GROUP 2ABurberry Case

The story so far…1856: Thomas Burberry in Basingstoke, UK

1914-18: Supplied trench coats to British Army1920s: Burberry check pattern introduced

1955: Great Universal Stores bought Burberry1970s-80s: Licensing agreements across

categories1990s: Company starts facing strategic issues

1997 : Rose Marie Bravo steps in as CEO

The Rose Marie Bravo Effect

Transform Burberry from outwear manufacturer to luxury brand

Recruitment of people with hands-on experience

Change of name, logo and packaging

Immediate Measures

Positioned the brand between cutting-edge fashion and classics

Aspirational as well as functional Represent accessible luxury

Repositioning The Brand

New product line - bandanas, miniskirts and spike heeled boots

Three Primary Collections

Revamping the Brand

► Outerwear, casualwear, tailored garments, swimwear and underwearWomen’s wear

► Tailored suits, raincoats, trousers and shirtsMen’s wear

► Soft accessories - scarves, shawls, ties► Hard accesso scarves, shawls, ties ries :leather

bags, umbrellas, timepieces, eyegear, women’s shoes

Accessories

PORTFOLIO EXPANSION

Low price segment:Thomas Burberry etc.

► Thomas Burberry available in Spain and Portugal

► Burberry Blue and Black in Japan

High price segment: Burberry Prorsum

► Hand tailored products from innovative fabrics

► Positioned as a luxury brand for fashion conscious people

► Promoted at major fashion weeks

Issues to Tackle

Product Categories Popularity of brand among Non-target

Consumers◦ Promotion Strategies

Role of the “Check” Sustainability of the Brand Positioning

◦ Existing vs New Strategy (proposed)

Product Categories

Mn pound % Mn pound % Mn pound % Mn pound %By product CategoryWomenswear 63.4 28.1 17.8 134.7 31.5 42.4 165.2 33.1 54.7 197.9 33.3 65.9 269.9Menswear 73.8 32.7 24.1 142.4 33.3 47.4 149.4 29.9 44.7 162.8 27.4 44.6 84.8Accessories 50.2 22.2 11.1 98.0 22.9 22.4 125.8 25.2 31.7 169.5 28.6 48.5 335.0Other 7.5 3.3 0.2 6.9 1.6 0.1 5.3 1.1 0.1 5.1 0.9 0.0 -81.5License 30.8 13.7 4.2 45.8 10.7 4.9 53.5 10.7 5.7 58.3 9.8 5.7 35.4

% change over 20012000 2001 2002 2003

Product Categories- The Numbers

Major focus on (in order of priority)◦ Accessories

Max. % increase in sales coupled with Max. margin

◦ Women’s Wear◦ Men’s Wear

Phasing out the licenses◦ Removes issue of counterfeiting◦ Focus on the core areas

Complete disbanding of the products in other category (fabrics and misc.)

Analysis of the Numbers

Womenswear Menswear Accessories Licensed Products ChildrenswearOuterwear Outerwear Handbags Fragnance OuterwearKnitwear Knitwear Hats Eyewear KnitwearCasualwear Tailored garments Shoes Time Pieces SportswearTailored garments Sportswear Belts & Wallets ChildrenswearSwimwear Undergarments Luggage Men's tailored clothingUnderwear Large Leather goods

UmbrellasSilk ScarvesShoesTiesWatchesSunglassesBeauty Products

Product Categories- The New Products(Product Mix)

Expand vigorously in Accessories segment◦ Only 4% share of the market (5th in Luxury

segment)◦ Introduction of the new products – eats into share

of the competitors thus automatically increasing share.

Diverge into children wear segment to increase the share in the apparel segment◦ Only 3% stake in the market (2nd in Luxury

segment)◦ Launch sports line (jackets etc.)

Recommendations

Place(Channels of distribution)

• Asian Markets (e.g. India, China etc.)• Retailers (choose them after careful scrutiny)

• Problem of counterfeiting• Maybe one or two flagship stores (initially in a country)• Start with Tier I and Tier II cities (posh markets)

UK and US market Focus on the flagship stores & directly operated stores Continue the current strategy of acquisitions of distributors

PromotionIssues

► Only 3% of sales (~ 98mn EUR) being spent on advertisements

► Asian and other Markets (with low penetration)

Proposed Strategy

► Adopt aggressive promotion strategy in the European and US market (rope in new models)

► For the Thomas Burberry use local advertising channels

► Rope in big stars(with big referent power) to attract markets

► For Tier II cities use local advertising channels

Popularity of brand among Non-target ConsumersPromotion Challenges

Popularity of Brand among Non-Target Customers

Issues

► Targeting non-target customers

Problem of Counterfeiting

Opportunity

► Burberry achieving aspirational status among youth

Challenge

► Prevent alienation of core customers while targeting new customers

Strengthen the Thomas Burberry brand◦ Caters to the aspirational youth vying for high end

fashion◦ Flanker brand to the Burberry brand

Promotion◦ Proper promotion

Local media (No national TV)◦ Proper distribution

Retailers (after proper scrutiny)

Recommendations

Role of the “Check”

“Check”

In the clothing line only 40% of the products did not use the check (and the sales increased)

In the apparels section 60% to 70% sales were check The check design is mainly targeted to the female

consumers Inhibition to use the check by the male consumers

Current Situation

Attribute Positioning of the Check

Male

Check

► Perception of feminity and hence a degree of dissonance

Non Check

► More in sync with the male macho image

► More adaptable to the men's-wear line

► Goes well with this category due to the perceived feminity

► Seemingly indifferent

Female

Re-launch the Burberry brand in the menswear segments with a less subtle expression of the check

Keep a high end fashion “check” line intact for the core customers (who associate Burberry with check)

Gradually phase out check (in the other lines) as it limits design options

In the Accessories segment e.g. perfume bottles, beauty products etc. stress on “check”

Strategy for milking the “check”

Sustainability of Brand Positioning

Sustainability of Brand Positioning(current scene)

• Comfortably nestled between • Lifestyle (represented by Ralph Lauren) &• High end Fashion products (represented by Gucci)

• In the Accessories and some Men’s apparels• High end brand in women’s wear and most of men’s apparels

Issues

► High end customers gravitating towards discount warehouses

Opportunity

► Middle Income people shopping at luxury retailers

Challenge

► Integrating the high end and the mid segment customers with a product line (different)

Issues and the Current/Proposed Strategy

Issues

► High End Brands launching a product in the lower category to compete with Burberry.

► Low Prices brands like launching a brand in the Burberry segment

Existing /Proposed Solution

► The existing Burberry brand is priced such that it takes care of the competition

► Strengthen the low end brand of Burberry (e.g. Burberry London)

• Will serve as a flanker brand.

• Will cater to the younger and comparatively less affluent.

PLC

Time

Sale

s

Introduction

Growth

Maturity

Decline

Pioneering

Competitive Comparative

Imposing “Time Premium” for fashion◦ Introduce new fashion in the Prorsum brand◦ After a time, introduce them in the Burberry brand

and after that in theThomas Burberry brand

Advantages◦ Extended life cycle of the product resulting in◦ Higher revenues

Recommendations

THANK YOU