CASE STUDY ISSAREE CHULAKASEM N0578931
BURBERRY CASE STUDY CAN IT SUSTAIN ? ISSAREE CHULAKASEM N0578931 MA INTERNATIONAL FASHION BUSINESS NOTTINGHAM TRENT UNIVERSITY
Figure 1: iPhone 5s video Burberry spring summer 2014 fashion show
Table of Content Executive Summary Key Words Introduction Methodology Burberry as a luxury brand The Turn-around of Burberry Rose Marie Bravo Angela Ahrendts Burberry under Christopher Bailey The Future of Burberry Conclusion List of illustrations List of bibliography Appendix Appendix I : SWOT Analysis Appendix II : PESTEL Analysis Appendix III : 7P’s of Marketing Mix Appendix IV : 6I’s of E-Marketing Appendix V : Store Observation Appendix VI : Online Engagement Observation
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Executive Summary This report is mainly discusses the company’s revival under Rose Marie Bravo and Angela Ahrendts based on the case study, Burberry’s Revival: Can it Sustain? and evaluate the strengths and weaknesses of Burberry as a luxury brand. The focus is on the turn-around strategies of both CEOs of the brand. Bravo had set new target for the brand which was the younger customers, therefore she had changed Burberry products from trench coats and scarves to skirts and ball gowns instead. It resulted Burberry to lose its focus and its initial charm. Ahrendts’s strategy had shift the brand decisively. She had employed the digital marketing strategy to communicate to the right target customers as well as create more awareness. She had restored the brand’s core product like trench coats and innovated product diversification around the brand’s DNA. Burberry came back successfully under her leads, however she had left the company in 2013. The questions of the future of Burberry had been raised up since Christopher Bailey took charge as a CEO. This report will also demonstrate the strategy of Bailey to sustain the growth of Burberry in the slowing economy and purpose recommendations to ensure the future success of the company in the mid-21st century.
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Figure 2: Kate Moss & Cara Delevingne Summer Dresses 2015-2016 My Burberry Fragrance Campaign.
Key words Burberry, Luxury brand, Strategy, Stregths, Weaknesses, Digital Marketing, British Heritage, Rose Marie Bravo, Angela Ahrendts, Christopher Bailey, Millennial customer, Slowing economy, Turn-around Strategy, Connected Culture, Centralization
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The brand has developed a vertical integration, business model structured by channel, region, product and core corporate functions, as shown in figure., it sells products through retail (including e-tail), whole sale and also has licensing agreements in Japan (Burberryplc.com, 2015). Still, it is not an overall vertically integrated operation, due to the fact that it outsources fabrics and materials from external suppliers and also manufactures at external factories, located in both Asia and Europe.
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Figure 3: Burberry’s autumn/winter 2012 show at London Fashion Week.
Burberry was founded by Thomas Burberry in 1856, started with selling outdoor gear to local sportsmen. It was over 32 years of operating that Burberry patented the innovative waterproof Gabardine fabric and used it as material for its trademark trench coat that became instantly hit among high society, including the royal family. Burberry designed coats for British soldiers during World War I, and after the war, it became a fashion symbol that represented Britishness. As the time passed by, the brand had a trickle-down wider range of customers with lower class. Burberry then decided to diversify the types of outfits and accessories such as Rainwear, Scarves and Ready-towear lines. It had continued with development and gradually growing, however, the brand had faced many problems with slow growth rates and had lost its focus for a period of time before Rose Marie Bravo and Angela Ahrendts were appointed CEO. Both of American CEOs had established various strategies to turn around Burberry and finally gained a successful comeback (John, 2014).
Introduction Figure 4: Brand Positioning.
After 158 years of operation, in the present, as shown in brand positioning map in figure4 , Burberry has become one of the top global luxury brand with nearly 500 directly operated stores, 70 franchise stores, and approximately 1,400 wholesale departments and specialty stores in over 80 countries executed by more than 10,000 employees who operating in 34 countries (Appendix III). According to the annual report of Burberry, the total revenue by March 2014 was a 17 % increase to ÂŁ2,330m, with adjusted profit before tax up 8% to ÂŁ461m and reported profit before tax up 27% (Burberryplc.com, 2015).
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Figure 5: Burberry Gets Festive for “Burberry With Love� Campaign.
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Methodology This report had evaluated based on the case study, Burberry’s Revival: Can it sustain? Written by Doris Rajakumari John. Research was conducted by two major approaches to gather data from secondary and primary sources.
Secondary Research
Primary Research
The research has been conducted through the data that have been collected by the case study author and through academic literatures related to Burberry revival strategy. Strategic analysis tools have been used to analyse external and internal factors surrounding the company including SWOT Analysis, PESTEL analysis, 7P’s of marketing and 6I’s of E-marketing. Theories have been employed to demonstrate the strategies of the two CEOs including Ansoff’s Matrix model, 3C’s framework, AIDA Model.
Participant observation (Saunders, Lewis and Thornhill 2012) was used by visit Burberry store at Bicester Outlet to understand the store environment, product mix, price architecture and staff organization. Online observation has been conducted to collect data about the online engagement of Burberry through social media networks including Facebook, Twitter, Google+ and Youtube.
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Burberry as a luxury brand The definition of ‘luxury brand’ has been translated variously as it cannot be described in single meaning. Customers’ perception about it has changed as time passes by, the modern understanding is that luxury brand is associated to high level of prices, best product quality, exclusivity and aesthetics which can fulfill their self-esteem and self-identity (Conceptofluxurybrands.com, 2015). Considering Burberry as an icon of British heritage brand that embedded with history and tradition, it should have had advantage over other luxury brands, however it had gone through many highs and lows. According to the case study, before the time of Rose Marie Bravo and Angela Ahrendts, the two American CEOs of Burberry, the brand only offered stereotypical, synonymous raincoats with trademark check (The Economist, 2001) and faced number of problems arose from licensing its trademark check and logo to other manufacturers, almost every kind of products were established with Burberry name (john, 2014), as a result, Burberry had lost its initial charm and became an outdated brand with no fashionable goods (Hill and Jones, 2012). Other significant problems were its decentralized manufacturing in many different places globally and about the revenue model that overly depended on export to Asia especially to Japan and China, as stated in SWOT analysis (Appendix I), hence, the company had faced problem with an Asian economy collapse (Lauren, 1998) and with a large grey market that imitated its products, which effected directly to the brand’s image. At that period of time, Burberry was positioned far from top luxury brand as it aspired to be. 10
Figure 6: Burberry Prorsum Menswear Spring 2014
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The Turn Around of Burberry
12 Figure 7: Burberry Bloomsbury bag in ad campaign.
Rose Marie Bravo In 1997 during the hard time of Burberry, Rose Marie Bravo, an ex-president of Saks, was appointed CEO (John, 2014). She had stated to target new younger customers that have more fashion conscious but nevertheless still include the brand’s loyal old customers as well. “We have to get new clients who will say, ‘Oh my God, I never really thought of Burberry,” Bravo said. Therefore, her strategy was to turn the brand to a luxury brand in the international fashion scene just like Louis Vuitton or Prada by reworked on the distribution, decreased licensees and ramped up marketing and advertising of the brand. Adopted Ansoff’s Matrix, shown in figure 8, Bravo’s strategy to expand Burberry’s product range to younger generation was part of the Market Development. She started using celebrities in advertising, one of it was featured Kate Moss, ‘It cut the average age of our customers by 30 years in one fell swoop.’ (Bravo, 2001). She also used Product Development strategy when she hired Roberto Menichetti to be a designer who changed Burberry’ offerings from trench coats and scarves to skirts and ball gowns as well as in 1999, that company launched Burberry Prorsum collections as a new designer wear with more fashionable looks. She launched new flagship store which included diversified product range like lingerie, swimwear and fragrance range, Burberry Brit (John, 2014).
Figure 8: Burberry Ansoff’s Matrix.
Bravo’s strategy had improved Burberry’s situation by increased in sales and profits, however, its major problem about trademark plaid licensing had got out of balance, Burberry check were suffered from overexposure (John, 2014). It was called the ‘Chav check’ after football hooligans took to wear Burberry caps. Bravo had responded to the problem but in the end could not get the brand out of that bad image. Considering her strategy to move Burberry towards young generation was the right idea, but the way to communicate with them were not effective enough. Moreover, too many product diversification had made the brand lost its focus on the core product like outerwear, resulted of losing the brand identity.
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Angela Ahrendts Angela Ahrendts took charge as CEO after Bravo in July 2006. It was the time when Burberry had lost its central point and lost uniqueness in product offerings. Her strategy was to centralize design and focus on innovating around Burberry’s core heritage products, outerwear. As analysis using 7P’s of Marketing Mix (Appendix III), Ahrendts had adopted the digital route under concept of ‘connected culture’, aiming to connect Burberry’s rich history with fashion conscious millennial customers. In the meantime, implemented ‘Atlas’ program to increase supply chain efficiency and reworked on office systems to generate more accurate sales prediction as well as faster movements of store merchandising (Norton, 2007). She started with building her team and consistently kept in touch with all of her employees via company’s activities, as she commented that ‘…the more the associates know about the strategy, about what’s coming the better they can perform. Everyone talks about building a relationship with your customer. I think you build one with your employees first.’ Her significant move was to buy back all of the licenses that allowed other companies to use Burberry’s trademark (John, 2014). It was considered as an essential thing to do as she needed to centralize Burberry to represent only one brand.
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Applying 3C’s Model of Kenishi Ohmae, figure 9, considering about Company’s unique selling point, Ahrendts had chosen to reinforce trench coat as it was a part of Burberry’s DNA. She innovated products around this core heritage, developed the designs, materials and colours, however, cut the Burberry plaid to less than 10%. She had established a retail strategy to expand the brand into the markets where its competitors already had a presence, which will allowed Burberry to reach the right customer target (TUAW, 2015). The most effective strategy of Ahrendts was the decision to invest on digital route. Burberry took advantage over its competitors like Louis Vuitton and Prada, to communicate with millennial future luxury customers who younger than 30 via social networks. According to her, the younger generation was the segment that was ignored by competitors.
Figure 9: 3C’s Model.
In the video1 : Authentic Branding for a Global Audience: Angel Ahrendts (Future of StoryTelling 2013) on http://www.youtube.com/watch?v=krQG2Hceov4, She explained how digital strategy had turned Burberry from the wholesaler and brand licenser into a cutting-edge retailer, especially online (Gilchrist, 2015). She had employed 6I’s of E-Marketing (Appendix IV), consists of Interactivity, Intelligence, Individualism, Integration, Industry Restructuring and Independence of Location to differentiate Burberry from other luxury brands. Burberry has been using interactive social media to consistently keep in touch with its customers, according to the primary research observing on the Burberry online engagement (Appendix VI), by January 2015, the official Facebook page of Burberry has 18Million followers while Twitter account has 3.4Million followers who can receive news and updates from the brand every day. Apart from that, Ahrendts has integrated physical and online experiences together. Burberry’s official website (Appendix III), has created a single platform that showcased brand’s identity through music and movies (Burberry Acoustic), while in its flagship store that Ahrendts called ‘a physical version of website’, Burberry Acoustic are played on the large screens to enhance store experience as well. She aimed to get customer engagement from utilizing multi-channel media, ‘Every interaction the customer had with the brand was crucial irrespective of the channel customers opted to engage with brand Burberry’ (Gilchrist, 2015).
Figure 10: Burberry Acoustic.
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Figure 11: Burberry’s Fashion show shot with iPhone 5s
From the Video2: Full Show – Burberry Prorsum Womenswear A/W13 on http://www.youtube.com/ watch?v=NuNZ2JUpYOo), In the A/W 2013 London Fashion Week, associated with the ides of Independence of Location, Burberry fashion show was live-streamed to viewers around the world and allowed customers to post comments as well as place orders immediately from their mobile phones or websites (Mark, 2013), as to give impetus to its digital strategy, Burberry created ‘click and buy’ technology that available new collections much before they were available in stores (Forbes, 2012).
Figure 12: AIDA Model
Ahrendts’s strategy had also adopted AIDA model, figure 12, to generate customer demand at the stages of Awareness and Interest, Ahrendts had promoted Burberry’s Campaigns and events. The remarkable events were the launch of Beijing store in 2011. It held a runway show with live music from Keane that featured a sensational virtual experience enhanced by Musion Eyeliner holographic technology (The Creators Project, 2015), and the live streaming of the London Fashion week at Piccadilly Circus screens. The events had caught attentions and interests from all around the world.
At the stage of creating desire, Ahrendts together with Christopher Bailey, a Chief Creative Officer at the time, had developed Burberry Prorsum to become more like couture fashion that merely, serves to attract mass media. Quantities were limited and were exclusive for well-off customers (profile, 2010). Price range of Prorsum started from £300 to £10000 (Appendix III). However, it was not only about the high quality but the ‘Exclusivity’ that can drive the desire of customers. Burberry offered ‘runway Made-to-order’ with personalized nameplate inside a coat or a bag (John, 2014). This strategy aimed at potential customers who wants to go ‘First Class’ (eHow, 2014), and have ability to purchase its products.
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Figure 13: Bravo and Ahrendts’s Strategies
Strategy of Ahrendts had transformed Burberry into a new world. According to the case study, by 2012, Burberry stock price had increased more than 250% since she was appointed CEO (The Business of Fashion, 2013) and the 4th fastest-growing brand in the world of 2011. There was no doubt for the success of her strategy. The most important thing was the precise way to communicate and send its message through to target customers. However, there were criticisms about the strategy to move upscale too fast where the Burberry range didn’t justify with the prices (Andrew, 2012). Its products had failed to offer excitement to high profile spenders while attracted to many who could not afford it. Therefore, Burberry had to choose whether to go up-scale or go mass-market, as Uché Okonkwo commented, ‘Changes in brand positioning usually take a couple of seasons for consumers to adjust… You can’t sell everything to everybody.’ (Roberts, 2012).
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Figure 14: Burberry Prorsum Menswear Spring 2015
Burberry under Christopher Bailey
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Christopher Bailey was named the CEO after Ahrendts had decided to leave Burberry for Apple in October 2013. 7.6% shares had dropped as investors were skeptical about his fit into the CEO’s role (John, 2014). At the time Burberry was facing economic slowdown of Europe and China. Since 2012, Burberry issued a profit warning due to the fact that luxury customers were becoming more price conscious (Murali, 2012). Bailey had to fight to sustain the brand’s success, hence, his strategy was to maintain and develop more on the same path with Ahrendts. After 6 months on the job, Bailey has revealed his plan for Burberry to focus on strengthening and extend the brand through products like accessories, bags, shoes and beauty as well as optimize the investment in Under-penetrated markets. (Friedman, 2014). Burberry has integrated Beauty and Fragrance with luxury fashion in 2013. It became one of the significant tasks for Bailey to establish the whole process for the range, including supply-chains, design, marketing and pricing strategies. The annual report of 2013/14 stated the adjusted retail/ wholesale operating margin declined 30 bps to 17.5% due to integration of Beauty (Burberryplc.com, 2015). However, Bailey has continued to implement a digital strategy into beauty by spending approximately 30% of its total marketing budget on digital media. He has integrated Burberry cosmetics with Womenswear fashion shows, with full runway exposure, as well as other products, beauty, new collections were immediately available for order and personalized. 20
Figure 15: Naomi Campbell + Jourdan Dunn Star in Burberry Spring 2015 Ads.
Apart from Beauty segment, Bailey has performed very well in all of his projects for 2014 and 2015. Celebrity endorsement was employed throughout the campaigns and advertisements, in the September 2014 campaign for My Burberry fragrance, he had paired Kate Moss with Cara Delevingne, and after that for The S/S15 campaign has featured Naomi Campbell and Jourdan Dunn. The campaigns had set the brand to get the feeling of a new generation of female. Bailey and Ahrendts had built a solid ground for Burberry before Ahrendts left the company, therefore, it seems to grow stronger in spite of an economic slowdown. To the end of 2014, Burberry had contributed to the 17% revenue growth (Burberry, 2015).
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The Future of Burberry
Figure 16: Burberry Live Digital Event | Beijing.
As to sustain the future of Burberry, Christopher Bailey should maintain and consistently invest in the innovative digital media. It must be considered as another USP of the brand. Moreover, He should consider on innovating on the products as well, equipping digital devices or functions within the garments or accessories would catch attention from the millennial customers. Apart from that, according to the strategy of Bailey that intend to expand into Under-penetrated markets, the latest emerging market like CIVET is a very interesting area for Burberry, shown in PESTEL analysis (Appendix II). It was the right strategy to focus on the Chinese market, however, Burberry should not depend too much on the Asian market due to the fact that the growth speed of China is starting to slow down. It is essential to spread the risks into both developed markets like U.S.A. and the growth economies across the world. In the past 2 years, Europe has been facing problems with the uncertain economic situation while the euro has reached a nine-year low of 1.2% against the dollar to $1.1864 (Appendix II). The brand should take advantage from this situation. Considering if the euro will continue to fall, it is the chance to shift all of the manufacturing and suppliers to generate in Europe, which will cut the outsourcing costs and also be able to produce better quality products.
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Conclusion In conclusion, Burberry integrated digital marketing will remain an important future growth driver, however, not only the communications part that should be consistently improve but also the product designs and product innovations. According to the strong performance of the brand in the past decade, Burberry will be able to sustain the growth in the mid21st century by continuing the main strategy that has been empoyed to innovate around the core history of the brand together with systematically creating unexpected experiences for customers through digital platform. The most important thing is that the brand should have totally control over its franchising and focus on improving its one brand image.
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25 Figure 17: Burberry Regent Street Flagship
List of Illustrations Cover Image: Burberry Prorsum 2012. BURBERRY PRORSUM Presents A Year in Review – 2012. [online] Entertainista.com. Available at: http://entertainista.com/2012/12/07/burberry-prorsum-presents-year-review/ [Accessed 14 Jan. 2015]. Figure 1: iPhone 5s video Burberry spring summer 2014 fashion show teaser | Obama Pacman. [online] Available at: http://obamapacman.com/2013/09/burberry-fashion-show-iphone-5s-photography-live-broadcast-videography-teaser-video/iphone-5s-video-burberry-spring-summer-2014-fashion-show-teaser/ [Accessed 14 Jan. 2015]. Figure 2: Kate Moss & Cara Delevingne Summer Dresses 2015-2016 My Burberry Fragrance Campaign. [online] Available at: http://thefashionwatch.com/2653/kate-moss-cara-delevingne-summer-dresses-2015-2016-my-burberry-fragrance-campaign.html [Accessed 14 Jan. 2015]. Figure 3: Burberry’s autumn/winter 2012 show at London Fashion Week. [online]Available at: http://scenesofdestiny.blogspot.co.uk/ [Accessed 14 Jan. 2015]. Figure 4: Brand Positioning. [online] Available at: https://louisvuittonbrand.wordpress.com/brand-positioning/ [Accessed 11 Jan. 2015]. Figure 5: Burberry Gets Festive for “Burberry With Love” Campaign. [online] Available at: http://www.fashiongonerogue.com/burberry-gets-festive-burberry-love-campaign/ [Accessed 14 Jan. 2015]. Figure 6: Stylerumor.com, (2013). Backstage at Burberry Prorsum Menswear Spring 2014 |. [online] Available at: http://stylerumor.com/ blog/2013/06/18/backstage-at-burberry-prorsum-menswear-spring-2014/ [Accessed 14 Jan. 2015]. Figure 7: Cara Delevingne debuts new Burberry Bloomsbury bag in ad campaign. [online] handbag.com. Available at: http://www. handbag.com/shopping-bag/news/a416817/cara-delevingne-debuts-new-burberry-bloomsbury-bag-in-ad-campaign.html [Accessed 14 Jan. 2015]. Figure 8: Burberry Ansoff’s Matrix. Own Diagram 26
Figure 9: 3C’s Model. Own Diagram Figure 10: Burberry Acoustic. - FADA webzine. [online] Available at: http://fada-webzine.com/burberry-acoustic/ [Accessed 14 Jan. 2015]. Figure 11: Burberry’s Fashion show shot with iPhone 5s. [online] Available at: http://www.iphonehacks.com/2014/02/new-runaway-video-burberry-fashion-shot-iphone-5s.html [Accessed 14 Jan. 2015]. Figure 12: AIDA Model. Figure 13: Comparative Table between Bravo and Ahrendts’s Strategies. Own Table Figure 14: Burberry Prorsum Menswear Spring 2015 |. [online] Available at: http://stylerumor.com/blog/2013/06/18/backstage-at-burberry-prorsum-menswear-spring-2014/ [Accessed 14 Jan. 2015]. Figure 15: Naomi Campbell + Jourdan Dunn Star in Burberry Spring 2015 Ads. [online] Available at: http://www.fashiongonerogue. com/naomi-campbell-jourdan-dunn-star-burberry-spring-2015-ads/ [Accessed 14 Jan. 2015]. Figure 16: Burberry Live Digital Event | Beijing. [online] Available at: http://ftape.com/media/?p=21422 [Accessed 14 Jan. 2015]. Figure 17: Burberry Regent Street Flagship. [online] Available at: http://newgrids.fr/2012/09/17/burberry-regent-street-flagship-review/ [Accessed 14 Jan. 2015]. Figure 18: Burberry Prorsum x London Collections Men S/S 2015 |The Manila Urbanite. [online] Available at: http://www.themanilaurbanite.com/2014/06/watch-burberry-prorsum-x-london.html [Accessed 14 Jan. 2015]. Figure 19: Burberry store at Bicester Village. Own images. Figure 20: Burberry Facebook. 27
List of Bibliography John, D. (2014). Burberr’s Revival. Can it Sustain?. Bangalore: Amity Research Centers Headquarters. L’invitation au voyage. Louis Vuitton., (2013). Brand Positioning. [online] Available at: https://louisvuittonbrand.wordpress.com/brand-positioning/ [Accessed 11 Jan. 2015]. Hill, C. and Jones, G. (1998). Strategic management. Boston: Houghton Mifflin Co. Harvard Business Review, (2013). Burberry’s CEO on Turning an Aging British Icon into a Global Luxury Brand - HBR. [online] Available at: https://hbr.org/2013/01/burberrys-ceo-on-turning-an-aging-british-icon-into-a-global-luxury-brand [Accessed 12 Jan. 2015]. Gilchrist, S. (2015). The Democratic Republic Of Burberry. [online] Brunswick. Available at: http://www.brunswickgroup.com/publications/ brunswick-review/issue-6/the-democratic-republic-of-burberry/ [Accessed 13 Jan. 2015]. Burberryplc.com, (2015). Annual Report 2013/14. [online] Available at: http://www.burberryplc.com/investor_relations/annual_reports/ annual-report-2013-14 [Accessed 10 Jan. 2015]. Arno, C. (2012). CIVETS: New Global Marketing Opportunities in Emerging Economies. [online] Search Engine Watch. Available at: http:// searchenginewatch.com/sew/opinion/2174005/civets-new-global-marketing-opportunities-in-emerging-economies [Accessed 14 Jan. 2015]. Carr, T. (2015). Burberry revamps beauty campaign via multichannel efforts - Luxury Daily - Multichannel. [online] Luxurydaily.com. Available at: http://www.luxurydaily.com/burberry-revamps-beauty-campaign-via-multichannel-efforts/ [Accessed 14 Jan. 2015]. Conceptofluxurybrands.com, (2015). 1. The Definition of Luxury Brands. [online] Available at: http://www.conceptofluxurybrands.com/ concept/luxury-brands-definition [Accessed 9 Jan. 2015]. eHow, (2014). Three Reasons Why Customers Pay More for Exclusivity | eHow. [online] Available at: http://www.ehow.com/info_8223920_ three-reasons-customers-pay-exclusivity.html [Accessed 13 Jan. 2015]. 28
Forbes, M. (2012). Burberry CEO Proves Tradition Doesn’t Prevent Innovation. [online] Forbes. Available at: http://www.forbes.com/ sites/moiraforbes/2012/03/09/burberry-ceo-proves-tradition-doesnt-prevent-innovation/ [Accessed 13 Jan. 2015]. Friedman, V. (2014). Christopher Bailey Reveals His Plan for Burberry. [online] On the Runway Blog. Available at: http://runway.blogs. nytimes.com/2014/11/13/christopher-bailey-reveals-his-plan-for-burberry/?_r=0 [Accessed 13 Jan. 2015]. Front Row PR, (2013). How Burberry reclaimed its brand.. [online] Available at: https://frontrowpr.wordpress.com/2013/03/27/howburberry-reclaimed-its-brand/ [Accessed 14 Jan. 2015]. Investopedia, (2010). CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa) Definition | Investopedia. [online] Available at: http://www.investopedia.com/terms/c/civets.asp [Accessed 14 Jan. 2015]. Marketing, O. (2014). Six Trends That Will Shape Consumer Behavior This Year. [online] Forbes. Available at: http://www.forbes.com/ sites/onmarketing/2014/02/04/six-trends-that-will-shape-consumer-behavior-this-year/ [Accessed 14 Jan. 2015]. Mbaskool.com, (2015). Burberry | SWOT Analysis | BrandGuide | MBA Skool-Study.Learn.Share.. [online] Available at: http://www. mbaskool.com/brandguide/lifestyle-and-retail/2658-burberry.html [Accessed 14 Jan. 2015]. Nesrin Sokucu / BA Hons Fashion Design, (2014). Burberry Project - Brand Research. [online] Available at: https://nesrinreflectivejournal.wordpress.com/2014/01/08/burberry-project-brand-research/ [Accessed 12 Jan. 2015]. Norton, K. (2007). Burberry, Plaid in Check, Is Hot Again. [online] Businessweek.com. Available at: http://www.businessweek.com/ stories/2007-04-16/burberry-plaid-in-check-is-hot-againbusinessweek-business-news-stock-market-and-financial-advice [Accessed 12 Jan. 2015]. profile, V. (2010). Fashion as Medium: Brand Strategy. [online] Fashionmedium.blogspot.co.uk. Available at: http://fashionmedium. blogspot.co.uk/2010/02/brand-strategy.html [Accessed 13 Jan. 2015]. 29
Roberts, A. (2012). Burberry Lags Luxury Peers as Buyers Won’t Pay for Plaid. [online] Bloomberg. Available at: http://www.bloomberg. com/news/2012-09-13/burberry-lags-luxury-peers-as-buyers-won-t-pay-for-plaid.html [Accessed 13 Jan. 2015]. Tech in Asia, (2015). Flipkart may deliver your packages in just three hours. [online] Available at: https://www.techinasia.com/flipkart-three-hour-delivery/ [Accessed 14 Jan. 2015]. The Business of Fashion, (2013). CEO Talk | Angela Ahrendts on Burberry’s Connected Culture - The Business of Fashion. [online] Available at: http://www.businessoffashion.com/2013/09/burberry-angela-ahrendts.html [Accessed 13 Jan. 2015]. The Creators Project, (2015). Burberry Hosts A Holographic Fashion Show In Beijing | The Creators Project. [online] Available at: http:// thecreatorsproject.vice.com/en_uk/blog/burberry-hosts-a-holographic-fashion-show-in-beijing [Accessed 13 Jan. 2015]. The Economist, (2001). Stretching the plaid. [online] Available at: http://www.economist.com/node/491000 [Accessed 9 Jan. 2015]. TUAW: Apple news, reviews and how-tos since 2004, (2015). The parallels between Angela Ahrendts tenure at Burberry and Steve Jobs’ return to Apple. [online] Available at: http://www.tuaw.com/2013/10/21/the-parallels-between-angela-ahrendts-tenure-at-burberryand-ste/ [Accessed 12 Jan. 2015].
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Appendix
Figure 18: Burberry Prorsum x London Collections Men S/S 2015
Appendix I : SWOT Analysis
S
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• The brand has long history with its British heritage. Associated with royal family. • Huge network of retail, wholesale and licensing channels globally (Mbaskool.com, 2015) • Trench coat and check are the cores of the brand that associated with British tradition. • The brand’s current social media strategy is going strong in engagement, operations and commerce (Burberryplc.com, 2015) as well as to utilisation of digital media that embedded within the stores • Retail, wholesale and digital initiatives have delivered a 17% increase in revenue to £2,330m, with adjusted profit before tax up 8% to £461m and reported profit before tax up 27% in 2014 (Burberryplc.com, 2015) • Burberry’s outerwear, trench coat, menswear, leather goods and beauty products are the key growth drivers • Burberry has high brand presence in Europe and Asia, that have large demand of luxury goods. • The brand has great celebrity endorsement by ensuring that products are endorsed by celebrities to whom their target audience can relate (Front Row PR, 2013).
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• The brand’s trademark check pattern has overexposure and has been imitated by grey markets • Burberry is in the cross-road between luxury market and mass-market, while it’s trying to move upscale, its products had failed to offer excitement to high profile spenders which seek exclusivity from luxury brands. • Its core such as outerwear and trench coat are suitable only for cold weather territories • Burberry revenues are increasingly dependent on consumers from the Asia region as the brand is focusing in expanding in China (Burberryplc.com, 2015).
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• It can develop further with new technological innovation • International expansion with e-commerce before establishing new store in new market • Burberry integrates Beauty with womenswear that creating a more accessible entry point for potential new customers (Carr, 2015) • Blurring of the online and offline sales channels by integrating digital and physical store innovations to create a seamless customer experience, allowing customers to purchase online and collect from the stores in the following day. (Burberryplc. com, 2015) • Expand in emerging markets in both BRIC and CIVET countries
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• Economic slowdown in Europe and China. People are more price conscious • The Group operates on a global basis and earns revenues, incurs costs and makes investments in a number of currencies. The Group’s financial results are reported in Sterling. The majority of reported revenues are earned in non-sterling currencies, with a significant proportion of costs in Sterling. Therefore the Sterling value of reported revenues, profits and cash flows may be reduced as a result of currency exchange rate movements. • Major incidents such as natural catastrophes, global pandemics or terrorist attacks affecting one or more of the Group’s key locations could significantly impact its operations. • The Group relies on a small number of vendors in key product categories, and for specialist digital and IT services. Failure of one of these businesses to deliver products or services would have a significant impact on business operations. • Unauthorised use of Brand’s trademark, as well as the distribution of counterfeit products, damages the Burberry brand image and profits (Burberryplc.cpm, 2015)
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Appendix II : PESTEL Analysis
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• The political row between Britain and China over Hong Kong has intensified when China prevent British politicians from travelling to Hong Kong and warns the UK not to interfere in China’s domestic affairs (BBC news,2015). It can results on the relationship of the two countries which will affect Burberry as it manufactures some of products in China. • Greece’s internal political issue is affecting the Eurozone. In 2015, Greek is trying to bailout from Eurozone after the election, but most of the European fear that, Greece would not fully comply with the conditions of the bailout agreements negotiated with the European Central Bank, the EU and IMF. It has resulted a stressful situation throughout Europe (BBC news,2015) • The positive aspects of the CIVETS group of countries includes relative political stability (especially when compared to previous generations), young populations that focused on education and overall growing economic trends. Exposure to these countries has recently become possible for the retail investor through the use of ETFs from specific countries (Investopedia, 2010).
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• In 2015 economic recovery will be uneven. Demand is chronically weak. Germany will remain the engine room of the European economy but will not be the powerhouse it was two years ago. Growth in France will be around 0.7%. Italy should edge away from recession but the eurozone is not expected to achieve growth of more than 1% and that will not be enough to dent an unemployment rate that remains at 11.7%. (BBC news, 2015) • The prices of both Brent crude and US oil, known as West Texas Intermediate crude, have now fallen by more than 50% since mid-2014. The demand for oil in economies across the world from Europe to China - the world’s second-largest consumer of oil - has slowed can cause global oversupply and the prices will tumble further. (BBC news,2015) • Many economists regard the CIVETS countries – Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa – as the next wave of fast growing emerging economies. This follows from the last acronym of emerging economies the BRIC group, which consisted of Brazil, Russia, India, and China. They all have improving infrastructures, relatively sophisticated financial systems, and (for the most part) are unconstrained by high inflation. For Burberry, it is an attractive alternative to investing in the BRIC countries, and offer an “early mover advantage” (Arno, 2012). • The euro slid to a nine-year low by 1.2% against the dollar to $1.1864, marking its weakest level since March 2006, before recovering slightly to $1.19370 as the Greek political turmoil also weighed on the currency (BBC news,2015)
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• Customer behaviour is changing as people in this century tend to seek for exclusivity and individualistic styles more than just cheap price product. • The cultural shifts we are witnessing show a move towards the wholehearted and intense. People want all aspects of their lives to be rich and full. These trends give us a clear sense of where culture is heading, and brands this year will have to work hard to meet consumers’ demands and expectations (Marketing, 2014). • Fashion customers has increased more awareness about ethical issue of the fashion brands. • The one child policy in China is creating expectation for a growth in population as the birth rate in some part of the world is low while the national age it raising. This can cause changing in demographic and affect the fast fashion industry.
• The use of science is no longer just for experts. In the midst of a new form of industrial revolution where technological advances are enabling people to make the transition from users to creators. A new appreciation of the digital as a source of inspiration and the means to create are now in the hands of everyone. Coding has gone fully mainstream, and the rise of 3D printing is hailing a new era for industry. Soon everyone will be a manufacturer, able to create what they want, when they want it (Forbes, 2015) It will definitely effect on the fashion retailer in the future.
• New innovative technology is being used within the fashion retailers to communicate in both inside company and to their customers, moreover, the using of Social media can create more awareness to reach broader potential customers. News and feedbacks can spread widely within minutes all over the world, if the brand can use the technology wisely, it can create powerful impact to customer’s perception about the brand and also it can increase sales. • In some countries like India, South Korea and China has been reducing time for the E-commerce delivery to support the growing in this business, as reported in (Tech in Asia, 2015), in 2015, Flipkart, an Indian E-commerce company is working on its logistic to introduce 3 hours delivery to domestic areas. • Burberry continued to invest in technology to enable the front and back-end applications needed to support the Group’s digital strategy and growth ambitions. These included the development of the Customer 1-2-1 platform and the infrastructure to support Beauty and Burberry Kisses (Burberryplc. com, 2015) • It equipped iPad in every stores globally, using customer permission-based application tool to create and view customer profiles in one place, including a visual wardrobe, shopping history, recorded product and fit preference.
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• More than 2,701 websites are or were blocked in mainland China (excluding Hong Kong and Macau) under the country’s policy of Internet censorship “ (GreatFire.org - Bringing Transparency To The Great Firewall Of China”. Retrieved 9 January 2012) including the biggest social media sites such as Facebook, Google, Gmail, Youtube, Twitter and Instagram. Since, China is one of the biggest customer target of Burberry, the brand should use different communicate channel. • The brand states that its manufacturing factory need to abide by the local lows, including minimum wages and environment quality within the manufacturing area. It indicated that ‘Burberry believes that its products should only be made in factories that comply with local labour and environmental laws and by workers who work fair but not excessive hours; are provided with a safe and hygienic work environment; and who can exercise their right to freedom of association and collective bargaining. All Burberry suppliers are governed by its Ethical Trading Policy that sets clear expectations regarding issues like living wage, child labour and regular employment’ (Annualreview2009-10.burberry.com, 2015)
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• The brand is now committed to addressing the global challenge posed by climate change and is seeking to reduce greenhouse gas emissions throughout its supply chain. (Burberryplc. com, 2015) • In 2014, The Sustainable Clothing Action Plan (SCAP) brings together more than 50 organisations including leading fashion outlets M&S, Next, Asos and Tesco, fashion designers, including Stella MacCartney, recyclers and charities. It aims to cut carbon, water and waste to landfill by 15 per cent measured over the lifecycle of the clothing. It also pledges to reduce waste arising, per tonne of clothing by 3.5 per cent 2020 (compared to 2012). It is being led by WRAP, the Government-backed programme tackling waste created by Britain’s homes and businesses (GreenwiseBusiness, 2014).
Appendix III : 7P’s Of marketing mix
Product • Outerwear has been at the core of Burberry’s Business, especially its trademark trench coat with Gabardine water proof fabric. As to target ‘millennial’ customers, Burberry designs and develops outerwear that is innovative and trendy with colorful ranges and materials. • Burberry has a diversified product offering across apparel, accessories and Beauty. Year 2013/14, accessories accounted 36% of retail and wholesale revenue, womenswear 30%, menswear 23%, Children 4% and Beauty 7% (Burberryplc.com, 2015) • It launched 3 Burberry ranges : Burberry London – Classic Burberry Burberry Brit – with Fragrance and slightly cheaper than the others Burberry Prorsum – High end range, offer high fashion and high price
PRICE • Burberry London price ranges : 200 – 1500 Trench coat 1000-1500 • Burberry Brit price ranges : 130-1300 Trench coat 300-1300 • Burberry Prorsum price range :200 – 10,000 Trench caot 1200- 9000
PLACE • Burberry has 497 directly operated stores and concessions operated in 32 countries across Europe, Asia , Middle-east, USA. Its stores are located in city centre and expanded to markets where its competitors already has a presence so that it could reach the right luxury customers (Ahrendt) • Online store : Burberry.com which is a digital platform that active in 11 languages • Integrate online and offline shopping experience such as Click and Collect, ROPO ‘research online and purchase offline • Burberry design and develop its product at London headquarters 37
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PROMOTION
PEOPLE
Physical Evidence
• The brand adopted digital route to communicate with young customers under the concept of ‘connected culture’, connecting rich history with young fashion conscious generations. • Centralized all the promotion activities to use the same concept. Totally controlled by Burberry headquarter. Integrate the regional websites and create a single platform that showcased brand content through music, movies, heritage, storytelling. (Harvard Business Review, 2013) • Collaborate with big company such as Apple and Google for promoting campaigns • Utilizing of social medias such as Facebook, Twitter, Pinterest and Google+ Facebook by January 2015 has 18millions followers Twitter by January 2015 has 3.4millions followers (Primary research, Appendix VI) • Using celebrity endorsement to reach millennial customers : Emma Watson, Naomi Campbell, Jordan Dunn
• Burberry has over 10,000 employees in 34 countries but it established strategy to keep in touch with its employees by Monthly webcasts, Hip videos and previews of advertise campaigns before it made public (John, 2014) • By march 2014, 7,253 employees were female and occupied 49 of the 128 senior management roles. Women are consistently well represented in Burberry’s talent development programs • In 2013, Burberry received Proshare Award for Best overall performance in fostering employee share ownership.
• Flagships store located in city centre and tourism attractive destinations of each countries. • Equipped Digital Media within stores to enhance shopping experience with large screens, music, Ipad and decorated stores in digital luxury concept by using bronze as main colour, glasses, grand staircase. (Appendix VI) • Burberry’s packaging is suitable for a gift. Light brown box with knight logo and Burberry font, classic and simple style
PROCESS • Ahrendt implemented ‘Atlas’ program to increase supply chain efficiency and revamp back office systems to help more accurate sales prediction and faster movements of merchandising into stores (John, 2014) • Centralized Research and Design Process within London headquarters. • The brand established 80 customer services around the world that are live 24/7 in 14 languages to enhance customer’s experience ( Ahrendt) and operated customer 1-2-1 platform to support Beauty line.
appendix Iv : 6 I’s of E-Marketing Interactivity: The power of the Internet allows consumers to become interactive with marketing collateral. Types of this interactivity include QR codes and the ability to scan a code with a mobile phone; social media conversations via Facebook, LinkedIn, Twitter, Google+, etc; online videos featuring options to answer questions, choose which commercial to watch.
Intelligence: Internet marketing provides a level of intelligence due to the fact that extensive market research is conducted in a cost effective manner. The Internet provides information about consumers and companies are able to gather this information and use it for their benefit.
Individualization: Advertisements and other marketing activities on the Internet can be customized to an individuals location, demographic, age, gender, interests, and more; the ability to target a certain demographic or geographic area is also how Internet marketing excels in individualization.
Integration: The integration of traditional and online marketing methods such as a billboard or magazine with a QR code is evolving and marketers are utilizing the concept of integration daily; combining different media channels via Internet marketing also allows the point of interactivity and intelligence to occur.
Industry Restructuring: The marketing industry as previously mentioned is continuously evolving. The disintermediation occurs in Internet marketing and is continuing as the middleman is constantly being removed from the marketing process
Independence of Location: Being able to do the marketing of a product or service from a personal computer at home is a great advantage of Internet marketing, as well as the ability to be reached as a consumer from anywhere with a wifi connection whether it be via mobile device or computer.
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appendix V : Primary research In-Store Observation
Figure 19: Burberry store at Bicester Village
Location : Burberry store at Bicester Otlet Date : 8 January 2015 Price: ÂŁ120 - ÂŁ5,000 Demographic : Tourists, Asian customers, 18-60 years old Store Organisation : 2floors Store with a grand staircase Trench Coats, Scarves, Bags and Womenswear are located on the first floor, Menswear was located on the second floor, Digital screens equipped within store shows Burberry latest collections advertise, Ipad Promotions : Seasonal sales 30-50% Staff : Integrate Mandarin-speaking staffs
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appendix VI : Primary research burberry Online engagement Date observed : 11 January 2015 Facebook Page : 18,000,000 Followers Twitter : 3,400,000 Fllowers Google + : 4,191,000 Followers and 55,682,000 Views Youtube : 146,000 Subscribers
Figure 20: Burberry Facebook.
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