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Burberry Page |
Case Study- Burberry
Burberry, a brand known for its quality, luxurious and royal association was confronted with strategic issues of style, product conventional look and targeted to older customer segment. The company was not only having concerns with their product line but they were lacking unified corporate vision and strategy. Due to which they started having loophole in their luxurious goods market discipline. Strategic concern for the company was how does the brand image cascade down in the target market and how does it rejuvenate itself is a management lesson.
Burberry founded by a young lad of 21-year of age, Thomas Burberry when he started the work by opening a draper's shop in Basingstoke, England. Burberry had captured the market and builds its brand image initially among the British Army, politician, renowned adventurers and celebrities with the introduction of gabardine, a waterproof breathable fabric. The product and brand development timeline started with the company inception in 1860s when it introduced gabardine and then gradually matured in the coming years and decades. In the early decades of 1900, Burberry was associated with uniform designing of British army in World War II. Then in 1924-1930s Burberry's signature checkered black & white and camel color coat became a signature item in the coats and this design was a Burberry trademark. In the preceding years of 1940s Burberry coats were famous among celebrities and soon its brand entered the Hollywood industry.
In the years of 1970s and 1980s, Burberry was not making any remarkable moves in the fashion industry but its signature coats were still its brand pride and loyalty. In the year of 1970s well before the new CEO Rose Marie Bravo took up the charge for the company's executive position, Burberry's corporate strategy was focused on licensing and distribution arrangements and company maintaining limited set of products.
Burberry Strategic Outlook
Rose Marie Bravo brought with her new vision and strategic goal for the company. She had a strong conviction over the development and rebuilding of the Burberry brand in the target market, for this purpose she made up the team of professionals who were devoted to work whole heartedly for the company new vision. Bravo has redefined the distribution strategies for the improvement of the product line and growth of the market share along with market penetration. Thus, for invigorating the company's profitability and brand building appetite Bravo and her team had the vision of maintaining the financial health of the existing brands, while increasing the customer based by entering new product categories and expanding the distribution network. The results of the new corporate strategy were that company achieved sky rocketing sales revenue in the year 2003 with an increase of 166% from the year 2000. From 1999 to 2003 company showed growth in the handbags from 36% to 49% in the accessories section and small leather goods items from 16% to 18% under the same section.
Burberry corporate strategy to a newer dimension
When Rose Marie Bravo joined the company, Burberry had a new dimension for its growth that was based on the luxurious products that not only offered material item to its customers but also provided them with the lifestyle which is inspirational, stylish and innovative. Teams were made that comprise of people from stores and retailers that had the experience of knowing what exactly customer thrives for, at what price they would be willing to hit a certain product and what are the current company's gaps. Company name was changed from Burberry's to Burberry, logo was redesigned according to the modern times and newer forms of packaging were introduced. Since Burberry had been limited to the older segment of the market, the new strategic objective was to expand the customer base to younger groups while maintaining the existing customer base. The company had started to reposition it brands by conducting surveys to collect the primary source of market information. The objective of the survey was to identify the gaps and how can Burberry fill theses gaps against competition. Eventually it was able to identify its place in the market of accessories and apparels.
Marketing strategies plays an important role in the organization development and financial well beings. The process adopted by companies to target their product, design distribution strategies, position the branch within their target market and pricing strategies adopted all trickle down in a complete well defined marketing plan. On the way of achieving the revised corporate objective of Burberry of increased customer base, while maintaining the existing ones and redefining the distribution strategy with increased product line, Bravo after redefining the brand and building brand awareness and brand equity, she implemented a marketing mix with revitalized product, price, place and promotional strategies.
The first step in product improvement category was that Bravo with her team had eliminated the outdated and products with expired designs. Further with her professional team she had replaced the old product line with new range of products with extension of Burberry's image to a new range of products. Products were associated with contemporary fashion trends with the introduction of collection and products are introduced in the market with latest fashion trends on collection by collection basis. They have introduced three primary collections namely womenswear, menswear, and accessories.
i. The womenswear includes outerwear, knitwear, casual wear, tailored garments, swimwear and underwear. Initially it had focused its offering for the autumn and winter season but gradually it introduced collections for spring and summer wear as well which were highly popular in the target market.
ii. The menswear includes tailored suits, raincoats, trousers and shirts. Burberry redesigned its product from traditional plait coats which were not in high demand in the current fashion trends.
iii. Accessories have scarves, shawls, ties, handbags, small leather goods like belts and wallets, women's shoes, luggage, umbrellas, eyewear and timepieces. Accessories have higher margin then apparels because they are less fashion oriented to less risky and besides it has no size restrictions and accommodations.
For its product distribution strategy, Burberry had adopted various strategies like forward integration by buying the distribution channels, terminating the relation with few and renegotiating contracts with others. In the year 2002, company reported to have 3,162 wholesale outlets, including 434 departmental stores and 2,728 specialty stores. It also opened 132 company operated stores. The concept of these stored was to display all range of products, outlay the company's vision and provide the platform to test the new concept and design.
The company repositioned its brand by increasing the prices and enhancing the gross margin from 47% in 2000 to 56% currently. This was done to have consistent brand image. As the company widened its product offering to divergent market groups with different age brackets and professional backgrounds so their needs and preferences would be different from each other. Therefore, it adopted a pricing strategy that builds up the brand which speaks about the company's vision and creating the brand credibility unanimously.
Product Placement strategy:
To attract young and fashion oriented customers company also promoted their product with lower prices in such segments. In the broader perspective it expanded its brand portfolio in the luxury market with the label called Prorsum. The concept behind Prorsum was the introduction of high profile and a high-end brand which was not meant for masses but some elite group authentically interested in fashion and was only displayed in the best stores of the world so the company has limited their distribution for the products under this category.
For the purpose of promoting company's new brand image it decided to run an advertising campaign with the millions of budget by hiring professional photographer from the industry. The objective behind it was to replace the brand image of old conventional…[continue]
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