Posted at 11.29.2018
Q-1 Analyze Burberry's current products and marketplaces and identify potential new marketplace opportunities and new market opportunities. Use the Ansoff development matrix as the theoretical framework for the answer. How might Burberry differentiate their offering from that of competition?
Burberry's Current Markets and Product Lines:
Burberry is currently offering four big regions i. e.
Burberry's product line is very extensive and is covering six major categories.
Coats and Jackets
Trousers and Shorts
Small leather goods
Hats and Gloves
Ballerinas & Flats
Baby (Up to two years)
Analysis of Burberry's latest shift of target:
Burberry's has transfer company culture and processes from a static inexpensive model to a dynamic retail model. Retail-led expansion refers not and then the operation of Burberry's own stores, but also to a fundamental shift in the Group's operating structure.
2009/10 saw improvement in a number of areas:
New store openings:
The Group added 21 mainline stores through the time, including Burberry's first flagship store in Asia at Singapore's Ion Orchard. New locations are added into existing marketplaces including Paris and New York to intensify Burberry's presence in these high potential urban centers.
Upgrading existing stores:
28 stores and concessions were renovated over the time, in line with initiatives to ensure better persistence of brand expression and customer experience.
Industry-leading criteria of customer service in Burberry's stores are their main emphasis. To improve service to top customers, the Group launched a pilot initiative aimed at better meeting the specific requirements of the clients.
Digital integration and e-commerce development:
Burberry is committed to creating a seamless link between your physical and digital existence of the Burberry brand, giving an answer to the course of retailing as an increasingly multichannel proposition. Burberry achieved 60% progress in the year in E-commerce, and has designed to invest further in it. The brand is also bringing this commitment to digital technology in-store. E-commerce enabled tablets were put into mainline stores during 2009/10.
Potential New Target market and New Product Opportunities:
Current Concentrate on Market
The brand retains a broad charm across dual gender audience of age range of 18-55+. The customer has an income of $55, 000+.
Burberry goals traditional individuals as well as the new fashion mindful customer.
The customer is an person that is interested in the British style of clean, smart traditional clothes.
New Product Opportunities
Although Burberry offers a variety of products, yet there are some products which its competitors i. e. Gucci, Prada and Armani are providing but Burberry is not. As Burberry is included one of the 100 best global brands, now it is important for it to keep an eye on competitor's move and products. Burberry must boost its product category to keep pace with your competition. Following are the products that Burberry can introduce
More variety in Jewelry
These services are to be launch as well as the existing products and market so product development strategy is preferred from the Ansoff progress matrix below.
New Market opportunities
Currently Burberry is providing four big locations i. e. UK, US, Asia and European countries but it isn't covering it entirely. There's a huge untapped market within Asian region. For instance, Burberry happens to be offering 14 countries of Asia but there are extensive Asian countries which have profiles somewhat comparable to these 14 countries and it might be easier for Burberry to serve them. Furthermore Figure 1 is confirming the actual fact that the luxury spending from high net value consumer has began to show up in the older markets of Western world and there is a rise in the luxury spending habits in the Parts of asia and is likely to grow further in future. Because of these facts, I would suggest Burberry to enter in the new markets with the existing products so that it can serve the untapped customers. So market development strategy is recommended from the Ansoff progress matrix. (Amount 2)
The Burberry signature item is the trench cover for both genders. However, there's a theme of a specific check structure (known as Burberry's check) which is now a hallmark for Burberry's most of the products and its products are typically accepted through these habits. (Display 1) In a way Burberry is differentiating itself through its personal trench coat and specific design therefore i would recommend Burberry to start its existing products in new market with the same theme to be able to differentiate their offering form that of competition.
Burberry has been utilizing a variety of ways to promote its products in unique ways e. g. clothing, store design, headquarters architecture images and social press are been a significant part of its promotional strategy. Following actions are taken during Burberry's IMC campaigns:
Equipped Roald Amundson when he became the first man to attain South Pole and kept a gabardine tent there to let Shackleton know that he previously came first (power and hague2008)
Provided equipment for Shackleton's ill-fated imperial Trans-Antarctic Expedition in 1914.
Supplied the Ministry of Protection with a version of gabardine cover for use of its officials in the trenches of Northern France in World Warfare 1.
Sponsored Peter Retailers in Pink Panther series.
Produced a forerunner of the famous personal trench jacket for British officials in the Boer War and later.
Sponsored Hollywood film stars Humphrey Bogart and Ingrid Bergman in Casablanca.
Sponsored Audrey Hepburn in Breakfast time at Tiffany's.
Celebrity endorsement through English 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 isles actress Emma Watson.
Social networking through Facebook and own communal network called "Art of the Trench" which presents pictures of its customers.
Show at the London Fasion Week in '09 2009.
Television commercials for different products.
Promotion of latest collection in 3 Dimensional graphics at Burberry's website.
Develop interest and curiosity of customers through online Burberry games where you can modify the clothes and accessories of an dummy to enable you to imagine your personal choice by yourself.
Billboards at selective places. (Show 2)
Public relations using various papers and newspapers.
Direct Marketing as their main emphasis is on retailing immediately through their stores.
Most of the marketing and promotional attempts of Burberry gone for success but once they caused much problem for the brand management. Because of some wrong promotional products, the brand was began to take up by young working class that resulted in tarnishing the brand image as it was heading against the central values and target market of the brand. The check became the symbols of undesirables and customers putting on this brand were banned in some cities by the pub landlords. This issue put a huge question mark on the near future success of Burberry but Burberry's brand management responded well, regained its United kingdom luxury lifestyle and gained strong rise popular specially from Asian countries.
Burberry is using multiple types of marketing and sales communications tools to be able to aid its IMC promotions. Yet this isn't totally an IMC plan as there are a lot more tools that should be involved for a complete IMC plan but remember that Burberry is a distinct segment brand which has to do marketing and campaign inside a certain limit and target market, the absence of some IMC tools are understandable.
The only thing that I would suggest to Burberry is to focus on Corporate Community Responsibility (CSR). Although it is being concentrating on Corporate Public Responsibility but it is merely regarding fair procedures and handles the company and partner organizations. But CSR also wants some cultural works so that folks might have a soft place in their head and hearts about Burberry. CSR is also reported to be a silent promoter of the business and this factor is missed in Burberry's focus. Despite of this SCR factor, Burberry's current IMC plan is very good as this course of action has got all the top elements that must be included in IMC of a distinct segment brand. The current IMC is principally composed of star endorsement, direct selling, reselling through franchise, sponsorships, advertising on the internet, e-retailing, public relations, billboards, games, Tv commercials, brand image and personality work, limited mass media selection and unique selling point. All of these elements are substance of any well defined and controlled IMC plan which is obviously seen from Burberry's current market success. Its financial email address details are improved significantly as they entered the new millennium. Its European and American market segments grew and the trading earnings and sales are increased handsomely. Burberry has also started removing non profitable stores and exposed new stores in NEVADA, Tokyo and Nevada. Also, a three-floor flagship store is opened in London. All of these progresses are reflecting the exponential growth of the business which is a proof of its successful marketing strategies that's why I would recommend to stick with the current IMC plan.
There are three major pricing issues that are experienced by the companies like Burberry who provide high-end products, when going to a new country (say Australia).
Nature of the product.
Buying electric power of the customers.
Strength of competition and costing for the reason that country.
"A luxury brand with a unique British isles sensibility, strong international acceptance and different beliefs that resonate across a multi-generational and dual-gender audience. "
For buying ability of the potential customers in Australia, Burberry won't have to begin from the base as Australia is not the first country in which Burberry is pondering to start business. The most effective way to solve this issue is to compare the per capita income of Australian residents with those countries in which Burberry has already been present. A few of them are showed below.
The above comparison unveils that Burberry is present in those countries whose per capita income is way below that of Australia's and if Burberry continues to be in those countries it shows they remain there because they are earning earnings. By keeping high prices if Burberry can earn earnings from a country like India where per capita income is 3248, then they will definitely be successful in Australia (with 39231 per capita income) with the same high quality and high costs techniques.
To set the purchase price, Burberry finally must see the power of competition in Australia. Because of this, Burberry has to check how many of its major rivals can be purchased in Australia and what are their philosophies. Most of its major rivals is there in Australia and are operating with the same high prices that are worldwide. Let's see the availability of some of the rivals:
Gucci is available in Australia.
"The new and joyous eyesight coupled with savvy interpretation of the Gucci legacy has delighted fashion followers all over the world. "
Chanel is available in Sydney and Melbourne.
"Classic personalized style, especially in ready-to-wear, feminine elegance, luxury materials; reinvention of the technology of the girl suit.
Tiffany and Co. is also offered by seven different locations in Australia.
Prada comes in Melbourne, Sydney, Southbank and Surfer's Paradise.
There are nine factors which a company must consider while setting up a price:
If your product is having popular in the market, you may charge high price if the demand is low or competition is strong, you will have to lower the prices unless your product is not distinctively identified.
Can the business give you a reasonable profit? It must be calculated by keeping in mind all costs including hidden costs.
Although it isn't possible to get 100% information about your competitors, yet you can get an acceptable amount of information about the costs and strategies of rivals and this becomes a base of setting up prices based on the market power and potential.
Level of Success:
How much money you want to make above the break-even point,
Depending upon the experience and customer standard bank of your company, you can establish the price. A multinational brand has intense experience regarding workload, efficiency and quantity of customers, so they can certainly establish high prices.
The dynamics of the merchandise you provide to customer and services associated with it will also affect pricing techniques. Usually the products that want after sales services or warrantees are placed at high price level as compared to the main one who requires only 1 time purchasing. In addition, your store service and how you access the customer also matters. For instance if you are having a company held store and special preparations are created for customer romance management, you will try to place your price high despite having no after sales services.
The charges techniques heavily hinge after the strategy of the business. A brandname aiming at mass marketing won't place prices comparative to the market brands that just concentrate on selective customers with high-quality products.
Set price by keeping the main competency of your product and skilled labor. In case the level of skill is so high, you can charge above average and revel in high earnings as area of interest brands do.
The pricing also depends after your target market. If your possible client is elite course, you will give attention to setting the price high as in case of luxury products. But if your customer is price mindful, you will aim to arranged your price below average, in case you have to bargain on quality.
The costing strategy depends upon market segmentation and the prospective market. This strategy takes into account the costs and values associated with the brands. A luxury item customer have more concern with the value of the brand and not its price so he's ready to pay more for such product when compared with a price sensitive customer who are able to compensate the quality on price.
Pricing is the most direct way of connecting the merchandise value to the customers. Nonetheless it is a hard task to set a price as it requires included decision making at different levels of the organization ranging from tactical planning (which calls for long term planning profit objectives into account), tactical planning (which take short-term market dynamics like demand shifts and competitive effects into consideration) and execution level planning (which is concerned about inventory and offer management).
The only strategy that Burberry will have to adopt would be a Skimming Prices Strategy as though a company's offering has enough differentiation which can justify a high price and have minimal needs for having market penetration, then it can establish your prices high. The other reason for high prices is its skimming rates in every the countries where Burberry is obtainable. So it would be a sort of need for Burberry to go with the same pricing technique so that I can have a same image worldwide. Furthermore, all the primary competitors of Burberry are operating in Australia and are functioning with the same skimming price strategy, so to be able to be competitive them internationally, Burberry would need to stick to the same prices strategy.
The syndication strategy establishes the availability of the product. It is an integral part of product position and shows how Burberry will make the product open to the customers. A lot more distribution channels used, the more strong the brand's subjection and greater availableness to consumer marketplaces.
Which channels of distribution should Burberry use to market its products in Australia?
Where should Burberry produce its products and exactly how should it distribute them in Australian market?
What types of associates, brokers, wholesalers, sellers, marketers, or end-use customers, and so forth should Burberry use?
What will be the characteristics and capacities of the available intermediaries for Burberry?
After distribution considerations, Burberry need to finalize the setting of international market entrance that how it'll access Australian market.
There are four options for Burberry to enter into the Australian market.
-Limited sales potential in focus on country
-High aim for country
-Liberal transfer policies
-Minimizes risk and Investment.
-Speed of entry
-Maximizes range uses existing facilities
-Limits access to local
-Company considered an outsider
-Legal coverage possible in focus on environment.
-Low sales probable in aim for country.
-Large ethnical distance
-Licensee lacks capacity to become competitor
-Minimizes risk and investment.
-Speed of entry
-Able to circumvent trade barriers
Lack of control over use of resources.
-Licensee may become competitor.
-License period is limited
-Large ethnical distance
-Assets cannot be fairly priced
-High sales potential
-Some politics risk
-Overcomes ownership constraints and ethnical distance
-Potential for learning
-Difficult to manage
-Dilution of control
-Greater risk than exporting a & Licensing
-Small social distance
-Assets can't be fairly priced
-High sales potential
-Low political risk
-Greater knowledge of
-Can better apply
-Can be looked at as an
-Higher risk than other modes
-Requires more resources and
-May be difficult to control the
After analyzing the pros and disadvantages of the various modes available for Burberry, I would suggest Burberry to choose the first two settings i. e. exporting and licensing as exporting gives the features of minimizes risk and Investment, quickness of admittance and maximizes level uses existing facilities while licensing will contain the benefits associated with legal protection and can cover the factor of ethnic distance. On the other hand, direct investments and joint projects will never be feasible for Burberry as they have got the cons of huge capital purchases, sharing income, dilution of control, dependence on more resources and difficulty in taking care of local resources.
Once Burberry will be prepared to take care of exporting and licensing, another challenge will be the physical circulation of the products that you can do through four possible options.
1) Transport: It can be by air, by rail, by street or by sea.
The product is topic, so high control must ensure the grade of the products. For this, the degrees of distribution channels will be low.
Distributors will be asked to make the products available to the franchises. They will take the Burberry goods from sea dock to the franchises.
For home delivery of products that are shopped through website, Burberry needs to have a courier service that will cover the complete country (Australia)
2) Warehousing: Burberry can hire one of the three possible warehouse options.
Besides warehouses, Burberry can also use Hub-and-Spoke distribution systems where small shipments are consolidated in regional warehouse and then sent to franchises.
3)Inventory Management: All type of inventories i. e. process stocks, lot size stocks and options, safety stocks and options, seasonal and smoothing stocks can be completed and maintained in the warehouses.
4) Order Processing: It can be managed according to the need and demand of the Burberry's products in various franchises in Australia.
Extended Ranges and Multiple Variables Goods are typically traveling a greater geographical distance, possibly demanding different modes of transportation. As a result, extending a resource chain beyond borders lengthens Burberry's source chain and leads to exposure to better variables. These factors can include boundary crossings, multiple modes of transport, different authorities systems, technology issues and security concerns.
The opportunities and difficulties for joining Australian market will require Burberry to establish associations with new types of reliable and specific country-savvy suppliers because Burberry can't possibly know all the ins and outs of doing business atlanta divorce attorneys single international market of these global supply string. Each country has its unique set of trade compliance restrictions and certainly each create its own group of logistical issues. Burberry must turn to outsource providers who can offer the expertise needed to keep the source chain moving. Using this method, the chance will be shared, the experience will be improved and Burberry will get an easy access to market.
Some of the broader aspects of global logistics that should be implemented while going global and therefore Australia:
Visibility in global logistics becomes highly complex and difficult to attain within an international supply string. This is specifically critical in order to allow Burberry to control its supply chain strategically, determining various details throughout the source chain where goods can be performed to reduce the chance of delays.
Missing and unreliable information brings risk and reduces overall flexibility in the international source chain. Often supply chain managers and the ultimate customer can't make sure what they'll be receiving until the shipment actually happens. Most companies are not sure ways to get their goods from origins to port in-country, how to ship from port to port above the ocean. Signing up for the ranks of global market players is not easy and takes a lot of forethought, planning and concern. Burberry must take these factors into considerations and design its distribution network regarding to it.
Amongst the largest problems in global resource chains include:
Long and uncertain business lead times which inhibit the capability to react to market needs and adequately orders on a timely basis.
Projected product cost savings are absorbed by unanticipated, higher costs from functioning longer and more technical global supply chains
To achieve higher service levels, better asset usage and lower logistics costs in the modern supply chain travel management solution is necessary that works with multiple modes
and many languages at a price that provides Burberry a same satisfaction level of customers and handsome amount of revenue across the world.
Figure 1: Regional progress in consumer expenses on luxury products 118
Sally McKechnie, Caroline Tynan Nottingham School Business School,
Nottingham, United Kingdom