Q-1 Analyze Burberry's current products and markets and identify potential new target market opportunities and new market opportunities. Use the Ansoff growth matrix as the theoretical framework for the solution. How might Burberry differentiate their offering from that of challengers?
Burberry is currently offering four big regions i. e.
United Kingdom
Europe
United States
Asia
Burberry's products is very extensive and is also covering six major categories.
1. Women's wear
Men's Wear
Iconic Trenches
Coats
Jackets
Shirts
Tops
Knitwear
Skirts
Trousers
Denim
Swimwear
Iconic Trenches
Coats and Jackets
Tailoring
Shirts
Tops
Knitwear
Trousers and Shorts
Denim
Ties
Swimwear
Body
Iconic Checks
Bags
Small leather goods
Jewellery
Scarves
Belts
Watches
Sunglasses
Hats and Gloves
Umbrellas
Fragrances
Gifts
4. Shoes
5. Beauty
Children's wear
Boots
Platforms
Courts
Ballerinas & Flats
Trainers
Weather Boots
Men's Shoes
Skin
Glow
Eyes
Lips
Girls
Boys
Baby (Around two years)
Analysis of Burberry's latest change of focus:
There is an alteration of concentrate from Burberry. This change is in the culture plus some processes over the time based on the need of the clients and to enhance the Burberry's products. Furthermore, Burberry has improved its concentrate from whole vendors to retailers by keeping because the client demand and company's success. Also there is certainly some changing in the operating composition too:
Openings of New stores:
21 mainline stores are added by the group in this year, where Burberry's first flagship store was included. Paris and New York were added as part of market development to bolster the existence of Burberry in those metropolitan places.
Existing Store's up gradation:
More than 25 stores were renovated over the period so that to ensure the brand consistency and customer experience.
More Focus on Service:
Burberry's main concentrate was industry-leading specifications of customer service in Burberry's stores. The Group launched a pilot initiative targeted at better meeting the precise requirements of these clients as a part of customer satisfaction plan to improve service to top customers.
Focus on E-Commerce:
Burberry always concentrate on creating defect less connection between your physical and online stores as it was a matter of international and multichannel proposition. Burberry achieved more than 50% growth this year 2010 in E-commerce which brings about further investment in this field. Burberry is also delivering itself to digital technology in-store. Furthermore, E-commerce allowed tablets were added to mainline stores lately.
Potential New Target market and New Product Opportunities
Current Concentrate on Market
The brand sustains a broad appeal across dual gender audience of age ranges of 18-55+. The customer comes with an income of $55, 000+ (Lauran Ralph)
Customer Profile
Burberry goals traditional individuals as well as the new fashion conscious customer.
The customer can be an individual who is enthusiastic about the British design of clean, smart traditional attire.
New Product Opportunities
Although Burberry offers a variety of products, yet there are some products which its opponents i. e. Gucci, Prada and Armani are providing but Burberry is not. As Burberry is highlighted among the list of 100 best global brands, now it's important for it to monitor competitor's move and products. Burberry must improve its product category in order to keep pace with the competition. Following will be the products that Burberry can introduce
Desk Accessories
Belt Bags
More variety in Jewelry
These new products are to be launch in addition to the existing products and market so product development strategy is recommended from the Ansoff expansion matrix below.
New Market opportunities
Currently Burberry is offering four big regions i. e. UK, US, Asia and European countries but it is not covering it completely. There is a huge untapped market within Asian region. For example, Burberry happens to be offering 14 countries of Asia but there are numerous Asian countries that have profiles somewhat similar to these 14 countries and it would be easier for Burberry to provide them. Furthermore Figure 1 is confirming the fact that the luxury spending from high online value consumer has started to show up in the mature markets of Western and there's a rise in the blissful luxury spending patterns in the Parts of asia and is expected to develop further in future. (McKechnie) Because of these facts, I would suggest Burberry to enter in the new market segments with the existing products so that it can serve the untapped customers. So market development strategy is preferred from the Ansoff growth matrix. (Figure 2)
Differentiation from Competitors
The Burberry personal item is the trench coat for both genders. (Lauran Ralph). However, there's a theme of a specific check routine (known as Burberry's check) which is becoming a hallmark for Burberry's almost all of the products and its products are generally accepted through these habits. (Show 1) In a sense Burberry is differentiating itself through its signature trench layer and specific routine so I would recommend Burberry to establish its existing products in new market with the same theme to be able to differentiate their offering form that of rivals.
Q-2 Evaluate critically the IMC campaign that has been used by Burberry. Design an IMC advertising campaign that you think may succeed in today's market. Discuss your procedure and the tools that you'll use when developing the IMC campaign?
Answer:2
IMC campaign used by Burberry
Burberry has been by using a variety of ways to promote its products in unique ways e. g. clothing, store design, headquarters architecture images and social mass media are been a substantial part of its promotional strategy. Following actions are used during Burberry's IMC campaigns:
Equipped Roald Amundson when he became the first man to attain South Pole and left a gabardine tent there to let Shackleton know that he previously appeared first (ability 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 overcoat for use of its officers in the trenches of Northern France in World Battle 1.
Sponsored Peter Sellers in Pink Panther series.
Produced a forerunner of the famous personal trench layer for British officers in the Boer Warfare and later.
Sponsored Hollywood film actors 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 choices.
Kate Moss became the facial skin of Burberry for sometime and in '09 2009 Burberry endorsed British celebrity Emma Watson.
Social networking through Facebook and own interpersonal network called "Art of the Trench" which presents pictures of its customers. (The Art work of the Trench)
Show at the London Fasion Week in 2009 2009. (The Combat)
Television advertisements for different products.
Promotion of latest collection in 3 Dimensional images at Burberry's website.
Develop interest and interest of customers through online Burberry game titles where you can modify the clothes and accessories of a dummy to be able to imagine your individual choice on your own.
Billboards at selective places. (Display 2)
Public relations using various papers and mags.
Direct Marketing as their main emphasis is on retailing directly through their stores.
Most of the marketing and promotional initiatives of Burberry gone for success but after they caused much problem for the brand management. Because of some incorrect promotional products, the brand was started to take up by young working category that resulted in tarnishing the brand image as it was heading against the central values and marketplace of the brand. The check became the symbols of undesirables and customers wearing this brand were restricted in some locations by the pub landlords. This problem put a large question mark on the future success of Burberry but Burberry's brand management responded well, regained its United kingdom luxury lifestyle and gained strong climb in demand specially from Parts of asia.
Burberry is using multiple types of marketing communications tools to be able to support its IMC promotions. Yet this is not completely an IMC plan as there are a lot more tools that are to be involved for a complete IMC plan but remember that Burberry is a niche brand which has to do marketing and advertising in just a certain limit and target market, the lack of some IMC tools are understandable.
The only thing that I would suggest to Burberry is to concentrate on Corporate Sociable Responsibility (CSR). Though it is being focusing on Corporate Friendly Responsibility but it is only regarding fair regulations and deals with the company and partner businesses. But CSR also requires some cultural works so that folks may have a soft place in their mind 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 pretty good as this course of action has got all quite elements that must definitely be contained in IMC of a distinct segment brand. The current IMC is principally composed of celebrity endorsement, direct offering, offering through franchise, sponsorships, advertising on the internet, e-retailing, pr, billboards, games, Tv commercials, brand image and personality initiatives, limited multimedia selection and unique selling point. All of these elements are essence of any well identified and managed IMC plan which is plainly seen from Burberry's market success. Its financial results are improved significantly as they moved into the new millennium. Its Western european and American marketplaces grew and the trading gains and sales are increased handsomely. Burberry in addition has started eliminating non profitable stores and opened up new stores in Las Vegas, Tokyo and Nevada. Also, a three-floor flagship store is exposed in London. All of these progresses are reflecting the exponential progress of the company which is a proof of its successful marketing strategies that is why I would recommend to stick to the existing IMC plan.
Q-3 Discuss the pricing issues that face a business such as Burberry when introducing their product onto the Australian market. What factors must be looked at by an organization when setting a price? What rates strategy might Burberry adopt in the Australian market?
Answer:3
Pricing Issues while starting in Australia:
There are three major costs challenges that are experienced by the companies like Burberry who provide high-end products, when heading to a fresh country (say Australia).
Nature of the product.
Buying power of the potential customers.
Strength of competition and prices in that country.
Nature of the merchandise:
"An extravagance brand with a distinctive United kingdom sensibility, strong international identification and different beliefs that resonate across a multi-generational and dual-gender audience. "
Buying electric power of the customers:
For buying electric power of the customers in Australia, Burberry won't have to start from the base as Australia is not the first country where Burberry is considering to begin business. The most effective way to solve this problem is to compare the per capita income of Australian residents with those countries where Burberry is already present. (Set of countries by GDP) Some of them are proved below.
Countries
Per Capita Income
Singapore
50701
United States
46436
Hong Kong
43862
Australia's income per capita
39231
United Kingdom
36496
France
34689
Japan
32443
Italy
31903
India
3248
The above evaluation reveals that Burberry is present in those countries whose per capita income is very good below that of Australia's in case Burberry continues to be in those countries it shows they remain there because they are earning revenue. By keeping high prices if Burberry can earn revenue from a country like India where per capita income is 3248, they will definitely be successful in Australia (with 39231 per capita income) with the same high quality and high costs techniques.
Strength of competition and rates in that country (Australia):
To set the purchase price, Burberry finally has to see the durability of competition in Australia. For this, Burberry has to check just how many of its major competitors can be purchased in Australia and what are their philosophies. All of its major competition is there in Australia and are operating with the same high prices that are worldwide. Let's see the availability of a few of the rivals:
Gucci comes in Australia.
Design Philosophy
"The fresh and joyous perspective coupled with savvy interpretation of the Gucci legacy has delighted fashion supporters all over the world. "
Chanel is available in Sydney and Melbourne.
Design Philosophy
"Classic designed style, especially in ready-to-wear, feminine elegance, luxury fabric; reinvention of the invention of the girl suit.
Tiffany and Co. is also available at seven different locations in Australia.
Prada is available in Melbourne, Sydney, Southbank and Surfer's Heaven.
Factors must be looked at when setting a price:
There are nine factors which an organization must consider while establishing a price: (Fabioloa Fleuranvil)
Existing Demand:
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 need to lower the costs unless your product is not uniquely identified.
Product Costs:
Can the business enterprise offer you a reasonable earnings? It must be determined by remember all costs including hidden costs.
Competitor's Prices:
Although it isn't possible to get 100% information about your competition, yet you can get a reasonable amount of information about the prices and strategies of opponents which becomes a base of environment prices based on the market power and probable.
Level of Profitability:
How much money you are trying to make above the break-even point.
Your Experience:
Depending upon the experience and customer bank or investment company of your enterprise, you can set the price. A multinational brand has extensive experience regarding workload, efficiency and amount of customers, so they can simply set high prices.
Services offered:
The characteristics of the merchandise you provide to customer and services associated with it will also affect charges techniques. Usually the merchandise that require after sales services or warrantees are established at high price level as compared to the one who requires only 1 time purchasing. In addition, your store service and the way you access the client also matters. For example if you are having a company owned or operated store and special plans are made for customer marriage management, you will try to establish your price high despite having no after sales services.
Business Strategy:
The pricing techniques heavily hinge upon the strategy of a business. A brandname aiming at mass marketing will never arranged prices comparative to the topic brands that just concentrate on selective customers with supreme quality products.
Required Skills:
Set price by keeping the key competency of your product and skilled labor. In case the level of skill is so high, you may charge above average and enjoy high profits as niche market brands do.
Customer:
The rates also depends upon your marketplace. If your potential customer is elite class, you will focus on setting the purchase price high as in case there is luxury products. But if your customer is price conscious, you will aim to placed your price substandard, even though you have to compromise on quality.
Pricing strategy might Burberry adopt in the Australian market:
The charges strategy depends upon market segmentation and the mark market. This strategy takes into account the costs and values from the brands. A luxury item customer have significantly more concern with the worthiness of the brand rather than its price so he's prepared to pay more for such product as compared to a price sensitive customer who can compensate the product quality on price. (Jay Joseph)
Pricing is the most immediate way of interacting the product value to the clients. Nonetheless it is a difficult task to set a price as it includes included decision making at different levels of the organization which range from tactical planning (which will take long term planning profit objectives into consideration), tactical planning (which take short-term market dynamics like demand shifts and competitive results into consideration) and execution level planning (which is concerned about inventory and offer management).
The only strategy that Burberry must adopt will be a Skimming Charges Strategy as if a company's offering has enough differentiation which can justify a high price and have minimal wishes for having market penetration, then it can established your prices very high. The other reason for high prices is its skimming costing in every the countries in which Burberry can be obtained. So it would be a sort of requirement for Burberry to go with the same pricing strategy so that I could have a same image worldwide. Furthermore, all the primary opponents of Burberry are working in Australia and are operating with the same skimming price strategy, so in order to compete internationally, Burberry would have to stick to the same pricing strategy.
Q-4 Among the important elements of online marketing strategy is distribution. What factors would Burberry need to consider distributing the merchandise in international market segments such as Australia?
Answer:4
Distribution:
The circulation strategy establishes the availability of the product. It is a part of product positioning and shows how Burberry is going to make the product open to the customers. The greater distribution channels used, a lot more extreme the brand's subjection and greater supply to consumer market segments.
Points to consider for Circulation:
What type of intermediaries (retailers, representatives, distributors etc) should Burberry use?
Which will be the ultimate channels for Burberry for syndication of products in Australia?
How to deliver the Burberry products and where to install the Burberry production plant?
What are the available intermediaries for Burberry? What exactly are their characteristics and features?After distribution concerns, Burberry need to finalize the mode of foreign market access that how it'll gain access to Australian market.
Modes of Foreign Market Accessibility:
There are four options for Burberry to enter into the Australian market.
Mode
Condition Favoring Mode
Advantages
Disadvantages
Exporting
-Production costs are so high
-Sales has limited potential
-Risks are reduced.
-Quick access
-Better use of existing resources
-High logistics costs
-Your company is an outsider for them
-Your access to local information is relatively limited
Licensing
-Low sales potential in goal country.
-Less legal security
-Licensee has a limit on resources
-Risks are reduced.
-Quick access
-The problem of trade barriers is resolved.
- Return on investment is relatively high
-Limited control over resources.
-There are chances that licensee might become your competitor due to experience is same field.
-Time period have slightly some limitations.
Joint Ventures
-Barriers from administration regarding imports.
-Difference between civilizations of the countries of both partners
-Two associates can bring about more expertise
-High room for learning and take advantage of each other's resources.
-Expertise is pooled.
-Management problems
-Less control over resources
-Above two factors can make it more risky
Direct Investments
-Foreign policies
-Import barriers
-More prospect of sales
-Less risky
-Greater knowledge of
local market
-Skills can be carried out regarding to your own will
-Can see yourself as a part of local industry
-High responsibilities are implemented
-Government supports the neighborhood industry
-More resources are required
-Above factor might lead to problems in controlling the resources
After analyzing the pros and negative aspects of the several modes available for Burberry, I would suggest Burberry to choose the first two settings i. e. exporting and licensing as exporting will give the features of quick access to market, better use of existing resources and reduced dangers while licensing will have great things about resolving the trade barrios and give high return on investments. . On the other hand, direct investments and joint endeavors will never be feasible for Burberry as they have got the negatives of huge capital investment funds, sharing earnings, dilution of control, requirement of more resources and difficulty in taking care of local resources.
Once Burberry will be structured to handle exporting and licensing, another challenge is the physical circulation of the merchandise that can be done through four possible options.
1) Travel: It can be by air, by rail, by highway or by sea.
Exclusive Stations of Distribution:
The product is niche market, so high control must ensure the grade of the products. For this, the degrees of distribution channels will be low.
Distributors:
Distributors will be required to make the products available to the franchises. They'll take the Burberry goods from sea dock to the franchises.
Couriers:
For home delivery of products that are shopped through website, Burberry will need a courier service that covers the whole country (Australia)
2) Warehousing: Burberry can employ the service of one of the three possible warehouse options.
Private warehouse
Public warehouse
Contract warehouse
Besides warehouses, Burberry can also use Hub-and-Spoke distribution systems where small shipments are consolidated in local warehouse and then transported to franchises.
3)Inventory Management: All type of inventories i. e. process stocks, lot size stocks and options, safety companies, seasonal and smoothing shares can be completed and been able in the warehouses.
4) Order Control: It could be managed according to the need and demand of the Burberry's products in various franchises in Australia.
Extended Supply Chain:
Goods that come from extended distances and have multiple variables cover a greater geographical distance; possibly require different settings of transportation. Because of this, supply chain expansion beyond the edges prolongs Burberry's supply chain and requires exposure to higher variables. These factors range from various settings of transportation, transformed government systems, different technology issues and high security concerns.
Logistics-Partners:
The new opportunities and future challenges for stepping into Australian market will require Burberry to determine human relationships with new types of reliable suppliers because Burberry can't possibly know all the positives and negatives to do business atlanta divorce attorneys single overseas market with their global supply string. Each country has its unique group of trade legislation and certainly each collection has its own difficulties regarding logistics. Burberry must utilize outsource providers who can provide the expertise needed to keep the supply chain moving. By doing this, the risk will be shared, the skills will be enhanced and Burberry will get an easy usage of market.
Some of the broader aspects of global logistics that needs to be implemented while heading global and hence Australia is:
Challenged Visibility
As supply chain is a intricate process even at domestic level, visibility in global logistics becomes more difficult to achieve in an international supply chain. This is specifically critical in taking care of the things strategically, figuring out various things throughout the supply chain where goods can be performed to reduce the chance of delays.
Inconsistency in Technology
Unreliable and incomplete information contributes risk and reduces versatility in the international supply chain. Often resource chain professionals and the customers are not sure what they'll be receiving from a particular delivery until it finds the dock. Most companies aren't sure how to ship from dock to port on the ocean. Being a global player is not easy and takes a lot of planning and consideration. Burberry must take these factors into things to consider and design its circulation network regarding to it.
To achieve higher service levels, better advantage utilization and lower logistics costs in the modern supply chain vehicles management solution is necessary that helps multiple modes
and many languages at a price that provides Burberry a same satisfaction degree of customers and good-looking amount of profits throughout the world.
APPENDIX
Figure 1: Regional expansion in consumer costs on luxury products 118
Sally McKechnie, Caroline Tynan Nottingham College or university Business University,
Nottingham, United Kingdom
