefore the Internet is a new geographical region; a territory where netizens inhabit a web of online communication.(WGSN, 2013). For instance IBM predict that by 2017, computers will be innovating through five sensory categories: sight, hearing, taste, smell and touch. On the other hand, technology could destroy human nature and society as people begin to depend on computers. As a result, when technology breaks, human risk being dis-abled. Technology can cause high unemployment rates too. Many manufactures jobs were replaced by technology. CareerBuilder has done survey that 20% of companies replaced them with new technology and number increase to 30% when looking at firm with more than 500 employees (Kennedy,B 2014). However, new technological innovation will have good impact; such as on human health like the technology that can build 3D human organs, biological parts in medical industry which use for organ transplant (WGSN 2013), health app allow them to build health management and even diapers with specialise QR codes to allow parents to scan and monitor their kids health (WGSN, 2014). Paradoxically, technology can also destroy human health because of addiction to use technology. Knapton, S 2014 said that “ 50% of British use technology device before sleep and nearly six in ten people in Britain now get seven hours of less sleep because of smartphones and computers which affect them at risk of cancer, diabetes and heart attacks, it has been warned.” Furthermore, statistics show that over one third of people feel overwhelmed by technology today and are more likely to feel less satisfied with their life which causing the stress (Coxon, R undated). Therefore there are many mobile applications which help the user feel calm and mindful. The Buddhify app was the first urban meditation app for example. A Modern Meditation app can be used to increase mental clarity and just 10 minutes using a high-tech Meditation app designed to play an audio track can help to reset the balance in the brain in a short time. (WGSN, 2013). As a result humans lives are connected to technology – we are using technology to heal the problem which means technology is starting to control and not the other way around. In conclusion, Technology is making life easier and does support the human’s lifestyle, connecting the world in one place yet, technology has become one of our body’s organ. People sleep with smartphone, people ask smartphone to solve the problem not the human brain. Technology is growing too fast and the speed is such that there is no way to catch up, people therefore feel lost, and their human nature and feelings are dulled. It is hard to predict what will happen but technology will keep at this pace or people will move away from it to live more inline with nature.
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1.8. SWOT Analysis Stregths
Weaknesses
Burberry is currently are the forefront of digital innovation Technology innovation can help Burberry to differentiate from competitors Huge network of retail, wholesale and licensing channels globally One of the biggest fashion houses in UK offering clothes, perfumes, beauty products etc Granted Royal Warrants by Queen Elizabeth II and the Prince of Wales. One of the most valuable companies in the world owing to its legacy Good advertising and brand presence in Europe specially England Associations with international celebrities to reach out to the customers
Requires a large amount investment Might be too technological Legalities of the spray within an in-store environment Due to Burberry’s positioning it is very much accessible in the highstreet, and has a low couture presence. The brand can diversify into youth everyday fashion as currently the apparels have too much of English appeal.
Threats Opportunities After collaboration with other brands, the brand hopes to make fashion more affordable. More advertising and marketing would increase visibility Global expansion would help the brand grow worldwide -in-store more technology e.g. Moving mannequin, team lab hanger
The brand faces threat from other competitive everyday brands in terms of pricing as well as availability The customers have a higher bargaining power and low switching costs Hype might not meet the public expectation Fashion industry may not to be prepared for the innovation
Burberry is an iconic, it has a strong brand identity which is currently at forefront of innovation. They have integrated with customers digitally and they are not afraid to try new things. In collaboration with technology innovators Burberry become the most followed luxury brand on social media. However the brand invests 60% of its marketing budget on digital channels which is three times higher than average investment of other brands. Moreover, only concentrating on technological strategy could be a weakness, most promotional campaigns or flagship stores are also related to social media digital aspects. Technologies in store are more likely to integrated with customers smartphones not the person, which means their eyes and finger glued to their mobile device and customers are not interacting with the products. Therefore, the opportunity is to use interactive technologies in store and develop more consumer interactive activities in stores.
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1.9. Strategic Option Having analysed Burberry’s technology aspect of micro environment and macro environment, there are some strategies option can be identified. The objective is to accelerate Burberry into the future, to make it better prepared than any other luxury brand for the fast changing world ahead.
Digital Burberry could continue to develop a digital strategy. Even though Burberry is the most digital innovator brand, but other luxury brands are extremely growing in digital marketing and they are close to overtake the Burberry. Mobile Application Burberry does not have Mobile Application yet, other competitors Gucci, Chanel, Dior have their own app to entertainment the customer. Therefore, Burberry should launch a mobile application.The content of the application offer online magazine that includes : Traveling, Acoustic, styling (allows customer to the product directly for the image) and also shoppable video (customer can buy product while they are watching the video).
In-Store Burberry is doing well via e-commerce and m-commerce. But in-store can be left behind. Even though there are some Burberry high-tech flagship stores, it is not as efficient as the attraction of customers through iPads or screen. If Burberry use interactive technologies and collaborate with technology innovators, consumers can enjoy the shopping experience more in-store and perhaps prefer to shop in-store rather than online. Interactive Mannequin Burberry can collaborate with United Arrow who produced first moving mannequin. How it work:The mannequin can copy exactly what the customer was doing. Result: Attract more consumer into store. Differenciate from the e-commerce and competitors, Interactive Hanger Burberry should collaborate with Team lab who produce interactive hanger. How it work: The product is linked via a sensor that is installed in the hanger and when consumer picks up the hanger it is coordinated with the screens on the store and shows more information about the product. In Flagship store in Regent street, there are more than 100 screens in the store. Therefore, it can apply these innovations on Flagship Stores which will invest less. Furthermore, there are questionnaire for what informations would show on the screen, if Burberry collaborate with Team Lab. The Information will be: 1.Show the product 180 grades and small decorations of the product 2.Show the Fashion show where model who wear that specific product 3.Celebrities picture who wears that specific product. 4.Connect to the Trench Of Art if it is trench coat, show the pictures of people how they styled that product Result: Attract more consumers into store, Differenciate from the e-commerce and competitors,
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Burberry Marketing PLAn
2.1.Introduction This marketing audit has highlighted Burberry’s key strengths that lie in digitally transformed brand, engagement with music, culture and power of social networking. Areas where Burberry needs to improve include a lack of engaging consumer in-stores. The Burberry Chief Financial Officer Carol Fairweather stated that the number of shoppers visiting Burberry’s stores had been weak in 2013. In 2014 Burberry revenue growth is 15% even though, they have increased its number of customer service staff, working on and offline, by 30% in 2012. Therefore, Burberry will use visual merchandising marketing plan to tell a fashion story showcasing a Burberry AW2015 collection and to expand in-store experience that it will involve new interactive technologies and collaborate with technology innovators. The steps of the planning process are as follows: Set objective Determine suitable platform and place Choose the target customers Integrated Marketing Communication Set budget Set a time frame Measuring the campaign effectiveness
Goal and Objectives By taking the brand mission in mind and where they are at the moment long/medium/short term objectives have been set up to make the company keep up with the external environment factors in the fast moving fashion business,where brands have to “ Be proactive rather than reactive”. (Jackson,T and Shaw,D 2010). The aim is to address customer needs and customer experience with a technology innovations in-store, to engage the audience through physical stores and social media. Financial implication -To increase revenue by 10% year on year. Objective (non-financial) -Increase customer satisfaction by 20% within the 3 months among the targeted customers -Increase the visitors in the physical store and increase in sales from stores. -Increase brand loyalty by 10% within a year
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2.2.Visual Merchandising Strategy Visual merchandising is a creative display of goods in-store and windows. Atmospherics and visual marketing using sound and interactive technology and it achieves an increased overall sophistication of visual merchandising.(Posner, H 2011). In 2015 July, Burberry will launch two interactive technologies in Flagship store in Regent street and it will support the AW 2015 collections. The Burberry flagship stores mission statement is “the digital world meets the physical�. Burberry has a strong reputation of being head of their game and being the first when it comes to a new technology and digital innovation. Ansoff Matrix marketing tool (Jackson,T and Shaw,D 2009), the strategy for Burberry range update for the AW2015 collection will focus on service development (as also said product) for an existing customer. This brings an assumption that such interactive technology is an ideal method for Burberry to achieve its objective to bring more customers to in-store and experience of in-store shopping.
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Interactive Window Display Windows provide amazing canvas and major marketing opportunity for retailers. The eye catching window display act as a powerful magnet, bringing customers in and enticing them to visit the store and promote what is inside (Posner, H 2011). Burberry will introduce reactive window display. The idea is Reactive window display uses a video camera to watch as pedestrians walk by and reacts to their movement and shows a catwalk. As the selected pedestrian continues walking and moves the slider along, the window will start displaying a model (who wear aw2015) that will walk same time as pedestrian. Moreover, when the pedestrian stops in any direction, the model will also stop and pose the same direction. Therefore, pedestrian can see 360 degrees of the collection of the outfit. One person can interact with only one model, for example, if three people pass by the window display then three models will be shown in the window display and each model will have different outfits. The Studio for Interactive Media is good provider of Interactive technology that The Studio has worked for 500 companies including: Adobe Systems, Coca-Cola, The Rockwell Group, Built NY, Sheraton, and the Back O’Bourke Museum (( tsfim, undated). Recently the window display was transformed into huge hit for the brand and luxury brands are adopting interactive window display such as Projection interactive boutique Chanel, Hermes Leather forever display, Lacoste for 80th anniversary window display, Hugo Boss Augmented Reality Promo. However, the concept and technology they used are much different than Reactive window display. The similar one is the Adobe reactive mural that could indicate the effectiveness of the technology. Adobe reactive mural debuted at the Adobe Creative Suite 3 launch event and the concept is similar that this mural uses a video camera to watch as people walk by and reacts to their movement by revealing a mixed-media mural. The difference is that one is drawing and other one is showing catwalk. As a result of campaign, they attract quite a lot publications and consumers. For instance, The New York Times moved coverage of the wall up to page one of its Business section. That article was the fourth most e-mailed business piece (Tsukerman, R 2007).
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Interactive Hanger Once a customer is in the store, then the visual merchandising is important for communication, promotion. Hence, Burberry will introduce new technology called Interactive hanger. The Japanese company Team lab has introduced an interactive hanger. The product is linked via a sensor that is installed in the hanger and when consumer picks up the hanger it is coordinated with the screens on the store and shows more information about the product (TeamLab, 2010). Moreover, this technology have used in Japanese small retailers yet, it has not introduced globally. Therefore it could works for Burberry.For Burberry, on the digital display will shows four different types videos or pictures: 1.Show the product 360 degree and specific decorations of the product 2.Show the Fashion show where model who wear that specific products 3.Celebrities photos who wears that specific product. 4.Connect to the Trench of Art if it is trench coat, show the pictures of people how they styled that product The Merchant Warehouse info graphic stated that nearly 85% of respondents report researching products before they making the purchase (Szymczyk 2014) and 38% of them are using phone in-store to find more information (Shopatron,2013). Therefore, interactive hanger is useful to find product details on the digital screen immediately and it stops customers using their phones and interact more with in-store. The teamLabHanger acts as an interface that provides additional information as a result of this action. In other words, it is value of fast shopping purchase, consumer does not need to research later and all the information will be shown in digital screen directly. In Flagship store in Regent street approximately 100 screens will be installed in the store. Therefore, it can apply these innovations on Flagship Stores which will invest less digital screens.
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2.3.VM Stragtegy plan When the AW2015 collection comes in stores in July, the interactive window display and interactive hanger will introduce same time. The window display will drawing customers in-store. When consumers get in store, 22 feet high digital screen will show AW2015 collections. Moreover, when the customers go to see new or old collections, they will meet the interactive hanger and consumer picks up the hanger. It will coordinate the customers to the screens where provides all information available on that product. These technologies are not only for loyal customers; it is for everyone who can enjoy for shopping experience. According to the Motorola 2014, “Retailer technology investment leading to better in-store experience and satisfaction with checkout process and availability of store associates has increased 32% and 47.6% generation y have better experience in stores where that associates use the latest technology to assist customers�.
First Step The window display will drawing customers in-store
Second Step 22ft high digital screen will show AW2015 collections.
In conclusion, the projects will take a year to implement and achieve the objectives. Upon the succession of the strategy Burberry will upgrade rest of the stores nationwide. Burberry will put the interactive hangers to other Burberry shops and make Burberry truthfully High-tech brand.
Third Step Consumer picks up the interactive product from the hanger and it is coordinated with the screens on the store and shows more informations about that product.
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2.4.Target Customer There is not any age barrier in the target customers. The merchandising plan is to engage all age groups because any age people can integrate with it and the technologies are not difficult to use. Effectively main concern and target market is at the tech savvy millennials existing and new customers. Millennials spending on luxury products increased by 31%, followed by Generation X at 23%, baby boomers at 19% and seniors at the lowest with 6% between 2010 and 2011(Hutzler, 2011). Therefore, the strategy is to attract the millennials to the store and let them engage with new technologies. Millennials tend to be internet savvy as they were born in the era of technology. This age group display different shopping style, based on their individual personalities and characteristics (Bae, 2004) and some consumer consider a low price and trendy clothing, while the others are interested in brand name and high quality (Mandhlazi, L 2013). Burberry targeted customers have a high disposable income and they are natural spenders who spending wisely on products which are beneficial to them, add value and are worth because of good quality and style. Moreover, they emotionally engage with fashion industry and fashion trends that they follow the style of fashion innovators such as celebrities, bloggers and reliance on online information. Interestingly young adults are more susceptible to be influenced by celebrities as compared to mature population. This group’s purchase behavior is firstly to identify the product and doing thorough research on it before buying.
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2.5.Integrated Marketing Communication The visual merchandising campaign is all about promoting AW2015 collection to achieve our objectives; we will use an IMC (Integrated Marketing Communication) plan. According to Easey, M (2009) “IMC is a concept of Marketing communications planning that it recognises the added value of a comprehensive plan that evaluates the strategic roles of a variety of communication disciplines and combines these disciplines to provide clarity, consistency and maximum communication impact”. Moreover, the main objective of IMC is to use direct communication in order to bring behavioral changes and that marketing communication means should be used together in order to establish a relation between target consumer and the brand (Shimp,T 2000). Communication involves engaging with the target market “sender....message.... receiver”. For this marketing strategy, the aim is to address customer needs and experience with a technology innovations in-store, to engage the audience through physical stores and social media. We will operate this mix. of promotion tools. There are 3 differents ways to launch the promotion tools. The table 1 shows the techniques of promotion.
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2.6.Timeline
Start promote AW15 collection
Collect informations interactive hanger
AW2015 Fashion Show
t us g Au
ne Ju
ril p A
y ur a br Fe
Promotions will continue
O
r be o t c
D
r be m e ec
y ur a br Fe
2016
2015 M ar ch
Creative concept
M ay
Ju ly
Se pt em be r
Launch the high-tech merchandising in Regent Street
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No ve m be
r
Jan ua ry
2.7.Budget Burberry invests large amounts of money on technology to support the digital strategy and growth. According to Parsons, R (2011) stated that Burberry spent 60% of its marketing budget on digital channels which is three times higher than average investment by most brands.
Interactive Window Display The window display is 105 square feet (height of 7 feet X width of 15 feet). The similar technology Magic touch window interactive projection window (Alibaba, 2011) costs 1 square feet is about $457 to $1981 ($1500x0.3048 to $6500x0.3048) . The Burberry’s Interactive Window Display, the total investment of installing 105 square feet window display will be from $47,985 to $208,005 (105 square feet x $457 to 105 square feet x $1981). Therefore, Interactive window display cost approximately around $208,005 that is £133,507.
Interactive Hanger One hanger costs around £100 and Burberry in Regent street sales 24,000 - individual pieces (Dacre,K and Urwin,R 2012). Total investment of installing is approximately £2.4 million. As the digital screens are already have been installed previously there is no cost to it. Therefore, total invest is around £2.4 million ((24,000 pieces X £100)+ £0).
Promotions Burberry will spend £40.000 which includes: Printed media, Publication, Social Media and official website and most of them are owned by Burberry which is free investment. In conclusion both technologies cost approximately £2533507 and therefore we expect to invest less than £3 million including the promotions.
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2.8.Financial Forecast Financial Ratios
Forecast
Total Revenue for 2014: £2,329.8m Gross Profit for the year in 2014: £1,658.5m Total Profit before tax for 2014: £444.4m Gross Profit Margin (Gross profit/revenue) in 2014 is 71.18%(£1,658.5m/£2,329.8mx100%). Net Profit Margin in the same year is 13.8% (£322.5m/£2,329.8mx100%). As shown above the net profit margin is only 13.8% comparing to gross profit margin of 71.18%. Hence, cost control has not been conducted adequately, meaning raw materials and other overheads are relatively high. Perhaps the labour overheads are relatively high as operating profit for the year in 2014 was £1,198.2m. By introducing the teamlab hanger the cost of customer service on providing information on products and staffing requirements will be lesser because all the relevant information and relevant advertisement will be available on screen on the visit by customers. Thus, cost savings can be achieved. Inventory days turnover is given about 66 days (£419.8m/£2329.8mx365 days). Hence, this figure shows inventory is moved from warehouse to the hand of the final consumer that this will take about 66 days. With my proposed promotional activity the inventory turnover could be improved through increased and quick sales. Team lab hanger and Interactive wall displays will encourage customers to make a decision to buy the product in store and revenue will increase. Hence, inventory days will improve significantly.
Total Revenue growth in retail is one of the key performance indicators (KPIs) in Burberry’s management. It indicates the growth in productivity of existing stores and from new space. Hence, Burberry allocates the revenue per square feet of the shopping floor. In 2010, the revenue growth KPI was amounted at 15%. The highest percentage increase was recorded in 2011 and 2012, by 32% and 31% respectively. However, there was a significant fall by 19% (31%-12%) in 2013. The recent trend is looking favourable with 15% increase in 2014. Retail revenue analysis has been done in this section. Revenue breakdown could be find in the 160 from the Burberry Annual report 2013/2014. Retail Revenue has increased by 35.5% between 2010 and 2011, followed by 32% in 2012. However, from 2013 and so on retail revenue has declined significantly, only amounted at 11.5% and 12.7%, 2013 and 2014 respectively. This demonstrates that the economic slowdown and recession hit the businesses in the UK widely. In my projects I have amounted this KPI as about 10%, considering external environmental factors such as economic recession and downturn. Furthermore, it is notable that China acquisition have taken place between 2011 and 2012 and this has stopped in recent years. It is always difficult to predict future especially when it is up to guessing the demand. Therefore, I built two scenarios such as if the demand will be high or if demand will be low. Check Appendix for the present value of the projects.
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2.9.Measuring the effectiveness There are three big risks come with visual merchandising plan as follows: 1, Extremely innovative in technology aspect. Some consumers may found difficult to use the innovative tools. Assessment- Burberry has already established as a high-tech brand and if they stop using marketing stragtegy in technology aspect, it is risky to lose their existing customers. The burberry target consumers are aged between 18 to 35 who are tech savvy and adopting to new things quickly. In conclusion, it is a good idea to continue to implement technological strategy at Burberry to keep up with customers. Moreover, even tough the technologies are quite innovative, both these technologies are easy to use which means any age person can interact with it. 2. Invest Heavily on technologies. Technology in-store is high investment yet, it helps in store experience and technology in store and lasts longer marketing strategy. 3.Maintenance of the technology and data back up In conclution, Consumers will use mobile phone in store and that means customer couldn't interact with brand. According to the Szymczyk 2014 stated that 38% of them are using phone in-store to find more informations. Nearly 85% of respondents report researching products before they making the purchase (Szymczyk 2014) which means it will slow the shopping purchase. To conclude, the management of this risk is to shift the consumers attention to new technologies recently installed in store. Hence, there is no need to use their phones ad mobile applications while shopping.
in Regent street flagship store. There are two different statistics to be measured for the analysis. Firstly, Burberry will account units of AW2015 collection’s sales and analysed by weekly and monthly and compare to other stores to measure effectiveness and to find out that “does the technology help to sell more products”. Secondly, The Burberry will account all purchase made in Regent street flagship store and it will compare to previous months/years purchases made in same store. 2. Sales of product the Regent street flagship store Analytical review of percentage increase of sales will be conducted on timely manner and these will be compared to past year’s figures. 3.Opportunity To see (OTS) OTS is a figure of how many people from target audience have had an opportunity to see and this figures are created using surveys with customers or face to face interviews. Burberry will send online survey to UK based targeted customers. 4. Communication Mix It is convenient to use social media platform to interact with customers that which means the number of comments and likes on the photos are help to measures the effectiveness of the strategy.
Measuring the effectiveness Measuring advertising effectiveness is important for determining the extent to which a campaign has met its strategic objectives (Posner, H 2011). The technologies are based on Regent street Flagship store that the performance measurement mostly analysed in Regent street. Regent Street receives over 7.5 million tourist visits a year and average number of pedestrians passing certain points Regent Street ranged from 13,000 to 29,000 per hour (Borwick,V 2010). Therefore, this is a suitable place to implement the strategy and measuring the performance on timely manner. Units of purchase made in Regent street flagship store The Burberry will measure the effectiveness by units of purchases i.e. sales increase made
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APPENDIX Appendix 1 : Rank of Burberry
Appendix 2 Segmentation
Burberry GBIN RTB Score Website Country of Origin Industry Social Media
: : : : : :
1232157732 7 points in 2014 website United Kingdom Fashion & Personal Care
Rankings where listed
Year
Position
Best Global Brands By Interbrand
2014
73
LinkedIn's Most InDemand Employers By LinkedIn Corporation
2014
36
UK Most Valuable Brands By Brand Finance
2014
36
Beauty Digital IQ Score By L2 ThinkTank
2013
48
Best Global Brands By Interbrand
2013
77
Fashion Brands Ranked by Digital IQ Score By L2 ThinkTank
2013
1
LinkedIn's Most InDemand Employers By LinkedIn Corporation
2013
30
The World's Most Valuable Brands By Forbes
2013
99
Top 50 Most-Searched for Luxury Brands in Brazil By DLG and Luxury Society
2013
32
Top 50 Most-Searched for Luxury Brands in China By DLG and Luxury Society
2013
21
Geographic Region: Worldwide City size: metropolitan area - the stores are located in the city and the consumer, too. Demographic (Appendix) Age: 18-55+. The customer has an income of ÂŁ 55,000+. Sex: Female and male Marital Status: independent, married or in a committed relationship Family Size: small family Education: High educational background Occupation: creative professionals Psychological Needs-motivation: ambition Personality: cultural creative, intellectualist, innovator Learning-involvement: high-involvement Attitudes: a positive career driven woman Lifestyle Economy-minded, modern yet traditional Benefits wanted: quality, on-trend, practical luxury
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Appendix 4: Internet users
Appendix 3: Promotion Art of trench and Bespoke are created to engage the consumer and spread awareness.
Distribution of internet users worldwide as of June 2014, by age group 30% 26.7%
26.6%
25%
Bespoke: Burberry Bespoke was launched in 2012 which allows customers to customise their own trench coat and it is now estimated to offer around 12 million different types of its classic trench (Stylesight,2013).
20.3%
20% Share of internet users
Art of trench: Art of the Trench started in 2009 and is social media site that inspires people around the world and across generations to share their experience of the iconic trench coat. Here they can share their photos or liked pictures on other social media. Burberry’s success with the Art of the Trench campaign and its ability to leverage Facebook fans led to a growth in e-commerce sales of 50 per cent year on year. In 2012, Burberry saw e-commerce growth of 50 percent in Europe and 30 percent in the U.S (Manfield,L 2013). This website has recorded almost 24 million page views from over 200 countries in 2013 (Annual report 2013/14).
15%
13.7%
12.7%
10%
5%
0% 15-24
25-34
35-44
45-54
Source:
Additional Information:
comScore © Statista 2014
Worldwide; June 2014; 15 years and older; Home and work locations
55+
Appendix 5: Finance In 2013/14, Burberry total revenue increased 17% to £2,330 million, with adjusted before tax profit up 8% to £461 million. The retail/wholesale business achieved a 17% increase in adjusted operating profit on a 19% revenue gain to £2,251 million, driven by the 15% revenue growth and 12% comparable store sales increase in retail.. Capital investment totalled £154 million and the Group ended the year.
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Net Present Value to calculate the additional revenue to be raised I used the Net Present Value (NPV) method from Investment Appraisal. In order to find the NPV i should rather find the cash flows to be generated each year using Expected return method which uses the following formula: E(r)= P1 x Revenue+ P2 x Revenue P1- probability when demand is high P2- probability when demand is low and relevant revenues accordingly for each scenario.
E(r1)= 0.75 x 373 + 0.25 x 130 = 312 E(r2)= 0.75 x 487 + 0.25 x 162 = 406 E(r3)= 0.75 x 568 + 0.25 x 162 = 467 Present Value of the project is £1,125.8m. Obviously these are very profitable projects. project Table 1
Years
In year zero the initial investment will occur which is £ 3 million. In year 1 if the demand will be high expected cash flow will be £373m (£1,623m x 23%); Revenue will increase by 23% -Retail revenue was £1,623 million in 2014. Else if the demand will be low the expected cash flow would be £130m (Revenue will increase by 8% ).
Cash Flows
Discount factor
Discounted Cash flow
1
312
0.909
283.6
2
406
0.826
491.5
3
467
0.751
350.7
In year 2 if the demand will be high then the expected cash flow will be £487m (Revenue increase by 30% ). however, if the demand will be low then the expected cash flow will be £162m (Revenue increase by 10% ) in year 3 if the demand will be high then the expected cash flow will be £568m (Revenue increase by 35%). on the other hand, if the demand will be low then the expected cash flow will fall into £162m (Revenue increase by 10%). The probability of demand will be high is 75% and probability of demand will be low is 25%. Hence, the expected return for each year is calculated as follows:
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