Marketing Managment

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1. 1Marketing Assignment Page 1 2. 2 EXECUTIVE SUMMARYAny company thrives or perishes based on the strength of their brand strategy. Depending on thedynamics of the…
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  • 1. 1Marketing Assignment Page 1
  • 2. 2 EXECUTIVE SUMMARYAny company thrives or perishes based on the strength of their brand strategy. Depending on thedynamics of the industry or the innovations in the company the strategies keep changing. While forFMCG companies the changes could be frequent, heavy industries and government organizationsusually make strategies for longer durations.Fashion industry has historically been one of the fastest to change, both in terms of their range andstrategies for their brands, justifying the term „fashion being fickle‟. Burberry has been an alwaysbeen an oasis in this desert of fickleness. In their history of 150 years, there have been only twomajor shifts in their brand positioning. One from an army trench coat maker to a complete men‟swear company and more recently in 1998 a shift from a “me too” brand in the luxury segment to apioneer in newer products and digital promotions. To understand the brand it was necessary to understand the personality of the brand, which inBurberry‟s case is quite apparent. The change in strategy in the last decade also gave a paradigmshift in their positioning related to their competition and changed them from a preferred choice of thefootball hooligans to the attire of the affluent. The change in the entire image and perception hasbeen brought about under the leadership of two different CEO‟s and a completely internal designteam. The current brand equity could be said to be the result to multi-pronged strategies of newerproduct, defined pricing, varied channels and a strong promotion through the digital media.While a company like Burberry would have generally done extensive research on their targetmarket, new market penetration and the product lines, there are certain points which stand out whilediscussing their brand strategy. Most of these points could be termed as potential threats, but aswith any company with a lineage like Burberry it is extremely important to understand both theobvious threats as well as the potential ones. Most of the weaknesses in this report are looked atfrom the perspective of „service as a drama‟.Each of the weaknesses identified and are grouped into one of the three parameters of the drama.The stage defining demographic and the digital innovation challenges, the executive turnover as theactors, the loyalty policies are placed in the audience parameter. Corporate Shared Value (CSV)stands out as a long term strategy in not just building the brand but also the merging the socioeconomic development with the development of the company.The actual challenge for Burberry is not just to keep their brand strategy distinct from thecompetition but also to maintain the upward swing of their fortunes in both the revenue and thebrand equity.Marketing Assignment Page 2
  • 3. 3 TABLE OF CONTENTS1 FIRST QUESTION ............................................................................................................................ 4 1.1 Introduction ................................................................................................................................. 4 1.2 History of Burberry ...................................................................................................................... 4 1.3 Personality of the Brand ............................................................................................................. 4 1.3.1 Kapferers brand identity prism.......................................................................................................... 5 1.4 Burberrys Positioning expected and real strategy .................................................................... 7 1.4.1 Burberry Target Consumer ............................................................................................................... 7 1.4.2 Description of Competitors ............................................................................................................... 7 1.4.3 Points of Parity ................................................................................................................................. 7 1.4.4 Points-of-difference .......................................................................................................................... 8 1.5 Burberrys Brand Equity.............................................................................................................. 8 1.5.1 Product ............................................................................................................................................. 9 1.5.2 Place ................................................................................................................................................ 9 1.5.1 Employees...................................................................................................................................... 11 1.5.2 Pricing Strategy .............................................................................................................................. 11 1.5.3 Promotion strategy ......................................................................................................................... 11 1.5.4 Burberrys Brand Strategy .............................................................................................................. 142 SECOND QUESTION ..................................................................................................................... 16 2.1 Introduction ............................................................................................................................... 16 2.2 Enlarging Audience-Cost.......................................................................................................... 17 2.2.1 Loyalty Plans and Alliances ............................................................................................................ 17 2.3 Enlarging Actors-Employees .................................................................................................... 18 2.3.1 Threat to Brand from Executive Dependency ................................................................................. 18 2.4 Enlarging Stage-Market............................................................................................................ 19 2.4.1 Digital Innovation Challenges ......................................................................................................... 19 2.4.2 Demographic Risk .......................................................................................................................... 20 2.5 Corporate Shared Value ........................................................................................................... 21 2.6 Conclusion ................................................................................................................................ 223 APPENDIX ...................................................................................................................................... 23 3.1 Best Global Luxury Brands....................................................................................................... 23 3.2 Digital IQ Ranking ..................................................................................................................... 23 3.3 Strategic plan ............................................................................................................................ 244 Work Cited ..................................................................................................................................... 255 Bibliography .................................................................................................................................. 29Marketing Assignment Page 3
  • 4. 4 1 FIRST QUESTION1.1 Introduction"When I look back I dont think there‟s anything Id change"(Bolshow, 2011) stated the CEO ofBurberry. The quote portrays the comfort in the company‟s current position and faith in the on-goingBurberry strategy. The fact that she is considered among the top 50 women executives in the worldalso confirms the global perception of the company. The study below shows the journey of Burberryand the path taken in reaching the current status, with special focus on the last decade which hasseen the biggest changes and the best phase for the company. The report looks at the Personality,Positioning and the Strategy of the brand and the methods used in achieving the same.1.2 History of BurberryFew companies have sustained for over 150 years without going through a paradigm shift multipletimes. Burberry seems to be defying the odds and continuing with their strategy. During this periodthey have had their ups and downs like all companies, but the core brand ethos of being British andaccessible luxury has prevailed and is still relevant. The company started as supplier of trench coatsto the Army, then became a men outdoor clothing designer and finally they transformed into aluxury brand for all market segments.1.3 Personality of the BrandBurberrys personality is reflected by the core traits which consumers attribute to the brand(Okonwono, 2007). The brand identity message should clear and consistent with the image thecompany wishes to portray. This is crucial for brands as consumers not only bond but enter intorelationships when feelings are elicited by interacting with the brand.The purpose of defining the traits of a brand is crucial for a marketer as it can give insight into theconsumers‟ minds and therefore their needs and wants (Keller, 2008)Two models have been applied for the analysis of the personality, Kapferer‟s indentity prism hasbeen utilised for the global brand identity and Aakers personality scale.Marketing Assignment Page 4
  • 5. 5 1.3.1 Kapferers brand identity prism Adapted from Kapferers (2008) Brand identity prism .Utilising the brand identity prism, (Kapferer, 2008) the brand is decomposed into 6 facets; these theycan be classified into tangible and intangible aspects. All facets are interrelated and should beconsidered in the context of shaping the personality. 1. Physique, this is the most tangible aspect of the brand (Kapferer, 2008), in Burberrys case this would be the “Burberry” check, the Prorsum knight, the logos, font script etc. These items are consistent across stores, the World Wide Web etc. 2. The personality will be further discussed below. 3. Culture, these are the ideals that inspire the brand (Kapferer, 2008). Burberry has carved a British niche firmly in the minds of consumers. The coat born from WWI leverages heritage and tradition. 4. Self image, this is how the consumer visualizes themself (Kapferer, 2008) this facet is vital as consumers maintain their self image through the brands they purchase. 5. Reflection, this is the client type the brand is addressing (Kapferer, 2008) 6. Relationship; the mode of conduct that most identifies the brand (Kapferer, 2008). It is vital to establish a relationship with the consumer as then trust is built. By creating a strong relationship this further ensures trust, attachment and commitment to the brand. (Didier, 2010)Marketing Assignment Page 5
  • 6. 6 Adapted from Aakers personality scale 1997Aaker (1997) suggests that the personality of a brand could be regarded as the humancharacteristics associated with it. According to Aaker, the “big” five factors in brand personality aresincerity, excitement, competence, sophistication, ruggedness. These traits can be furtherdecomposed as seen above.The perception that Burberry wishes to portray is reflected by the following factors and traits;Sincerity/Original:Burberrys core product, the trench coat is vital to their success; it is original and a key differentiatorof the brand. The personality shown by the original trench coat evokes halcyon days of the 1950‟swhere Burberry was worn by the film stars of that era.Excitement/Unique/Spirited/Cool/young/trendy and Reliable/successful/confidentThese personality traits are consistent with the message of the brand and the usage of theirambassadors. They are well known English startlets.It could be argued that “young, cool and trendy” are the traits that Burberry aspires to; the clarity ofthis message is consistent with the strategic goals of the brand. Burberry repositioned to ensure thatthe brand shifted from their older demographic to take in a wider segmentation of the market.Sophisticated/Upper class/glamorous/good lookingAny of the “big five” factors may elicit more excitement dependent upon the brand; Burberry fulfilsmany of these traits. As a luxury fashion brand many of the traits should correspond with this sectionsince this is the niche that Burberry has carved for itself.Rugged/toughThe fact that the company was born from the advent of gabardine gives the brand an air oftoughness. Gabardine was sold as tear proof, waterproof and utilitarian product in the 1880‟s.Marketing Assignment Page 6
  • 7. 7It should be noted that the “Aaker” factors when applied to other cultures/nations may elicit differentresponses. (Keller, 2008)It should be noted that any divergence from the core brand aspects will result in a divergence of thebranding message. If this occurs the consumer will become confused and a gap between theconsumers1.4 Burberrys Positioning expected and real strategy 1.4.1 Burberry Target ConsumerBurberry changed its narrow target market to become one of the global luxury brands. Two mainaspects shall be taken into account for this expansion: The brand is “focused on the younger millennial customer" inspired by the British brand (Bailey, 2011) Digital marketing has been the catalyser of the current success of the brand. 1.4.2 Description of CompetitorsThe two major competitors for Burberry are Louis Vuitton and Gucci. The reasons for specifyingthese competitors are: Louis Vuitton and Gucci are the two Luxury brands that recorded the most important "brand value" growth during the last 7 years, (Interbrand, 2011). Refer to Appendix 3.1. Louis Vuitton and Gucci are the ambassadors of their own culture; French for Louis Vuitton and Gucci for Italy. As Burberry embodies the British culture (Anonymous, 2010) "Both companies are among the most recognizable and wealthy brands in the world today" (Anonymous, 2010). 1.4.3 Points of ParityThe similarities of these three brands are:1) History and Heritage:The brands were established over 90 years ago. This increases the level of reliability of the brand,the perception of heritage and how-know. "Thomas Burberry founded Burberry in 1856" (Moore, 2004) Louis Vuitton " opened his first store in Paris in 1854" (Anonymous, 2004) "1921 Gucci opens his first stores in Florence" (Anonymous, 2011)2) Digital Media:The strategy of the companies is to develop as much as possible the digital media: Websites [Official site of the brands, Artofthetrench.com (Burberry), Digital flagships (Gucci)] Digital Marketing (Presence in blogs, visibility in search engines, Social media (Facebook, Twitter, Youtube) Mobiles (iPads integrations)Accordingly, the companies are in the top 10 Digital IQ companies (Galloway, 2010) Refer toAppendix, 3.2 "Digital IQ Ranking".Marketing Assignment Page 7
  • 8. 83) Counterfeiting Threat:The three companies have been suffering and fighting against the counterfeiting. It has become oneof the principal issues that the three companies have decided fight (Wilkinson & Grist, 2006) 1.4.4 Points-of-differenceOne of the key branding strategies is to ensure that the customer is able to differentiate Burberryfrom others within the same category. The comparative differences are:1) “British”Throughout its existence Burberry has created an image of a pure British luxury brand. This isreflected in not only their designs and product ranges, but also their marketing and brandingstrategies. The brand campaigns have also projected the British ethos through the selection ofbrand ambassadors "Burberry has selected a different young face each season to continue thebrands rejuvenation. “While the face might have changed the story has remained the same. Theseare all British girls" (Riston, 2011). This has helped Burberry in differentiating themselves from theirLatin peers. Moreover, it allows the brand to be accepted and recognised in the emerging markets.For example, in China they aspire to own the quality of the British brand.2) The "Trench Coat", a Unique ProductAs indicated by the CEO Angela Ahrendts in 2011 "We were born from the coat and as you lookacross all our luxury peers, none of them were". Burberry is the only company with unique andiconic product call the "Trench Coat" (Zeitgeistminds, 2011)3) The Luxury Brand is an IT PioneerBurberry is one of the pioneers in the implementation of Information Technology. As the BurberryCEO, indicated at the World Retail Congress 2010 (Burberry, 2010) "The more connected we are,the greater is the trust, and the greater is the trust, the stronger is the energy and the stronger is theenergy, the more we will continue to achieve". The utilisation of technology as a mean to optimiseworking methods and customer relation is one of the priorities of the brand.4) Blend of Function and FashionOne distinction Burberry has created from other luxury brands is that their products are not onlyfashionable but also functional. Burberrys products are born from gabardine - a practical andwaterproof fabric.5) Luxurious but AccessibleBurberry, because of its founder‟s origins has always positioned itself as a “Democratic luxurybrand”. Unlike its continental peers who have positioned themselves as a brand for a “few”.1.5 Burberrys Brand EquityIt could be argued that Burberry has been building its brand equity since 1856. However, 1998 wasthe company‟s nadir where the company‟s profits dwindled from £65m to £27m. Finch and May(1998) described it as “an outdated model with a fashion cachet of almost zero.” Furthermore, theperception of the consumer brand awareness was high and the image was low due to the brand“appealing only to the hunting, shooting and fishing set” (Anonymous, 2002) and “the chav”(Bothwell, 2005).Marketing Assignment Page 8
  • 9. 9In 1999 a new CEO was appointed and Burberry started repositioning and rebuilding their equity.To complete this transformation the company redeveloped their value proposition, divested thenegative awareness, associations and attitudes that were linked with the brand and strengthenedthe positives. 1.5.1 ProductThe steps Burberry took to reposition were drastic but necessary. The product mix was reviewed,75% of products were removed from sale. Any item below $50 dollars was removed from sale; thisincluded the baseball caps and scarves, the clothing of choice for “chavs.” (Pectu, 2011) Thecompany removed ranges like Thomas Burberry as it cost 25% less than their other products anddid not fit the new image being created for Brand. Despite the range being popular and bringing inrevenue from countries like Spain, it was discontinued for the overall benefit of the brand. The use ofthe trademark check was reviewed and although integral to the brand, it was also ubiquitous. Thisdid not fit into the luxury niche the company was fashioning for itself. Rather than divest of the checkcompletely it became more subtle and brand heritage items such as the name “Prorsum” (meaningforward) and the Knight logo originally used in 1901 were returned as the brand identifiers. BurberryLondon as a range has since been the driving force for the brand and is being used as a platform toposition the company in all demography‟s, gender and geography. These factors reversed thedecline of the equity and some of the negative connotations associated with the brand. (Anon,2008) 1.5.2 PlaceBurberry has three main channels of
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