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EXECUTIVE SUMMARY

Any company thrives or perishes based on the strength of their brand strategy. Depending on the
dynamics of the industry or the innovations in the company the strategies keep changing. While for
FMCG companies the changes could be frequent, heavy industries and government organizations
usually make strategies for longer durations.
Fashion industry has historically been one of the fastest to change, both in terms of their range and
strategies for their brands, justifying the term fashion being fickle. Burberry has been an always
been an oasis in this desert of fickleness. In their history of 150 years, there have been only two
major shifts in their brand positioning. One from an army trench coat maker to a complete mens
wear company and more recently in 1998 a shift from a me too brand in the luxury segment to a
pioneer in newer products and digital promotions.
To understand the brand it was necessary to understand the personality of the brand, which in
Burberrys case is quite apparent. The change in strategy in the last decade also gave a paradigm
shift in their positioning related to their competition and changed them from a preferred choice of the
football hooligans to the attire of the affluent. The change in the entire image and perception has
been brought about under the leadership of two different CEOs and a completely internal design
team. The current brand equity could be said to be the result to multi-pronged strategies of newer
product, 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 target
market, new market penetration and the product lines, there are certain points which stand out while
discussing their brand strategy. Most of these points could be termed as potential threats, but as
with any company with a lineage like Burberry it is extremely important to understand both the
obvious threats as well as the potential ones. Most of the weaknesses in this report are looked at
from 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 the
actors, 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 socio
economic development with the development of the company.
The actual challenge for Burberry is not just to keep their brand strategy distinct from the
competition but also to maintain the upward swing of their fortunes in both the revenue and the
brand equity.

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TABLE OF CONTENTS
1 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 Burberry's 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 Burberry's 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 Burberry's Brand Strategy ........................................................................................................... 14

2 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 ........................................................................................................................... 22
3 APPENDIX ................................................................................................................................ 23
3.1 Best Global Luxury Brands .................................................................................................. 23
3.2 Digital IQ Ranking ................................................................................................................ 23
3.3 Strategic plan ....................................................................................................................... 24
4 QUOTED DOCUMENTS ................................................................... Error! Bookmark not defined.
5 BIBLIOGRAPHY .............................................................................. Error! Bookmark not defined.

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1 FIRST QUESTION
1.1 Introduction
"When I look back I don't think theres anything I'd change"(Bolshow, 2011) stated the CEO of
Burberry. The quote portrays the comfort in the companys current position and faith in the on-going
Burberry strategy. The fact that she is considered among the top 50 women executives in the world
also confirms the global perception of the company. The study below shows the journey of Burberry
and the path taken in reaching the current status, with special focus on the last decade which has
seen 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 Burberry


Few companies have sustained for over 150 years without going through a paradigm shift multiple
times. Burberry seems to be defying the odds and continuing with their strategy. During this period
they have had their ups and downs like all companies, but the core brand ethos of being British and
accessible luxury has prevailed and is still relevant. The company started as supplier of trench coats
to the Army, then became a men outdoor clothing designer and finally they transformed into a
luxury brand for all market segments.

1.3 Personality of the Brand


Burberrys 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 the
company wishes to portray. This is crucial for brands as consumers not only bond but enter into
relationships 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 the
consumers minds and therefore their needs and wants (Keller, 2008)
Two models have been applied for the analysis of the personality, Kapferers indentity prism has
been utilised for the global brand identity and Aakers personality scale.

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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 they
can be classified into tangible and intangible aspects. All facets are interrelated and should be
considered 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)

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Adapted from Aakers personality scale 1997

Aaker (1997) suggests that the personality of a brand could be regarded as the human
characteristics associated with it. According to Aaker, the big five factors in brand personality are
sincerity, excitement, competence, sophistication, ruggedness. These traits can be further
decomposed 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 differentiator
of the brand. The personality shown by the original trench coat evokes halcyon days of the 1950s
where Burberry was worn by the film stars of that era.
Excitement/Unique/Spirited/Cool/young/trendy and Reliable/successful/confident
These personality traits are consistent with the message of the brand and the usage of their
ambassadors. They are well known English startlets.
It could be argued that young, cool and trendy are the traits that Burberry aspires to; the clarity of
this message is consistent with the strategic goals of the brand. Burberry repositioned to ensure that
the brand shifted from their older demographic to take in a wider segmentation of the market.
Sophisticated/Upper class/glamorous/good looking
Any of the big five factors may elicit more excitement dependent upon the brand; Burberry fulfils
many of these traits. As a luxury fashion brand many of the traits should correspond with this section
since this is the niche that Burberry has carved for itself.
Rugged/tough
The fact that the company was born from the advent of gabardine gives the brand an air of
toughness. Gabardine was sold as tear proof, waterproof and utilitarian product in the 1880s.

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It should be noted that the Aaker factors when applied to other cultures/nations may elicit different
responses. (Keller, 2008)

It should be noted that any divergence from the core brand aspects will result in a divergence of the
branding message. If this occurs the consumer will become confused and a gap between the
consumers

1.4 Burberry's Positioning expected and real strategy


1.4.1 Burberry Target Consumer
Burberry changed its narrow target market to become one of the global luxury brands. Two main
aspects 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 Competitors


The two major competitors for Burberry are Louis Vuitton and Gucci. The reasons for specifying
these 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 Parity


The 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 to
Appendix, 3.2 "Digital IQ Ranking".

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3) Counterfeiting Threat:

The three companies have been suffering and fighting against the counterfeiting. It has become one
of the principal issues that the three companies have decided fight (Wilkinson & Grist, 2006)

1.4.4 Points-of-difference
One of the key branding strategies is to ensure that the customer is able to differentiate Burberry
from 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 is
reflected in not only their designs and product ranges, but also their marketing and branding
strategies. The brand campaigns have also projected the British ethos through the selection of
brand ambassadors "Burberry has selected a different young face each season to continue the
brand's rejuvenation. While the face might have changed the story has remained the same. These
are all British girls" (Riston, 2011). This has helped Burberry in differentiating themselves from their
Latin 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 Product
As indicated by the CEO Angela Ahrendts in 2011 "We were born from the coat and as you look
across all our luxury peers, none of them were". Burberry is the only company with unique and
iconic product call the "Trench Coat" (Zeitgeistminds, 2011)
3) The Luxury Brand is an IT Pioneer
Burberry is one of the pioneers in the implementation of Information Technology. As the Burberry
CEO, 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 the
energy, the more we will continue to achieve". The utilisation of technology as a mean to optimise
working methods and customer relation is one of the priorities of the brand.
4) Blend of Function and Fashion
One distinction Burberry has created from other luxury brands is that their products are not only
fashionable but also functional. Burberrys products are born from gabardine - a practical and
waterproof fabric.
5) Luxurious but Accessible
Burberry, because of its founders origins has always positioned itself as a Democratic luxury
brand. Unlike its continental peers who have positioned themselves as a brand for a few.

1.5 Burberry's Brand Equity


It could be argued that Burberry has been building its brand equity since 1856. However, 1998 was
the companys nadir where the companys profits dwindled from 65m to 27m. Finch and May
(1998) described it as an outdated model with a fashion cachet of almost zero. Furthermore, the
perception 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).

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In 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 the
negative awareness, associations and attitudes that were linked with the brand and strengthened
the positives.

1.5.1 Product
The 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; this
included the baseball caps and scarves, the clothing of choice for chavs. (Pectu, 2011) The
company removed ranges like Thomas Burberry as it cost 25% less than their other products and
did not fit the new image being created for Brand. Despite the range being popular and bringing in
revenue from countries like Spain, it was discontinued for the overall benefit of the brand. The use of
the trademark check was reviewed and although integral to the brand, it was also ubiquitous. This
did not fit into the luxury niche the company was fashioning for itself. Rather than divest of the check
completely it became more subtle and brand heritage items such as the name Prorsum (meaning
forward) and the Knight logo originally used in 1901 were returned as the brand identifiers. Burberry
London as a range has since been the driving force for the brand and is being used as a platform to
position the company in all demographys, gender and geography. These factors reversed the
decline of the equity and some of the negative connotations associated with the brand. (Anon,
2008)

1.5.2 Place
Burberry has three main channels of sales: retail, wholesale and licensing. Burberrys place strategy
is evolving from a wholesale model to a dynamic retail model with a global reach. By increasing the
B2C over the B2B, Burberry controls and enlarges the messages aligned with the positioning
statements in the store.

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Burberry was being sold across London


but not in Harrods or Selfridges (Moore,
2004). The flagship store concept was
rolled out and Burberry moved back to its
original site in Haymarket thus again
leveraging the brands heritage. The
flagship store was crucial for the growth
of brand equity as it fulfils the
requirements of brand building. The store
not only makes a statement of intent by
being in a prestigious area but also exerts
the brand identity; from entering the doors
you are within a management device that
serves to establish an experience as a context for the wider activities of the brand (Doyle, 2008).
Flagship stores also give a clear, consistent and relevant statement of the brand, projecting its
personality on a global stage
The Global presence objective is directly related to the equity of the brand around the world. The
brand is building awareness in over 80 countries with clear priorities in terms of the potential of the
market. Burberry is focusing to develop the
brand in under-penetrated markets. (Burberry,
2010-2011)The message is consistent, since
they not only invest in potential markets, but
also close operations in countries that are not
building image consistent with the brand. They
opened four and 50 stores in US and China
respectively and conversely closed operations
in Spain since the brand became overexposed
(Milligan, 2010)
From the most exclusive and inspirational
design, to the most simple model of affordable
products, stores are defined by the potential of
that particular market in terms of sale and brand awareness. Wholesale are strategically used to
build awareness in emerging economies, and then sometimes are upgraded if the market responds.
This strategy also responds to an increasingly multi-channel customer, who has more interests than
before.

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1.5.1 Employees
Burberry considers its employees as internal
customers (Burberry, 2010) which fosters an
employee engagement with the brand. Burberry
uses various in house programmes to ensure
excellent customer service and develop the equity in
the process.
From the selection of the employees to the
assimilation of the human capital in the company
culture it is done with the sole purpose of giving the
best experience to the customer and building brand
in the eyes of the consumer. Christopher Bailey, the
creative director, ensures employees are aware of
products being launched and to involve them as the
main actors of each campaign and thus using the
internal customer in building equity for the brand.

1.5.2 Pricing Strategy


Their price strategy has two elements: they focus in value and segmentation of markets. A luxury
price strategy needs to be backed up with premium service and aftercare, since customers are
service-sensitive buyers. Burberry has segmented products by price in four categories, from the
most exclusive and expensive to the more affordable ones.
In segmentation, the highest hierarchy segment should be
aspirational to the lower ones, as a magnetic for customer
of lower ranked products. However it is complex to
establishing frontiers between segments. (Kiley, 2007)
Burberry has also distinguished from competitors by
sticking to their price strategy. During the recession, many
firms employed panic pricing; however Burberry held
prices on core offerings (Burton, 2011).

1.5.3 Promotion strategy


Burberry has a diverse and powerful marketing communication tool to generate a cohesive brand
identity.
With the advent of the internet, Burberry has changed the Advertising
emphasis from traditional methods to new media.
Burberry has used a celebrity endorsement like Emma Watson, to
communicate with younger consumers (Riston, 2011). Top management is
also involved in advertising campaigns to
reinforce the identity of the brand.
This strategy increases the associations that
consumers have with the brand.

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"Retail Theatre" is a significant source of promotion and sales for the brand. This concept was
initaiated by Burberry.

It allows the live streaming of runway shows directly to flagships stores globally.
Customers watch the show in real time, they can buy products from the
collection on Ipads an they are able to purchase the product several months
before the items are available in store, this gives a cachet of exclusivity.
It is modern way of selling the product. The experience is exiting and unique.
The customer feels like being part of the life of the brand.
Several events have been designed by the brand to transmit customer's
experience as it is one of priorities of the brand "The experience would be that
the customer will be total access to Burberry across any device, anywhere and
they would get exactly the same feeling of the brand" (Saleforce, 2011).
ArtofTrench.com
Burberry created its own version of Facebook for its iconic product:

In ArtofTrench.com customers are able to upload their pictures wearing the "Trench Coat".
According to the (Burberry, 2010-2011) "The Groups own social media site, artofthetrench.com,
continued to inspire people around the world and across generations to share their experiences of
the iconic trench coat, the site had received more than 11 million page views since its launch in
November 2009"(Zeitgeistminds, 2011)
ArtofTrench.com allows the social community to interact with the product and contribute to the brand
image. This is an excellent tool for brand promotion without expending significant capital.

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Acoustic Campaign

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This is a collaborative "Site featuring music and videos from emerging British artists" (Ahrendts,
2011). Groups promote their songs and the image of the brand is associated with art and inspiration.

Burberry acoustic campaign strategy is to sell the brand in a democratic manner and target the
"younger millennial customer"(Bailey, 2011)
Feelings
One of the values for Burberry is to communicate
feelings to customers. It allows to creates an intimate
connection between the brand and the customer's
identity.
When the brand creates emotions, the customer buys
the product to prove his engagement with the brand. For
example, Burberry created a specific song untitled "The
Feeling"
for the promotion of its last fragrance.
(Burberry, 2010-2011)
Ensuring a quality customer relationship management
(CRM) service is critical for a brand positioned within the luxury niche. The fact that the Trench coat
is virtually indestructible may seem a poor concept of product life cycle application, furthermore,
Burberry are still selling buttons and accessories to those who have bought vintage coats.
However negative this may seem from a financial perspective, supporting these customers has
enhanced the brand awareness and built up brand equity. This forward thinking approach has
generated new customers, who may be small scale but are now firm advocates of the brand who
aspire to purchase full cost items and more importantly will espouse the virtues of this superior
customer service and thus the brand as a whole (Lilibeau, 2010)
Burberry has also worked effectively on its After-Sales Service. It has implemented global repair
centres and an International Return Policy ensuring a personalised experience at every interaction
with the brand.
Burberry re-segmented their target market focusing "on the younger millennial customer" (Bailey,
2011) Jobber states the focus was to emphasize the new credentials of the brand without casting of
its roots. Bravo has said that the famous picture of supermodel Kate Moss in a Burberry check bra
cut the average age of Burberry's customer by some 30 years. (Carayol, 2005). By executing this
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strategy the salience and imagery of the brand in the context of consumer perception was
reinforced and brand equity further strengthened.

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The consistency and clarity of the brand is carried out


throughout all of the stores and across all products. The
DNA of the brand heritage, Britishness is the key
differentiator (Bailey, 2011) and the Trench coat are
entwined through all aspects of Burberry, by trading on
these points of difference Burberry have carved a large
market share, but also have ensured that their brand
commands a price premium and great profitability
(Burberry, 2010-2011).

1.5.4 Burberry's Brand Strategy

Following the analysis of Burberrys personality positioning and the methodology with which the
company has built the equity, the brand strategy of Burberry can be summarised with the utilisation
of Kellers customer based brand equity pyramid.
Burberry built up brand salience by ensuring consumers associate the brand with their specific
needs and the product class (Keller, 2009). By utilising conventional media and pioneering social
media communications consumers have a depth and breadth of association with Burberry as being
British, trendy, accessible high end fashion.
To ensure that the consumers value proposition is met, Burberry have to ensure that not only their
products meet customers' demands but more importantly the value added services meet or exceed
consumer expectations. Brand performance is a key differentiator and if gaps either in service or
product quality appears the value proposition is tarnished and the consumer will be at the least
disappointed.

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Brand imagery is an intangible property of the brand but a crucial aspect. Ten years ago Burberry
had high brand awareness but for all the wrong reasons. Over Burberrys latest evolution to present
day they have worked hard to divest their negative associations of chavs and the upper class and
put all efforts into strengthening the positives and repositioning their customer base.
Keller states that the four most important brand judgements are comprised of quality, credibility,
consideration and superiority. Burberry is fulfilling the criteria of credibility as they are market
leaders in social media and pioneering the digital revolution. Furthermore, in respect of superiority
Burberry has carved many unique associations into consumers awareness with the brand, for
example the trench coat and check.

Brand Feelings are the emotional response which is engendered when consumers think of the
brand. Again this is a crucial aspect as if the feelings are negative, the brand equity is eroded.
At the peak of the pyramid is the pinnacle of brand equity, the resonance. The previous items are all
required to reach this. If any are missing the pyramid fails. The resonance is the amount that
consumers are in tune with the brand, the way they connect to it; if they are connected then they will
advocate the virtues of the brand. The benefit for this is that the customers will return and generate
income for the brand on a repeat basis.

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2 SECOND QUESTION
2.1 Introduction
Previously it was concluded that Burberry brand is positioned well with excellent performance and a
strong marketing strategy. However, they are in a dynamic market with strong competitors, evolving
customers which increases the complexity of any branding decisions made for the future.
Furthermore, price elasticity in the luxury brand industry is very low (Stephen S. Tax, 2006).
Burberrys consumers are seeking not only for the highest quality product, but also for the highest,
differentiated or even customized service. (Berry, 2006) Accordingly, Burberry should concentrate
on service marketing.
This section will analyse and clarify the potential weaknesses of Burberrys current brand strategy
and propose solutions from the service as a drama model (Grove and Fisk 1983). In this model,
there are three important components: a stage, actors and an audience. In terms of Burberry service
marketing strategy, these components mean a place, the company and their consumers.
Furthermore, by extending and developing of each component of the model, Burberry can better
position themselves to ensure future profitability and sustainable competitive advantage (Lesh,
1991).

Lastly, by utilizing the principles of creating shared value (Porter, 2011), another method of
implementing their long-term business sustainability and profitability can be utilised.
According to Grove and Fisk services are by their nature intangible, heterogeneous, inseparable and
perishable, they create unique strategic challenges.

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2.2 Enlarging Audience-Cost


2.2.1 Loyalty Plans and Alliances
The audience refers to customers and they are evolving rapidly; they want to pay more for luxury
goods because of the association to life quality. However, consumers have also modified their
approach to shopping; therefore brands need to evolve with the same dynamic. Conversely,
competitors already understand this changing behaviour in the consumer and therefore focus for
differentiation from its competition is to create loyal customers. If people are treated well, they
should not want to go anywhere else. (West, Ford and Ibrahim, 2010)
Recommendations
The emotional connection between brand and consumers is
important; there are many players, many of them focusing in the
same market. However, each Brand satisfies different needs and
has generated their own unique differentiators. An possible
solution improving service profitability involves strategic partnering
between different service providers. Alliances can effectively be
used to strengthen brands and cut costs. (West, Ford and
Ibrahim, 2010)
In order to use these alliances to strengthen relationships with
customers, the suggestion is to promote a loyalty plan that stands
apart from the rest of loyalty plans in the market. The way of doing
this is focusing in the most relevant emotions that their target consumers seek. Through buying
products customers can gain points that they can exchange for attractive items.

Experience of Shopping (1 day $10 K) - One day of shopping in Burberrys stores with one
designer.

Breakfast at Tiffanys Experience (Breakfast-SPA-Hotel) - Womens experience, where they


can have a luxury day as in the movie.

James Bond Experience (Dinner-Car-Hotel) - Mens experience, for an intrepid, memorable


and elegant day.

These are some examples of brands that have similar brand images to Burberry.

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The partners should have the same Brand equity and image as Burberry as anything less will
diminish Burberrys brand. Furthermore, alliances can effectively be used to strengthen brands and
cut costs. (West, Ford and Ibrahim, 2010)

2.3 Enlarging Actors-Employees


2.3.1 Threat to Brand from Executive Dependency
A Wall Street Journal survey completed in 30 companies in the S&P 500-stock index which looked
at the performance of the companies with a change in CEOs between Jan 2005 and Jun 2007
states that both the companies shares and their brand image has declined invariably in many
instances (Journal, 2008). A study conducted
among financial advisors and high-net-worth
investors by business and financial
communications consultancy FD found that a
company can lose in excess of 30 percent of
its share value as a result of a highly
publicized crisis. ( FD Consultancy, 2008)
Burberry had a decline in its fortunes and its
image during the phase preceding Rose
Marie Bravo becoming the CEO. With the two
changes in the leadership, first with Bravo
and now Angela Ahrendts, the brand has
seen a marked rise in the image. Burberrys
image is not only dependent on its CEO but also on its Chief design officer (CDO), Christopher
Bailey. The current positioning through its designs and the products are due to Christophers
influence and the company has for the last decade kept its designer strategies completely within
house

2.3.1.1 Recommendations
The 34th Annual Board of Directors study by Korn/Ferry International states that 84% of boards of
directors believe in the importance of a succession plan for the CEO but less than half of them
actually had such a plan in process (Institute, 2008).
For Burberry the natural process would be to have a succession plan not only for its current CEO,
but also for its (CDO). Some of the recommendations for the same are:

Follow the example of TATA group of companies, which has been training three of its internal
leaders for the last 10 years with the possibility of replacing their iconic leader. Burberry
needs to identify a set of internal people ready to take up the top job since an internal person
can carry forward the current successful strategies for the brand. In the year 2008, nearly
76% of the new CEOs were internally hired. (Booz and Co. 2009) Also identify the emerging
leaders in the industry and monitor them as a large 24% of the CEOs hired also seem to be
from outside. But the biggest challenge seems to be the involuntary exits of senior
management when an outside CEOs takes over, being extremely high at an average of 26%.
(Kevin et al 2007)

With the spread of the brand it would also become increasingly important to have
international designers in its talent pool. While they need to continue with the core ethos of
being British they will have to expand their creativity to suit other cultures. The best way to
tackle the over dependence on a single person would be to create a multi polar team with
international sensitivities managed by an individual. This will ensure that one person leaving
will not directly impact the brand internationally.

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2.4 Enlarging Stage-Market

19

2.4.1 Digital Innovation Challenges


Burberry believes in the new mantra innovate or die its CEO makes this evident by saying
Burberry is a design-driven organization; Innovation is in its DNA, its inevitable. (Thinkvoices,
2011) In 2009 Burberry launched its own social networking site Artofthetrench.com and Bespoke.
The bolstering in its digital approach had a marked effect
on its sales (24% global increase) which strengthens the
fact that Burberry needs to showcase itself more in the
digital space (Burberry, 2010-2011).
There are strong chances of a brand becoming
overexposed as a result of trading on the Internet and
subsequently becoming devalued. It happens if the luxury
brand fails to design and implement its Web proposition
correctly and falls short of consumer expectations with
regard to content and presentation. (Cocoran, 2007) This
would result in a huge loss of brand image.

2.4.1.1 Recommendations
Keeping these viewpoints in mind, Burberry should focus on its wide emergence in the digital space
and constant involvement of consumers with the brand. The lack of online buying experience should
not delineate the customers from the brand. The digital platform should be such that the customers
can feel the comfort and luxury of the online purchase. Online change rooms, review from experts,
easy purchase and smooth cash transactions should be its key elements.

The use of Avatars should be adopted as then customers can create their own self digital
image and replace the models with themselves. This gives a concept of personal touch to
the customer by the brand.

Once the selection is complete, the user interacts with the leading designers and shares it for
reviews.

Burberry can extend its social networking site Artofthetrench.com so that the user can share
their selections to their friends for more personal reviews.

All these suggestions would develop the emotional connect between the consumer and the brand
since the purchasing experience gives a feel of grandeur and opulence. After all, he gets his silklined stylish trench-coat at his doorstep by some clicks.

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2.4.2 Demographic Risk

20

One of the primary threats to Burberry could be its own positioning as functional luxury which leads
in alienating the age band of 18 to 25, and gives a lower value to the functional positioning than to
the basic positioning of fashionable by Gucci and Louis Vuitton. This is more relevant as Burberry
carries a baggage of being known as a brand for the middle aged. The changing power of purchase
is clearly shown in this study by McKinsey in China (Atsmon, 2009) which shows a stark difference
in the demography of emerging
markets as compared to the mature
ones. 80% of the wealthy population in
China is in the age band between 1844 years which is nearly three times
and more than 4 times of US and
Japan, respectively.
While the shift and focus on the digital
media and the inclusion of youth icons
like Emma Watson in the print
campaigns is a positive step towards
changing this image it might not be
enough as the entire industry has
been following this.

2.4.2.1 Recommendations
Some initiatives to attract and hold the attention of the Y generation are:

Create a range especially for the age group between 16 and 24 years. As this is the fastest
growing new customers in luxury segment especially in the emerging markets, it will be crucial to
target them separately. Currently the clothing range is segmented only in kids and adults. In the
apparel range there too needs to be a focus on this generation with trendier and modern
designs. Burberry is quite robust in its digital marketing but it needs to have a separate
interactive and trendy platform for the Y generation age group. This could be done using their
Facebook account, but will make a bigger impact if the same is done through their home site.
Integrating this platform in the mobile devices would give more access to this generation.

Create associations with the student community


through sponsorship of events both in the
universities and outside. While it could be debated
that this is not the target segment, the idea here
being the change in brand positioning with the
objective of increasing the Top of the Mind and
creating an aspiration value within the younger
generation.

Its been noticed increasingly that the presentation


of the product makes a huge impact on the
customers, particularly in the aforementioned age
segment. A clear positioning and display of the new
range for youth between 18 and 24 would be
essential to position the brand. The power of
presentation study done by McKinsey (Atsmon Y,
2009) in China gives a clear idea about the impact
of presentation in the top of the mind of the target
segment, as shown in the chart. Burberry was
ranked lowest in both visual presentation as well as the overall merchandise appeal.

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21

2.5 Corporate Shared Value


As a representative brand of the UK, Burberry group has contributed to society in various ways. In
order to build ethical supply chain, they set up a Groups Ethical Trading Policy which focused on
animal welfare guidelines and the exotic skins supply chain. Consequently, the release of a common
Animal Welfare Policy by the Group was communicated to Burberry suppliers, detailing its high
expectations in respect of welfare standards. Furthermore, the group has established Burberry
Foundation in 2008 (UK registered charity number 1123102) to create strategic philanthropy
platform (Burberry, 2010-2011).
Through CSR, Burberry can make itself more reliable and trustworthy. However, CSR is only a
short-term process. As a long-term strategy, Burberry needs to create a shared value to ensure its
sustainability and stability.

Recommendations

Health care coverage

Burberry employs 6,681 people (Burberry, 2010-2011). It could minimize the health care cost by
helping employees stop smoking and supplying food for lunch. Johnson & Johnson Company has
saved $250 million on health care costs by helping employees stop smoking. Furthermore, Johnson
and Johnson also benefited from higher employee productivity (Porter, 2011).This strategy can help
to create social value, in terms of creating hygienic environment, and also to create business value,
in terms of cost savings.

Establish schools in Emerging country

In September 2011, Burberry acquired 50 retail stores in China (Burberry, 2010-2011). In order to
succeed, it needs to train the local people and hire them. Keeping in mind the lack of skilled
manpower and the inferior quality of education system in China, Burberry should initiate and seek to
establish schools for the under-privileged children in local society. This contributes in creating a
social value and strengthens the relationship with local people. Furthermore, the company can also
provide higher education in design, marketing and retail business for outstanding students. Thus
Burberry can secure a high quality human resource recruiting local talents who can help the
company to understand their market culture and customers needs. This strategy helps in creating
social value and creates long term business value.

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22

2.6 Conclusion
As previously stated, these are potential weaknesses and not something threatening Burberrys
existence. Considering the changes and dynamics in the fashion industry it is important that
Burberry keeps reinventing itself
The focus on their demography and their interaction through innovative digital media will clearly help
them in the ever changing customer base. By having a clear succession plan for their executives will
ensure that they do not have a crisis because of executive turnover but also keep the company
culture moving forward. The importance of shared value becomes all the more important to Burberry
as they shift to newer markets and the opportunity to contribute back to the society greatly
increases. This will mean that as we speak about the companys legacy in the field of fashion for the
last 150 years, future generations remember Burberry for their values as well as their products.

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23

3 APPENDIX
3.1 Best Global Luxury Brands

3.2 Digital IQ Ranking

Marketing Assignment

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24

3.3 Strategic plan

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28

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29

5 BIBLIOGRAPHY
Ahrendts, A. (2011) 'Chief executive officers letter', in PLC, B.G. (ed.) Annual Report.
Anon (2008) The luxury brand with a chequered past, Burberry's shaken off its chav image to
become
the
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Anonymous (2004) 'Louis Vuitton Kicks off Its 150th Anniversary by Opening Its Largest Store, on
New York's Fifth Avenue', Business Wire, Feb , p. 1.
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Available:

Anonymous (2011) 'China's VIPStore Expands Luxury Brand Portfolio', PR Newswire, Aug, p. 1.
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Bolshow, L. (2011) 'Women at the top', Financial Times, Nov, p. 19.
Booz and Co. (2009) 'CEO Succession 2008- stability in the storm', Reputation Rx, Apr, p. 1.
Bothwell, C. (2005) Burberry versus The Chavs, 28
http://news.bbc.co.uk/1/hi/business/4381140.stm [15 Nov 2011].

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Burberry (2010) SHOPPING AT BURBERRY 4 BAGS, CLOTHES (Spycam), 9 Jun, [Online],


Available: http://youtu.be/qzDYamQlPsc [18 Nov 2011].
Burberry,
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148,

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2011].
Castelli, C.a.B.A. (2010) 'Alignment of retail channels in the fashion supply chain An empirical study
of Italian fashion retailers', International Journal of Retail & Distribution Management, vol. 38, pp. 2444.
Cocoran, I. (2007) 'The Luxury Media', in Allworth (ed.) The Art of Digital Branding, 1st edition,
London: Allworth.
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4
Oct,
[Online],
Available:
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r_momentum_but_challenges_remain?productid=E3E24076-3519-4DCF-963E-60610F931A98 [19
Nov 2011].
Didier, L.C. (2010) 'impact of brand personality on three major relational cosequenses (trust,
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Doyle, S.M.C.D.A.H.M. (2008) 'Brand context and control: the role of the flagship store in B&B Italia',
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Ennis, S. (2010) Marketing Management, Strathclyde business school.
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S.
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Nov 2011].
Fournier, J.A.J. (2011) 'The uninvited brand', Business Horizons , no. 54, pp. 193-207.
Galloway,
S.
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Digital
IQ
Index:
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Luxury,

[Online],

Available:

Grove, S.J..F.R.P. (1983) 'The Dramaturgy of Services Exchange: An Analytical Framework for
Services Marketing', Emerging Perspectives on Services Marketing, vol. 1, no. 1983, Feb, pp. 45-49.
Institute, K. (2008) 'Korn/Ferry International's 34th Annual Board of Directors Study', The Korn
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Marketing Assignment

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31

Interbrand (2011) Best Global Brands 2011.


journal, T.w.S. (2008) '99 Tips to Safekeeping Reputation', The wall Street journal, Jun, p. 1.
Journal, T.W.S. (2008) 'CEO TURNOVER', The Wall Street Journal.
Keller, K.L. (2008) Strategic Brand Management, 3rd edition, New Jersey: Pearson Prentice Hall.

Keller, K.L. (2009) 'Building strong brands in a modern marketing communications environment',
Marketing Communications, pp. 15:2-3, 139-15.
Kevin, P., J, C., Edward, J. and Sr, C. (2007) 'Surviving your new CEO', Harvard Business Review,
May.
Kiley, D. (2007) How five names in this year's rankings staged their turnarounds, 6 Aug, [Online],
Available: http://www.businessweek.com/magazine/content/07_32/b4045401.htm [15 Nov 2011].
Kotler, P.K.K. (2009) Marketing Management, 13th edition, New Jersey.
L. Aaker, J. (1997) 'Dimensions of Brand Peronality', J.M.R. Journal of Marketing Research, vol.
XXXIV, Aug.
Lesh, A.C.J.a.A.D. (1991) 'Financial service', AMA of Handbook of Marketing for the Service
Industries, vol. 1, no. 1991, Dec, pp. 469-477.
Lilibeau
(2010)
Burberry
customer
service,
31
Mar,
[Online],
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