Situational Analysis Burberry Services
Burberry, a luxury fashion house was founded by Thomas Burberry in 1856 in Britain, manufacturing clothes and fashion accessories. The very first store on sportswear was unlocked in Basingstoke, London. The 163-old company undergone a huge transformation during its lengthen journey and today has become a leading clothing luxury brand with uniqueness of British heritage. This large global business entity has its own store across the countries. Burberry also deals in licensing and wholesaling along with the retail business. According to Burberry Annual report, till the financial year 2018, the net income of the company was marked at £293.6 million with the operating income £410.3 million. Burberry firmly stands on the principles of delivering quality, function and modern classic style, so resulting it is a well-distinguished firm for its unique wear ranging for women, men and children.
“Consumer behavior can be explained as the events and the activities of people and organization that purchase and use economic goods and services, including the influence on these activities and actions.” JF Engel. Thus to study consumer behavior a deep search on the psychological and behavioral aspects of the consumers need to be made. The consumer makes decisions before the final purchase of the product with the availability of budget, buying motive, product efficacy, durability, quality, and moreover the prominence of the brand.
On diverse point, being a luxury brand Burberry opted to reach out to customers who can afford luxury clothing and other products. By its diversified and striking advertisements, it targeted the young clients who follow the latest and luxurious fashion trends (Minxuan 2016). Being a luxury and unique brand which facilitates the Royal Family with its clothing and accessories, Burberry chose to focus on the fashion followers and economically sound people (Godey, et al., 2016)
A mixed promotional strategy including advertisement, sales promotion, public relation, and direct marketing which traces all the edges of the marketing tactics (Fill 2013). This brought each of the branding approaches including sales policies in a single box, enabling the team to know and deal the public interest through direct communication (Straker and Wrigley, 2016).
86 percentage of marketer believes that social media play a key role in marketing (Tuten and Soloman, 2017). Social media, internet, radio, television, newspaper, billboard-like many other options have also been approached for the promotional activities and advertisement campaigns at a huge level. Besides the above tactics, outside agencies are also hired for brand promotion so as to offer the best in class services to its customers.
By organizing fashion shows and similar events helps to grab the attention of the targeted customer zones, fetching their attention towards the new launch of apparel, fragrances, cosmetics, and accessories. Showcasing the launch of new fashion and style, they develop an interest to know more about the product and enforce them to visit the store, here additional factors relevant to the product is revealed at this stage (Rocamora 2017)
Micro Environment Analysis
In the assessment of Micro Environment, a company evaluates the factors such as customers, competitors, marketing arbitrators, public groups and the company itself. The analysis of internal and external strength and weakness supports the company on the applied market strategies and further decisions.
a. Company Factors
Burberry has strong principles of product and process improvements. The renowned faces are used by the company to promote the brand among its consumers to attract them towards the latest launches (Rocamora 2016). Well skilled workforce in the sales and marketing department efficient enough to fetch the attention of customers through effective strategies and innovative ideas. A flexible supply chain system enables to meet the bulk supply challenges.
Selecting target markets and designing market activities helps to attract the customers to get the successful conversion. The segmented customers are analyzed by Burberry through the earnings levels, regularity of purchase, the purpose of buying, industry trends, target market segment, potential market, etc.
To reduce the impede competitive pressure from the parallel competitors the relevant marketing activities are strategized by the company. A competitor enforces the company in the position relocation in the trending and competitive market. Burberry focuses on counter-marketing campaigns so as to maintain the lead in the market. The product line positioning and marketing strategy not only affect the supply chain management but also impacts the luxury product strategy (Mcdonald and Dunbar, 2012).
d. Marketing Arbitrators
Marketing arbitrators or the collaborators comprised of both the upstream and downstream of the supply chain. Its efficacy is analyzed by the bargaining capacity, flexibility and alertness, profit sharing and market hold. Burberry has its stores and outlets across the countries with either on franchisees or licensing basis. Because of its flexible supply chain system the company sustains a successful and profit making franchisees chains (Mcdonald and Dunbar, 2012).
Macro Environment Situational Analysis
Macro Environment Situation facilitates the business with information on relevant factors of macro environmental trends that affect the business accordingly. This comprised of external forces that cannot be controlled directly by the organization, instead of a company needs to cope up their macro environment in such a way to get the benefit.
The core purpose of designing and implementing a retail marketing plan is to ensure that Burberry grows on the international front in terms of overall sales ratio. Generally, a PESTLE analysis is used to identify external factors affecting an organization forming its macro environment. The analysis comprised of Political, Economic, Social, Technological, Legal, and Environmental factors.
Globalization exposures corporate liability towards politically influenced changes and demands a foreign tax, import legislation when public debt is high, both government and fiscal organizations overcome uncertainties and tax revenue is low (Rowe 2010), in terms of seeking benefit in international growth and variation (Moore and Birtwistle 2004). However, nearly 60% raw material is sourced by the company from Europe. Burberry is an extreme luxury brand, thus practicable in specific geographic governments and demographics as every country does not bear the political condition favorable for market setup.
The global economic recession indeed affects the proportion of expense on discretionary luxury products. Particularly, customers in the Middle East, Russia, Japan, China, and Asia prefer a group sale while traveling overseas. This in result shifts the travel pattern and hence affects the trading ratio (Merk 2014). The decline in the luxury market also distresses staff slowing, which in turn produced high staff throughput at Burberry. Though, it help the company to survive with declining stress as instantaneously showed exceptional gains.
Social factors hold prodigious significance. Europe has shown tremendous growth in its High Net worth Individuals (HNWI) and the UK market has gained an increase of 15.4% in the same. Majority of the population of a specific age segment spend a prominent figure on luxury items. Socio-culturally, as different countries have different lifestyles and cultures and prefers different styles. So, while distributing the product, the company has to be alert about the customer preference while developing the strategic investment that helps to target customers from various culture groups.
Technology embrace becomes higher on the customer’s changing attitude and increasing expectation. In a few past years, online sale on luxury brands has shown a double increase in comparison of offline sales. A key to retain and attract customers more so as to gain viable benefits was due to digital presence (Milnes, 2015). Burberry’s website “Art of the Trench” highlights youthful pictures of its star. Company’s “Live Streaming” design council facilitates buyers to know about the newest launches and trends at first before they come in the market (Straker and Wringley, 2016).
Source: Google image/ PESTLE
For a Legal, like other brands, the Burberry brand is also vulnerable for copycat infringement that has effects on sales as well as goodwill of company in global markets (Sun 2014). The Burberry’s Environmental policies are systematically comprehensive and respect all the global environment fences and attributes by its business activities. Also, shows dedication, commitment in supporting and developing such goals (Burberry GEP 2014).
Strengths: Being a traditionally established brand, Burberry remains tantamount with British fashion. It continues to be #1 in e-commerce strategic reach, retail, licensing, wholesale, and digital customer experience (Gasparini, 2017). By sharing their brand story on social media platforms Burberry outshines and tends to connect with its customers at the fullest sustaining its presence among them. Burberry has extensive geographical assortment. Including Europe and Spain, it has acquired remarkable gain in America, Asia-Pacific along with emerging markets such as China, Russia, Eastern Europe, India and the Middle East, contributing to retail and wholesale revenue (Ahrendts 2013).
Weakness: Being high luxury brand premium price range makes it unreachable to all its admirers because its luxurious brands are out of the reach of everyone’s pockets (Wiki Wealth, 2014). Limited product line comprising apparel, beauty products, and accessories also hedges the company in luxury and fashion segment only, whereas many other similar companies put themselves into home décor, furniture and personal grooming segments as well.
Opportunities: Continuous international extension focusing on innovation and product range among different groups of age that a fundamental strategy which helps to sustain for long-term. This tends Burberry to enter into new potential markets those have shown a tremendous growth rate in the past few years (Swire, 2014). Burberry has also an opportunity to get increased the demand of its prime products at global markets and expanding its market size there, referencing its brand image and value across the globe (Forbes, 2016).
Threats: Burberry, being an iconic fashion brand also faces the heap of imitating and copied products in the market, which affects its brand value and adversely affects the revenue generation as well (Wiki Wealth 2014; Gasparini 2017 ). Price limitation in developing countries is the main issue, where the customers are more cultured and price-conscious both. Continuous changing lifestyle and fashion aspiration is the main concern for the company to serve with innovative and attractive launches continuously (Rankabrand, 2015).
- Strong innovation in technology as the market and current trend are changing continuously.
- Promotional strategy by adopting new advertising style that helps to increase the brand visibility.
- Increase use of social media that broaden their reach and appeal to consumers.
- Increase product range in order to attract more audience and create casual range of products that have more diversity which can be purchase by middle- income consumers as well.
- Expand the reliable network distribution outlets and developing strategic global partnering approach.
- Can focus on children clothing apparel.
- Changing the key marketing strategy focusing on adding vague value, celebrity endorsement that enhance brand image which will lead to overall growth of the products.
Burberry Plc, with the legacy of “Britishness”, deals in the luxury apparel for women, men, and children; along with offering cosmetics and bags. The company also facilitates with franchise its arbitrators to open-up the brands’ stores across the countries ensuring the growth, sell, eminence, and success of the brand. Even in the tough economic environment and varying consumer cultures and preferences, it has maintained the British heritage; however, Burberry also knows well how to satisfy the market and the consumers both with its differentiate brand value, marketing skills, applied strategies and selling tactics, which are the core reasons for its impactful global presence. Strong innovation in technology, elucidated analysis of macro and micro market environment with a strong perception of the geographical conditions, has empowered the company a prominent brand.
Ahrendts, A. (2013). Burberry’s CEO on turning an aging British icon into a global luxury brand. Harvard Business Review, 91(1), 39-42.
Burberry annual report 2014-15 (Burberry Group PLC, 2015). Retrieved from: http://www.annualreports.com/HostedData/AnnualReportArchive/b/LSE_BRBY_2015.pdf
Burberry Global Environmental Policy (2014). Retrieved from: https://www.burberryplc.com/content/dam/burberry/corporate/Responsibility/Responsibility_docs/Policies_statements/Policies/global-environmental-policy.pdf.
Burberry (2015). Strategic Report, 2014-2015. [Online. Accessed at: http://www.burberryplc.com/documents/ar-1415/burberry_strategic_report_2014-15.pdf, February 6, 2016].
Christiansen, B. (Ed.). (2013). Transcultural marketing for incremental and radical innovation. IGI Global.
Cooper, D.R. & Schindler, P.S. 2014. Business Research Methods. 12th edition. New York: MCGraw-Hill.
Fill, C. (2013). Marketing Communications: Brands, Experiences and Participation. Pearson: Harlow, England, U.K. ISBN-13: 978-0273770541. p. 752-754
Financial Times (2002). The History of Burberry. FT.com (May 29, 2002).
Gasparini, R. Burberry: A Marketing Success Story. Retrieved from; https://www.scribd.com/document/348690266/Burberrys-Marketing-Success-Story-Upda-pdf
Godey, B., Manthiou, A., Pederzoli, D., Rokka, J., Aiello, G., Donvito, R., & Singh, R. (2016). Social media marketing efforts of luxury brands: Influence on brand equity and consumer behavior. Journal of business research, 69(12), 5833-5841.
Jones, Sarah (2014). Burberry’s brand value rose 42pc since last year: report. Retrieved from http://www.luxurydaily.com/burberrys-brand-value-rose-42pc-since-last-year-report/,
McDonald, M., & Dunbar, I. (2012). Market segmentation: How to do it and how to profit from it. John Wiley & Sons.
Merk, M. (2014). Luxury sales force management: strategies for winning over your brand ambassadors. Springer.
Milnes, H. (2015) How Burberry Became The Top Digital Luxury Brand. Retrieved from: https://digiday.com/marketing/burberry-became-top-digital-luxury-brand/
Minxuan, H. U. A. N. G. (2016). Digital Marketing Communication of Luxurious Brands in China: A Case Study of Burberry (Doctoral dissertation, Hong Kong Baptist University Hong Kong).
Moore, C & Birtwistle, G 2004, ‘Creating an international luxury fashion brand’, International Journal of Retail & Distribution Management, vol 32, no 8, pp. 412-422.
Rocamora, A. (2017). Mediatization and digital media in the field of fashion. Fashion Theory, 21(5), 505-522.
Straker, K., & Wrigley, C. (2016). Emotionally engaging customers in the digital age: the case study of “Burberry love”. Journal of Fashion Marketing and Management, 20(3), 276-299.
Swire, R. (2014). Why is Burberry‘s Digital Strategy Is So Good? Parallax Agency. Retrieved from: https://parall.ax/blog/view/3047/why-is-burberry-s-digital-strategy-so-good
Tuten, T. L., & Solomon, M. R. (2017). Social media marketing. Sage.
Walshe, P. (2016). Why Brand Is Key To Burberry’s Future. Forbes. Retrived from; https://www.forbes.com/sites/onmarketing/2016/04/26/why-brand-is-key-to-burberrys-future/#3bd90fba4541
Links for Us