Burberry

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 even made the brand popular with British Royalty. As a result, the brand increasingly became a symbol of both luxury and durability.

1930, marketing campaign declared, “For Safety on land, in the air or afloat, there is nothing to equal the Burberry coat.

1955, Great Universal Stores Plc. (GUS)-a British holding company that ran a home shopping network and other businesses-bought Burberry.

1970, The Japanese had discovered the brand’s iconic check, and GUS management had agreed to license the brand in Japan through Mitsui and Sanyo. Over the next decade, Burberry continued to grow worldwide, primarily through additional licensing and distribution agreements.

1990, Burberry’s product line was being sold in retail environments inconsistent with its quality proposition. The company had become overly reliant on a narrow base of core products (e.g., outerwear and umbrellas), and its customer base had become heavily concentrated among older male and Asian tourists.

PROBLEMS

By the mid-90s, the company was facing a number of strategic and structural issues. Although the business was profitable, earning quality was low. The brand was stodgy looking and conservative, and skewed to an older customer base. The company not only lacked a cohesive vision, it lacked the discipline necessary for a luxury goods retailer. Another task is to manage the popularity of the brand in a way that lays the foundation for long term growth.

QUESTIONS and ANSWERS

1. Compare Burberry’s market position relative to that of its competitors, including Polo, Coach, Armani, and Gucci. Is Burberry’s competitive position sustainable over the long-term? Why or Why not?

Since the early 1920s, well after the Burberry check was visible to the public, Burberry has remained as a staple of both luxury and durability. This theme has remained consistent throughout the life of the Burberry brand and is a main driver in propelling Burberry into its current market position.

According to Bravo, “We focused on a particular price point and a particular bracket. We knew we did not want to be cutting-edge fashion; that was too tough, too rarified, too fickle, and too antithetical to Burberry. We also knew that we did not want to be just classic because there were enough of those brands.” With the mindset, as well as extensive market surveying, Bravo knew that this was how to fill those missing gaps if the market. This niche resided “between labels such as Polo, Ralph Lauren, and Giorgio Armani in apparel, and between Coach and Gucci in accessories.”

THE BURBERRY NICHE

ACCESSORIES APPAREL

This competitive position for Burberry is sustainable over the long term due to several reasons. Not only due its particular price points, but Burberry’s intensive consumer surveying is also important. Burberry has consistently focused on “remaining true to (their) core brand values” and heritage to the Burberry brand. The main question posed in the Marketing Myopia is “What business are you really in?”. It is said that the main way to ensure growth for your company is to concentrate on meeting customers’ needs rather than selling products. Burberry must focus on meeting its customers need to sustain its long term success and growth. 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