Burberry Case

1856: Thomas Burberry in Basingstoke, UK 1914-18: Supplied trench coats to British Army 1920s: Burberry check pattern introduced 1955: Great Universal Stores bought Burberry 1970s-80s: Licensing agreements across categories 1990s: Company starts facing strategic issues 1997 : Rose Marie Bravo steps in as CEO

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Immediate Measures

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Transform Burberry from outwear manufacturer to luxury brand Recruitment of people with hands-on experience Change of name, logo and packaging

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Repositioning The Brand

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Positioned the brand between cutting-edge fashion and classics Aspirational as well as functional Represent accessible luxury

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New product line - bandanas, miniskirts and spike heeled boots Three Primary Collections
Outerwear, casualwear, tailored garments, swimwear and underwear

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Women¶s wear

Men¶s wear

Tailored suits, raincoats, trousers and shirts

Accessories

Soft accessories - scarves, shawls, ties Hard accesso scarves, shawls, ties ries :leather bags, umbrellas, timepieces, eyegear, women¶s shoes

PORTFOLIO EXPANSION
Low price segment: Thomas Burberry etc.
Thomas Burberry available in Spain and Portugal Burberry Blue and Black in Japan

High price segment: Burberry Prorsum
Hand tailored products from innovative fabrics Positioned as a luxury brand for fashion conscious people Promoted at major fashion weeks

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Product Categories Popularity of brand among Non-target Consumers
Promotion Strategies

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Role of the ³Check´ Sustainability of the Brand Positioning
Existing vs New Strategy (proposed)

` Product

Categories

2000 Mn pound % By product Category Womenswear Menswear Accessories Other License 63.4 73.8 50.2 7.5 30.8 28.1 32.7 22.2 3.3 13.7 17.8 24.1 11.1 0.2 4.2

2001 Mn pound % 134.7 142.4 98.0 6.9 45.8 31.5 33.3 22.9 1.6 10.7 42.4 47.4 22.4 0.1 4.9

2002 Mn pound % 165.2 149.4 125.8 5.3 53.5 33.1 29.9 25.2 1.1 10.7 54.7 44.7 31.7 0.1 5.7

2003 Mn pound % 197.9 162.8 169.5 5.1 58.3 33.3 27.4 28.6 0.9 9.8 65.9 44.6 48.5 0.0 5.7

% change over 2001 269.9 84.8 335.0 -81.5 35.4

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Major focus on (in order of priority)
Accessories
x Max. % increase in sales coupled with x Max. margin

Women¶s Wear Men¶s Wear
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Phasing out the licenses
Removes issue of counterfeiting Focus on the core areas

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Complete disbanding of the products in other category (fabrics and misc.)

Womenswear Outerwear Knitwear Casualwear Tailored garments Swimwear Underwear

Menswear Outerwear Knitwear Tailored garments Sportswear Undergarments

Accessories Handbags Hats Shoes Belts & Wallets Luggage Large Leather goods Umbrellas Silk Scarves Shoes Ties Watches Sunglasses Beauty Products

Licensed Products Fragnance Eyewear Time Pieces Childrenswear Men's tailored clothing

Childrenswear Outerwear Knitwear Sportswear

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Expand vigorously in Accessories segment
Only 4% share of the market (5th in Luxury segment) Introduction of the new products ± eats into share of the competitors thus automatically increasing share.

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Diverge into children wear segment to increase the share in the apparel segment
Only 3% stake in the market (2nd in Luxury segment) Launch sports line (jackets etc.)

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UK and US market
Focus on the flagship stores & directly operated stores Continue the current strategy of acquisitions of distributors

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Asian Markets (e.g. India, China etc.)
‡Retailers (choose them after careful scrutiny) ‡ Problem of counterfeiting ‡Maybe one or two flagship stores (initially in a country) ‡Start with Tier I and Tier II cities (posh markets)

Issues
Only 3% of sales (~ 98mn EUR) being spent on advertisements

Proposed Strategy
Adopt aggressive promotion strategy in the European and US market (rope in new models) For the Thomas Burberry use local advertising channels Rope in big stars(with big referent power) to attract markets For Tier II cities use local advertising channels

Asian and other Markets (with low penetration)

` Popularity

of brand among Non-target Consumers
x Promotion Challenges

Issues
Targeting non-target customers Problem of Counterfeiting

Opportunity
Burberry achieving aspirational status among youth

Challenge
Prevent alienation of core customers while targeting new customers

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Strengthen the Thomas Burberry brand
Caters to the aspirational youth vying for high end fashion Flanker brand to the Burberry brand

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Promotion
Proper promotion
x Local media (No national TV)

Proper distribution
x Retailers (after proper scrutiny)

` Role

of the ³Check´

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Current Situation

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In the clothing line only 40% of the products did not use the check (and the sales increased) In the apparels section 60% to 70% sales were check The check design is mainly targeted to the female consumers Inhibition to use the check by the male consumers

Check
Perception of feminity and hence a degree of dissonance

Non Check
More in sync with the male macho image More adaptable to the men's-wear line Seemingly indifferent

Male

Female

Goes well with this category due to the perceived feminity

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Strategy for milking the ³check´

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Re-launch the Burberry brand in the menswear segments with a less subtle expression of the check Keep a high end fashion ³check´ line intact for the core customers (who associate Burberry with check) Gradually phase out check (in the other lines) as it limits design options In the Accessories segment e.g. perfume bottles, beauty products etc. stress on ³check´

` Sustainability

of Brand Positioning

‡ Comfortably nestled between ‡Lifestyle (represented by Ralph Lauren) & ‡High end Fashion products (represented by Gucci) ‡In the Accessories and some Men¶s apparels ‡ High end brand in women¶s wear and most of men¶s apparels

Issues
High end customers gravitating towards discount warehouses

Opportunity
Middle Income people shopping at luxury retailers

Challenge
Integrating the high end and the mid segment customers with a product line (different)

Issues
High End Brands launching a product in the lower category to compete with Burberry. Low Prices brands like launching a brand in the Burberry segment

Existing /Proposed Solution
The existing Burberry brand is priced such that it takes care of the competition

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Strengthen the low end brand of Burberry (e.g. Burberry London) Will serve as a flanker brand. Will cater to the younger and comparatively less affluent.

Maturity Decline

Sales

Growth

Introduction

Time
Pioneering Competitive Comparative

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Imposing ³Time Premium´ for fashion
Introduce new fashion in the Prorsum brand After a time, introduce them in the Burberry brand and after that in theThomas Burberry brand

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Advantages
Extended life cycle of the product resulting in Higher revenues

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