Burberry

Group 6
Atul Malik - 17 Puneet Gulati - 51 Sayak Chakrabarty 62 Shakti Tandon - 63 Sidhartha Rastogi - 64

agenda

Company history Rose Marie Bravo Era(1997-2003) Issues ahead(Next 5 years) Recommendations References

Company history

Burberry Group plc is a British luxury fashion house, distributing clothing and fashion accessories and licensing fragrances. Burberry is most famous for its trench coat, which was designed by founder Thomas Burberry. The company has branded stores and franchises around the world and also sells through concessions in third-party stores. According to a 2009 report released by Business Weekly, Burberry was the 98th most valuable brand in the world that year. The company is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.

Company history

Founded in 1856,by 21 year old Thomas Burberry who opened a drapers shop in England. Gabardine(Waterproof and breathable fabric) and Trench Coat(Official Coat of British Army in World War-I) were some its its successful products. Burberry Check pattern, introduced in 1920 was a trademark in itself. Aviators, balloonists , politicians and famous celebrities such as Audrey Hepburn , Ingrid Bergman and Humphrey Bogart wore Burberry products. Such was the quality and design that even King Edward VIII was a regular Burberry wearer.

Company history

GUS-A British holding company bought Burberry in 1955. GUS started to license brand in Japan through Mitsui and Sanyo, by the 1970s Various issues cropped up when Burberry was licensed. Some of them were: Price, design and quality of products began to vary across local markets. Parallel Trading was being observed, wherein retailers sold to unauthorized dealers at prices ,channels and locations that hampered products brand. Apart from the above ,quality was going down ,firm was reliant on a few products only and Far East accounted for a disproportionate 75% sales. Firm lacked a cohesive vision and there were structural/strategic issues.

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Rose Marie Bravo Era(19972003)

Bravo joined as CEO in 1997,and had a decent 25 years experience in the industry. He immediately hired A-list industry talent ,to transform brand from tired outerwear manufacturer to luxury lifestyle brand. Companys name was changed from Burberrys to Burberry, contemporary logo/packaging was introduced and new strategic decisions were made . Brand repositioning: Core customer base had to be kept and younger customers had to be targeted. They repositioned themselves somewhere between a niche in apparels(Ralph Lauren/Armani) and accessories(Gucci). The brand was being portrayed as accessible luxury ,that was aspirational and did not loose its functionality.

Rose Marie Bravo Era(19972003)

Product Line updation: SKUs brought down from 100,000 to 24K to eliminate outdated designs. New design team was hired to redesign traditional products and bring new products. Product line was categorized in 2 parts: 1. Continuity Products :PLC=2-3 years. 2. Fashion-Oriented Products: Designed responsive to fashion trends. 450-500 womens apparel styles introduced each season. Extended product ranges for spring/summer and check swim suits introduced. 330-350 mens styles offered per season . More emphasis laid on iconic plaid rather than check.

Rose Marie Bravo Era(19972003)

Accessories collection included soft accessories(such as scarfs, shawls ,ties) and hard accessories(such as handbags ,belts ,wallets etc). Burberry began to exercise more control in non-licensed products , particularly in areas of design , sourcing ,manufacturing and distribution. Old licensing agreements were reined to remove inconsistencies in price ,design and quality .Some contracts were ended and some re-negotiated. Brand Portfolio Expansion: Low priced labels such as Thomas Burberry were available in Spain and Portugal. Similarly Burberry Black and Blue existed for young men and women. Prorsum -New label introduced .It consisted of hand tailored innovative fabrics. This label targeted high profile ,classy and people truly interested in fashion(and with a modern vision)

Rose Marie Bravo Era(19972003)

Advertising: Photographer Testino was hired for a new advertising campaign , whose aim would be to associate brand with trend conscious modern look ,and at the same time stick to its heritage. Campaign was launched in 2 phases: First one featured British Aristocrat Model Stella Tenant , in 1998.It gave a touch of aristocracy and class. 2. Model Kate Moss ,in the winter of 1999 gave a more modern/fashion oriented outlook to the brand .Average age of customer was brought down.
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Challenges

First issue was as to which product categories should Burberry enter in to? They were already planning to launch Burberry Brit-Perfume line featuring a bottle with check design , a new childrens wear line and footwear. Non target customers such as youth and hip hop musicians , were going for Burberry . This affiliation was a clash to Burberrys core customers. The check design was overtaking the brand .It appeared everywhere from socks ,scarves ,shoes ,coats etc. 25% of companys revenue came from check products .Some people only bought Burberry for the check. Should the firm go for check under cover philosophy or continue with its current position? With the new positioning of the brand the target audience had increased .So the competitors had also widened .How sustainable was this positioning of the brand ?Was it suited to long term growth or should it be altered?

Recommendations

Expand in the Accessories segment

- only 4% share in the market

- introduction of new products

Diverge into children wear segment to increase the share in the apparel segment
- only 3% stake in the market - launch sports line (jackets etc)

Imposing Time Premium for fashion

- Introduce new fashion in the Prorsum brand - After a time, introduce them in the Burberry brand and after that in the Thomas Burberry brand Advantages : Extended life cycle of the product resulting in Higher revenues

Recommendations
Place (Channels of Distribution) Asian Markets (e.g. India, China etc.)
Retailers (choose them after careful scrutiny) Problem of counterfeiting Maybe one or two flagship stores (initially in a country)

UK and US Market
Focus on the flagship stores & directly operated stores Continue the current strategy of acquisitions of distributors

Promotion Issues
1. Only 3% sales ~ 98mn EUR being spent on advertisements 2. Asian and Other markets (with low penetration)

Proposed Strategy
Adopt aggressive promotion strategy in the European and US market. Use local advertising channels for Tier II cities

Role of the check (current scene)

In the clothing line only 40% of the products did not use the check (and the sales increased)

In the apparels section 60% to 70% sales were check

The check design is mainly targeted to the female consumers Inhibition to use the check by the male consumers

Attribute Positioning of the check

Check Male
Perception of feminity and hence a degree of dissonance

Non check
More in sync with male image More adaptable to mens wear line

Female

Goes well due to perceived feminity

Seemingly indifferent

Role of the check (proposed solution)

Strategy for milking the check

Re-launch the Burberry brand in the Menswear segments with a less subtle expression of the check Keep a high end fashion check line intact for the core customers (who associate Burberry with check) Gradually phase out check (in the other lines) as it limits design options In the Accessories segment e.g. perfume bottles, beauty products etc. stress on check

Sustainability of Brand Positioning (current scene)

Comfortably nestled between
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Lifestyle (represented by Ralph Lauren) &

High end Fashion products (represented by Gucci)

In the Accessories and some Mens apparels High end brand in womens wear and most of mens apparels

Issues
High end customers gravitating towards discount warehouses

Opportunity
Middle income people shopping at luxury retailers

Challenge
Integrating the high end and the mid segment customers with a product line

Sustainability of Brand Positioning (Proposed Strategy)

High end brands launching a product in the lower category to compete with Burberry

The existing Burberry brand is priced such that it takes care of the competition

Low price brand launching a product in the Burberry segment

Strengthen the low end brand of Burberry ( e.g. Burberry Blue & Black)

References

http://en.wikipedia.org/wiki/Burberry
http://in.burberry.com/store/

Thank You !!!