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Burberry - CEO Case Analysis

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Burberry - CEO Case Analysis

  1. 1. Burberry Case Study International Fashion Academy Luxury Brand Management Strategic Marketing
  2. 2. Case Objectives: 1. Compare Burberry’s market position relative to that of its competitors, including Polo, Coach, Armani, and Gucci. Is Burberry’s competitive position sustainable over the long-term? Why or why not? 2. Because demand tends to be unpredictable in the world of fashion, the fashion business is inherently risky. In this context, consider the various changes Bravo made upon her arrival at Burberry. To what extent have these changes exacerbated or mitigated Burberry’s risk profile? 3. Describe Burberry’s customer base. Who is Burberry’s target customer? How could Burberry’s popularity among non-target customers affect the brand? How should Burberry respond to this popularity? 4. Brand extension: Was it a good idea for Burberry to launch ‘Brit’, the new perfume line? what other product categories should Burberry be entering? Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  3. 3. Contents: • History of Burberry Brand • Brand Positioning • Bravo’s Strategic Changes • Defining the Target Customer • Remaining Competitive • Brand Extensions Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  4. 4. 1856: Thomas Burberry founds Burberry in Hampshire, England as an outerwear company 1891: Burberry opens its first store in Haymarket 1914: Burberry is commissioned by Great Britain to redesign officers coats, thus creating the "trench coat” 1920s: The Burberry “check” is developed for the lining of coats 2006: Burberry begins online sales first 2010: Burberry launches its cosmetics line Burberry Beauty 2015: Burberry operates three brands, sold in Burberry stores, franchises, and department stores worldwide: • Burberry Prorsum – fashion, styled • Burberry London – tailored, suiting • Burberry Brit – casual, weekend wear Faces of Burberry: History of Burberry: Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  5. 5. Market Positioning: • Burberry is positioned as an accessible luxury brand, between mid-level brands (ex. Polo and Coach) and high-end brands (ex. Armani and Gucci) • It is also positioned as a functional and wearable brand • Burberry offers its classic products and also fashion-forward items • The brand heritage and diverse product mix catering to a large target group provides a sustainable advantage Price Product Mix Prèt-a-Porter Price Product Mix Accessories Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  6. 6. • Took control of licensing issues, design, production and distribution • Liscensed products more than doubled in total sales • 2000- 30.8 Million Pounds • 2003- 58.3 Million Pounds • Updated Product line • Cut the number of product stock-keeping units from 100,000 to 24,00 • Result: keep products up to date • Streamlined into three collections: • Womenswear- 450-500 styles each season • Sporty, Function, Protection AND style • Menswear – 330-350 per season • Accessories • Soft & Hard offerings • “Accessories are a piece of the dream” • Higher margins than fashion because more secure purchase, available to target and aspirational consumer Bravo’s Changes: Overview Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  7. 7. • Increased prices for positioning • Revenue increase: • 2000- 47% • 2005- 56% • Added Prorsum label • Debut at Fashion Week 1998 • Invested in marketing and hiring industry leaders • Launched flagship stores to display new fashion items for the market Bravo’s Changes: Overview Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  8. 8. Brand Name: Bravo began her tenure with a clear rebranding strategy starting with a new name that brought focus and new attention to the brand. Plaid Management: To prevent oversaturation of the market, Bravo and her team worked to manage the use of plaid in all fashion and accessories trying to limit the risk of counterfeit by setting clear guidelines and standards for its use. Bravo’s Changes: Rebranding Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  9. 9. Bravo reigned in licensing in weak areas and extended herself in others. In what seemed to be a shift towards control, licensing deals caused the Burberry check to flood the market which showed the aspirational success of a luxury brand but also potentially alienated the target market. Reward: • Removed licenses with little control over quality and distribution • Purchased distributors • Re-established relationships with quality manufacturers Risk: • Too many items on the market at varying price levels • May have over extended use of the Burberry check Bravo’s Changes: Restrictive Licensing Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  10. 10. • Risk: 10 million pound investment in the re-launching of the brand. Hired notable photographer Mario Testino. • Reward: Use of socialite Stella Tenant and supermodel Kate Moss revitalized the image of the brand, lowering the age demographic and created an edgier and higher end look for the consumer to identify with. Bravo’s Changes: Marketing Investment Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  11. 11. Bravo decreased risks by taking control of the brand name, quality and distribution and directing the public perception through focused advertising campaigns and high end fashion designs. Though it could be argued that she over licensed to brand in some respects, she successfully positioned the brand in the high end luxury market while still keeping it accessible to aspirational consumers. Bravo’s Changes: Results Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  12. 12. • A man or woman seeking functional luxury • A customer preferring classic style • Partial to accessibly priced products • Has access to disposable income • Cross-Generational market • Product mix includes “continuity” items and “fashion” items providing mass appeal • Large amount of aspiration purchases Burberry’s Target Customer: • Brand awareness among non-target market can add to brand equity, though it reduces exclusivity • To avoid devaluation of brand, anti-counterfeiting operations are critical, as is a more limited use of the plaid tartan design • If Burberry wants to profit off of consumers outside of its current target market, it can expand its entry-level product line Non-Target Market Brand Awareness: Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  13. 13. Social Class: Executives Professionals Professional Support Clerical, Service, & Blue Collar Part-Time & Unemployed $200,000 > $100,000 $72,500 $50,000 $32,000 $25,000 $20,000 $15,000 < *Primary Target Group $70,000 USD + Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  14. 14. VALS Framework Segmentation: Ideals Achievement Self-Expression Believers Strivers Thinkers Makers High Resource High Innovation Low Resource Low Innovation Achievers: • High resources • Motivated by achievement • Enjoy showing off success • Preference for established brands Strivers: for accessories • Lower-Resources • Highly Style-Conscious • Desire to Emulate Achievement Achievers Experiencers Survivors Innovators Innovators: • High-Income • High Self-Esteem • Materialistically Indulgent • “Finer things in Life” Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  15. 15. Consumer Conditioning: Primary Reference Group Secondary Reference Group Shopping Displays Television Style Icons Childhood Peers Childhood PeersChildhood Travels Adult Travels Historic Appreciation Style Icons Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  16. 16. Marketing Mix: Capturing the Target Market Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  17. 17. Product: Womenswear Menswear Childrenswear Cosmetics Accessories Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  18. 18. Place: Mono-Brand Boutiques Multi-Brand Stores Online Portal Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  19. 19. Price: Accessories: Menswear:Womenswear: Childrenswear: Cosmetics: $95 - $4,300 USD $167 - $2,900 USD $79 - $289 USD $22 - $125 USD $150 - $3,040 USD Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  20. 20. Promotion:Magazines: Social Media: Digital Content: TV Commercials: Concert Sponsorships:Billboards: Promotion: Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  21. 21. Prorsum, Burberry’s award winning label is the key to Burberry staying relevant in the luxury market. Their ability to enter into high fashion keeps the brand interesting to the target luxury consumer and aspirational to other consumers. Staying Competitive: Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  22. 22. Plaid management and restrictive licensing is also key to the survival of the brand. Although estimates of 25% of revenue comes from items with the plaid, popularity among non target consumers such as hip hop artists detracts the core target. Bravos goal of decreasing the visibility of the check in the future is important to avoid over saturation and alienating the core consumer. Staying Competitive: Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  23. 23. Keeping the story alive through the use of British icons (ex: celebrities, models, public figures) in marketing will help keep the brand relevant in the luxury market and keep it noticeable in the media. Romeo Beckham – Childrenswear 2014 Staying Competitive: Eddie Redmayne and Cara Delevingne S/S 2012 Cara Delevingne and Kate Moss, My Burberry 2014 Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  24. 24. Fragrances are a key gateway item for luxury brands. The launch of Burberry Brit was another way for Bravo to reach a younger demographic and open doors to new consumers. Price: $94 USD Promotion: Use of younger models and playful campaigns Distribution: Brand stores, Department Stores, Beauty stores Brand Extension: Burberry Brit Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  25. 25. The goal of becoming “like Chanel No.5” was over reaching as it does not have the historical status. Chanel No. 5 also has different demographics than the Burberry Brit goal of: “30s, English, Charismatic” This is the right demographic for the re- launch of the brand, but wrong competitor expectations. *Next steps would include launching men’s fragrances and expanding the Burberry Brit line to include complimentary items for gifts Brand Extension: Burberry Brit Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  26. 26. Homegoods: In staying with the heritage of the brand, offering traditional home items such as textiles, china and decor in the Burberry brand would continue to reach the target market and open more gift offerings. Target Customer Home Purchase Future Brand Extensions Extended Target Home Purchase or Gift Items Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  27. 27. Bespoke Luxury is a growing trend in the industry and offering personalized products such as monograms and other goods would continue to reach the sophisticated luxury consumer. Monogramed Poncho Runway AW 14/15 Future Brand Extensions Monogramed Poncho popularity amongst celebrities Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015
  28. 28. Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015 FIN
  29. 29. Lisa Delamarter Ι Vik Pisipati Ι January 15, 2015 Works Cited: Davis, Scott. "Burberry's Blurred Lines: The Integrated Customer Experience." Forbes, 27 Mar. 2014. Web. 6 Jan. 2015. <Burberry's Blurred Lines: The Integrated Customer Experience>. Goldfingle, Gemma. "Analysis: Burberry's Brand Revitalisation Continues in Bid to Attract New Customers." RetailWeek, 14 Sept. 2012. Web. 7 Jan. 2015. <http://www.retail-week.com/analysis-burberrys-brand- revitalisation-continues-in-bid-to-attract-new-customers/5040531.article>. "Annual Report 2013/14." Burberry PLC. Web. 6 Jan. 2015. <http://www.burberryplc.com/investor_relations/ annual_reports/annual-report-2013-14>. Schlesinger, Fay. "According to Burberry's New Shopper System, Are You Brit, London or Prorsum?" Daily Mail UK, 18 Nov. 2009. Web. 5 Jan. 2015. <http://www.dailymail.co.uk/femail/article-1228672/According-Burberrys- new-shopper-class-Brit-London-Prorsum.html>.

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