Brand and Burberry

Burberry, founded in 1856, is a leading international luxury brand. Burberry designs, manufactures and licenses apparel and accessories for distribution through its own stores and network of prestige retailers worldwide. In early 1998, the new management team at Burberry set out its strategy to reposition and revitalise the brand, which resulted in significantly improved results and strengthened the base to build the business. With continuous growth since last five years, Burberry has faced new challenges of brand sustainability and positioning in a volatile industry (fashion) where customer behaviour is unpredictable. Thus, it requires a strategy that lays foundations for long-term growth and addresses the issues related to the challenges of product extension, management of the Burberry check and customer segmentation. To reach a recommendation, we come up with five criteria: Brand image; Financial implications; Competitive advantage; Market growth and Ease of business. As maintenance of the brand image is always the fore most important factor for the luxury brands in order to sustain in the market we based our recommendation on this criterion. Based on the situational analysis, we narrowed to the following three alternatives: 1. Status quo 2. Reposition the brand through segmentation of the market 3. Reposition the brand to target core customers After careful scrutiny and evaluation of alternatives, we recommended that Burberry should reposition its brand in order to target the core customers. By implementing this alternative, Burberry will be able to sustain its brand positioning in the fashion industry, which would provide competitive edge to Burberry over the other luxury brands. Association with high-end customers would further enhance the brand image, which would be very helpful to sustain the market growth in global arena. Further, Burberry would be able to implement this strategy with much less efforts and with minimum financial implications. 2. Situation and Problem Definition Burberry, founded in 1856, is a leading international luxury brand. Burberry designs, manufactures and licenses apparel and accessories for distribution through its own stores and network of prestige retailers worldwide. In early 1998, the new management team at Burberry set out its strategy to reposition and revitalise the brand, which resulted in significantly improved results and strengthened the base to build the business. With continuous growth since last five years, Burberry has faced new challenges of brand sustainability and positioning in a volatile industry (fashion) where customer behaviour is unpredictable. Thus, it requires a strategy that lays foundations for long-term growth and addresses the issues related to the challenges of product extension, management of the Burberry check and customer segmentation. With the above issues in mind, we will carefully analyze the situation (Section 4) and develop the alternative course of actions (Section 5). Further, using the recommendation criteria (Section 3), we will evaluate each alternative (Section 6) and will come up with a recommendation in form of a business strategy that Burberry should adopt (Section7). Finally, we will prepare an action plan for the implementation of the recommended business strategy (Section 8). 3. Recommendation Criteria In order to evaluate the effectiveness of the alternatives and to reach a final recommendation, following criteria is devised. 1. Brand image: Burberry has gained a reputation as distinctive luxury brand with international recognition and a broad appeal. Any poor strategy at this stage would hamper the brand value of the company so the recommendation should strengthen the Burberry brand. 2. Financial implications: Firms often need to spend tremendous amount of money to make tangible changes to the product and packages, as well as intangible changes to brand’s image through advertising. Therefore, strategy adopted at this stage would have a huge impact on the profitability of Burberry. So alternatives will be evaluated to reach the final recommendation that should have minimum financial implications. . Competitive advantage: Another key criterion is that of competitive advantage. Fashion industry is highly competitive and Burberry is facing competition from all brands i. e. from lower end to higher end, and from lifestyle to fashion. Therefore, maintaining competitive edge in this market is very important and hence, we would take this factor into account in reaching the final recommendation. 4. Market growth: Repositioning and revival of the brand has led the company to the fast growing path and Burberry would like to continue it in future. Business strategy adopted by Burberry at this stage would have long-term impact on its growth. Therefore, market growth becomes an important criterion for basing any recommendation. 5. Ease of Business: Entrepreneurs always try to bring simplicity in their processes and business. Accomplishment of different strategies requires different level of efforts. Therefore, we will evaluate our alternatives on the dimensions of efforts. Maintenance of the brand image is always the fore most important factor for the luxury brands in order to sustain in the market. s very critical. Therefore, of all the criteria mentioned above, we have determined the brand image is the most important criterion on which we will base our recommendation. 4. Situational Analysis (refer Appendix A for SWOT analysis of Burberry) Since last five years, Bravo, chief executive of Burberry, renewed the popularity of the company brand by successfully implementing the combination of key strategic initiatives, including:  ·Changed the company name from Burberry’s to Burberry and introduced a contemporary logo and packaging. Introduced the Prorsum designer collection for women in Spring 1999, which further extended to menswear for the Spring 2000 season. In addition, the collection provided valuable design inspiration for the Burberry and Thomas Burberry clothing and accessories collections.  ·Enhanced the awareness and perception of the brand among customers and the fashion industry through an image-building global advertising campaign and extensive editorial coverage.  ·More modern merchandising focus and product extensions, transforming the fashion consciousness of the brand. Reviewed the distribution channels, leading to more focu sed presence in premier retailers worldwide. Additional opportunities were addressed in the retail division with the closure of a number of non-strategic Burberry stores, the opening of a new store in Las Vegas and a new flagship store in London.  ·More disciplined stock control, enhanced systems and a substantial reduction in the size of the range, leading to improved profitability.  ·Renegotiation of Japanese licensee arrangements resulted in enhanced control of the brand, the confirmation of Burberrys pre-eminent position in Japan and a very significant boost to profitability. Analysis of the marketing plan of Bravo on the four dimensions of marketing mix (4Ps) reveals the Burberry’s present competitive positioning in the fashion industry. Bravo targeted to transform Burberry products as luxury products with functionality and positioning Burberry as a luxury brand, which is â€Å"aspirational but also functional. † She promoted the Burberry brand in two phases. The first ad campaign conveyed the brand values as â€Å"classic and chic and fun and witty† and second ad emphasized on the fashion side by presenting â€Å"good girl bad girl† theme. Further, in order to present the brand’s new position in the market, she raised the prices and focused on a particular price point. The price range of Burberry apparels is comparable to Hugo Boss (Exhibit 15 of the case) and that of accessories is between Coach and Gucci (Exhibit 16 of the case). Finally, she attained the global presence of Burberry by utilizing three distribution channels (retail, wholesale and licensing) and by exercising tight control over its distribution channel. Bravo’s goal was to transform Burberry from a tired outwear to a luxury lifestyle brand that is aspirational, stylish, and innovative. However, in order to attract younger customers while retaining Burberry’s core customer base, promotion campaign seems to be an inherent juxtaposition of almost opposite association in Burberry’s new position. In first phase, ad campaign seems to convey the classic and new style of the brand while in second phase, it emphasized more on the fashion side of the brand, which resulted in the popularity of the brand among the non-target customer, urban youth and hip-hop musicians. As the lifestyle of a new non-target customer is very different from the lifestyles of Burberry’s core customers, there is a probability that the brand affiliation of Burberry with this non-target market would eventually alienate Burberry’s core customers. Analysis of the Burberry sales breakdown chart clearly indicates the increase in the percentage sales of the accessories to the total sales and decrease in the percentage sales of apparel to the total sales, over the three years. In case of accessories there are two main reasons for the increase. One, the wide range of price points made them an accessible entry point for new customers and secondly, Bravo rightly set the price of its accessories according to its niche i. e. between the price range of Coach and Gucci products. However, in case of apparels, although Burberry put lot more efforts as compared to other sections (introduction of 450 to 500 apparels styles each season in womenswear and 330 to 350 apparels styles each season in menswear), its percentage sales did not increased, primarily because of incorrect pricing. Market research showed that apparels of Burberry has a niche between the labels of Polo Ralph Lauren and Giorgio Armani, but Bravo priced its apparels almost equal to Hugo Boss, which is much higher then the target competitors. This inconsistent with the original positioning might make consumer confused and even suspicious of the brand’s overvaluation, which in turn will somehow damage its image. On the other hand, even with the higher price range, over all increase in the sales of the apparels points to the requirement of the revaluation of the Burberry’s niche in the market. As markets are not stagnant, especially in the fashion industry where the consumer’s tastes and trends shift very rapidly, Burberry should constantly review the needs and wants of the customers. Thus to maintain the competitive edge in the market, Burberry should constantly update its product. Extension of the existing product line and entering into new needs product categories would be the two strategies that Burberry should adopt to sustain the growth of the company. Burberry is known in the fashion market for its distinctive checks. Thus the brand image of Burberry is associated with the checks. Further, having customers who buy Burberry products only because of its prominent checks and also, customers with one item check aspirational in the target market segment, forming a strategy to manage the ubiquity of check become even more critical for Burberry, which would clearly affect the positioning of the brand. Overuse of the check pattern can present a risk of diluting the brand, which can eventually lead to customer burnout. In sum, analysis of the case indicates that over the past five years, Bravo and her team were able to revive the Burberry brand and provide the new positioning in the market. However, there are some areas, such as, pricing of apparels and consistency in target market, which does not reflects the discipline of the luxury brand and demands repositioning. While there are other new areas, such as, management of the Burberry check and extension of product line, that should be addressed to maintain the popularity of the brand. Thus, it clearly indicates the requirement of the repositioning of the brand in order to sustain the brand image and to lay foundation for long-term growth of the company. 5. Alternatives Following are the alternative business strategies that Burberry can adopt for managing the popularity of the brand and strengthening the brand’s positioning in order to sustain the growth of the company. 1. Status quo 2. Reposition the brand through segmentation of the market 3. Reposition the brand to target the core customers 6. Evaluation of Alternatives 1. Status quo: This is the simplest alternative, as it requires Bravo and her team to perform no action other than continuing the business in same manner. Sustain the brand position as aspirational luxury brand along with functionality factor and advertise it with the goal being to attract younger customers while retaining Burberry’s core customers base. Further, focus on the set price point in the apparel and accessories market, continue with the extensive use of Burberry check, update the current product line, and further tighten the control on the distribution channels. The advantage of this alternative is that it is very easy for the Bravo and team to follow as they have hand on experience with this strategy. Also, sustaining this strategy would be having very less financial implications. However, in the changing world of fashion and lifestyle, this strategy would not be able to sustain the brand image for the long term, which would result in the loss of competitive advantage over the other luxury brands that Burberry brand has attained over the last five years by reviving the brand’s positioning. With the same strategy in place, sustaining market growth would also be hard to achieve. 2. Reposition the brand through segmentation of the market: Under this alternative, Bravo and her team, should adopt a strategy to change brand focus to target two segments of the market, hip-hop youth and core customers and realign the brand’s core emphasis with changing market preferences. Thus, introducing two new product categories, one with designs and fabric representing the latest fashion that matches with the wants and needs of the new market segment of Hip Hop musicians and urban youth, and another with high-profile high-end fabric and design representing the lifestyle that addresses the needs and wants of the core customers. Further, reassessing the Burberry niche in the market and setting the prices of the products accordingly and realigning the use of Burberry checks according the market segments. The advantage of adopting this strategy is that it would enhance the competitive advantage of the Burberry brand over the other luxury brands. It would help the Burberry brand to represent both, fashion and lifestyle, at same time thus increases the likelihood of increasing the market growth. However, even with the clear segmentation, it would not eliminate the concern that youth affiliation with Burberry brand would alienate Burberry’s core customers, which would have a negative impact on the brand image of Burberry. Further, although repositioning will improve the brand’s fit with its target segment, it is not without cost. A risk of not recovering the costs if repositioned brand is not credible to the customer is also associated with this strategy. It would also be very difficult to maintain these two different segments of market and would demand lot of efforts from the Bravo and her team. 3. Reposition the brand to target core customers: Under this alternative, Bravo and her team should focus on its core customers by realigning the brand positioning, and grow the brand in the emerging global markets. The strategy to realign brand positioning will include the use of high-profile fabric and design that should represent both lifestyle and fashion. Burberry will also have to devise the strategy for the use of Burberry check in order to bring soul to its designs and to re-evaluate his niche in the market in order to align the price of its apparels and accessories accordingly. This strategy will guarantee the sustainability of the loyalty of the Burberry’s core customers. This brand affiliation with the core customers would enhance the brand image, while strategic use of Burberry checks and introduction of products with both lifestyle and fashion would help to sustain the brand positioning in the fashion industry. This would provide the competitive edge to Burberry over the other luxury brands. Emergence in the new global market would provide enough opportunities to Burberry to maintain its market growth, however, in the short run, losing some section of the non-target customer would hurt the revenues of the company but in the long run, core customer loyalty would be beneficial to the company. Implementation of this strategy would also be easy for Bravo but it would be challenging to the designing team of Burberry to develop design that should represent both fashion and lifestyle. Burberry would also have to incur some costs in order to reposition the brand that fits with its target customers. 7. Recommendation In order to assess the different alternatives mentioned in Section 6, we will use the criteria mentioned in Section 3: Brand image; Financial Implication; Competitive advantage; Market growth; and Ease of Business. We set up a chart listing all alternatives and assign points to each alternative based on the five criteria. Ranks are assigned with a higher number indicating higher rank i. . better the alternative ranked against specific criteria, higher the number assigned. Of all the criteria mentioned above, we have determined that brand image is the most important criterion so we have assigned double the weight as compare to the weights of other criteria. Finally, the alternative that collects the maximum total points shall be considered as the alternative of our choice. AlternativeBrand ImageFinancial implicationsCompetitive advantageMarket growthEase of BusinessTotal Weight2 x1 x1 x1 x1 x Status quo2311310 Reposition through segmentation of the market4123111 Reposition by targeting core customers6232215 Based on the analysis of the chart above, it is recommended that Burberry should reposition its brand in order to target the core customers. By implementing this alternative, Burberry will be able to sustain its brand positioning in the fashion industry, which would provide competitive edge to Burberry over the other luxury brands. Association with high-end customers would further enhance the brand image, which would be very helpful to sustain the market growth in global arena. Further, Burberry would be able to implement this strategy with much less efforts and with minimum financial implications. 8. Action Plan The recommended alternative can be implemented in three phases. 1. Brand strategy formation and brand repositioning 2. Brand strategy implementation 3. Measurement, evaluation and adjustment of brand strategy Phase 1: Brand strategy formation and brand repositioning Redefine the corporate mission statement that should address the target customers. Formulate strategies to address internal requirements, such as, design of Burberry products that represents lifestyle and fashion and management of usage of Burberry checks, and external requirements, such as improvement of customer’s brand recognition and reinforcement of the new brand, while maximizing the effectiveness of financial budgets. Phase 2: Brand Identity system It would be accomplished in two steps: Step 1: Brand Identity System: conveys a single Brand image and personality through all your marketing communications. The brand value conveyed by advertisement campaigns should match the corporate goal of brand positioning. Step 2: Integrate Marketing Strategy: leverage Brand Strategy across all marketing communications and extend the strategy internally i. e. to all the related departments. Further, reinforce the â€Å"Defined Brand† through interactions both internal and external to your organization in order to strengthen your Brand. Phase 3: Measurement, evaluation and adjustment of brand strategy It would work as the quality check on the brand strategy. To accomplish this phase, two step approach should be used Step 1: Response Analysis and Tracking System: obtain feedback by setting up a Response Analysis and Tracking System for individual media, as well as measuring the effectiveness of marketing investments. Further create an objective metrics that should measure the performance of your Branding Strategy in creating awareness/exposure, inquiry and action/sale. Step 2: Evaluation and Adjustment: ongoing evaluation of performance is critical to gauge the impact of the Brand on the markets. In order to make effective adjustments, a system should be devised to ensure effective and fast responsiveness to the feedback. Appendix A: SWOT ANAYLSIS Environment Evaluation PositiveNegative Internal Strengths-Leading luxury brand with more than 150 years of istory-A top management team made up of A-list industry talent -Broad market base and product lines;-Global presence-Wide brand awareness; Burberry check widely known around the world and derived 25% of all company revenue-Brand is considered classic as well as contemporary-Large profit margins-Tight controls over the distribution channelsWeaknesses-possibly over-extended brand that do not relate to the brand’s image -Historical problems as sociated with licensing and check management-The actual price is not consist with its price positioning-Heavy reliance on the check pattern-Newly emerging customer base could alienate core customer base. ExternalOpportunities-growing luxury market in Asia Pacific-Extending product categories and customer segments Threats-Competition with both lifestyle and fashionable brands. -Volatile industry