International business final project on Burberry

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An international brand/business analysis of Burberry.Burberry is one of the leading British luxurious clothing brand, having a great iconic history of about 200 years.

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International business final project on Burberry

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  2. 2. History  Founded in 1856 by Thomas Burberry in Basingstoke, England  Innovative in fabric and outwear design  1895 Burberry develops a coat for British officers during the Boer War: early trench  1914 Epaulettes and „D“ rings are added: Birth of the trench coat  1955 Burberry was awarded a Royal Warrant by Queen Elizabeth II
  3. 3. Heritage  Outerwear core with adventure/exploration history  Iconic products  Burberry was originally synonymous with quality and durability  Was part of regulation uniform for soldiers duringWW I  Received royal warrant by British royal family  (Burberry check) world’s most recognized and widely copied tartan pattern  Past: classic, rogue outerwear brand. Future: next generation,  Fashionable youth. “Burberry chic”
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  5. 5. Corporate Identity  1920 The Burberry Check, registered as a trademark, was introduced as a lining to the trench coat.  Itwas later used for a broad variety of accessories and clothes and became more symbolic as the actual logo
  6. 6. BRAND & CULTURE:  Quintessential British fashion with outerwear core  -One of the oldest & most respected British labels  -Leading luxury brand with global business found in 26 stores worldwide  -Iconic trench coat, trademark check and Prorsum knight heritage logo  -Brand leader in digital communication (social media, burberry.com, fashion shows)  -Personalized customer care offering consumers a superior shopping experience  -Social Responsibility (Burberry Foundation)
  7. 7. USP  Authentic British heritage  Rooted in integrity of outerwear  Broad consumer appeal  Across genders and generations  Global reach
  8. 8. Consistent execution of key strategies  LEVERAGE THE FRANCHISE  Outerwear around half of apparel sales  Significant opportunity in menswear; grow tailoring  Unlock the potential in licensing  Directly operating fragrance and beauty • Greater brand control • Under-penetrated; significant opportunity  Digital marketing critical for reach and engagement  Innovation in social media: nearly 15m Facebook fans
  9. 9. INTENSIFY NON-APPAREL  Innovation in large leather goods, half of non- apparel  Significant opportunity in men’s accessories, especially in male-focused Emerging Markets  Continued opportunity in soft and shoes
  10. 10. ACCELERATE RETAIL-LED GROWTH  RETAIL-LED GROWTH  Investing in flagship markets, biased to  Larger store formats  Focus on driving retail productivity through  Monthly floor sets and replenishment  Building customer centricity with investment in customer insight
  11. 11. INVEST IN UNDER-PENETRATED MARKETS  Move from franchise to direct control over time; Increase investment in retail and infrastructure  Drive productivity in China; evolve store network  Develop new high potential markets including  Middle East, Central/Latin America and India  Continued opportunity in US wholesale; 9% of group retail/wholesale revenue
  12. 12. PURSUE OPERATIONALEXCELLENCE  Support business growth in logistics  Drive efficiency through existing supply chain infrastructure  Improve assortment planning and reduce inventory growth
  13. 13. DIVERSIFIED BUSINESS MODEL  By channel  By region  By product
  14. 14. STRONG FOUNDATION FOR SUSTAINED PROFITABLE GROWTH  BY CHANNEL Retail expansion: c. 12-14% new space in FY 2013  BY REGION Drive growth in core regions, especially flagship markets Emerging Markets growth and evolution  BY PRODUCT Accessories Women Men Children's Beauty
  15. 15. Image problems and its buildup strategies
  16. 16. Image Problems  Burberry became mainstream culture, threatened to lose its luxury image  Check became ubiquitous  Kate Moss: not upmarket  Became popular with British football casual cult, associated with chavs and hooligans  Pubs started to ban people dressed in Burberry  No respect to the brand image  Sold in retail environments inconsistent with its quality proposition  Brand loses its exclusivity
  17. 17. The 90s: First Repositioning  1997 To over come retail problems, Burberry repositioned itself through new design, merchandising and marketing strategy  Strong focus on the Burberry Check  Broader product line , focus on younger target group  Kate Moss as new testimonial for instant accessiblity
  18. 18. Second repositioning:2000 era  Recapturing the luxury market  Baseball Caps removed from sale  Reduced visibility of the Burberry Check 2001: 20% 2004: <5%  Kate Moss got replaced by Rachel Weisz (Upper Class, sophisticated, elegant)
  19. 19. A new era: (Digital age)  New Creative Director: Christopher Bailey  Focus on sub brand/catwalk label Burberry Prorsum  2009 Return to LFW for the 25th anniversary of the British Fashion Council: celebration of Britishness, pushing London as fashion hotspot  New testimonial, Emma Watson is appealing to young , but upscale target group
  20. 20. Marketing strategy:
  21. 21. COMPETITIVE ADVANTAGE • -Performance based advertising • -Cost effective for international banner and text ad campaigns • -Text and image ads supported • -Placement is automated, more relevant to users • -Ads are placed on a wide range of sites not just search engines
  22. 22. TARGET MARKET -Burberry maintains a broad appeal across dual gender audience, 20s to 50s -People with a medium to high standard of living -Accessible “functional” luxury -Cross-generational: -Mature audience seeks classic appearance -Youth audience seeks innovative/contemporary design
  23. 23. STRENGTHS & WEAKNESSES Existing Strengths -Strong/proven management team -Licensing growth. High incremental return on incremental capital -Well-established luxury brand with classic heritage products -Powerful celebrity endorsements -Iconic products, logo, check print -Accessible “functional” luxury -Progressive digital communication (website, fashion shows, social media) Existing Weaknesses -Low vertical integration reduces capture of margin and value from manufacturing -Apparel segment has increased fashion risk but accounts for majority of profits -Internal brand awareness confusion (Burberry London, Burberry Brit, Burberry Prorsum, etc.)
  24. 24. Embracing Social Media:  Burberry has a sophisticated digital strategy  Youtube channel  Facebook fanpage  Twitter Account  Engaging younger customers with the brand  Giving them a unique insight/background information  Using the opportunity of feedback
  25. 25. Before • Dependent on licensing and distribution arrangements • Limited set of products • Brand image of being staid and boring • Just another clothing brand After • Distribution strategy was overhauled • Product line was revamped • Seen as being young yet classy • One of the leading luxury brands of the world
  26. 26. Current strategies
  27. 27. Changing the way things are done New Goal: • To transform Burberry from a tired outerwear manufacturer to a luxury lifestyle brand that was inspirational, stylish and innovative Hiring the best talent • Top management team made up of A-list industry talent • People who had worked on shop floors and in fitting rooms • People who knew – What customers wanted – What price points people wanted – Where the gaps were
  28. 28. Repostioning the Brand  Surveyed the market and identified gaps  Goal was to attract younger customers while retaining core customer base  Contemporary logo and packaging were introduced  Didn’t want to be cutting edge nor just classic  Key differentiator from other brands was its functionality
  29. 29. Changes on the ground • Updating the Product Line • Slashing the number of product stock keeping units (SKU’s) from 100,000 to 24,000 • Eliminated outdated designs and had a consistent look about products • Almost a 1000 new styles each season across women swear menswear and accessories but stayed true to its heritage • With non-licensed products Burberry exercised control over EVERYTHING (design, sourcing, manufacturing, distribution)
  30. 30. Changes on the ground (contd.) • Curbed inconsistencies in price, design and quality across markets • Tighter control over distribution • Opening up of flag ship stores – Display full product range – Showcase the vision – Testing ground for new concepts and designs • Create consistent brand image to avoid risk of brand credibility
  31. 31. Expanding Brand Porfolio Lower end • Low price labels to appeal to younger, fashion conscious customers • E.g.:Thomas Burberry and Burberry Blue and Black Upper end (Burberry Prorsum) • Limited distribution, not meant to be a brand for millions of people • Ultra luxury and appeared on runways with the fashion greats • Opportunity to showcase new brand image and get editorial press for its collections • Way to tell people something new was happening at Burberry
  32. 32. BURBERRY’S COMPETITION In competition with Burberry there are a lot of companies like Coach or Gucci. But in the three years since Burberry’s floatation on the London Stock Exchange in 2002, the Company has enjoyed exceptional growth, with revenues growing over 40% and operating profits increasing in excess of 80%. Looking to the future, Burberry is committed to build upon this momentum in order to continue to generate shareholder value over the long term.
  33. 33. The Next Five Years • The Burberry brand has successfully been turned around • Expansion into product categories such as perfumes, children swear and footwear • Popularity of brand among non-target customers needs to be tapped • The distinctive Burberry “check” appears in over 60-70% of all sales, more restrained use is required • Pervasiveness of the “check” needs to be done in a more strategic way (not too much nor too little) • Sustaining the brand positioning • Broken brand has been fixed but biggest challenge now is to continue to grow the brand without risking customer burnout
  34. 34. China:  The integration of the company’s China operation was finalized and enhanced merchandising, marketing and store service.  Intensified marketing focus extended reach and relevance.  Burberry achieved a leading luxury position on Chinese social media platforms, launched a simplified Chinese version of burberry.com and was named the brand with the second-highest ‘digital IQ’ in China by the influential L2 think tank.
  35. 35. Japan:  Sold in Japan and made locally  High quality apparel but lower positioning and price points than the International Line.  Weaker accessories due to licenses held buy small manufacturers.  •Blue and Black Labels.
  36. 36. USA:  In the United States, over 30 new women’s, men’s, accessories and children’s shop-in- shops were opened in key department stores.
  37. 37. India and Middle East  In India, Burberry is still new but they focuses but they focuses on formation of a new subsidiary with a local partner in Saudi Arabia.  From that subsidiary partner ,they are also have a presence in Middle East.
  38. 38. Thank you

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