Q-1 Analyze Burberry’s current products and markets and identify potential different marketplace opportunities and new industry opportunities. Use the Ansoff growth matrix as the theoretical framework for the answer. How might Burberry differentiate their selling from that of competitors?
Burberry happens to be serving four big areas i.e.
Burberry’s product line is very intensive and can be covering six major categories.
1. Women’s wear
3. Men & Women Accessories
Coats and Jackets
Trousers and Shorts
Small leather goods
Hats and Gloves
Ballerinas & Flats
Baby (Up to two years)
Analysis of Burberry’s hottest shift of focus:
There is a transformation of concentration from Burberry. This modification is in the traditions plus some processes over the time according to the need of the clients and to improve the Burberry’s product line. Furthermore, Burberry has changed its emphasis from whole sellers to vendors by keeping because the client demand and company’s profitability. Also there can be some changing in the operating framework too:
Openings of New shops:
21 mainline stores happen to be added by the group during this year, where Burberry’s first flagship retail outlet was included. Paris and NY were added as part of market development to reinforce the occurrence of Burberry in those metropolitan places.
Existing Store’s up gradation:
More than 25 retailers were renovated over the period so that to guarantee the brand consistency and buyer experience.
More Focus on Service:
Burberry’s main concentration was industry-leading criteria of customer service in Burberry’s shops. The Group launched a pilot initiative aimed at better meeting the specific requirements of the clients as a part of customer satisfaction scheme to improve service to top clients.
Focus on E-Commerce:
Burberry always concentrate on creating defect less bond between the physical and online shops as it was a subject of international and multichannel proposition. Burberry accomplished more than 50% growth in 2010 2010 in E-commerce which brings about further expenditure in this field. Burberry is also delivering itself to digital technology in-retail store. Furthermore, E-commerce allowed tablets were put into mainline stores recently.
Potential New Marketplace and New Product Opportunities
Current Target Market
The brand maintains a wide appeal across dual gender crowd of ages of 18-55+. The customer has an income of $55,000+ (Lauran Ralph)
Burberry targets traditional individuals as well as the new fashion conscious customer.
The customer can be an individual who is considering the British design of clean, smart traditional apparel.
New Product Opportunities
Although Burberry offers a number of products, yet there are several products which its competition i actually.e. Gucci, Prada and Armani are providing but Burberry isn’t. As Burberry is highlighted among the 100 greatest global brands, now it is important for it to monitor competitor’s move and items. Burberry must enhance its product category to keep pace with the competition. Following are the goods that Burberry can introduce
More variety in Jewelry
These new products should be launch in addition to the existing products and marketplace so product development approach is preferred from the Ansoff progress matrix below.
New Market opportunities
Currently Burberry is serving four big areas i.e. UK, US, Asia and Europe but it isn’t covering it entirely. There exists a huge untapped industry within Asian region. For example, Burberry is currently serving 14 countries of Asia but there are numerous Asian countries that have profiles somewhat similar to these 14 countries and it will be less difficult for Burberry to provide them. Furthermore Figure 1 is confirming the fact that the blissful luxury spending from substantial net worth buyer has started to fall in the mature marketplaces of West and there’s a rise in the blissful luxury spending patterns in the Parts of asia and is expected to grow further in future. (McKechnie) Due to these facts, I would recommend Burberry to enter in the brand new markets with the prevailing products so that it can serve the untapped buyers. So market development strategy is preferred from the Ansoff development matrix. (Figure 2)
Differentiation from Competitors
The Burberry signature item is the trench layer for both genders. (Lauran Ralph). However, there is a theme of a specific check pattern (referred to as Burberry’s check) which is becoming a trademark for Burberry’s almost all of the products and its products are typically recognized through these patterns. (Exhibit 1) In a sense Burberry is usually differentiating itself through its signature trench coat and specific pattern therefore i would suggest Burberry to release its existing items in new industry with the same theme as a way to differentiate their offering variety that of competitors.
Q-2 Evaluate critically the IMC campaign that is used by Burberry. Style an IMC plan that you imagine may be effective in today’s market. Discuss your strategy and the tools that you’ll use when producing the IMC advertising campaign?
IMC campaign used by Burberry
Burberry has been utilizing a variety of ways to promote its products in unique ways e.g. clothing, store design, headquarters architecture design and social press are been a substantial part of its promotional technique. Following actions are taken during Burberry’s IMC campaigns:
Equipped Roald Amundson when he started to be the first man to attain South Pole and left a gabardine tent generally there to let Shackleton know that he had arrived first (electric power and hague2008)
Provided tools for Shackleton’s ill-fated imperial Trans-Antarctic Expedition in 1914.
Supplied the Ministry of Security with a release of gabardine layer for use of its officers in the trenches of Northern France in Universe War 1.
Sponsored Peter Retailers in Pink Panther series.
Produced a forerunner of their well-known signature trench coating for British officers in the Boer War and later.
Sponsored Hollywood film stars Humphrey Bogart and Ingrid Bergman in Casablanca.
Sponsored Audrey Hepburn in Breakfast at Tiffany’s.
Celebrity endorsement through British supermodels like Lily Donalson and Agyness Deyn to sponsor their latest collections.
Kate Moss became the face of Burberry for sometime and in 2009 2009 Burberry endorsed British actress Emma Watson.
Social networking through Facebook and unique social network known as "Art of the Trench" which presents pictures of its buyers. (The Artwork of the Trench)
Show at the London Fasion Week in ’09 2009. (The Beat)
Television commercials for diverse products.
Promotion of latest collection in 3 Dimensional graphics at Burberry’s web-site.
Develop fascination and curiosity of buyers through online Burberry video games where you can modify the clothes and accessories of a dummy in order that you can imagine your individual choice all on your own.
Billboards at selective locations. (Exhibit 2)
Public relations using many newspapers and magazines.
Direct Advertising as their main concentration is on selling immediately through their stores.
Most of the marketing and promotional initiatives of Burberry went for success but once they caused much problem for the manufacturer management. Because of some wrong promotional products, the brand was started to adopt by adolescent working class that led to tarnishing the brand graphic as it was going against the core values and target market of the manufacturer. The check became the symbols of undesirables and clients wearing this manufacturer were banned in some metropolitan areas by the pub landlords. This issue put a large question mark on the near future success of Burberry but Burberry’s brand administration responded very well, regained its British luxury lifestyle and gained strong rise in demand specially from Parts of asia.
Burberry is using multiple types of marketing communications tools so as to support its IMC campaigns. Yet this is not entirely an IMC program as there are many more tools that should be involved for a comprehensive IMC plan but remember that Burberry is a niche brand which has to accomplish marketing and advertising within a specific limit and target market, the lack of some IMC equipment are understandable.
The only factor that I would suggest to Burberry is usually to focus on Corporate Sociable Responsibility (CSR). Though it is being focusing on Corporate Social Responsibility but it is only regarding fair guidelines and handles the supplier and spouse firms. But CSR also demands some social functions so that people might have a soft corner within their mind and hearts about Burberry. CSR can be reported to be a silent promoter of the company and this factor is missed in Burberry’s focus. Despite of this SCR element, Burberry’s current IMC method is very good as this plan has got all the important factors that must be included in IMC of a niche brand. The existing IMC is mainly made up of celebrity endorsement, direct selling, retailing through franchise, sponsorships, internet advertising, e-retailing, public relations, billboards, games, Television set commercials, brand image and personality attempts, limited media variety and unique selling point. These all elements are essence of a well defined and controlled IMC approach which is obviously seen from Burberry’s market success. Its financial results are improved dramatically because they entered the new millennium. Its European and American market segments grew and the trading profits and sales are raised handsomely. Burberry in addition has started eliminating non successful stores and opened brand-new stores in Las Vegas, Tokyo and Nevada. Also, a three-floor flagship retailer is opened up in London. All of these progresses will be reflecting the exponential development of the business which is a proof of its successful marketing approaches that’s why I would recommend to stick with the existing IMC plan.
Q-3 Discuss the pricing challenges that face a business such as Burberry when launching their item onto the Australian marketplace. What factors must be considered by an organization when setting a cost? What pricing technique might Burberry adopt in the Australian marketplace?
Pricing Difficulties while launching in Australia:
There are three significant pricing challenges that are confronted by the firms like Burberry who furnish high-end products, when likely to a new country (say Australia).
Nature of the product.
Buying ability of the potential consumers.
Strength of competition and prices for the reason that country.
Nature of the Product:
"A luxury brand with a distinctive British sensibility, strong intercontinental recognition and different values that resonate across a multi-generational and dual-gender audience."
Buying electric power of the potential consumers:
For buying vitality of the potential customers in Australia, Burberry won’t have to start out from the base as Australia isn’t the first country where Burberry is thinking to start business. The optimum approach to solve this issue is to evaluate the per capita salary of Australian people with those countries in which Burberry is already present. (List of countries by GDP) Many of them are showed below.
Per Capita Income
Australia’s income per capita
The above assessment reveals that Burberry exists in those countries whose per capita salary is considerably below that of Australia’s and if Burberry continues to be in those countries it displays they remain there because they are earning profits. By keeping high prices if Burberry can acquire profits from a nation like India where per capita salary is 3248, then they will definitely be successful in Australia (with 39231 per capita money) with the same top quality and high pricing tactics.
Strength of competition and prices in that country (Australia):
To set the price, Burberry finally has to see the strength of
competition in Australia. Because of this, Burberry must check just how many of its major competition can be purchased in Australia and what are their philosophies. Most of its major competitors is there in Australia and are operating with the same large prices that are worldwide. Let’s start to see the availability of a number of the competitors:
Gucci comes in Australia.
"The fresh and joyous vision combined with savvy interpretation of the Gucci legacy provides delighted fashion followers all over the world."
Chanel comes in Sydney and Melbourne.
"Classic tailored design, especially in ready-to-don, feminine elegance, luxury materials; reinvention of the invention of the woman suit.
Tiffany and Co. can be available at seven different spots in Australia.
Prada comes in Melbourne, Sydney, Southbank and Surfer’s Paradise.
Factors must be considered when setting a price:
There are nine factors which a company must consider while setting a cost: (Fabioloa Fleuranvil)
If your product is having popular in the market, you may charge high price but if the demand is usually low or competition is definitely strong, you will have to lower the prices unless your product is not uniquely identified.
Can the business offer you a reasonable profit? It must be calculated by remember all costs including hidden costs.
Although it is not possible to get 100% information about your competitors, yet you may get an acceptable amount of info on the prices and strategies of rivals and that becomes a foundation of setting prices according to the market strength and potential.
Level of Profitability:
How much cash you want to generate above the break-even point.
Depending upon the experience and customer bank of your enterprise, you can set the purchase price. A multinational brand has intensive encounter regarding workload, productivity and number of clients, so they can certainly set high prices.
The nature of the merchandise you present to customer and services associated with it will also affect pricing techniques. Generally the products that require after sales companies or warrantees are established at huge price level in comparison with the main one who requires only one time purchasing. Furthermore, your store provider and how you access the client also matters. For example when you are having a organization owned store and exceptional arrangements are made for customer relationship control, you will aim to set your price substantial despite having no after sales companies.
The pricing techniques seriously depend upon the approach of a business. A brand aiming at mass advertising will never set prices comparative to the specific niche market brands that just give attention to selective customers with supreme quality products.
Set cost by keeping the core competency of your merchandise and competent labor. If the skill level is indeed high, you may charge above average and enjoy high profits as market brands do.
The pricing likewise depends upon your marketplace. If your possible client is elite category, you will focus on setting the price high as in case there is luxury products. If a customer is price conscious, you will aim to set your price substandard, even if you need to compromise on quality.
Pricing technique might Burberry adopt in the Australian market:
The pricing technique depends upon market segmentation and the prospective market. This strategy takes into account the costs and values linked to the brands. An extravagance item customer have more concern with the worthiness of the brand rather than its price so he’s ready to pay more for such product as compared with a price sensitive consumer who can compensate the quality on value. (Jay Joseph)
Pricing is the most direct way of communicating the merchandise value to the customers. But it is a hard task to set a cost since it involves integrated decision producing at different levels of the organization ranging from strategic planning (which takes permanent planning profit objectives into consideration), tactical preparation (which take short-term marketplace dynamics like demand shifts and competitive results into consideration) and execution level preparation (which is concerned about inventory and supply management).
The only approach that Burberry will need to adopt would be a Skimming Pricing Strategy as though a company’s selling has enough differentiation that may justify a high price and also have minimal wishes for having marketplace penetration, then it could set your prices very high. The other reason for high rates is its skimming pricing in all the countries in which Burberry is available. So it would be a sort of need for Burberry to head out with the same prices technique so that I can have a same graphic worldwide. Furthermore, all the main competition of Burberry are working in Australia and are working with the same skimming cost strategy, so so as to compete globally, Burberry would have to stick to the same pricing strategy.
Q-4 One of the key elements of marketing strategy is distribution. What factors would Burberry need to consider distributing the merchandise in international markets such as for example Australia?
The distribution strategy determines the option of the product. It is a part of product placement and shows how Burberry will make the product open to the clients. The more distribution stations used, the more strong the brand’s publicity and higher availability to consumer marketplaces.
Points to consider for Distribution:
What kind of intermediaries (sellers, representatives, distributors and so forth) should Burberry use?
Which will be the ultimate stations for Burberry for distribution of products in Australia?
How to distribute the Burberry products and where you can install the Burberry creation plant?
What are the obtainable intermediaries for Burberry? What exactly are their characteristics and capabilities?After distribution factors, Burberry need to finalize the mode of foreign market access that how it will access Australian market.
Modes of Foreign Market Entry:
There are four choices for Burberry to get into the Australian marketplace.
Condition Favoring Mode
-Production costs are so high
-Sales has limited potential
-Risks are reduced.
-Better utilization of existing resources
-High logistics costs
-Your company can be an outsider for them
-Your access to local information is somewhat limited
-Low sales potential in target country.
-Less legal security
-Licensee has a limit on resources
-Risks are reduced.
-The problem of trade barriers is normally resolved.
– Profits on return is relatively high
-Limited control over means.
-There are possibilities that licensee might become your competitor due to experience is same field.
-Time period have somewhat some limitations.
-Barriers from federal government regarding imports.
-Difference between cultures of the countries of both partners
-Two partners can cause more expertise
-High bedroom for learning and take advantage of each other’s resources.
-Expertise is pooled.
-Less control over resources
-Above two factors can make it more risky
Direct Investments testmyprep.com
-More potential for sales
-Greater knowledge of
-Skills can be implemented according to your individual will
-Can see yourself as part of local industry
-High duties are implemented
-Government supports the local industry
-More resources are required
-Above factor might result in problems in controlling the resources
After analyzing the professionals and cons of the various modes available for Burberry, I would suggest Burberry to choose the first two modes i just.e. exporting and licensing as exporting gives the advantages of quick access to market, better make use of existing resources and reduced risks while licensing could have the great things about resolving the trade barrios and present high go back on investments.. However, immediate investments and joint ventures will never be feasible for Burberry as they have the disadvantages of huge capital investments, sharing income, dilution of control, dependence on more resources and difficulty in managing local solutions.
Once Burberry will end up being organized to take care of exporting and licensing, another challenge would be the physical distribution of the products that you can do through four possible options.
1) Transportation: It is usually by air flow, by rail, by road or by sea.
Exclusive Stations of Distribution:
The product is market, so high control is required to ensure the quality of the products. For this, the degrees of distribution stations will be low.
Distributors will be asked to make the products open to the franchises. They will take the Burberry items from sea interface to the franchises.
For house delivery of items that are shopped through webpage, Burberry will need a courier service that may cover the complete country (Australia)
2) Warehousing: Burberry can hire one of the three possible warehouse options.
Besides warehouses, Burberry may also use Hub-and-Spoke distribution systems in which little shipments will be consolidated in regional warehouse and shipped to franchises.
3)Inventory Management: All kind of inventories i.e. process stocks, lot size stocks and shares, safety shares, seasonal and smoothing stocks can be handled and managed in the warehouses.
4) Order Processing: It really is managed based on the have to have and demand of the Burberry’s products in a variety of franchises in Australia.
Extended Supply Chain:
Goods which come from extended distances and have multiple variables cover a larger geographical distance; probably require different modes of transportation. Because of this, supply chain expansion beyond the borders prolongs Burberry’s supply chain and demands contact with increased variables. These variables range from various modes of transportation, changed government systems, distinct technology issues and large security concerns.
The new options and upcoming problems for entering Australian marketplace will require Burberry to determine relationships with brand-new types of dependable suppliers because Burberry can’t possibly know all the positives and negatives to do business in every single foreign industry of their global supply chain. Each www.testmyprep.com region has its own unique group of trade regulations and absolutely each set has its challenges relating to logistics. Burberry must change to outsource suppliers who may offer the expertise needed to keep the supply chain moving. Using this method, the risk will become shared, the expertise will be enhanced and Burberry will get an easy usage of market.
Some of the broader areas of global logistics that should be implemented while going global and hence Australia is:
As supply chain is a intricate process possibly at domestic level, visibility in global logistics turns into more challenging to achieve within an international supply chain. This is particularly crucial in managing the items strategically, identifying various points through the entire supply chain where products could be held to reduce the chance of delays.
Inconsistency in Technology
Unreliable and incomplete facts adds risk and reduces versatility in the international source chain. Often supply chain managers and the clients are not sure what they’ll be receiving from a specific shipment until it finds the port. Most corporations are not sure how to ship from interface to port over the ocean. Being truly a global player is not easy and requires a lot of planning and account. Burberry must take these factors into considerations and style its distribution network regarding to it.
To achieve higher support levels, better asset utilization and lower logistics costs in the present day supply chain transportation supervision solution is necessary that supports multiple modes
and many languages at a price that can offer Burberry a same pleasure level of customers and handsome quantity of profits across the world.
Figure 1: Regional expansion in customer expenditure on luxury items 118
Sally McKechnie, Caroline Tynan Nottingham University Business Institution,
Nottingham, United Kingdom