Assignment 1

BMG 521
Strategic Management
01 October 2022

Soo Chee Kien

2022 Consultation Report For Burberry
Prepared by:

Eden Soo

+60173303552

sck2_KL@student.wou.edu.my

October 01,2022

Executive Summary.

In recent years, Burberry has never created an IP event that can cause a sensation

in the industry. In China, PRADA held the Rongzhai Art Exhibition and co branded

with the "Wuzhong Market" of the online shopping mall; LV and Valentino held a big

show in Anaya to build a fashion landmark, which has triggered a social media

frenzy. Burberry's offensive was always tepid and lacked a sense of existence. Since

Burberry re established its luxury status and changed its product style in 2018, it

needs to implement brand strategy, and building brand influence has become the

key point of influence building.

Background.

Burberry is a luxury brand in the UK, belonging to Burberry Group Plc. Its products

include women's clothing, women's clothing accessories, handbags and shoes,

men's clothing, men's clothing accessories, children's clothing, cosmetics, perfume,

watches, household goods and gifts.

In 1856, Thomas Burberry founded the Burberry brand. In 1879, the founder of the

brand invented the innovative weatherproof gabardine fabric, which has the function

of preventing rain, is practical, durable and breathable. Its waterproof materials are
patented. The coat features a single strap and snap closure with only one button on

the collar. Burberry Company operates its own brand stores and authorized

franchise stores around the world, and sells them in third-party stores through

franchise counters. Burberry was awarded the Royal Badge by Queen Elizabeth II

and Prince Charles of Wales. Burberry Group is listed on the London Stock

Exchange and one of the constituent stocks of the FTSE 100 Index.

According to the analysis, in 2013, "Burberry" ranked 77th among the most valuable

brands in the world.

On May 18, 2022, Burberry Group, a British luxury goods company, released its

preliminary performance report for fiscal year 2022 (53 weeks as of April 2, 2022).

The revenue of Burberry Group in fiscal year 2022 increased by 23% year-on-year to

£ 2826 million at a fixed exchange rate, and the adjusted operating profit increased

by 38% to £ 523 million, exceeding expectations, and the operating profit margin

increased to 19.0%.

In the fiscal year 2022, the sales of the group's regular price comparable stores

increased by 30% compared with that in the fiscal year 2020, mainly because the

main line products and online retail gave up discount promotion.

In order to re-establish the positioning of the global landmark luxury brand, Burberry

Group has set three stages of work priorities from fiscal year 2018 to fiscal year

2022. In fiscal year 2022 and the third stage after that: accelerating growth - continue

to strengthen brand strength, accelerate revenue growth, increase profits in a

meaningful way, and achieve positive changes with environmental and social

responsibility as the core. Although Burberry Group has been affected by various

macro environmental factors in this year, it has analyzed the characteristics of the

problems and applied appropriate strategies the crisis may be an opportunity.

Internal Environment Scanning (VRIO).

People:

For any enterprise, only when the personal values of most employees in the

enterprise tend to be the same, can the values of the whole enterprise be formed.

Like the behavior of the individual values leader, the values that the enterprise
believes in and advocates are the internal basis for the daily operation and

management of the enterprise. Burberry Group is striving to provide support and

assistance for the development of youth, creativity and community, so as to help

create a better tomorrow for all mankind and achieve a better next generation with

brand values and purposes. In recent activities, Burberry planned a project called

"NETWORK: INSPIRE". Joining hands with global e-sports enterprise Gen. G to

produce a series of four series of videos, gathering female talents and discussing the

importance of inclusiveness in the game industry.

Customer:

The value of Burberry Group is to attach importance to establishing and maintaining

relationships with customers, and to provide a better customer experience from

Burberry stores by integrating digital and physical journeys.

Brand:

Creative driving force, forward-looking thinking, uniqueness, tradition, luxury and

fashion (quality, craft) and pride in our tradition are the most outstanding symbols of

Burberry. Since the company was founded in 1856, it has always been the core of its

brand.

Financial:

Listed in FTSE100, create shareholders value and funding. Long term view on

revenue growth, operating, margin accretion and capital efficiency.

Supply Chain (Distribution, Sourcing and Manufacturing):

Burberry's supply chain is complex and diversified, with a series of key functions,

including product engineering, procurement, manufacturing and customer order

execution. The global team cooperates with internal design, sales, retail teams and

other supply chains as well as external suppliers to provide customers with

elaborately manufactured products with excellent care and efficiency. As the global

business continues to expand and become increasingly complex, Burberry has built

a sustainable and consumer oriented supply chain to meet the needs of business

expansion and consumers, and provide excellent brand and product experience.

ESG:

The commitment to ESG related matters is the purest expression of Burberry's

purposes and values. Burberry is not only committed to building a Burberry with

stronger financial strength, but also to building a better company, which is a

beneficial force in the world. Disclosure plays a key role in driving meaningful

change. In June 2021, Burberry announced a new environmental sustainability goal,

committed to achieving positive climate change by 2040, surpassing the company's

net zero goal by 2040, and committed to generating positive climate impacts beyond

its value chain footprint. The medium-term goal is to reduce the supply chain

emissions of Scope 3 by 46% by 2030.

Randazzo (1993), in principle, compared the essence of a brand with its core value,

and chose to talk about the soul of a brand: "The soul of a brand is its spiritual

center, which is the core value that defines a brand and penetrates all other aspects

of a brand" (Randazzo 1993, p. 17). The core values of an enterprise are the views

or attitudes of the enterprise to the market, customers, employees, etc. It is the

proposition of the enterprise to show how to survive. The "core values" of an

enterprise are "an essential and lasting set of principles". Burberry's corporate spirit

in its core values. It includes the enterprise tradition, awareness of the times, basic

beliefs, values and ideas that an enterprise should have, which determine the basic
characteristics of the company and make it unique. This is essential for enterprises

to achieve the goal of sustainable development.

All these factors together make a highly critical situation in the luxury apparel

industry, and hence we may conclude that competitive rivalry is a strong force to

shape the competitive landscape for Burberry.

To conclude, the above Burberry Porter Five Forces Analysis highlights the various

elements which impact its competitive environment. This understanding helps to

evaluate the various external business factors for any company.

Burberry's vision is to become a leading British luxury brand, providing sustainable

and high-quality growth and value for stakeholders and communities. In terms of

brand strategy, from 2001 to 2005, Burberry was "related" to the "football hooligan"

culture, which was the biggest brand crisis of Burberry in recent decades. Low price

products, a large number of counterfeit products, and unfortunately favored by

"football hooligans", Burberry's image at that time was very embarrassing.

In July 2006, Angela Ahrendts succeeded Rose Marie Bravo as CEO. Together with

Christopher Bailey, the design director at that time, we successfully reversed the

brand dilemma. They made a comprehensive adjustment from top to bottom, inside

and outside, with no details. It has also changed Burberry's brand. In the past few

years, it has made use of unique brand stories to strengthen the relationship

between consumers and Burberry. It will focus on inspiring and motivating

customers, and through product oriented content, emotional activities and brand
activation, it will be rooted in Burberry's heritage and historical adventure and

exploration.

Although Angela Ahrendts left Burberry and joined Apple in 2014, and later became

Marco Gobbetti, Jonathan Akeroyd, the New CEO in March 2022, promoted

Burberry as an iconic and unique British luxury with his rich experience and expertise

in building a global luxury fashion brand. According to the quarterly financial report,

Burberry's ambition and mission are not necessary to change.

Brand & Products strategy:

Since this year, LV, Burberry, Gucci and other luxury brands have shrunk their front

in closing stores in China, and this wave of closing has continued in 2018. Maybe

LV, Burberry and Gucci are not unique, and the overall luxury consumption is

declining. And Mingchuangyou, Uniqlo, China's Li Ning, etc. are shining brilliantly in

China. How to explain this? To answer this question, we need to figure out who is

the mainstream consumer, what is the real demand of the mainstream consumer,

and what changes have taken place in the consumption concept. Only in this way

can we understand what brand marketing should do to meet consumers.

Consumption upgrading takes the lead in leading edge and avant-garde

consumption, because of the homogenization competition in the mass market, and

the imbalance between quality consumption demand and high-end supply, especially

the "affluent" and "young" of mainstream consumers, which mainly refers to the post-

90s, post-90s and post-90s, post-90s and post-00s, should attract the attention of

operators. Brand marketing that fails to capture young consumers has no future.

Make sure that the market share of the brand in the young group is higher than that

in the older group. Research shows that (Ding Jiayong, 2019): by the end of 2020,
the post-90s, post-90s and post-90s will account for more than 50% of the overall

consumption power. Moreover, thanks to the development of smart phones, they

have mastered more than half of the right to speak and become the most active

force on social media.

The post-95s and post-00s are a group of new generation with super confidence and

individuality. The key to the change is that the social and cultural environment of

their lives, especially the information environment, has undergone tremendous

changes, enabling them to have the opportunity to pursue themselves and form a

distinctive personality. We can see the truth from the consumption of the post-90s

and post-90s. Take shoes as an example. If we look at pedestrians on the road, we

can see that the proportion of the post-90s and post-90s of Nike is much higher than

that of the post-80s. Shoes need to be personality and publicity. The consumption

concept of the post-90s and post-90s is far more than their income. They don't care

about price, but more about personality and fashion.

The key to success is to use social media to carry out brand marketing for the post-

90s and post-90s generation. The following point are very important to develop and

maintain the relationship with consumers and achieve brand marketing goals through

social media.

Find out the precise users of Burberry, turn them into fans, and let the brand

become the collusion of fans;

The term "fans" was first used to refer to "fans", which means a group that worships

a star. Most of them are young people with a fashionable mentality.

The scope of application has expanded to all walks of life. The followers of WeChat

official account, the people who follow each other on Weibo, and even the users who
watch short videos on the Internet are also called "fans". It has almost become a

new social relationship and a required course for brands.

It can also be seen that with the development of the Internet, the popularity of new

media, the speed of information dissemination has been accelerated, and the time

and space distance has been shortened. Whether it is Li Jiaqi and Weiya, who sell

goods live, or Wu Xiaobo, a knowledge e-commerce channel, or the APP, or major

well-known brands, the operation core behind them is based on fans. Therefore, a

series of "fans economy" has been triggered.

The "fan economy" is essentially a C2B (consumer to enterprise) economy. Its mode

is to determine the output according to the demand of users, that is, supply on

demand. To put it simply, the product has not been officially produced before it

begins to accept consumer reservations. This mode is most commonly used in "fans"

groups. For example, the production quantity of a product is often based on its

popularity with "fans". The higher the popularity of "fans", the higher the output.

In the Internet era, "fan economy" is crucial to brand communication and can bring

great value to the brand. The brand puts consumers at the center, and at the same

time, it improves consumers' awareness of the brand, so that more people can know

the brand and understand the brand, so as to enhance the value of the brand and

enhance consumers' loyalty to the brand, thus turning consumers into "fans" of the

brand. As the "fans" of the brand, loyal buyers will become the guarantee for the

brand to obtain sustainable income in the future. This "fan" power will be gradually

transformed into a "fan economy" to promote the spread of the enterprise brand.

In the era of fan economy, whoever can grasp the psychology of fans can have an

absolute market; Who owns a large number of fans can occupy more market share;

Whose fan loyalty is great, whose brand can continue to develop.

In addition, there is a generally recognized common sense in marketing: the cost of

developing a new customer is 3 to 10 times that of retaining an old customer, and

retaining customers is an important condition for the success of a brand. Therefore,

the low-cost accumulation of fans through the Internet has become a core

competitiveness of future brands. A true fan will talk about the brand name, product,

service and user experience, tell others how good the brand is, and recommend it to

others. A true fan will devote himself to the brand's "ecology" and be proud to be a

fan of a brand. There are few brands that can do this, such as Apple, Google,

Amazon, Huawei, Starbucks, Adidas, Nike, and so on. In particular, Xiaomi, through

its "sense of participation" in the early stage, is a typical brand to upgrade

consumers to fans.

 Strategy implementation of “Mutual achievements of Burberry, Artist /

KOL and fans

According to the research report, the number of Generation Z users has

exceeded 300 million in 2020. For a long time, Generation Z has also been an

important growth engine of the online economy. Therefore, grasping the

differentiated consumption demands of young people is the core element of

marketing.

The first step is naturally to build a way of communication between the brand and

young people, so as to gain the favor of this group. How to quickly "socialize" with

young people has become a required course for the brand.

There is a successful case in front of us, which is a classic marketing event jointly

completed by the brand side "Golden Arowana 1:1:1 zero anti blending oil", Zhou

Bichang and fans. Of course, there is also a key "social" carrier that facilitates the

"hand in hand" of the three parties, that is, the popular variety show IP "Sister
 Riding the Wind and the Waves 2". The reason why this marketing case is a

classic one is that all parties involved in it have quickly found the appeal point of

"need to rely on each other" in the process of exploring cooperation, and

achieved a win-win situation.

For the Brand (Golden Arowana), the appeal is to arouse attention at the

moment when the new product "Golden Arowana 1:1:1 zero anti blend oil" is

introduced to the market. The brand side hopes to make a voice for the new

product through the variety platform with large flow and mainstream audience,

increase the information, and convey the national brand's values of daring to

change and pursuing the ultimate;

For the variety show (Sister Riding the Wind and the Waves 2), the core of

the program creation is to "show the new strength of women", and achieve the

business goal of seeking high-quality reputation sponsors to support;

From the perspective of Artist (Zhou bichang), seek to meet their own

temperament stage and achieve business opportunities at the same time;

For the fans, they would no doubt like to see their idol obtain high-quality

resources. Whether they get on the popular variety show or win high-quality

endorsements, it is an encouragement of "being proud".

Use the most popular artists to match the top products, effectively use the star effect

and fan economy, and play for the brand. In the era of fan economy, the influence of

entertainment marketing is immeasurable. From the influence of many fans' praise,

the brand has accelerated into the hearts of more young consumers and broadened

the user base. Burberry Group can select IP program companies that meet the brand
image to discuss the planning direction. By selecting brand ambassadors that are

highly consistent with the brand characteristics, it is easier for young consumers to

have emotional resonance by grafting the public awareness of stars on the products.

Initial implantation stage

At the initial implantation stage, Burberry's vision is to realize the new product

notification and complete the "initial voice" of the new product; In the following online

and offline interaction stage, the purpose is to communicate with potential users to

increase their awareness of product benefits; At the closing stage, further enhance

the brand's popularity and realize the transformation of potential consumers. In

general, after the establishment of a clear stage goal, Burberry has realized the new

transformation of the new product through the combination of "online and offline

linkage+matrix communication coverage" with the help of the fan economy,

programs and artists as the communication fulcrum.

Frist stage

The theme marketing in the first stage realizes the linkage inside and outside the

program. Insert and release the selling points of the product in the program, conduct

fancy output, and spread it through Burberry social platform and KOL.

It is expected that Burberry's insert ads will soon spread and ferment inside and

outside the program. Later, the released joint poster of artist IP&Burberry's new

product showed fans the artist's "transformation and rebirth" side, which quickly

narrowed the distance with fans.

At the same time, the flow of artists is also channeled to the Burberry multi platform

account. With the collective fermentation of materials, the entertainment KOL

released the video of artists playing with sticks. In addition, the combination

marketing of creative videos involved artists fans, leveraging the Burberry brand

idea, and helping the brand expand and open its own track.

Second stage

In the second stage, the brand began to strengthen users at both ends to quickly

remember the brand and create a sense of trust in a short time, expand the brand

influence of the brand ambassador, and transform online and offline traffic into new

ones with a set of combined activities. Use theme activities to bind program fans with

the help of program IP, and then activate program traffic through online and offline

linkage. For example, the Tiktok National Challenge helps artists and stimulates the

conversion of fan traffic.

Final stage

In today's market environment, the most important aspect of entertainment marketing

is the marketing theme of delivering positive energy. The activity theme launched by

Burberry in the third stage is the best model to activate brand fans and sublimate

brand strength in line with the principle that "brand value comes from transmitting

value". In this process, the brand will increase the potential sales. From the

perspective of overall marketing effect, brand+artist+fans will complete the mutual

gain, achieve long-term brand equity precipitation, and set a new marketing

benchmark for the industry for long-term brand development.

In this campaign strategy, The activity strategy is expected to cost 10 episodes (1

million pounds) a quarter. To calculate the ROI, subtract the total expenses from the

revenue generated by advertising and product details, and then divide the result by

the total expenses, that is: ROI=(revenue - cost of goods sold)/cost of goods sold. It

is expected that the operating profit margin will increase to 20.0% in the next annual

financial report. Burberry's advertising investment risk lies in the screening of

program planning companies and brand image ambassadors, which will determine

the impact on the brand image of the enterprise. Burberry enterprises need to

establish an advertising investment risk early warning system and monitor their

planning activities in real time.

Reference

Randazzo, S. (1993), Mythmaking on Madison Avenue, Probus, Chicago, IL