BURBERRY
COMPANY BACKGROUND
1856, Burberry was founded, when 21-years old Thomas Burberry opened a draper’s shop in Basingstoke, England. Shortly thereafter he invented gabardine, a waterproof and breathable fabric that quickly become the fabric of choice for anyone venturing out into extreme conditions. Burberry’s trench coat was chosen to be the official coat of the British army in World War I.
1920, The Burberry check pattern-a camel, black, red, and white plaid design-was introduced as a lining to its signature trench coat and became a registered trademark. Over the ensuing years, celebrities, well-known adventurers, and politician were often seen in the Burberry ”check”. Burberry’s original designs and uncompromising quality
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Myth 2 seems to be relevant in the fashion industry: “There is no competitive substitute for our companies’ product.”Believing that Burberry’s product have no rivals makes the company vulnerable to dramatic innovations from others.
Perceptual mapping is a graphics technique used by marketers that attempts to visually display the perceptions of customers or potential customers. Typically the position of a product, product line, brand, or company is displayed relative to their competition. The following perceptual or intuitive map is a visual display of Burberry and some competitors.
Burberry’s market share in 2001 as rated against the top 100 luxury goods players was 5.2%, putting them in 4th place overall (Exhibit 1). This compare with 14.4% market share for LVMH (1st), 9.1% for Polo Ralph Lauren (2nd), and 4.4% for the Gucci Group (5th). Armani falls short with a smaller percentage (3.5%) of the market. Coach is far below these and does not appear on the top 10. If you compare by the type of luxury good; in accessories: Gucci is at 12% (Exhibit 2), Coach at 6%, Polo at 4%, and Burberry at 4%. And for apparel considerations: Polo is at 9%, Burberry at 3%, Armani at 2%, and Gucci at 1%.
It is clear here that these distinctions occur based on the depth and width of each company’s product line. Coach sells far more accessories (i.e. leather goods) than clothing, and Polo sells far more clothing than accessories. Burberry
This expansion demonstrates how the luxury industry is now run by massive corporations whose focus is only on growth, visibility, brand awareness, advertising, and most importantly, PROFITS! With growth and expansion, has come a decrease in quality and rarity. The luxury garments produced are mostly not handmade but are even outsourced to large factories in places such as China and Turkey. Also, to meet quarterly turnover projections, “designers churn(ed) out increasingly trendy collections of clothes, handbags, and shoes.” (Thomas, Pg. 246) With hundreds of new stores around the globe the surplus of designer labeled merchandise is immense hence, the proliferation of outlet malls.
One of the most successful clothing brands in the world, Polo Ralph Lauren has built its success around more than just its line of luxurious designer clothes, but the company is one of the top marketing designers also. It was awarded “ Luxury Brand of the Year” in 2010 by the Luxury Daily. A company that was founded by a man named Ralph Lifchitz, better known as Ralph Lauren of the Bronx, New York in 1968. Since the age of 12, Lauren’s had a strong appeal and taste for looking classy. He would spend the money he earned working with his father after school, purchasing expensive suites. In his latter years, while working for a company called A. Rivetz & Co., Lauren began designing wide ties, the beginning of what latter evolved into the
Over the course of the history of clothing styles and production, one thing has never changed: a person’s wealth directly influences
Price is an important factor in Burberry as price affects the value that costumers perceive they get from buying a product (Jobber & Ellis-Chadwick, 2012). Burberry uses competitive pricing similar to its competitors which produces a psychological effect on Burberry customers (Jacobson, n.d). If Burberry for example lowered its price dramatically then customers may believe the quality has decreased and may presume it’s not worthy to be named a luxury brand. However by being expensive it suggest better quality and desire to sustain its customers as well as making there products seem exclusive.
Not considering fashion focussed brands such as Puma as competition. This is a myopic trait of assuming indispensability
The following case analysis will assess Coach Inc. and its strategy in the accessible luxury brand goods market. The coach strategy focuses on its luxury rivals in matching key quality styles while offering it at a cheaper price. The company offers most products at a 50% off discount price less than other brands which gives them a competitive advantage pertaining to its customer base. Coach marketed its products to middle –income consumers desiring taste of luxury, but also affluent and wealthy consumers with means to spend considerably more on a handbag (Gamble, 2012. P.C-73) .The Company also has several other strategies such as to increase global distribution, improve same store sales productivity and continue its multi-channel business model which includes indirect whole sales to third party retailers but also focuses on direct consumer sales. Coach has done well in the luxury goods industry but the companies profit margin is still below the levels achieved prior to the onset of a slowing economy in 2007 ( Gamble, 2012. P.C-73.The Company had experienced a decline in sales as they are unsure if the company recent growth could remain constant and maintain their competitive advantage with other successful luxury lines Michael Kors, Salvatore Ferragamo, Prada and Dolce & Gabbana.
Most luxury brands have been family-owned or -controlled and, consequently, were single-brand firms for the most part. However, mergers and acquisitions have been growing in the industry, with LVMH leading the way. Our strategic recommendation is to follow LVMH’s lead and acquire a multitude of diverse companies to build the Gucci portfolio.
Growth has been fueled by Coach’s niche as being ‘accessible luxury’. While Coach does not have the prices of most of its high-end competition, it is regarded throughout the industry, and most importantly by consumers, as being equal in quality to much more expensive brands.
Ever since their invention many centuries ago, clothes have been used as a way of communicating. The message communicated relies on a number of factors including the social background of both the communicator and the receiver, and the context in which the message is communicated. Although at times the exact message or symbolism one is trying to portray may not be clear, it is evident that clothing has long been embraced as one of the best ways to project one’s desired personal image to those around them.
Moreover for the profit for the year, Burberry had a drop of 8.55% to 287.7m from 314.6m. The trend of the firm is decreasing in related to the three financial years. The reason of the decline can be due to the increase of the geopolitical concern in the Middle East and Russia and Uncertainty in Eurozone. These factors have any huge negative impact on the performance of the luxury sector.
Degree of Rivalry: The degree of rivalry is moderate in the global personal luxury goods industry. The industry is very concentrated and occupied by few large players. These companies do not need compete with price; however, they have high overlap of products’ category. Most of companies have several common characteristics. They have long history and start business in Europe areas; they all provide exclusive products and services backed by their brands; and they all served few amount of wealthiest customers over the world.
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
Burberry is uniquely positioned as a classic British apparel brand with high global brand awareness to capture the globalization of consumer demand. Its distinctive luxury brand with international recognition and broad appeal. The company’s outlook for the accessible luxury goods industry remains positive from both a geographic and product point of view. Burberry had become positively hip and popular among a younger demographic. It has a unique history and positioning as the authentic British lifestyle brand and highly successful merchandising and marketing strategy across both appeal and accessories. In 2000 Burberry’s total sales were 225.7 million and by 2003 sales had went up to 593.6 million.
earnings this year at the low end of estimates, sending its stock down the most in six
The history of Burberry started in 1856 by dress maker Thomas Burberry. His store had developed a reputation for selling a quality range of outerwear By 1870 and the success of Burberry was accelerated with the invention of innovative fabric ‘gabardine’ in 1880